Chicago Close - Friday
25/05/12 -- Soybeans: Jul 12 Soybeans closed at USD13.82, up 6 cents; Nov 12 Soybeans closed at USD12.89 1/4, up 13 cents; Jul 12 Soybean Meal closed at USD409.30, down USD1.50; Jul 12 Soybean Oil closed at 50.12, up 70 points. On the week as a whole Jul 12 beans were down 23 cents and Nov 12 up 1 1/4 cents. Jul 12 meal was USD8.60 lower and Jul 12 oil down 20 pips. The commitment of traders report shows funds decreasing their net long on soybeans by around 16,000 contracts as of Tuesday night. For nearby beans today was maybe a little bit of consolidation heading into a three day weekend with US markets shut on Monday for the Memorial Day Holiday. Weekend weather developments will maybe dictate market direction when trading resumes Monday night. "Thunderstorms are expected Friday night along a warm front stretching horizontally across the grain belt from Nebraska to northern Ohio. This front will be the focus of showers Saturday and Sunday, as it lifts northward into South Dakota, Minnesota, Wisconsin and Michigan," say Martell Crop Projections.
Corn: Jul 12 Corn closed at USD5.78 1/2, unchanged; Dec 12 Corn closed at USD5.21 1/2, up 6 1/2 cents. On the week as a whole Jul 12 corn fell a hefty 57 cents and Dec 12 a more modest 15 1/2 cents. This was the lowest close for Jul 12 on the weekly chart since late 2010. Funds were said to have bought around 4,000 contracts on the day heading into the long weekend, but that would still see them as a net seller of around 30,000 on the week if daily estimates are correct. Rumours that China has been cancelling US corn purchases and switching to South America are unconfirmed. It is note though that Brazilian FOB prices are around USD20/tonne cheaper than US values at the moment. The record fast pace of US corn plantings this year has the market focusing on the weather earlier than usual. Monday's usual crop progress report from the USDA is delayed until Tuesday next week. As of last Sunday night planting was 96% complete, emergence at 76% and good/excellent crop conditions at 77%.
Wheat: Jul 12 CBOT Wheat closed at USD6.80, up 17 cents; Jul 12 KCBT Wheat closed at USD7.00, up 13 cents; Jul 12 MGEX Wheat closed at USD7.86 1/4, up 11 cents. At the end of a choppy week Chicago wheat is 15 1/4 cents lower overall, with Kansas down 5 cents and Minneapolis down 5 3/4 cents. Heat and dryness in Russia and the US Great Plains is seen supporting the market. The commitment of traders report shows funds cutting their net short position in Chicago wheat by 57,000 contracts in the week through to Tuesday night. The US wheat harvest in Kansas is underway, with mixed reports filtering through with regards to yields. Many expect yields to tail off as the harvest progresses as recent adverse weather conditions are likely to have taken a heavier toll amongst the more immature wheats around the state. Good/excellent crop conditions in the State have slumped from 60% to 43% in the past fortnight. Revised crop conditions will be out on Tuesday.
EU Grains Closing Comments
25/05/12 -- EU grains finished mostly higher with Jul 12 London wheat up GBP1.00/tonne to GBP175.00/tonne, Nov 12 London wheat was GBP1.50/onne higher at GBP159.50/tonne. Aug 12 Paris wheat was unchanged at EUR212.75/tonne, whilst Nov 12 was up EUR3.75/tonne to EUR216.50/tonne.
For Nov 12 Paris wheat this was the highest close on the weekly chart in almost 12 months.
On the week as a whole Nov 12 London wheat gained GBP1.50/tonne and Nov 12 Paris wheat EUR1.25/tonne.
Drought, particularly in Russia, Ukraine and the US is making the headlines and supporting the market.
The Euro was back under renewed pressure after Spain's fourth-largest bank, Bankia, asked the government there for a EUR19 billion bailout and said that it in fact made a EUR2.98 billion loss in 2011 rather than the EUR309 million profit it announced in February.
The weak euro should support wheat prices on the continent where the same warm and dry weather that we are currently experiencing in the UK is also prevailing in France and Germany. As with here, this should be largely beneficial to crops after a cool and wet April and early May, although it may not be too long before some are saying it's too hot and too dry here as well.
In the UK most crops are looking magnificent and appear to be growing before your eyes now that they finally have some much-needed heat units.
Corn planting in France is said to be 93% complete by FranceAgriMer, with emergence running at 76%.
Brussels only issued 84,0162 MT of soft wheat export licences this week as the marketing year end nears - the lowest volume in 14 weeks. That brings total year to date exports to a rather disappointing 11.85 MMT.
The US and much of Europe, including France and Germany, will be closed for a public holiday on Monday.
Point of interest: A year ago today drought talk was all the rage in the UK, France, Germany, Ukraine and Russia. The first winter barley was cut in the Charantes area of France on 24th May 2011, with resulting yields described at "catastrophic". Yields there finally averaged 5.7 MT/ha, around the same as here in the UK.
EU Rapemeal Prices
25/05/12 -- Rapemeal prices on the continent unchanged across the board today for the first time in months.
Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous session:
| May12 | 241.00 |
unch |
| Jun/Jul12 | 240.00 |
unch |
| Aug/Oct12 | 214.00 |
unch |
| Nov12/Jan13 | 213.00 |
unch |
| Feb/Apr13 | 212.00 |
unch |
| May/Jul13 | 202.00 |
unch |
| Aug/Oct13 | 172.00 |
unch |
| Nov13/Jan14 | 180.00 |
unch |
Chicago Corn Slumps To 17-Month Low
24/05/12 -- Jul 12 Soybeans closed at USD13.76, up 13 1/2 cents; Nov 12 Soybeans closed at USD12.76 1/4, up 18 1/2 cents; Jul 12 Soybean Meal closed at USD410.80, up USD5.00; Jul 12 Soybean Oil closed at 49.42, up 51 points. Export sales of 953,700 MT for soybeans were marginally below expectations of 1.0-1.25 MMT, but heavily weighted in favour of old crop once again at 800,100 MT - keeping nearby supplies very tight. China bought more than half of the old crop (436,800 MT) and most of the new crop (118,000 MT). Even so, new crop sales are also at an all time high for this time of year showing that demand is very robust. The Argentine crop was cut by 1.1 MMT to 39.9 MMT by the Buenos Aires Grain Exchange today, 2.6 MMT lower than the USDA's current estimate and 9.1 MMT, or 19%, down on last year. Funds bought an estimated 6,000 soybean contracts on the day.
Corn: Jul 12 Corn closed at USD5.78 1/2, down 25 cents; Dec 12 Corn closed at USD5.15, down 8 cents. This was the lowest close for a front month since late 2010. Funds selling, estimated at around 17,000 contracts on the day, put corn under pressure throughout the session. Weekly export sales were disappointing at 482,000 MT, less than half of what was anticipated (1.0-1.3 MMT) although China was a featured buyer of both it was largely on the back of switched sales from unknown. The International Grains Council raised their 2012/13 global corn production estimate by 13 MMT from last month to 913 MMT, a 5.4% increase on last year and an all time record high. Corn ending stocks are also raised by 6 MMT to 141 MMT. That added to the bearish tone even though both totals are well below the USDA's initial estimates for the coming season. The bulls have been trying to get a weather market going in the US this past week or so citing heat and dryness in some Midwest states, latest forecasts have taken on a cooler, wetter look in the 6-10 day timeframe.
Wheat: Jul 12 CBOT Wheat closed at USD6.63, down 2 1/2 cents; Jul 12 KCBT Wheat closed at USD6.87, up 1/2 cent; Jul 12 MGEX Wheat closed at USD7.75 1/4, unchanged. Weekly export sales for wheat were a combined 827,000 MT of almost all new crop, well above expectations for sales of 350-550,000 MT. Accumulated sales for the new crop marketing year are now in excess of 3.3 MT. The IGC have cut their estimate for world 2012/13 wheat production by 5 MMT to 671 MMT, and lowered their projected ending stocks for next season by a hefty 15 MMT to 191 MMT. The Kansas wheat tour earlier this month concluded with an estimated record 49.1 bu/acre yield State-wide. Early yields on what has been cut so far are ranging 43 to 57 bu/acre. It would seem likely that these earlier maturing crops will have been less badly effected by the recent high temperatures and lack of moisture that has seen good/excellent crop conditions in the State slump from 60% to 43% in a fortnight. Yields may drop as harvesting progresses. Funds were said to have been around even on the day as neither a featured buyer nor a seller.
EU Wheat Closing Comments
24/05/12 -- EU grains finished mostly higher with Jul 12 London wheat ending up GBP0.25/tonne to GBP174.00/tonne, and new crop Nov 12 up GBP1.85/tonne to close at GBP158.00/tonne. Aug 12 Paris wheat was unchanged at EUR212.75/tonne, whilst Nov 12 was EUR0.75/tonne firmer at EUR212.75/tonne.
Reports of heavy overnight rain in southern and eastern Ukraine should help wheat crops there. The south of Russia is apparently seeing more scattered showers, and although crop production estimates here are being trimmed most local analysts agree that this is not a repeat of 2010 - at least not yet.
The Russian Grain Union says that the 2012/13 grain harvest will “at least" match last year’s 94 MMT, with wheat production at "at least" 56 MMT. SovEcon have trimmed their estimate slightly to 87m-91 MMT from 87m-93 MMT.
The International Grains Council have cut their 2012/13 world wheat production estimate by 5 MMT from last month to 671 MMT, 3.5% down on last year. World ending stocks are seen falling 15 MMT, or 7.3% from last month to 191 MMT - although this is still more than three month's usage.
World corn production on the other hand is seen rising to an all time record 913 MT, 13 MMT up on last month's estimate and 47 MMT more than global output last year.
"Early seeding has reinforced expectations for a huge US harvest. Assuming a significant rise in harvested area, and with yields forecast to match the 10-year trend, US production is projected at 355 MMT, up by 13% year-on-year," they said.
Meanwhile corn production in Ukraine this year is pegged at around 23.0-25.5 MMT by an assortment of local groups, around half of the country's total cereal harvest - a much larger share than we have seen from them before and one that could propel them to be the world's second largest exporter after the US in the coming season.
It would seem that wheat's misfortune is going to be corn's gain in 2012.
In other news, the UK is technically in a double dip recession, according to the latest figures from the Office for National Statistics.
EU Rapemeal Prices
24/05/12 -- Rapemeal prices on the continent are mostly a little lower today.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| May12 | 241.00 |
-1.00 |
| Jun/Jul12 | 240.00 |
-2.00 |
| Aug/Oct12 | 214.00 |
unch |
| Nov12/Jan13 | 213.00 |
-1.00 |
| Feb/Apr13 | 212.00 |
-1.00 |
| May/Jul13 | 202.00 |
-1.00 |
| Aug/Oct13 | 172.00 |
-1.00 |
| Nov13/Jan14 | 180.00 |
-1.00 |
Lunchtime News
24/05/12 -- The overnight grains are higher with beans up around 18-20 cents, wheat up 7-9 cents and corn 2-4 cents firmer. Crude oil is around a dollar higher.
The USDA's weekly export sales report came in at a combined 953,700 MT for soybeans, a bit below the expected sales of 1.0-1.25 MMT. Once again though it is noticeable that the vast majority of these sales were for old crop (800,100 MT) keeping nearby supplies very tight. China bought more than half of the old crop (436,800 MT) and most of the new crop (118,000 MT).
Corn sales at 482,000 MT were less than half of what was anticipated (1.0-1.3 MMT) although China was a featured buyer of both - largely on switched from sales to unknown. Wheat sales were a combined 827,000 MT of almost all new crop, above expectations for sales of 350-550,000 MT.
The IGC have cut their estimate for world 2012/13 wheat production by 5 MMT to 671 MMT, and lowered their projected ending stocks for next season by a hefty 15 MMT to 191 MMT. Even so that's still a plentiful number being the equivalent of more than three months worth of consumption.
The cut in wheat production was due as "adverse conditions lowered harvest expectations in the EU, Russia and Morocco," they said. Earlier this week the FAO said of Morocco: "Prospects for the 2012 winter wheat and coarse grain crops, about to be harvested, are poor. In November, timely but significantly above average precipitation delayed planting activities into December and January. Subsequently, rainfall levels dropped rapidly to minimal amounts from December until early March. In addition, the unusually low temperatures in early and mid-February affected standing crops. Despite a resumption of rainfall in April, much of the yield potential had already been lost as the typical reproductive period of March, especially for wheat, has passed."
Conversely corn production is increased by the IGC, up 13 MMT from last month to 913 MMT, a 5.4% increase on last year and an all time record high. Corn ending stocks are also raised by 6 MMT to 141 MMT.
"Early seeding has reinforced expectations for a huge US harvest. Assuming a significant rise in harvested area, and with yields forecast to match the 10-year trend, US production is projected at 355 MMT, up by 13% year-on-year," they said.
Early wheat harvesting is underway in southern Kansas, with yields said to a a bit disappointing so far.
Ukraine Latest
24/05/12 -- Agritel report this morning that the Ukraine grain harvest is likely to total 45.0-47.50 MMT this season. Corn's share of production has increased dramatically over the past couple of years, whether by design or default, with output this year pegged at 23.0-25.5 MMT, around half of the total cereal harvest. That beats last season's record production of 22.8 MMT, according to the USDA.
Wheat production is seen at 12-14 MMT this year, versus the USDA's total of 22.1 MMT in 2011.
My agronomist chum over there, Mike Lee, tweets this morning that there's been heavy rain over much of Ukraine this morning, including the needy south and the east. He's also posted a picture up of a healthy looking field of Ukraine wheat at the flag leaf stage here.
