Chicago Closing Comments - Friday
22/02/13 -- Soycomplex: It was a roller-coaster day for beans, which hit a 3 1/2 month high in overnight trade - with front month Mar 13 rallying well above the USD15/bu mark that have proven to be a difficult nut to crack - before slumping violently later in the afternoon. Weekly export sales of minus 119,500 MT old crop and only 62,000 MT of new crop were dismal against expectations of 500-900 TMT. The USDA did however throw the market a sop, reporting sales of 410 TMT of (admittedly mostly new crop) soybeans to China under the daily reporting system. Brazilian dockers at the port of Santos went on a 6-hour strike today, although there are reports that a second more nationwide stoppage planned for Tuesday has been called off. Other reports suggest that both parties have agreed a strike-free negotiation period that will last until mid-March. Nevertheless shipping delays in Brazil are said to be around 40 days at the moment, and look more likely to increase rather than decrease in the month ahead. The second day of the USDA's February Outlook Forum said that 2013/14 US soybean ending stocks will double from 125 million bushels this year to 250 million next year - a seven-year high, according to Agrimoney.com. That does however assume that a) this season's ending stocks won't be tighter than the USDA currently project and b) that this season's crop does indeed turn out to be a record 3.405 billion bin-buster. Fund selling was estimated at 14,000 contracts on the day in beans. Mar 13 Soybeans closed at USD14.61 1/4, down 26 1/2 cents; May 13 Soybeans closed at USD14.43 3/4, down 26 3/4 cents; Mar 13 Soybean Meal closed at USD426.90, down USD10.40; Mar 13 Soybean Oil closed at 50.35, down 96 points. On the week front month beans were up 36 3/4 cents, meal up USD17.50 and oil down 127 points.
Corn: The USDA weekly export sales for corn of 361,800 MT old crop and 20,100 MT of new crop beat expectations of 150-300 TMT. For once that actually came in ahead of the level required to hit USDA export targets for the season. Still, spillover weakness from falling soybeans in afternoon trade dragged corn modestly lower on the day. The USDA Outlook Forum said that 2013/14 corn ending stocks will triple to 2.177 billion bushels. That does include the caveat that US corn yields will rebound to a "trendline" 163.6 bu/acre - versus 123.4 bu/acre this year - and the second highest on record. It also however is based on a US planted area of "only" 96.5 million acres, many are forecasting plantings in the region of 97-99 million, and some are over 99 million. Thailand and Malaysia both tendering for 60,000 MT of optional origin corn for April shipment. South America may be the favourite to supply that. India continue to plug away with cheap feed wheat sales into Asia and beyond, picking up business that may otherwise have gone to corn. Yesterday's data from the Energy Dept shows that corn used for ethanol production in the US last week was 83.7 million bushels against the required 87.6 million bushels required to meet this crop year’s USDA estimate of 4.5 billion bushels of demand from that sector. Fund selling was estimated at a net 1-2,000 contracts on the day. Mar 13 Corn closed at USD6.90 1/4, down 1/2 cent; May 13 Corn closed at USD6.84 1/4, down 1 1/4 cents. On the week Mar 13 corn was 8 1/2 cents lower.
Wheat: Wheat fell on the back of a perceived improvement in US winter wheat prospects following a major winter storm moving across the Plains and into the Midwest. "Very heavy snowfall has improved wheat potential in Kansas and Oklahoma, the number 1 and 2 top winter wheat states. Much of Kansas received 10-20 inches of snow, equating to 1-1.5 inch of snow melt. Oklahoma received 0.50 to 1.25 inch of moisture from mixed precipitation rain and snow. Precipitation was lighter in the Texas panhandle, the number 3 top hard red winter wheat state, with variable amounts from 0.10-0.65 inches. Wheat growing areas in northeast Colorado got 4-8 inches of snow, all very beneficial for hard red winter wheat. The storm lifted rapidly northward overnight spreading a wide band of heavy snow across Missouri, Nebraska, southern Iowa and central Illinois," said Martell Crop Projections. Weekly export sales of 699,300 MT of old crop and 56,600 MT of new crop were ahead of trade forecasts. The USDA Outlook Forum said that US wheat exports in 2013/14 will be 950 million bushels and that ending stocks will be 639 million. For 2012/13 the current USDA estimates are 1.08 billion and 691 million. Fund selling was estimated at 1-2,000 Chicago wheat contracts on the day. Mar 13 CBOT Wheat closed at USD7.15, down 6 1/4 cents; Mar 13 KCBT Wheat closed at USD7.49 3/4, down 7 1/2 cents; Mar 13 MGEX Wheat closed at USD8.02 3/4, down 3 3/4 cents. For the week Mar 13 Chicago wheat fell 27 1/4 cents, with Kansas down 27 3/4 cents and Minneapolis declining 20 3/4 cents.
EU Wheat Mixed, Treading Water
Old crop prices remain buoyed by the continued rapid pace of EU export sales which are now 46% ahead of this time a year ago, although the huge increase in UK imports has tempered domestic demand here. The exceptionally poor quality of this season's crop seems to have encouraged consumers to get their cover on earlier and in greater percentages than normal to ensure supplies.
FranceAgriMer said that winter wheat crop conditions there are 66% good/excellent versus 74% this time last year. The have 12% of the crop rated poor/very poor against 6% this time twelve months ago. They say that only 84% of the crop has reached the tillering stage versus 99% this time last year.
On the day London wheat closed with front month Mar 13 down GBP0.60/tonne at GBP203.55/tonne and new crop Nov 13 GBP1.35/tonne lower at GBP186.15/tonne. Mar 13 Paris wheat was EUR0.50/tonne higher at EUR243.00/tonne.
For the week as a whole that puts Mar 13 London wheat down GBP0.70/tonne, Nov 13 up GBP0.65/tonne and Mar 13 Paris wheat down EUR1.25/tonne.
US wheat has been under pressure this past few days after what is being called "the largest snow storm in years" hit the western plains before moving onto the Midwest, potentially relieving moisture stress for winter wheat planted in parched conditions and still in dormancy.
Weekly export sales for US wheat, delayed until today because of Monday's President's Day Holiday, were better than trade expectations of 350-600 TMT at 699,300 MT old crop and 56,600 MT new crop. China was a confirmed buyer of both old and new crop, although not in the volumes that have been rumoured of late. There was no confirmation of any sales to the UK or Russia however.
The IGC pegged world wheat production in 2012/13 unchanged from last month at 656 MMT, with ending stocks raised 2 MMT to 176 MMT.
"World output for 2013/14 is tentatively projected up 4% year-on-year, but much is expected to be absorbed by higher demand and stocks are forecast to rise by only 2 MMT," they added.
Following this week's Egyptian government tender, where they only bought just the one cargo (as they also did in their last tender) there have also been rumours in the market that private Egyptian buyers may also have been enquiring for wheat. The FT ran a story this week saying that the political instability there and weak Egyptian pound are behind Egypt's general absence from the market and that subsequently domestic wheat stocks are only half of what they would normally be.
The Egyptian government reportedly spend USD5.5 billion a year on food subsidies, much of which is used to buy wheat. Meanwhile GASC's high profile vice chairman and the man regarded as generally being responsible for the government's wheat purchasing program, Nomani Nomani, stepped down from his job this week.
Chicago Close - Thursday
21/02/13 -- Soycomplex: At day one of the USDA Outlook Forum US 2013 spring soybean plantings were estimated at 77.5 million acres versus the USDA baseline projection of 76.0 million and 77.2 million in 2012. Production in 2013 was estimated at a record 3.405 billion bushels, up 390 million from 2012. The USDA also estimated the average soybean price in 2013/14 at USD10.50/bushel. Stocks estimates will be released tomorrow. Separately the USDA announced 130,450 MT of US soybeans sold to unknown – 75,540 MT of old crop and 55,000 MT of new crop. There's a Brazilian port strike set for tomorrow and another lined up for next week, which will only serve to further increase port congestion there. Vessel line-ups waiting to load beans are already said to be double versus this time a year ago. Lanworth Inc yesterday cut their 2012/13 Argentina soybean harvest outlook to 49.6 MMT versus 51.6 MMT previously. The USDA has production pegged at 53 MMT. The same company also pegged Brazilian soybean production at 81 MMT versus 80.3 MMT previously. The Buenos Aires Cereals Exchange pegged Argentine production at 50 MMT. Trade estimates for tomorrow's weekly export sales report for beans are 500-900,000 MT. The IGC estimated the global 2012/13 soybean crop at 269.0 MMT versus a previous estimate of 271.0 MMT. Fund buying in beans was estimated at around 3,000 contracts on the day. Mar 13 Soybeans closed at USD14.87 3/4, up 5 cents; May 13 Soybeans closed at USD14.70 1/2, up 2 cents; Mar 13 Soybean Meal closed at USD437.30, up USD3.70; Mar 13 Soybean Oil closed at 51.31, down 76 points.
Corn: The Outlook Forum pegged US corn plantings at 96.5 million acres versus the USDA baseline projection of 96.0 million and 97.2 million in 2012. Production was forecast at 14.53 billion bushels versus a USDA baseline projection of 14.435 billion and the 2012 crop of 10.780 billion. The 2013/14 average corn price was estimated at USD4.80/bushel. Corn use for ethanol production was increased to 4,675 million bushels from 4,500 million in 2012/13. The Energy Dept reported the weekly ethanol grind rose 8,000 barrels/day to 797,000 bpd. Taiwan bought 60 TMT of Argentine corn for April shipment. Oman bought 20 TMT of Argentine corn for April shipment. The Buenos Aires Cereals Exchange estimated the Argentine corn crop at 25.0 MMT versus the USDA's 27 MMT. The IGC estimated the global 2012/13 corn crop at 850 MMT versus their previous estimate of 845 MMT. The IGC estimated this year's Indian corn crop at 20.6 MMT versus a previous estimate of 18.0 MMT. Estimates for tomorrow's weekly export sales report are 150-300 TMT. There are said to be 59 ships are waiting to load grain at the Brazilian port of Santos versus 29 ships this time a year ago, and 82 ships waiting to load at Parangua versus 31 ships a year ago. Port workers at Santos begin a wildcat strike tomorrow. Fund selling in corn was estimated at a net 8,000 contracts on the day. Mar 13 Corn closed at USD6.90 3/4, down 9 3/4 cents; May 13 Corn closed at USD6.85 1/2, down 10 3/4 cents.
Wheat: News of a major winter storm sweeping across the Plains and Midwest was enough to get wheat on the defensive, with Southern Nebraska expected to receive 12-18 inches of snow today, according to Martell Crop Projections. The Outlook Forum placed US 13/14 US all wheat production at 2.1 billion bushels versus a USDA baseline projection of 2.19 billion and the 2012 crop of 2.269 billion. The 2013 US wheat acreage was estimated at 56 million acres versus a USDA baseline projection of 57.5 million and 55.7 million in 2012. The 2013/14 average wheat price was estimated at USD7.00/bushel. Separately the USDA announced the sale of 110 TMT of US soft red winter wheat sold to unknown – 55 TMT old crop and 55 TMT new crop. Argentina’s Ag Ministry estimated their 2012/13 wheat crop at 9.4 MMT versus a previous estimate of 10.1 MMT. The USDA still have the crop at 11.0 MMT. Output in 2011/12 was 15.5 MMT, so if the Ministry are correct then production is down almost 40% this season. Iran bought 180 TMT of Australian wheat for April shipment. Iraq was said to have bought 300 TMT of the same origin. Tomorrow's weekly export sales will be important for a wheat market that is looking tired. Trade estimates are for sales of 350-600,000 MT versus last week's total of 706,300 MT. Given all the recently rumoured business to Russia, China and Europe it will be interesting to see if any of that turns up in this week's report. Funds were judged to have been net sellers of around 6,000 Chicago wheat contracts on the day, adding to their already significant short-holding. Mar 13 CBOT Wheat closed at USD7.21 1/4, down 17 1/4 cents; Mar 13 KCBT Wheat closed at USD7.57 1/4, down 20 cents; Mar 13 MGEX Wheat closed at USD8.06 1/2, down 14 1/4 cents.
EU Wheat Stumbles Despite Strong Old Crop Demand
Strong demand for EU wheat continues however, with Brussels issuing another large 588,763 MT of soft wheat export licenses for the week through to Feb 19, bringing the 2012/13 marketing year-to-date total to 12.69 MMT for a hefty year-on-year increase of 46 percent.
Despite that news, Mar 12 London wheat finished down GBP1.60/tonne to GBP204.15/tonne, benchmark May 13 was GBP1.05/tonne lower at GBP206.70/tonne and new crop Nov 13 was GBP0.65/tonne easier to GBP187.50/tonne. Mar 13 Paris wheat fell EUR1.25/tonne to EUR242.50/tonne.
Further evidence of the strong demand for EU wheat was reflected in news from the Germany Statistical Office that Jul/Dec 2012 grain exports were up 44% to 5.9 MMT. Of that total wheat exports accounted for 3.4 MMT, an increase of 61% on the same period in 2011. Barley exports were up 50% to 813 TMT.
Whilst we will have to wait until tomorrow to see if the USDA put any more flesh on the bones of the recently reported US wheat sales to China, Russia and the UK they did today confirm the sale of 110 TMT of SRW wheat to "unknown" - split 50:50 between old and new crop.
That isn't the only international business going on either. Egypt bought 60,000 MT of US wheat yesterday, Ethiopia has a 35,000 MT tender pending, Bangladesh is in for 50,000 MT and Syria’s tender deadline is March 4th. In addition to that Tunisia bought 67,000 MT of optional origin durum wheat yesterday and Jordan purchased 50,000 MT of optional origin wheat overnight. This morning we had news of Iraq booking 300,000 MT of Australian wheat along with a further 180,000 MT from the same seller going to Iran.
Black Sea sellers remain largely out of the market. Kazakhstan said that it's Feb 1 grain stocks were down 34.6% to 12.4 MMT. Any surplus it does have to sell is likely to go to Russia.
Whilst the old crop supply & demand equation continues to look tight, things are starting to develop a more bearish look going forward.
Day one of the USDA's Outlook Forum, which provides their first glimpse into plantings and production for the coming season, pegged US all wheat plantings at 56 million acres - around a quarter of a million up on the area sown for the 2012 harvest. Despite that, production is seen down around 7.5% this year to 2.1 billion bushels (57.15 MMT) versus 2.27 billion (61.76 MMT) in 2012.
Corn plantings of 96.5 million acres will however produce a record crop of 14.53 billion bushels, up nearly 35% on last year's drought-hit production. Meanwhile, a soybean area of 77.5 million acres will also provide output of a record 3.405 billion bushels, up 13% on 2012. This all depends on a return to "normal" yields this year of course, and with no serious weather problems.
US wheat prices were forecast to average USD7.00/bushel in 2013/14, with corn falling to USD4.80/bushel and soybeans down to USD10.50/bushel.
US winter wheat prospects are looking a fair bit brighter than they were a month or so ago. "A powerful storm today is causing heavy snowfall in top wheat states in the Great Plains. This storm would lift into the Midwest bringing welcome precipitation to drought affected corn farms in Iowa and Minnesota. The overnight radar showed very heavy snowfall in central Kansas and northern Oklahoma. The forecast is for heavy snow that, when melted, would be around one inch of moisture, greatly benefiting dry wheat farms," say Martell Crop Projections.
"Kansas wheat farms have accrued a 2 inch soil moisture deficit since October 1 with reduced rainfall. Oklahoma, the driest of the bread-wheat states, has a 3.5 inch moisture deficit. Heavy storm precipitation is very welcome in the US top 2 winter wheat states," they add.
The USDA attaché in Dehli estimates the upcoming Indian wheat crop at 92.0 MMT, slightly lower than the local Ag Ministry's 92.3 MMT forecast and down 3% on last year's record 94.9 MMT. Despite a recent active export program they are still expected to have large carryover stocks at the end of the season, this will enable them to sell around 8 MMT (from 6.5 MMT in 2012/13) of wheat to foreign buyers in 2013/14 the attaché said.
USDA Outlook Forum
21/02/13
-- Day one of the USDA's Annual February Outlook Forum has kicked off with a range of early forecasts for US grains production in the year ahead from their Chief Economist Joseph Glauber.
US farmers are likely to plant 96.5 million acres of corn and 77.5 million acres of soybeans this spring, along with 56 million acres of all wheat - more than half of the latter which will already be in the ground.
Predictably forecasting a return to "normal" yields this year that potentially gives us a record corn crop of 14.53 billion bushels, up nearly 35% on last year's drought-battered production. Soybean output may also reach a record 3.405 billion bushels, up 13% on 2012. Wheat production is forecast to come in at 2.1 billion bushels, down 7.5% on last year despite a small increase in planted area, presumably reflecting the poor state of the winter crop as it went into dormancy.
Whilst at first glance you might call these numbers bearish for corn and soybeans, both the USDA acreage numbers are actually lower than many of the trade estimates that were already in the market. The corn figure is actually lower than last year and the soybean estimate only marginally higher.
For what it's worth this time a year ago the Forum pegged corn acres at 94 million, soybeans at 75 million and all wheat at 58 million. What we got in the end was 96.9 million, 77.2 million and 55.74 million respectively. So there clearly could be a couple of million acres either way between today's estimates and the final reality.
Stocks forecasts are not expected to be released until tomorrow.
India Wheat Latest
21/02/13 -- The USDA attaché in Dehli estimates the upcoming Indian wheat crop at 92.0 MMT, slightly lower than the local Ag Ministry's 92.3 MMT forecast and down 3% on last year's record 94.9 MMT.
Even so, that's well above domestic consumption levels. Given 2012/13 ending stocks projected at 23.8 MMT (well above the government's recommended minimum buffer of 7.0 MMT) then it looks like India will continue to be a force to be reckoned with on the international export stage for at least another year yet.
The attaché forecasts 2013/14 wheat exports at 8.0 MMT, of which 5.0 MMT will be come from government stocks and 3.0 MMT will private sales. The USDA currently have India down to export 6.5 MMT of wheat in the current 2012/13 season.
EU Rapemeal Prices
21/02/13 -- Rapemeal prices on the continent are mostly firmer again, following last night's gains in Chicago soymeal. The nearby market remains particularly tight with no offers for Feb collection and Mar up EUR7.00/tonne in the past week.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Feb13 | unq |
n/a |
| Mar13 | 285.00 |
+1.00 |
| Apr13 | 282.00 |
+3.00 |
| May/Jul13 | 261.00 |
+2.00 |
| Aug/Oct13 | 210.00 |
+1.00 |
| Nov13/Jan14 | 212.00 |
unch |
| Feb/Apr14 | 213.00 |
+1.00 |
| May/Jul14 | 212.00 |
+1.00 |
Chicago Closing Comments - Wednesday
20/02/13 -- Soycomplex: Beans got within 8 cents of USD15/bu, a level that has proven to be a tough nut to crack for some time, but failed. Nevertheless, prices have still posted decent gains since the return from the long weekend. Strong rumours abound of China booking US beans, and although we got confirmation of two cargoes from the USDA yesterday there were no such announcements today. A Brazilian port workers strike is earmarked for Friday and another for Tuesday, further increasing shipping delays. Reports suggest around double the number of vessels waiting at ports in Brazil to load soybeans compared with this time a year ago. This may continue to push Chinese demand to the US, and stocks there are already pencilled in to be alarmingly tight at the end of the season. There are unconfirmed reports that China has bought up to 10 cargoes of US beans for Feb/March shipment since they returned from holiday. A Beijing consultancy company said soybean inventories at Chinese ports will be below 4.0 MMT by the end of March. A year ago stocks were said to be 6.0 MMT. Japan imported 249,370 MT of soybeans in January, up 19.2% from a year ago. Funds were said to have bought around a net 5,000 soybean contracts on the day. At the close Mar 13 Soybeans were USD14.82 3/4, up 12 1/2 cents; May 13 Soybeans closed at USD14.68 1/2, up 11 1/4 cents; Mar 13 Soybean Meal closed at USD433.60, up USD8.30; Mar 13 Soybean Oil closed at 52.07, down 46 points.
Corn: The corn market put in quite a resilient performance, helped by spillover strength from beans, considering that crude oil crashed a couple of dollars. Cattle futures were also sharply lower. The demise of the latter two may have been linked to rumours circulating that a large un-named hedge fund is in trouble and being forced to liquidate some of their positions. The weekly ethanol production data, normally released on a Wednesday, isn't out until tomorrow due to the President's Day holiday on Monday. Amidst talk of improved margins of late the bulls will be hoping for an improvement on last week's daily grind of 789,000 barrels. A slump in crude oil prices might not help a fledgling recovery into next week though. Japan's Ministry of Agriculture said that the nation's December usage of corn in animal feed was 42.7% versus 45.2% a year ago. Wheat usage was up. Japan imported 14.9 MMT of corn in 2012, down 2.5% from a year previously. The US share of that market is also shrinking – down to 74.7% from 90.1% in 2011. Funds were said to have been net buyers of around 3-5,000 contracts on the day. Mar 13 Corn managed to score a little bonus by closing above USD7.00/bu, albeit very narrowly at USD7.00 1/2, up 5 1/4 cents on the day; May 13 Corn closed at USD6.96 1/4, up 4 1/4 cents.
Wheat: The US weather outlook for winter wheat has improved, with significant snow and rain expected in most areas this week. How much good that will do for a crop that went into dormancy in the worst state on record, and has deteriorated significantly since, remains to be seen in the spring. "Wheat is a weed," as they say, so it's resilience looks like being tested once again. News that Egypt bought US wheat was tempered by the fact that they only booked one cargo and said that they have ample supplies to last them into the early summer. Jordan bought 50 TMT of optional origin wheat for March shipment. Of more note was a Reuters report suggesting that China may have bought as much as 1 MMT of wheat in recent days, split between US, Canadian and Australian origin. Stocks there are clearly tight, at least they are of quality wheat, as almost all this business was said to have been done for April shipment. The Chinese government said that they will begin to auction wheat from state-owned reserves starting Feb 27. Russia’s Grain Union estimated the 2013 Russian grain crop at 90.0 MMT. The Ag Ministry currently say 95.0 MMT. Fund buying was estimated at 2,000 lots in Chicago today. Mar 13 CBOT Wheat closed at USD7.38 1/2, up 6 1/4 cents; Mar 13 KCBT Wheat closed at USD7.77 1/4, up 8 1/4 cents; Mar 13 MGEX Wheat closed at USD8.20 3/4, up 5 cents.
