Nogger's Blog

Chicago Soybeans Jump On Strong Sales And Record Shipment Pace

21/11/13 -- Soycomplex: Beans rallied on continued evidence of very strong nearby demand, Weekly export sales for bean came in at almost 1.4 MMT, well ahead of trade expectations of 6-800 TMT Cumulative sales are now 90% of the USDA's target for the entire season, one which we are only 2 1/2 months into. Sales this time a year ago were running at 74% of the USDA target and the 5 year average is 65%. This week's soybean shipments were huge at 2,488,600 MT, of which China took 1,926,100 MT. This is the third week in a row of shipments in excess of 2 MMT - something which has never happened before. That appears to contradict bear speculation that a lot of these existing sales are "protection" against possible supply disruptions from South America later in the season. Brazil is said to have assured China that there won't be a repeat of this year's delays in 2014. Even if they can cope with the logistics of handling another potentially record crop (which is doubtful - they struggled with the last one), there may not be much they can do about the almost inevitable dock/truck workers strikes. Dr Cordonnier notes that soybean planting in Brazil's top producing state of Mato Grosso was very concentrated around a short period, and that therefore a concentrated harvest effort is also likely. A lack of on-farm storage means that growers there are already attempting to contract trucks to move their beans in the second half of Jan/first half of Feb period, he says. There's a little bit of excitement following the news that Brazil has issued a state of national emergency this week for areas of Mato Grosso regarding the invasion of a particularly destructive infestation of Helicoverpa caterpillars. Chinese customs data shows that they imported 4.19 MMT of soybeans in October, a 3.9% rise versus a year ago. Meal export sales were below expectations of 150-350 TMT at 116 TMT, whilst oil sales beat trade forecasts coming in at almost 96 TMT. Jan 14 Soybeans closed at $12.91 1/2, up 17 3/4 cents; Mar 14 Soybeans closed at $12.79 3/4, up 15 1/2 cents; Dec 13 Soybean Meal closed at $411.00, up $4.00; Dec 13 Soybean Oil closed at 41.54, up 122 points.

Corn: The corn market closed higher, aided by export sales of 945,100 MT versus trade expectations of 600-800 TMT. There's also support from ideas that corn is simply cheap relative to wheat. South Korea's MFG cancelled a tender to import feed wheat, which was priced up at around $300 C&F. They bought Black Sea corn at less than $240 C&F earlier in the week, and US corn at not much more. US ethanol prices are trending higher (the Dec 13 future closed above $2.00 for the first time since June tonight), and production margins there are said to be very attractive with corn at not much more than $4/bushel. US ethanol production last week was 904,000 barrels per day, up 11.5% compared to the same week last year. DDGS values continue to trade at firm levels which is helping margins as well. This week's export sales included 321,600 MT to China and shipments of 756,300 MT saw China (339,700 MT) as the top home. This was the biggest weekly shipment total (apart from end 2012/13 and start 2013/14 adjustments) since May 2012. Shipments to China do need to pick up, Chinese customs data shows that the country only imported 39 TMT of corn in October, a 91% decline on October 2012. The USDA estimate China's 2013/14 corn imports at 7.0 MMT. That's up from 2.7 MMT in 2012/13. There's speculation that the eventual corn planted area in both Brazil and Argentina will prove to be significantly lower than current official forecasts. This is due to a combination of low corn prices and weather-related planting delays in Argentina. The Ukraine corn harvest is 87% done at 26.13 MMT, with yields averaging 6.2 MT/ha. They remain aggressive sellers and active shippers. The Ukraine Farm Association said that the country exported 2 MMT of corn in the Nov 1-12 period. APK Inform said that Ukraine exported 412 TMT of corn to Egypt alone in the the Nov 1-15 period. Dec 13 Corn closed at $4.23, up 6 cents; Mar 14 Corn closed at $4.29 1/2, up 4 1/4 cents.

Wheat: The wheat market couldn't manage to replicate gains in corn and soybeans, closing narrowly mixed. Talk of consumers shying away from wheat, as indicated by South Korea's MFG cancelling a feed wheat tender due to prices being around a $60/tonne premium to corn, weighs on upside potential unless corn can rally from here. India is flexing its muscles again on the export front. Another state-owned firm, MMTC, announced a tender for 55 TMT of wheat for Dec 22-Jan 25 shipment out of the west coast port of Paypavav. They were confirmed to have sold 50 TMT of wheat to Bangladesh. Further tenders are said to be in the pipeline. An Egyptian official indicated that French wheat prices were too high in their latest tender, and suggested that around 750 TMT of Black Sea wheat was available to the government from local private traders, in what looks like a fairly transparent bluff. Russia appears to mostly only have low grade wheat for sale, and it looks like Ukraine has already shipped most of it's exportable surplus. Likewise Romania. The IGC reported that the differential between feed and milling wheat FOB the Black Sea is now around $30/tonne. Lebanon managed to pick up 20 TMT of Romanian milling wheat at $316.60 C&F for December delivery, their second such purchase in the past few days. Chinese customs data shows that they imported an impressive 1.3 MMT a wheat in October, a 273% increase on the same period in 2012. Concerns for production potential for Australia and Argentina are also helping to support the market. Although output from both should be up on last year, production in Australia now looks like it might only be around 24.0-24.5 MMT versus some early season estimates that were in the 26.5-28.5 MMT region. Argentina's crop may be closer to 9 MMT than the 12 MMT that was forecast a few months ago it would seem. Japan bought it's regular combo of US/Australian and Canadian milling wheat (133,480 MT) for Dec-Feb shipment. Dec 13 CBOT Wheat closed at $6.48 3/4, up 1 1/2 cents; Dec 13 KCBT Wheat closed at $6.94 3/4, down 3/4 cent; Dec 13 MGEX Wheat closed at $6.96 1/4, down 1 1/2 cents.

EU Grains Still Stuck In Sideways Trade

21/11/13 -- EU grains closed mixed, but mostly a tad higher with Nov 13 London wheat ending up GBP0.75/tonne firmer at GBP164.25/tonne and Jan 14 Paris milling wheat settling EUR01.25/tonne steadier to close at EUR204.00/tonne.

Feb 14 Paris rapeseed jumped EUR5.25/tonne to EUR379.00/tonne, whilst Jan 14 Paris corn closed EUR3.50/tonne higher at EUR177.50/tonne.

The market continues to meander sideways. Fresh news is thin on the ground. Sellers are relaxed that French and German wheat in particular will find the market coming to them from now one, even if Egypt did manage to unearth a couple of cargoes of Russian wheat to satisfy their demand this week. The Egyptians say that French offers were too high and that they will look elsewhere, domestically even, for their requirements between now and their 2014 harvest - but what else would you expect them to say?

Buyers on the other hand point to much cheaper corn values, and the recent re-emergence of India back on the wheat export market.

South Korea's MFG passed on a tender to import feed wheat, based on a cheapest offer of $300/tonne C&F versus corn priced around %60/tonne beneath those levels.

India sold 50 TMT of wheat to Bangladesh in a tender. Their state-owned MMTC offered 55 TMT of what for sale out of the west coast port of Paypavav for Dec 22-Jan 25 shipment. That's on top of the volume offered by another government backed company PEC yesterday and their well-supported tender to sell 340 TMT of wheat that closed on Monday.

Lebanon bought 20 TMT of milling wheat from Romania today, their second such purchase in a week.

Ukraine's corn harvest is now 87% complete at over 26 MMT, with yields averaging 6.2 MT/ha, according to the local Ministry. Their total grain harvest is now at 59.7 MMT off 96% of the planned area. They'd only harvested 44.3 MMT of grain this time last year.

APK Inform say that Ukraine exported 550 TMT of grain to Egypt in the Nov 1-15 period alone, including 138 TMT of wheat and 412 TMT of corn, as they step up purchases of the latter.

The Ukraine Farmers Association say that Nov 1-12 corn exports were 2 MMT, and that the country could export more than 4 MMT of grains this month.

The Russian Grain Union estimated the clean weight harvest there at 89 MMT, up 25.5% on last year. They see the 2013/14 exportable surplus at 25 MMT versus the less than 16 MMT exported in 2012/13.

Whilst EU wheat exports continue to run at record levels that are well ahead of a year ago, and with supplies of good quality milling wheat running low out of the east/FSU, then the market will remain supported even with corn offered at a significant discount.

EU Rapemeal Prices

21/11/13 -- Rapemeal prices on the continent are a bit firmer on the nears and unchanged on the forwards today (unlike here in the UK where they are a lot firmer on the nears).

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

Nov13	226.00	+2.00
Dec13/Jan14	226.00	+2.00
Feb/Apr14	225.00	+1.00
May/Jul14	212.00	unch
Aug/Oct14	202.00	unch
Nov14/Jan15	204.00	unch
Feb/Apr15	204.00	unch

Chicago Market Drifts Mostly Slightly Lower Wednesday

20/11/13 -- Soycomplex: There wasn't a lot of direction today, with funds estimated to have been light sellers of around 1,000 lots each on beans and meal during the session. Physical demand for both remains strong, Vietnam bought 240 TMT of meal for Apr/Jun shipment in a tender today, but it was Argentine origin that they purchased, not US material. South Korea bought 30,000 MT of Indian/Chinese meal for Jan shipment, along with 40,000 MT of Argentine meal for Feb shipment. We will get a clue as to how well demand is holding up for US beans and meal with tomorrow's weekly export sales from the USDA. These are expected to come in at around 600-800 TMT for beans and 150-350 TMT on meal. Lanworth trimmed their forecast for the US 2013 soybean crop to 3.264 billion bushels from a previous estimate of 3.287 billion. They cut the 2013/14 world crop from 290 MMT to 289 MMT. The President of the Argentine Sunflower Association forecast sunseed plantings there for 2013/14 at 1.36-1.48 million ha versus the USDA's 1.65 million. Using the USDA's yield projection that would cut the crop to around 2.5-2.7 MMT. At it's peak fifteen years ago the country was harvesting in excess of 7 MMT of sunflower seed, but government taxes now make the crop far less viable, he said. Jan 14 Soybeans closed at $12.73 3/4, down 2 1/2 cents; Mar 14 Soybeans closed at $12.64 1/4, unchanged; Dec 13 Soybean Meal closed at $407.00, down $1.90; Dec 13 Soybean Oil closed at 40.32, up 33 points.

Corn: The corn market finished around a cent lower amidst light fund selling (net an estimated 2,000 lots on the day). Lanworth estimated the US 2013 corn crop at 13.911 billion bushels versus a previous estimate of 13.944 billion. However, they pegged the 2013/14 global corn crop at 963.0 MMT versus a previous estimate of 958.0 MMT. China's 2014/15 corn crop was forecast at a record 220 MMT. The Rosario Grains Exchange estimated Argentina’s 2013/14 corn area at 3.87 million hectares, down 12% from 4.4 million last season. South Korea bought 121 TMT of US corn for Apr/May shipment at around $240 C&F, along with a slightly cheaper 63 TMT parcel of Black Sea corn ($237.68 C&F). The IGC estimated China's 2013/14 corn imports at 7.0 MMT versus 3.7 MMT last season. Customs data shows that Japan imported 1.185 MMT of corn in September, up 5% on a year previously. Imports from the US only accounted for 55% of that, versus 73% in September 2012. Japan's September corn in feed usage was 41.8% versus 42.5% a year previously. Weekly US ethanol production came in at 904,000 barrels/day, down 23,000 bpd from the previous week. UkrAgroConsult estimated Russia's corn crop at 11 MMT versus 10.2 MMT previously. They see exports at 3.3 MMT versus 1.9 MMT in 2012/13 and the USDA's current 2.5 MMT. Trade estimates for tomorrow's weekly export sales report for corn are around 600-800 TMT. Dec 13 Corn closed at $4.17, down 3/4 cent; Mar 14 Corn closed at $4.25 1/4, down 1 cent.

Wheat: Wheat also ended generally marginally lower on the day. The USDA reported a private sale of 110 TMT of US SRW wheat to Egypt for 2013/14 delivery. Whilst there's been no confirmation yet from India that they've accepted any of the bids in their wheat tender that closed Monday, state-owned firm PEC issued another tender to export 155 TMT of wheat by Jan 25. There are trade reports that the Indians may look to release around 2 MMT of wheat onto the world market in the Jan/Mar period. Lanworth estimated the global wheat crop at 707.0 MMT, unchanged from their previous forecast. The Rosario Grains Exchange estimated Argentina’s 2013/14 wheat crop at 9.1 MMT, up from the 2012/13 crop of 8.7 MMT, but at the lower end of trade forecasts. The IGC estimated China’s 2013/14 wheat imports at 7.2 MMT versus 3.3 MMT in 2012/13 and the current USDA forecast of 8.5 MMT. Frost in the east and rain/hail in the west may have taken the top off the Australian wheat crop. A Reuters poll estimated that at 24.0 MMT, compared to last month's survey forecast of 25.3 MMT, although that's still a better result than the 22.1 MMT harvested in 2012/13. Jordan cancelled a tender to buy 100 TMT of wheat. Trade estimates for tomorrow's weekly export sales for wheat are around 300-500 TMT. Dec 13 CBOT Wheat closed at $6.47 1/4, down 3 cents Dec 13 KCBT Wheat closed at $6.95 1/2, down 3 cents; Dec 13 MGEX Wheat closed at $6.97 3/4, unchanged.

EU Grains End Mixed In Sideways Trade

20/11/13 -- EU grains closed mixed, with Nov 13 London wheat ending down GBP0.50tonne at GBP163.50/tonne, Jan 14 Paris wheat finishing EUR1.75/tonne firmer at EUR205.50/tonne, Jan 14 Paris corn EUR1.25/tonne steadier at EUR174.00/tonne, whilst Feb 14 Paris rapeseed rose EUR1.50/tonne to close at EUR373.75/tonne.

The sideways pattern that has prevailed for several weeks now still remains, with fresh news relatively limited. Demand for EU wheat is good, but the failure at yesterday's Egyptian tender is a reminder that other sellers are still out there. A weaker euro helped Paris grains gain versus London wheat today.

India is one of them. There are reports today that they sold 50 TMT of wheat to Bangladesh for Dec shipment, and that enthused by the good response to their weekend wheat tended that they intend to offload a further 2 MMT of their surplus wheat stocks onto the market in Q1 of 2014.

There are reports of hail/rain damage to wheat in Western Australia. Nationally the wheat harvest is said to be around 25% done. Australian Crop Forecasters cut their wheat production estimate from 24.9 MMT to 24.7 MMT. Commonwealth Bank of Australia estimated Australia’s 2013/14 wheat crop at 23.6 MMT. Output last year was 22.1 MMT.

The Russian grain harvest now stands at 93.9 MMT off 94.3% of the planned area. Wheat accounts for 54 MMT of that (off 97.9%), with barley at 16.3 MMT (95.4%) and corn at 9.0 MMT (70.4%).

The Russian government bought 29,160 MT of grains for their intervention fund today. That takes the total purchased so far in 2013/14 to 341,550 MT. They are supposed to be looking to purchase 2-3 MMT by the end of the year.

UkrAgroConsult increased their estimate for the Russian corn crop from 10.2 MMT to 11.0 MMT. They now see exports at 3.3 MMT versus 1.9 MMT a year ago and the 2013/14 estimate of 2.5 MMT from the USDA.

Ukraine meanwhile are currently exporting their record 2013/14 corn crop at the rate of 800 TMT a week, according to Agritel. Spain, South Korea and Japan are the main buyers, but Europe too is taking decent volumes.

Wheat plantings in Morocco are behind schedule following a dry spell. The north of the country only picked up 13 mm of precipitation in the Sep 21-Nov 10 period versus 68 mm normally. The 14 day forecast is wetter however. They produced 7.0 MMT of wheat in 2012, up sharply from the 2012 drought-riddled crop of 3.9 MMT, slashing imports from 3.9 MMT to 2.0 MMT this year.

The EU will plant 3% less OSR for the 2014 harvest (at 6.5 million hectares), say Oil World. Farmers are concerned about profitability on what proved to be a difficult crop to grow in 2013, along with the likelihood of a record world soybean crop depressing global oilseed prices next year it would seem.

Chicago Closing Comments - Tuesday

19/11/13 -- Soycomplex: Beans fell, despite news from the USDA reporting that US exporters had sold 240 TMT of US beans to China for 2014/15 delivery. Private estimates put China's Nov bean imports at 6.50 MMT, and those for Dec at around 7.0-7.2 MMT. Dr. Cordonnier estimated the 2013/14 Brazilian soybean crop at a record 90.0 MMT and said that about 70% of the crop has been planted. He forecast output in Argentina at 55.0 MMT, and said about 23-25% has been planted. The Argentina government are scheduled to estimate crop production on Thursday. There's been some talk that low corn prices in Brazil, and high transportation costs from the interior, may encourage some farmers in Mato Grosso state to consider planting a second soybean crop straight after harvesting early beans in Jan/Feb. That would obviously be bearish for soybean supplies going forward, already forecast at record levels in 2014. There is however also some discussion as to whether the Brazilian government might introduce legislation banning such as move for fear it could lead to the spread of the Asian rust virus. Watch this space on that one. Jan 14 Soybeans closed at $12.76 1/4, down 11 1/4 cents; Mar 14 Soybeans closed at $12.64 1/4, down 9 cents; Dec 13 Soybean Meal closed at $408.90, down $6.90; Dec 13 Soybean Oil closed at 39.99, down 12 points - the first close below 40 cents/lb in more than 3 years.

Corn: Corn closed around 5 cents higher on what simply looks like profit-taking and short-covering following declines to 39 month lows. There may also have been an element of unwinding long beans/short corn spreads. Dr Cordonnier forecast the 2013/14 Brazilian corn crop at 68.5 MMT, with output in Argentina estimated at 25.0 MMT. Both are unchanged from his previous estimates. The Russian corn harvest is 68.4% complete at 8.8 MMT. The Ukraine corn harvest is now probably closer to 90% done. The latter announced that they'd exported a record volume of corn in October, and they still have plenty of this record crop to market. Hence, Black Sea corn still remains very competitive, particularly on shorter hauls into Europe, although they've also been undercutting US corn into Asia in recent weeks. South Korea's MFG are tendering for 210,000 MT of optional origin corn for April–May shipment. Their last purchase was optional origin, but said to be most likely to be Black Sea sourced. Ukraine winter grains plantings are said to be complete, and around 500,000 ha less than originally intended. Russian winter plantings have also stalled at 14.4 million ha, some 2 million lower than initial forecasts. Much of this land is expected to go into corn in 2014. Dec 13 Corn closed at $4.17 3/4, up 5 3/4 cents; Mar 14 Corn closed at $4.26 1/4, up 5 1/4 cents.

Wheat: Wheat futures closed between 2-8 cents higher on the day, garnering support from the firmer corn market. Egypt bought Russian wheat, with US origin priced out due to freight. The market is still waiting to hear what India is going to do with the bids it picked up in its recent wheat tender. US wheat is heading into winter in generally great shape. Oklahoma good/excellent conditions rose to 73% in last night's crop progress report. That's up 1 point from last week and well above the 10 year average of 51%. Kansas conditions also jumped a point to 65% good/excellent. Overall good/excellent conditions nationwide fell 2 points to 63%, dragged down by a relatively poor looking crop in Texas. The latest weather forecast calls for a strong showers this week in hard red winter wheat that would boost development, said Martell Crop Projections. "The southern jet stream would strengthen, carving out a deep trough in the Southwest United States and spinning out a wave of strong showers into the heartland. Thursday is predicted to be very wet in the Great Plains. Rainfall would range from 0.50 to 0.75 in the eastern half of Kansas and Oklahoma. The wet forecast if it verifies would sharply improve wheat development. Cool weather is expected to persist in the heartland also favouring wheat development," they said. Jordan made no purchase in a 100,000 MT barley tender. Dec 13 CBOT Wheat closed at $6.50 1/4, up 8 cents; Dec 13 KCBT Wheat closed at $6.99, up 5 cents; Dec 13 MGEX Wheat closed at $6.97 3/4, up 2 1/2 cents.

EU Wheat Mostly Lower As Egypt Buys From Russia

19/11/13 -- EU grains closed mixed, but mostly lower, yet still range-bound. Egypt (or was it Russia) surprised the market by picking up a cheapest offer for 120 TMT of Russian wheat for Dec 11-20 delivery in their tender, when everyone was expecting a French clean sweep.

The session ended with Nov 13 London wheat down GBP0.50/tonne to GBP164.00/tonne, Jan 14 Paris wheat EUR0.25/tonne weaker at EUR203.75/tonne, Jan 14 Paris corn unchanged at EUR172.75/tonne and Feb 14 Paris rapeseed down EUR5.25/tonne at EUR372.25/tonne.

The outcome of the Egyptian tender was a surprise, and shook market confidence a little in that EU wheat - and particularly that from France - now more or less has free rein on purchase orders from North Africa for the remainder of 2013/14.

Whilst French wheat dominated the bidding, it was two cargoes of Russian wheat priced at USD305.66/tonne including freight that won the day.

Other news was very thin on the ground today. The Russian grain harvest is winding down at 94.1% complete, producing a crop of 93.6 MMT to date. That includes 54 MMT of wheat off 97.9 % of plan.

Russian winter grains plantings remain stalled at 14.4 million hectares versus 15.8 million in 2012 and the government's original target of 16.4 million.

The Russian Ministry announced today that they had bought 29,970 MT of wheat for the intervention fund. Total purchases now stand at 312,390 MT, of which 278,785 MT is wheat.

Ukraine farmers have managed to sow 7.73 million hectares of winter grains, including 6.3 million of wheat, according to UkrAgroConsult. That's down 4.1% from a year ago. The original target was around 8.2 million hectares.

"While that means a decline of 353,000 hectares of winter wheat year on year, many investors had expected a far bigger decline after persistent rains and cold hampered early seeding progress in many areas," said Agrimoney.com.

The Ukraine Ministry said that 95% of winter sowings had emerged, and that 91% of crops were in good to satisfactory condition.

The Ukraine Ministry also said that the country had exported a record volume of corn last month, at 1.3 MMT. The top homes were South Korea and Egypt. They are now around 85% through their 2013 corn harvest.

Cheap supplies of world, and Black Sea corn in particular, are seen keeping a lid on any potential rallies in UK wheat. The outlook for a much better, and maybe even record, UK wheat crop in 2014 is also an upside limiting factor.

Libya are said to have bought German wheat on Friday. EU wheat sales are already well advance versus 2012, and comfortably on track to meet expectations for record exports in 2013/14.

EU Rapemeal Prices

19/11/13 -- Rapemeal prices on the continent are unchanged on the nears, and mostly a little firmer further forward today.

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