Nogger's Blog

Dates For The Diary In The Week Ahead

27/04/13 -- Upcoming important events for the week ahead:

Monday: Weekly export inspections from the USDA; Weekly US crop progress from the USDA (corn planting expected 8-10% complete, US winter wheat conditions may fall 1-2% in the good/excellent category); Chinese Dalian market closed.

Tuesday: German and EuroZone unemployment data; The Wheat Quality Council's US winter wheat tour begins; Fed 2 day policy meeting begins; May 13 MATIF Rapeseed Expires; Chinese Dalian market closed; First notice day for deliveries against CBOT May contracts.

Wednesday: Chinese Dalian market closed.

Thursday: Weekly US export sales from the USDA; European and Chinese economic data released; ECB meets - speculation they may cut interest rates by 0.25%; Chinese Dalian market closed.

Friday: US unemployment data due; May 13 MATIF barley expires; Stats Canada Quarterly Grain Stocks Report; Chinese Dalian market reopens; Weekly Commitment of Traders Report released.

Chicago Mixed, Soybeans Up, Wheat And Corn Down

26/04/13 -- Soycomplex: Beans traded both sides, but managed to close with modest gains, despite minimal support from wheat or corn. There's talk of more Chinese soybean cancellations and/or rolling over of existing old crop purchases into new crop. Based on yesterday's weekly export sales data the US already has 99% of the USDA target for the season on the books, and 92% of it is shipped already, so further cancellations now shouldn't be too destructive. Soymeal sales incidentally are now 101% of the USDA target for the season, so an increase to exports there, and possibly a hike therefore in the domestic crush could be on the cards in the May WASDE report. A delay to timely planting of the 2013 US crop is what the market is fretting about. The IGC forecast China's 2012/13 soybean imports down 2 MMT from last month to 59 MMT. A Brazilian analyst said that, as of 25 April, Brazil has already exported 6.58 MMT of beans this month versus 3.53 MMT in the whole of March. The Rosario Grain Exchange said that Argentine farmers have only forward sold 26% of their soybean crop, versus 46% this time a year ago, as they continue to hold beans as a hedge against inflation and the declining peso. Fund buying in beans was estimated at around 3-4,000 contracts on the day. May 13 Soybeans closed at USD14.30 3/4, up 7 1/4 cents; Jul 13 Soybeans closed at USD13.81, up 8 3/4 cents; May 13 Soybean Meal closed at USD417.90, up USD3.60; May 13 Soybean Oil closed at 49.66, down 11 points. For the week that places front month May 13 beans 2 1/2 cents higher, with meal up USD5.50 and oil up 50 points.

Corn: The trade isn't expecting any huge improvement in Monday's corn planting progress report, with maybe around 8-10% of the US crop in the ground versus 4% a week ago and 33% normally. It is however expecting a big improvement to be made in the week ahead, which should be reflected in the USDA's report due May 6th. Warmer and drier weather is in the forecast for the US Midwest next week. US corn sales currently stand at 81% of the USDA target for the season, versus 85.5% normally at this time. Old crop sales need to average just over 200 TMT/week to hit USDA targets. Indonesia bought 200 TMT of South American corn for May/Jun shipment overnight. Corn planting in China is seen at 16.8% completed, slightly lower than average at this time. The Ukraine Ag Ministry said that Ukraine has exported 20.6 MMT of grains so far this season, including 6.49 MMT of wheat and 11.76 MMT of corn. Fund money continues to desert the grains sector, and corn in particular. Net fund ownership of corn, soybeans, CBOT and KCBT wheat as of Apr 23 was USD27.2 billion, down USD1.7 billion on the week and down 40.6% year-on-year - its lowest value since December 2011. Funds were estimated as being further net sellers of around 5-7,000 corn contracts today. May 13 Corn closed at USD6.44, down 1 1/4 cents; Jul 13 Corn closed at USD6.19 3/4, down 4 3/4 cents. May 13 was 8 cents lower on the week, with Jul 13 down 13 1/4 cents.

Wheat: Wheat didn't put up any sort of a positive performance heading into the weekend, with little sign of this week's price decline encouraging any fund short-covering. The trade will be looking with interest to Monday's crop report to see if any further freeze damage appears to have been done to wheat on the Plains this week. The threat of that has at least been supporting Kansas wheat relative to Chicago and Minneapolis this week. There's talk that Egypt's GASC may tender for wheat next week. If they do then US origin material might stand a decent chance, although it will be interesting to see if there are any Black Sea offers, judging on this week's talk of Ukraine and possibly Russia re-entering the market. Yesterday's weekly export sales report included only 71,700 MT of old crop wheat, with 253 TMT/week needed to hit the USDA target for the season. An Asian buyer is reportedly seeking 300 TMT of US or Australian wheat for July shipment. Ukraine and Russian weather conditions remain largely dry for the week ahead, which is seen a beneficial for planting progress, for now. Ukraine in particular seem confident of a very strong rebound in grain and oilseed output this year. Funds were estimated to have been net sellers of around 2-3,000 CBOT wheat contracts on the day. May 13 CBOT Wheat closed at USD6.88 3/4, down 12 1/2 cents; May 13 KCBT Wheat closed at USD7.56 1/2, down 7 1/4 cents; May 13 MGEX Wheat closed at USD8.11 1/4, down 12 cents. For the week that puts Chicago wheat down just over 20 cents, with Kansas adding 10 1/2 cents and Minneapolis losing 14 1/4 cents.

Old Crop London Wheat Closes At Lowest Since Early August

26/04/13 - The EU grains market closed mixed but mostly lower on the day, with old crop London wheat pretty friendless. New crop London wheat was supported by questionable production prospects here, even if things are improving on the Continent. The May/Nov spread tonight stands at GBP8.75/tonne, little more than half the  GBP16.50/tonne it was at the start of the month.

London wheat closed with front month May 13 down GBP1.75/tonne at GBP191.00/tonne and new crop Nov 13 GBP0.70/tonne easier to GBP182.25/tonne. May 13 Paris wheat finished EUR1.00/tonne higher at EUR242.50/tonne. For London wheat this was a new lowest close for a front month since the beginning of August 2012.

For the week as a whole May 13 London wheat fell GBP5.00/tonne, with Nov 13 down GBP4.40/tonne and May 13 Paris wheat down EUR3.00/tonne. A stronger pound/weak euro aided French wheat relative to London wheat this week. There's a growing feeling that the ECB may lower interest rates in the Eurozone next week, which is putting the euro under pressure. The pound finished at it's best level against the euro tonight since mid-January.

News that Brussels only issued 237 TMT of soft wheat export licenses this week, the smallest weekly total also since last August, was seen as a sign that demand for EU wheat is starting to wane. News this week that Ukraine, and possibly Russia too, will soon be back in the export market this side of new crop weighed on sentiment. Even so, EU soft wheat exports to date are 47% up on last year at 16.56 MMT.

Also of note was that Brussels granted over 100 TMT of wheat import licenses, with 77 TMT of that coming from the US. Corn imports are also flooding in to Europe, with 9.4 MMT of licenses granted so far in 2012/13, more than double year ago levels.

The Ukraine Ag Minister said that Ukraine would allow a further 0.3-0.5 MMT of wheat exports in 2012/13. Early spring grains there have now been planted on 92% of the planned area, whilst corn plantings are 20% complete and sunseed sowings at a 1.56 million ha are a record area for this time and constitutes 41% of the expected final area. A USDA official earlier this week suggested that both the corn and sunseed crops could set record production highs this year.

French conditions and planting progress have improved with a week of sun on the crops. Winter wheat headed has jumped from 69% last week to 94% this time round, although that still lags 100% from a year ago. Good/excellent is up two points from last week to 67%, which is also two points ahead of last year.

Winter barley headed is up from 76% to 96% (versus 100% last year), with good/excellent up from 65% last week to 66%, and ahead of 59% in 2012. Spring barley tillering is up from 17% to 37% (versus 89% last year), and good/excellent conditions there are up two points from a week ago to 81% (versus 87% in 2012).

French corn plantings have advanced from only 4% last week to 29% complete this week, although that still lags the strong early pace of 65% in 2012.

Jordan are tendering for 150 TMT of milling wheat, having passed on several recent tenders due to price. There's talk that Egypt's GASC might also tender for wheat next week.

Chicago Closing Comments - Thursday

25/04/13 -- Soycomplex: Strength in outside markets spilled over into the soycomplex, despite net cancellations of 206,300 MT in old crop beans and sales of "only" 628,500 MT for new crop in today's weekly export sales report. The trade was expecting net combined sales of 600 TMT to 1 MMT. The Buenos Aires Cereals Exchange estimated the Argentine soybean crop at 48.5 MMT, unchanged from their previous estimate and 2 MMT lower than the USDA. They said that Argentina’s bean harvest is 56.2% complete. There's talk of Chinese crushers rolling old crop US bean purchases to new crop, it's unclear whether this is due to bird flu reducing domestic demand for soymeal or not. A weaker US dollar was supportive to the entire complex today. There's some talk of that enabling South American beans to be shipped into the US reasonably economically. Funds were estimated to have been net buyers of around 7,000 soybean contracts on the day. May 13 Soybeans closed at USD14.23 1/2, up 19 1/2 cents; Jul 13 Soybeans finished at USD13.72 1/4, up 27 cents; May 13 Soybean Meal closed at USD414.30, up USD8.40; May 13 Soybean Oil closed at 49.77, up 59 points.

Corn: Weekly export sales were in line with trade expectations, and heavily skewed in favour of old crop at 314,700 T for 2012/13 and only 21,200 MT for 2013/14 (the trade was expecting a combined 200-600 TMT). In addition to that the USDA also announced sales of 300,000 MT of US corn to China and 240,000 MT to unknown for 2013/1 delivery. The Buenos Aires Cereals Exchange estimated Argentina’s 2012/13 corn crop at 24.8 MMT, down slightly from a previous estimate of 25.0 MMT and versus 26.5 MMT from the ever optimistic USDA. They said that said Argentina’s corn harvest is 35.1% complete. The IGC estimated the 2013/14 world corn crop at a record 939 MMT, up 10% from a year ago. They placed 2013/14 world corn ending stocks at 143 MMT versus their 2012/13 estimate of 116 MMT. MDA CropCast increased their Brazilian corn production estimate by 780 TMT from last week to 74.88 MMT. They are forecasting US corn production at 13.3 billion bushels in 2013 (337.9 MMT versus 253.6 MMT in 2012). The CME group declared force majeure at a number of Illinois River terminals due to high water levels. Funds were said to have been net buyers of around 7,000 contracts on the day. May 13 Corn closed at USD6.45 1/4, up 5 3/4 cents; Jul 13 Corn is at USD6.2 4 1/2, up 6 1/4 cents.

Wheat: Wheat got support from more fears of winterkill on the US Plains this week. Weekly export sale of 71,700 MT of old crop and 234,700 MT of new crop were uninspiring against the expected 500-800 TMT. Japan bought 95,621 MT of milling wheat for May/Jul delivery in a routine tender, with around 66 TMT of that coming from the US. MDA CropCast increased their world wheat production estimate by 200 TMT from last week to 676.4 MMT, with increases for Canada (to 27.5 MMT versus 26.4 MMT in 2012) more than offsetting a reduction in US production to 57.4 MMT. The IGC estimated the 2013/14 world wheat crop at 680 MMT versus a previous estimate of 683 MMT, but up from 655 MMT a year ago. They estimated 2013/14 world wheat ending stocks at 181 MMT versus a 2012/13 estimate of 179 MMT. Analysts said China will continue to import wheat to help rebuild their strategic reserves. Sinograin has bought 1.0 MMT of 2013/14 US SRW wheat so far and is expected to buy 2-3 MMT more. Dry weather is allowing good progress to be made with spring plantings in the Black Sea countries. MDA CropCast noted dryness concerns are building for wheat planting in Australia. Funds were estimated as net buyers of around 4,000 Chicago wheat contracts on the day. May 13 CBOT Wheat closed at USD7.01 1/4, up 9 1/2 cents; May 13 KCBT Wheat closed at USD7.62, up 23 cents; May 13 MGEX Wheat closed at USD8.23 1/4, up 6 cents.

EU Wheat Rebounds From Multi-Month Lows

25/04/13 -- EU grains closed mostly higher, following the US market lead, and rebounding modestly from recent multi-month lows.

On the day, May 13 London wheat closed GBP0.75/tonne higher at GBP192.75/tonne and with new crop Nov 13 GBP0.10/tonne firmer to GBP182.95/tonne. May 13 Paris wheat settled EUR1.75/tonne higher at EUR241.50/tonne.

The pound rose following the news that the UK had managed to avoid a triple dip recession courtesy of growth of 0.3% in Q1 of 2013, beating forecasts of growth of 0.1%, and fears of negative growth thereby signalling recession.

That kept a lid on UK price rises.

French grain exports from the main hub of Rouen fell 45% week on week to just under 88 TMT, including 33,370 MT of soft wheat. Morocco was the main destination for the latter, along with 4,400 MT heading for the UK.

MDA CropCast estimated the world wheat crop at 676.4 MMT, up 200 TMT from last month. Increases for Canadian output more than offset reductions to US production.

Bangladesh received a lowest offer of USD314 CIF in a tender to buy 50 TMT of optional origin wheat, India is thought to be the most likely seller.

Russian spring grain plantings are 8.8% complete at 2.65 million ha, well ahead of last year's pace of 1.22 million ha.

The International Grains Council (IGC) said today that global corn production in 2013/14 is expected to rise by 10% in 2013/14 to a record 939 MMT.

They also said that 2013/14 world wheat production is forecast to rise more modestly by around 4% to 680 MMT this year.

Despite the current poor UK crop conditions things look a whole lot rosier elsewhere around the world, especially in the Black Sea countries, frequently the cheapest sellers.

Get The Bunting Out

25/04/13 -- News that the UK managed to avoid slipping into a dreaded triple dip recession with growth of a MASSIVE 0.3% in the first quarter of 2013 was all it took to get the pound up above 1.18 against the euro and over 1.54 against the dollar today.

Chancellor George Osborne, the great big cry baby, said that the news was "encouraging" in a stunning display of gregariousness.

There's talk that the euro may weaken further next week if the ECB lowers interest rates in the Eurozone, which many think they will following weak German economic data this week.

With rates at 0.75% there's not a great deal of room for manoeuvring, and the benefit that would be derived from a 0.25% cut may only be minimal, but we shall see. An announcement is due next Thursday.

Meanwhile, Spanish unemployment has hit a record 27.2%, and a few Real Madrid and Barcelona players may be joining the queue judging on this week's football results.

EU Rapemeal Prices Mostly Lower

25/04/13 -- Rapemeal prices on the continent are mostly lower today on an improving new crop rapeseed outlook across most of Europe. Oil World yesterday forecast production in Ukraine in 2013 up 54% to 2 MMT.

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

Chicago Closing Comments - Wednesday

24/04/13 -- Soycomplex: Beans closed lower for a third session in a row, pressured by an improved Midwest weather outlook. Lanworth Inc increased their forecast for US soybean production this year from 3.38 billion bushels to 3.42 billion, up 12% on output of 3.015 billion in 2012. News that the Chinese bird flu outbreak has now spread to Taiwan was also viewed as bearish. The H7N9 Bird Flu virus has infected 108 people and killed 22 in China since it was first detected. Nearby demand remains strong though, which is reflected in cash premiums at near record levels. It will be interesting to see if tomorrow's weekly export sales include a decent slug of old crop sales Trade estimates are for combined soybean sales of 600 TMT - 1 MMT. The USDA today announced the sale of 116 TMT of new crop US soybeans to unknown destinations. Funds were estimated as being net sellers of around 3,000 soybean contracts on the day. May 13 Soybeans closed at USD14.04, down 15 3/4 cents; Jul 13 Soybeans closed at USD13.45 1/4, down 13 1/4 cents; May 13 Soybean Meal closed at USD405.90, down USD5.80; May 13 Soybean Oil closed at 49.18, up 61 points.

Corn: The corn market closed higher, albeit modestly, for the first time this week. Lanworth increased their 2013 US corn production forecast from 13.72 billion bushels to a record 13.93 billion, with potential yields were upped from 155.8 bu/acre to 158.1 bu/acre on the back of recent weather improvements. They also increased their Brazilian corn production forecast for 2012/13 from 76.0 MMT to 77.1 MMT. The weekly ethanol grind data was supportive, showing production up 21,000 barrels/day on last week to 853,000 bpd. POET announced that it was re-opening an ethanol plant in Montana due to better margins. South Korea said it had bought 55 TMT of optional origin corn overnight for August arrival at the lowest price it has managed to achieve in almost 10 months. Israel bought 100 TMT of optional origin corn overnight, possibly thought to be from South America. Stats Canada is projecting corn plantings there this year up 17.6% on last year at 3.81 million acres. Estimates for tomorrow's weekly export sales report are 200-600 TMT. Funds were estimates as being net buyers of around 4,000 contracts on the day. May 13 Corn closed at USD6.39 1/2, up 1 cent; Jul 13 Corn closed at USD6.18 1/4, up 4 1/4 cents.

Wheat: The wheat market was mixed, with Chicago ending lower and Minneapolis and Kansas finishing higher. Lanworth Inc lowered slightly their US all wheat production estimate from 2.02 billion bushels to 2.007 billion. They pegged Australian wheat production in 2013/14 at 25 MMT, up 13% on 2012/13. Jordan passed once again on their tender to buy 100 TMT of wheat due to price. Russia sold 57,884 MT of intervention grain in it's regular twice weekly offering. Japan bought 70 TMT of feed wheat and 20 TMT of barley for shipment by the end of July. They are also tendering for 95,621 MT of milling wheat for May/Jul delivery, most of which will be of US origin, with the results expected tomorrow. Israel bought 45 TMT of feed wheat, expected to be of Black Sea origin. Ukraine said it will raise the ceiling on 2012/13 wheat exports. There's talk that Russia too will soon be back in the export market. Stats Canada came out with a bearish wheat planting estimate of 26.6 million acres, up 12% on an area of 23.7 million in 2012. Many farmers are seen switching into wheat and out of rapeseed. Estimates for tomorrow's weekly export sales report are 500-800 TMT. May 13 CBOT Wheat closed at USD6.91 3/4, down 5 3/4 cents; May 13 KCBT Wheat closed at USD7.39, up 1 3/4 cents; May 13 MGEX Wheat closed at USD8.17 3/4, up 2 1/2 cents.