Nogger's Blog

EU Wheat Declines On Hangover From USDA Data

10/02/12 -- EU grains finished lower with front month Mar 12 London wheat falling GBP2.25/tonne to GBP165.00/tonne and Mar 12 Paris wheat down EUR2.50/tonne to EUR210.50/tonne.

The hangover from yesterday's bearish USDA data continues.

On the week as a whole London wheat was down GBP2.45/tonne and Paris wheat fell EUR6.75/tonne. At the end of the day, these are still very impressive prices considering that we have the largest projected wheat ending stocks that the world has ever known.

Also the constant nagging pain that is Greece means that the threat of a disorderly default simply refuses to go away. Five cabinet ministers there resigned today shortly after finance ministers in fellow Eurozone countries dismissed their austerity deal as incomplete.

Greece also still needs to agree a deal with private creditors to take a haircut before it can secure the next round of bail-out funds.

Late breaking news Friday was that S&P downgraded no less than 34 Italian banks. It would seem that the European debt crisis is getting worse not better.

There are also now concerns emerging that export dependant China's economic growth simply cannot continue at recent rates given the seemingly impending demise of Europe.

Ukraine said that it's marketing year-to-date grain exports are up 63% on last season at 11.76 MMT, of which 6.75 MMT is corn, 2.96 MMT wheat and 1.90 MMT barley.

Brussels issued 247 TMT of soft wheat export licences this past week, it says it all that this fairly modest amount is the best total in nine weeks.

Early Call On Chicago

10/02/12 -- Apologies for the lack of blogging activity today, I've been busy with other things. The fallout from last night continues I see, with the overnight grains finishing lower across the board. Beans ended 8-10 cents lower with wheat down 6-8 cents and corn 3-4 cents weaker.

Crude is down USD2/barrel, which won't help the grains sector this afternoon. Neither will the fanfare heralded Greek "deal" on austerity that fellow EU member countries are lining up to say is toilet paper.

Chinese economic data this week has been poor, the worst since the last financial crisis in fact, to add a bit more uncertainty concerning the world recovery - if there really is one.

Britain feels like it's in a recession to me. If GBP275 billion hasn't done the trick what difference is another GBP50 billion going to make?

The dollar is higher on a touch of "flight to safety" which won't help US exports too much, and is also bearish grains.

The word on the streets is that US ethanol margins suck, which would appear to be confirmed by a slump in production last week. The loss of the blenders' tax credit now appears to be biting, although the USDA held it's corn for ethanol demand steady at 5 billion bushels yesterday.

The USDA have confirmed the sale of 120,000 MT of soybean to China and 240,000 MT of corn to Egypt, but that's as bullish as it gets today.

I see red. Early calls for this afternoon's CBOT session are: beans down 8-10 cents, wheat down 6-8 cents, corn down 2-4 cents. This will be an interesting close tonight, will our old bottom picking mates the funds pile in looking to bag a pre-weekend bargain? If they fancy getting out then there may not anyone else looking to step in and we could see some significant losses by the close of play.

USDA Report Sends Chicago Lower

09/02/12 -- Soybeans: Mar 12 Soybeans closed at USD12.27 1/2, down 4 cents; Nov 12 Soybeans closed at USD12.38 1/2, down 1 1/2 cents; Mar 12 Soybean Meal closed at USD321.00, down USD0.70; Mar 12 Soybean Oil closed at 52.54, down 4 points. The long awaited USDA numbers came in more or less in line withe expectations for beans. Argentina's soybean production was cut 2.5 MMT to 48.5 MMT and Brazil's output was reduced 2 MMT to 72.0 MMT. World ending stocks were decreased to 60.28 MMT from 63.43 MMT and US carryout was pegged at 275 million bushels, exactly what the trade forecast. Weekly export sales of 603,200 MT for 2011/12 and 55,000 MT for delivery in 2012/13 were also bang in line with expectations of 550-750 TMT. Even so, bearish wheat data dragged the market lower.

Corn: Mar 12 Corn closed at USD6.37, down 5 1/2 cents; Dec 12 Corn closed at USD5.68, down 5 1/2 cents. As with beans corn was dragged lower by wheat despite the USDA coming up with pretty much what the trade expected. Argentine corn output was lowered 4.0 MMT to 22.0 MMT, although it may have been a slightly bearish surprise to see Brazilian production left unchanged at 61.0 MMT. World corn ending stocks were dropped to 125.35 MMT from 128.14 MMT. US corn ending stocks were reduced by marginally less than anticipated to 801 million. Weekly ethanol production slowed to 923,000 but it's too early to say that this is the start of a trend.

Wheat: Mar 12 CBOT Wheat closed at USD6.46, down 14 3/4 cents; Mar 12 KCBT Wheat closed at USD6.92, down 18 cents; Mar 12 MGEX Wheat closed at USD8.31 3/4, down 9 3/4 cents. The stand out number of the whole day was the USDA raising world wheat ending stocks to an all-time high 213.1 MMT. That beat the previous record of 210.4 MMT set in 1999/2000. US exports were raised half a million to 25.5 MMT, Argentina's were increased by a similar amount, with Russia's gaining by 1 MMT. India saw it's production raised to a record 86.9 MMT. Global consumption was reduced this month to 680.5 MMT and now falls 12.4 MMT lower than world production.

EU Wheat Mostly Lower As Trade Digests USDA Numbers

09/02/12 -- EU grains finished mixed but mostly lower with Mar 12 London wheat ending up GBP0.25/tonne to GBP167.25/tonne and Mar 12 Paris wheat down EUR3.00/tonne to EUR213.00/tonne.

The long awaited USDA production and stocks numbers were called neutral by many, despite the fact that they gave us the largest world wheat ending stocks of all time.

Coming in at 213.1 MMT that was 3 MMT up on last month and comfortably eclipses the previous record of 210.4 MMT set in the 1999/2000 season. As an interesting aside on this day in that particular production year front month London wheat was trading at GBP71/tonne. How times have changed, we've got more wheat in the world than we did then yet prices are almost 2 1/2 times higher!

The other pertinent bits of the USDA report include an increase in Russia's wheat exports this season by 1 MMT matched by a similar reduction in those from Ukraine. Overall world wheat production was increased 1.3 MMT and world consumption reduced by 1 MMT.

World corn production fell by 4 MMT courtesy of Argentina, a little surprisingly there was no reduction for Brazil.

Elsewhere there were reports of "under the counter" wheat business being done with Iran, despite international sanctions. They were said to have bought 200,000 MT each of Brazilian & German wheat in the past few days, with rumours suggest they are paying with gold bullion, oil & yen.

Iraq were also said today to have bought 100,000 MT of Australian wheat.

The Russian Ag Minister said that plantings for the 2012 grain harvest will increase 2.4%, and that winterkill of 6% is below average, adding that 2012 output "will exceed" 90 MMT.

The Bank of England decided to increase QE by a further GBP50 billion, that initially boosted the pound although by the close of play sterling was back down to the 1.19 mark against the euro and little more than 1.58 versus the US dollar.

The Early Call On Chicago

09/02/12 -- The overnight grains were quiet ahead of the USDA report with corn ending 2-4 cents weaker, wheat mostly 1-2 cents lower and beans 1-2 cents firmer. Crude is around three quarters of a dollar higher.

The USDA appears to have already thrown most of its curve balls, as today's reports didn't contain any overly dramatic surprises.

Catching the eye though was an increase in world wheat ending stocks to a new all time high of 213.1 MMT, 3 MMT up on last month.

For wheat, US exports were raised half a million to 25.5 MMT, Argentina's were increased by a similar amount, with Russia's gaining by 1 MMT. Ukraine's were cut by a million and Canada's reduced by a half million.

Overall world wheat production was increased 1.3 MMT and world consumption reduced by 1 MMT.

World corn production fell 4 MMT courtesy of Argentina. There was no reduction for Brazil. Global corn stocks fell to 125.3 MMT, the lowest since 2006/07.

World soybean production was reduced 5.5 MMT, largely courtesy of Brazil (-2 MMT), Argentina (-2.5 MMT) and Paraguay (-1.2 MMT). Global consumption was down 2.2 MMT, and world stocks cut by 2.2 MMT.

Weekly export sales for wheat came in at a marketing-year high of 707,900 MT with unknown taking the lion's share of that (183,000 MT). That beat expectations of 450-700 TMT. Actual shipments were 464,000 MT.

Corn export sales of 694,100 MT for 2011/12 and 63,700 MT for delivery in 2012/13 were below expectations of 800 TMT-1.3 MMT.

Soybean sales were 603,200 MT for 2011/12 and 55,000 MT for delivery in 2012/13 compared to expectations of 55-750 TMT.

Overall the data is being called neutral, although how the highest wheat stocks in history can be that is beyond me. As the market was expecting a supportive/bullish slant rather then a neutral to slightly negative one we could see prices work lower than the initial opening calls which are: corn and wheat down 2-3 cents, soybeans down 2-4 cents.

The USDA Numbers

09/02/12 -- The USDA's eagerly awaited raft of important numbers are out and for once are mostly in line with trade expectations.

Catching my eye however is world wheat ending stocks increasing by 3 MMT to an all time high 213.1 MMT whereas a drop of around 1 MMT had been expected.

Brazilian corn production wasn't dropped as expected but left unchanged at 61.0 MMT, Argy corn output was lowered to 22.0 MMT, roughly in line with trade guesses.

Argy soybean production was cut 2.5 MMT to 48.5 MMT, Brazil's ouput was reduced 2 MMT to 72.0 MMT.

US soybean ending stocks came in as per expectations at 275 million bushels, wheat stocks were cut a bit more than expected to 845 million due to increased US exports. Corn ending stocks were reduced by a little less than anticipated to 801 million.

Interesting Little Pre-USDA Snippet

09/02/12 -- And a great excuse to get the Brazilian arses out of the bottom drawer again. The government-backed CONAB have today increased their Brazilian corn production estimate from 59.2 MMT to 60.8 MMT, I hear. That's within 0.2 MMT of what the USDA said in January, and besides our chums in Washington the highest number on the table.

The reason for the increase seems to be optimism surrounding winter corn production, which is just starting to go into the ground now, right behind summer harvesting of corn and/or soybeans.

In contrast they've trimmed their soybean estimate from 71.8 MMT to 69.2 MMT, almost 5 MMT below the USDA's January estimate and one of the lowest numbers around at the moment.

EU Rapemeal Prices

09/02/12 -- Rapemeal prices on the continent are a bit lower today in line with modest losses in CBOT soymeal last night and again this morning.

Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous day: