Nogger's Blog

Chicago Up Again, With Old Crop Gaining The Most

27/04/12 -- Soybeans: May 12 Soybeans closed at USD14.96 3/4, up 15 1/2 cents; Nov 12 Soybeans closed at USD13.62, up 3 1/4 cents; May 12 Soybean Meal closed at USD427.40, up USD7.80; May 12 Soybean Oil closed at 55.18, down 19 points. For the week as a whole May 12 beans gained 60 cents, with new crop Nov 12 up only 6 cents this has clearly been all about old crop. May 12 meal was USD21.40 higher on the week, with May 12 oil losing 65 points. Strong rumours of Chinese buying US beans appeared to have at least been partially confirmed with the USDA today reporting the sale of 110,000 MT of new crop soybeans to China plus 116,000 MT to "unknown". Informa Economics slashed their 2012 Argentine soybean production estimate from 45 MMT to 40 MMT. May 12 beans hit a fresh contract high of USD15.09 but failed to hold above the USD15/bu level in what was possibly a bit of pre-weekend profit-taking. Funds were said to have been net buyers of 6,000 soybean contracts on the day.

Corn: May 12 Corn closed at USD6.53, up 29 cents; Dec 12 Corn closed at USD5.38 3/4, up 3 3/4 cents. On the week overall May 12 corn was up 40 1/2 cents and Dec 12 up 2 cents. As with soybeans it was old crop that did almost all the gaining this week. The USDA today reported a whopping 1.44 MMT of new crop to "unknown" along with 120,000 MT of old crop to China in what was said to be the largest one day corn sale since 1991. Following reports of smaller sales earlier in the week, his brings the total sales to China/unknown to over 2.8 MMT this week, with almost 700 TMT of it coming off an already very tight old crop position. We now have front month May 12 at a USD1.14 1/4 cent premium to Dec 12 compared with 75 3/4 cents just a week ago. The trade already seems to be banking on an early harvest to alleviate some of this old crop tightness.

Wheat: May 12 CBOT Wheat closed at USD6.42 1/4, up 16 1/4 cents; May 12 KCBT Wheat closed at USD6.46 1/2, up 7 1/4 cents; May 12 MGEX Wheat closed at USD7.74, up 6 1/4 cents. For the week Chicago wheat added 26 1/2 cents, Kansas was up 20 1/2 cents and Minneapolis fell 17 cents. Spillover support from corn helped wheat today, along with widespread talk that the acute tightness in old crop corn is and will continue to boost demand for wheat from the feed sector. There's some continued talk of too dry in the south and freeze potential in the north. The Commitment of Traders report shows funds reducing their net short position in Chicago wheat by 11,500 contracts for the week through to Tuesday. Trade estimates have them further cutting that short by a similar amount since.

EU Wheat Higher, Aided By Large US Corn Sales To China

27/04/12 -- EU grains finished mostly higher with May 12 London wheat up GBP1.10/tonne to GBP178.50/tonne and Nov 12 up GBP1.95/tonne to GBP155.60/tonne. May 12 Paris wheat was EUR2.75/tonne higher at EUR213.70/tonne, new crop Nov 12 was up EUR2.25/tonne to EUR202.75/tonne.

For the week overall May 12 London wheat was GBP2.20/tonne higher, whilst Nov 12 was up GBP1.10/tonne. Conversely May 12 Paris wheat lost EUR2.80/tonne, with new crop Nov 12 down a nominal EUR0.25/tonne.

London wheat seems determined to attempt to continue to punch above its weight, with May 12 now around a EUR5.00/tonne premium to its Paris counterpart.

Reports continue to circulate that the drought has not yet been broken in Eastern Europe. In stark contrast the BBC report that April rainfall in England has been 165% of normal so far this month, with Wales at 130% and Scotland 121%.

The HGCA say that following the rain, the condition of winter wheat and barley here is very good.

Finally igniting what had been a lacklustre US corn market so far this week was the USDA confirming 1.56 MMT of US corn sold to China/unknown. That is apparently the largest one day corn sale since 1991, and would appear to finally back up last week's reports of heavy Chinese interest.

I wonder if they will back up this week's widely touted reports of significant soybean sales to the same buyer next week?

FranceAgriMer report that winter wheat crop conditions there improved slightly this week to 63% good excellent compared to 62% a week previously.

New crop Paris rapeseed was up around EUR4.00-5.00/tonne today following a Reuters report that Strategie Grains are now predicting an EU-27 crop of just 17.6 MMT this year. That would be almost 8% down on last year and represents a six year low.

Early Call On Chicago

27/04/12 -- The overnight gains saw soybeans around 10-12 cents higher, with corn up 2-6 cents and wheat 4-5 cents firmer. Crude is a bit weaker and so too the dollar - the latter should help the grains this afternoon.

The USDA have announced the sale of 120,000 MT of old crop corn to China along with a monster 1.44 MMT of new crop to "unknown". The trade has made a pretty good job of shrugging off these corn sales to unknown/China this week, let's see what it makes of that today.

In addition, the USDA have reported sales of 110,000 MT of new crop soybeans to China plus 116,000 MT to "unknown".

The IGC say that China's corn imports will jump 50% in 2012/13 to 6 MMT from 4 MMT this season. It already looks like that may be conservative.

Meanwhile Argy corn and soybean production estimates keep shrinking.

Yesterday's weekly export sales were strong for beans, corn and wheat. They were also heavily weighted in favour of old crop for beans and corn, no wonder the differential between the nearby and the deferred months widened yesterday, a trend that looks set to continue today judging by the overnight action.

For the week as a whole, including the overnight market, we have May beans up 46 3/4 cents, with new crop Nov rising a more modest 9 1/2 cents. May corn is up 27 1/2 and Dec up just a 1/4 cent. May wheat is up 15 cents.

Early calls for this afternoon's CBOT session: corn and wheat up 4-6 cents and soybeans 10-12 cents higher.

EU Rapemeal Prices

27/04/12 -- Rapemeal prices on the continent are around a euro lower on old crop and one to three euros weaker on new crop this morning.

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

The Pain In Spain

27/04/12 -- It's been another bad week to be Spanish. Barcelona out of the Champions League, unemployment hits a record 5.64 million (nudging 25% of the entire workforce) and Standard and Poor’s downgrading them two notches and warning that it is already considering a further cut.

Now we hear that Spanish retail sales were down 3.7% in March - the 21st month in row sales have fallen. Unemployed people don't tend to shop that much do they?

On top of that figures due out on Monday are expected to confirm that the country has fallen back into recession. Welcome to the club.

Chicago Close - Thursday

26/04/12 -- Soybeans: May 12 Soybeans closed at USD14.81 1/4, up 7 3/4 cents; Nov 12 Soybeans closed at USD13.58 3/4, down 11 3/4 cents; May 12 Soybean Meal closed at USD419.60, up USD5.70; May 12 Soybean Oil closed at 55.37, down 28 points. A widening of the gap between old cro and new crop was a feature for both beans and meal on the day. Weekly export sales were strong and above expectations at a combined 1.4 MMT, slanted 926,200 MT in favour of a tight old crop supply. China accounted for 603,800 MT of that along with a further 365,000 MT of new crop. Funds were said to have been net buyers of around 4,000 soybean contracts on the day. With the Argentine soybean harvest now past halfway (56%) the Buenos Aries Grain Exchange cut their production estimate by 1 MMT to 43 MMT, pegging yields at 35 bu/acre.

Corn: May 12 Corn closed at USD6.24, up 13 cents; Dec 12 Corn closed at USD5.35, down 3 cents. Corn also saw the old crop/new crop spread widen, reflecting tight old crop supplies. Weekly export sales of a combined 826,200 MT were also tilted in favour of old crop at 645,600 MT. China popped up as a buyer of 37,300 MT old crop and 66,800 MT of new crop. The Buenos Aires Grain Exchange cut their Argentine corn crop estimate by 1 MMT to 19.8 MMT. There are widespread reports of elevators and ethanol producers struggling to find corn left for sale in the country, resulting in basis levels rising. It could be a heck of a long time to new crop.

Wheat: May 12 CBOT Wheat closed at USD6.26, up 9 1/2 cents; May 12 KCBT Wheat closed at USD6.39 1/4, up 7 1/4 cents; May 12 MGEX Wheat closed at USD7.67 3/4, down 15 cents. Weekly export sales of a combined 744 TMT beat expectations for sales of 350-700 TMT. China took a 58,000 MT cargo of the new crop sales. That seems to confirm that US wheat is competitively priced on the world stage. Algeria recently passed on Argentine wheat due to quality concerns. Early talk is that Argentine farmers will plant less wheat this year due to their dissatisfaction with government price control measures. Lingering drought in Eastern Europe is also attracting some attention.

EU Wheat Close - Thursday

26/04/12 -- EU grains finished mixed with May 12 London wheat closing GBP1.90/tonne higher at GBP177.40/tonne, but with new crop months GBP0.35/tonne lower. Paris wheat did the opposite with May 12 Paris wheat falling EUR1.50/tonne to EUR211.00/tonne and new crop months adding EUR0.50-0.75/tonne.

There are some reports of dryness lingering in Eastern Europe even though the drought in Western Europe has been well and truly broken.

The International Grains Council today reduced their estimate for world 2012/12 wheat production by 5 MMT from last month to 676 MMT, citing "worse than expected winter damage and recent dry conditions" in Europe.

That represents a fall of 2.7% on last year, although corn production is seen more than making up for that deficit with 2012/13 output rising 4% to a record 900 MMT.

US wheat was higher on ideas that hot weather in the southwest Plains and a low-to-moderate freeze threat for parts of the northern and eastern Midwest may cause some light damage.

Also lending support to US wheat was news that weekly export sales there beat trade expectations of 350-700 TMT, coming in at 744,000 TMT.

Brussels issued soft wheat export licences fo 223,500 MT this past week, bringing the 2011/12 year to date total to 11.3 MMT, almost a third down on where we were a year ago.

Commissioning at the Vivergo bioethanol plant in Hull is now said to be 46% complete.

EU Rapemeal Prices

26/04/12 -- Rapemeal prices on the continent are firmer today following firmer Chicago soymeal last night.

Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session: