Chicago Closing Comments - Friday
06/02/15 -- Soycomplex: Beans closed lower on the day, but higher for the week. The market seems to be trying to balance the impending record large South American soybean crop, with the hitherto record large demand that's been seen so far this season for US soybeans. The Brazilian crop is big, but maybe not as large as some were/are expecting. The Argentine crop seems to be getting larger though. The prospect for record large US soybean planting this spring is hardly bullish either, although the market has been talking these same stories now for the last 2 or 3 years. The very strong US dollar, and the outlook for that to remain so throughout 2015, is a negative. We also have the new element of weakness in crude oil values. Although WTI crude closed higher tonight and is now more than 16% up off the recent lows, it is still more than 50% lower than the highs of last summer. Soyoil posted decent gains, up 6%, this week on the back of resurgent palm oil prices. That has meal on the back foot for a change, making it the weakest leg of the three this week. Mar 15 Soybeans closed at $9.73 1/2, down 7 3/4 cents; May 15 Soybeans closed at $9.80, down 7 3/4 cents; Mar 15 Soybean Meal closed at $329.40, down $2.00; Mar 15 Soybean Oil closed at 31.82, up 11 points. For the week Mar 15 beans were up 12 1/2 cents, with meal down 50 cents and oil up 182 points.
Corn: The corn market closed with fractional gains on the day, but with decent advances for the week. Crude oil was firmer, which helped. US gasoline prices are now said to be at a small premium to ethanol levels, which won't do any harm either. The weak oil price is helping freight rates, with the Baltic Dry Index now within a few points of being at its lowest level since 1986. This is said to be helping demand for US corn. China still seems to prefer US sorghum however. CNGOIC said China bought more than 900,000 MT of US sorghum in January and estimated China’s 2014/15 sorghum imports at a record 6.2 MMT. Societe Generale forecast US 2015 corn plantings at a surprisingly high 90 million acres, down only 600,000 acres on last year. The USDA will release some initial planting projections at their Outlook Forum later this month, before the more "official" prospective plantings report comes out at the end of March. Next week's WASDE report, due Tuesday, isn't expected to throw up any major surprises for the corn market. Conab are due out next Thursday with their latest Brazilian crop production estimates. They had the Brazilian corn crop at a high looking 79.1 MMT last time versus the USDA's figure of 75 MMT. Mar 15 Corn closed at $3.85 3/4, up 1/2 cent; May 15 Corn closed at $3.94, up 3/4 cent. For the week, Mar 15 corn ended with gains of 15 3/4 cents, or more than 4%.
Wheat: The wheat market closed mixed, a little higher in Chicago, and a bit lower in Kansas and Minneapolis. An early attempt at a rally ran out of steam, possibly due to the firmer US dollar. All three markets still managed to end the week with gains of more than 20 cents however. There's some talk of US winter wheat being a bit vulnerable in places. "Temperatures are set warm up in the Central Great Plains, increasing concerns about already dry wheat fields. Mean temperatures are expected to exceed 41 F in the upcoming week, the threshold for wheat growth and development. This would be the 4th successive week of warming temperatures in hard red winter wheat areas. Wheat could lose its winter hardiness and begin breaking dormancy. This increases the risk for a potentially damaging freeze later on, when wheat development is more advanced," said Martell Crop Projections. "Declining topsoil moisture in Kansas is also worrisome, where the uppermost inch of the soil is very dry," they added. IKAR estimated Russia's 2014/15 grain exports at 28.7 MMT, and forecast those for next season at a wide ranging 20-30 MMT. The market still seems generally relaxed about widespread talk of winter crop damage and a lack of cash to fund spring plantings and fertiliser purchases in Russia. More relaxed than it should be I'd say. Mar 15 CBOT Wheat closed at $5.27, up 1 1/4 cents; Mar 15 KCBT Wheat closed at $5.61 3/4, down 2 1/4 cents; Mar 15 MGEX Wheat closed at $5.77, down 2 cents. For the week, Chicago wheat put on 24 1/4 cents, with Kansas adding 21 1/2 cents and Minneapolis gaining 20 1/4 cents.
EU Grains Higher As Weekly Exports Set New Record
06/02/15 -- EU grains posted mostly small gains on the day, and with modest advances for the week, as the pace of exports remains brisk.
At the finish, Mar 15 London wheat was up GBP0.10/tonne to GBP123.75/tonne; Mar 15 Paris wheat was EUR1.25/tonne higher at EUR188.25/tonne; Mar 15 Paris corn was EUR0.25/tonne firmer at EUR155.75/tonne; May 15 Paris rapeseed was down EUR1.00/tonne to EUR356.75/tonne.
For the week on a front month basis, London wheat gained GBP1.65/tonne, with Paris wheat up EUR2.75/tonne, Paris corn EUR2.00/tonne higher and Paris rapeseed adding EUR6.50/tonne.
Brussels announced that it had issued a record 1.67 MMT of soft wheat export licences this past week, taking the season to date total back up above last year's record pace at 18.4 MMT.
You will recall that the EU Commission raised their forecast for EU soft wheat exports by 2 MMT to 30 MMT earlier in the week, which would just top last season's record 29.989 MMT. This week also brought another 300 TMT clean sweep for Europe in the latest Egyptian tender from GASC.
The alarm bells have continued to ring this week relating to the state of winter grains in Russia, with one analyst saying that 21% of the crop is in poor condition nationally, and 29% is poor in the normally most productive areas in the Central and Southern regions.
There have also been experts voicing concern about the weak Russian rouble and Ukraine hryvnia, and raging inflation in both countries, combined with the generally lack of access to credit and how this will affect farmers' ability to carry out their normal spring activities.
The Ukraine Minister of Farm Policy told us this week that the cost of the spring planting campaign there is up by 150% versus a year ago.
SovEcon forecast the 2015 Russian grain crop at 86 MMT versus 104 MMT last year earlier in the week. IKAR today estimated production this year at 85-95 MMT. One other analysts view I saw said that output could fall as low as 65 MMT, in a worst case scenario, if yields fall to the low levels of 2003.
Clearly opinion for prospects this year is already widely divided. Nobody is forecasting higher production though, that's for sure, it's more of a case of how low could it go?
Next week brings the February WASDE report from the USDA, which may provide some direction, although as far as 2015/16 goes they don't usually start to issue production forecasts for the coming season until May.
At home there's still a large exportable surplus of wheat in the farmers' hands, despite news that UK millers’ usage of wheat (including starch and bioethanol) in December was a record 674 TMT. Demand from the bioethanol sector for the remainder of the season now looks questionable though.
The pound closed at its highest level against the euro since January 2008 tonight, which won't help the UK export effort. The euro meanwhile remains close to a 12-year low of 1.12 against the US dollar set in late January, which helps explain why the success being achieved on the export front is mostly coming from the Continent.
Chicago Grains Rally
05/02/15 -- Soycomplex: Beans closed with near 10 cent gains. Weekly export sales of 489,700 MT for 2014/15 were down 35 percent from the previous week, but still at the top end of trade estimates. Meal sales of 296,300 MT also topped expectations. News that Indonesia is to boost its biodiesel subsidies substantially saw palm oil futures jump 5% overnight, which had a knock-on effect for soyoil and beans. MDA CropCast raised their outlook for Argentina's soybean crop by 500 TMT to 56 MMT. They were unchanged on Brazil at 93.5 MMT. The FAO raised their forecast for the global soybean crop by 4 MMT to a new record 313 MMT. They also upped ending stocks to 42 MMT, a 40% increase on a year ago. Informa estimated the world 2015/16 soybean crop at 312.3 MMT versus a previous estimate of 313.7 MMT and their 2014/15 estimate of 314.7 MMT. The Buenos Aires Grain Exchange were unchanged on their estimate for soybean plantings in Argentina at 20.4 million hectares. Their first production estimate of the year was released at a record 57 MMT, "if the current favourable weather conditions persist", they said. Mar 15 Soybeans closed at $9.81 1/4, up 9 1/4 cents; May 15 Soybeans closed at $9.87 3/4, up 9 cents; Mar 15 Soybean Meal closed at $331.40, down $1.30; Mar 15 Soybean Oil closed at 31.71, up 112 points.
Corn: The corn market closed with small gains. Weekly export sales of 844,900 MT for 2014/15 were in line with expectations. Crude oil continued with the recent erratic trade, rallying back up above $50/barrel today, adding spillover support to corn. The FAO estimated the global corn crop at 1020 MMT, unchanged from their previous forecast. They did however trim ending stocks back by 4 MMT to 208 MMT. "In Brazil, conditions are mostly favourable for the first crop
however there is some concern over a delay in development due to the lack of rains in main producing areas and planting of the second crop has begun. In Argentina, planting is mostly complete and conditions remain generally favourable," they said. The Buenos Aires Grain Exchange estimated that corn planting in Argentina was now past 99% complete. They haven't yet issued a production forecast. Informa have the 2015/16 global corn crop estimated at 967.9 MMT, up from a previous estimate of 965.6 MMT, but below their 2014/15 crop estimate of 985.8 MMT. The USDA's FAS in Russia estimated the country's corn exports at 2.4 MMT this season. "Of note, today was the Ukrainian currency, which broke 34% against the USD after the Ukrainian Central Bank reported it would no longer be able to support it through monetary policy. A break of this magnitude will likely increase the rate of export sales out of the Black Sea," noted Benson Quinn. Mar 15 Corn closed at $3.85 1/4, up 1 3/4 cents; May 15 Corn closed at $3.93 1/4, up 1 3/4 cents.
Wheat: The wheat market closed with double digit gains across the three exchanges. Weekly export sales of 397,600 MT were in line with expectations. There's talk of Egypt buying 4-6 cargoes of US SRW wheat due to a special $100 million credit line extended to them by the US. The FAO trimmed 1 MMT off the world 2014/15 wheat crop to 724 MMT and knocked a similar amount off global ending stocks to 192 MMT. "In the southern hemisphere the harvest is complete and conditions at the end of the season were mixed in Australia and Argentina. In the northern hemisphere winter wheat is mostly dormant. In the EU, US, China, Ukraine and Canada the crop is dormant and progressing without any major concern. In Russia, conditions for the dormant crop are generally favourable except in the southern regions where there is some concern over limited protective snow cover and warmer than usual weather. In India, conditions are favourable," they said. Informa estimated the world 2015/16 wheat crop at 720.3 MMT, up from a previous forecast of 718.2 MMT, although down on their figure for 2014/15 of 722.5 MMT. They see improved prospects for Canada (up from 28 MMT to 29.5 MMT) and China (up from 122.5 MMT to 125 MMT). They cut their outlook for US wheat from 60 MMT to 58.5 MMT however. Mar 15 CBOT Wheat closed at $5.25 3/4, up 14 3/4 cents; Mar 15 KCBT Wheat closed at $5.64, up 11 1/4 cents; Mar 15 MGEX Wheat closed at $5.77 1/4, up 11 1/4 cents.
EU Grains Mixed, Problems Loom For Russian And Ukraine Growers
05/02/15 -- EU grains closed mixed, with little in the way of fresh news to get your teeth into ahead of next Tuesday's USDA WASDE report.
At the close, Mar 15 London wheat was GBP0.20/tonne firmer at GBP123.65/tonne, Mar 15 Paris wheat was EUR0.50/tonne higher at EUR187.00/tonne, Mar 15 Paris corn was up EUR1.00/tonne at EUR155.50/tonne and May 15 Paris rapeseed rose EUR5.50/tonne to EUR357.75/tonne.
The FAO lowered their forecast for the global wheat crop in 2014/15 by 1 MMT to 724 MMT, and cut ending stocks a similar amount to 192 MMT. World corn production was unchanged at 1020 MMT and ending stocks were reduced by 4 MMT to 208 MMT.
The Russian Ag Minister said that the country would export "no more than 28 MMT" of grains this season. Exports to Jan 28 were said to be 22.7 MMT.
The USDA's FAS in Russia estimated exports this year at 27.4 MMT, down from a previous forecast of 30 MMT. Wheat will account for 19.5 MMT of that total versus the 22 MMT that they estimated previously. Barley exports will total 4.4 MMT and corn exports 2.4 MMT, they added.
One Russian official said that 21% of the nation's winter grains were in poor condition, including 29% of crops in the main central and southern regions.
Russian AN prices are said to have risen 30% between September and December, due to raging inflation and the plunging rouble.
Mind you, inflation of "only" 11.4% at the end of December would be a dream if you were farming in Ukraine. Inflation there is now running at 24.9%, said Agritel.
Farmers in both countries will struggle to afford to purchase their spring inputs this year more than ever before.
Informa Economics forecast the 2015 Russian wheat crop at 55 MMT, down 8.3% on last year. Ukraine's wheat output will fall 12.5% to 21 MMT, they also said.
Strategie Grains estimated the EU-28 rapeseed crop at 21.5 MMT later this year, a drop of 11% compared with 2014.
Chicago Grains Give Up Some Of Tuesday's Gains
04/02/15 -- Soycomplex: Beans and meal closed lower, giving up a fair chunk of yesterday's gains. Soybean production estimates in Brazil are getting trimmed a little, and starting to centre around the 93 MMT mark versus the USDA's January estimate of 95.5 MMT. However in Argentina, forecasts are rising, with some now seeing their crop at around 57 MMT versus only 55 MMT from the USDA last month. Either way, both numbers would be a record volume. The USDA will update us with their February forecasts next Tuesday. Also due next Thursday are the latest estimates from Brazil's Conab. Trade estimates for tomorrow's weekly export sales report for beans are only around 200-400 TMT, with the market expecting that demand for US beans is finally showing some sign of slowing up as interest switches to Brazil. Meal sales are expected to be around 120-150 TMT. Mar 15 Soybeans closed at $9.72, down 15 cents; May 15 Soybeans closed at $9.78 3/4, down 14 1/4 cents; Mar 15 Soybean Meal closed at $332.70, down $7.90; Mar 15 Soybean Oil closed at 30.59, down 21 points.
Corn: The corn market closed around a couple of cents lower, which wasn't too bad considering that crude oil crashed back below $50/barrel having closed at over $53/barrel last night. The US Energy Dept reported weekly ethanol production down 7,000 barrels/day to 972,000 bpd. US crude oil stocks were pegged at the highest level for this time of year in at least 80 years, which is hardly bullish. A US oil refinery workers strike, said to be the largest since 1980, should soon start to cut into those stocks though. Brazil said that it had exported 3.2 MMT of corn in January versus 2.9 MMT in January 2014. "Everything else being considered, corn was able to defend its current price level relatively well," said Benson Quinn. Trade estimates for tomorrow's weekly export sales report are around 800,000 MT to 1 MMT. As with soybeans, the market is thinking that the USDA might be a little high with their current Brazilian corn crop estimate, and maybe a bit low on Argentina. Mar 15 Corn closed at $3.83 1/2, down 2 1/4 cents; May 15 Corn closed at $3.91 1/2, down 2 1/4 cents.
Wheat: The wheat market closed lower across the three exchanges, with Minneapolis suffering the largest losses. There's talk that Egypt may be in the market to buy specifically US wheat soon, using a $100 million grant given to it by, appropriately, the US. Given that they've been booking significant quantities of French wheat lately, it may be that they are also looking for some US wheat to up the quality a little. Stats Canada estimated Canadian Dec 31 all wheat stocks at 24.82 MMT, slightly below the average trade guess of 25 MMT, and down from 28.68 MMT a year previously. South Korea's CJ reportedly bought 50,000 MT of Australian wheat for June shipment. "Field moisture has improved with generous rain and snow this winter" across Kansas, Texas and Washington - three of the leading US bread wheat states, although Oklahoma remains dry, said Martell Crop Projections. Libya failed to make a purchase in their 50,000 MT wheat tender, apparently due to payment issues. Tomorrow's weekly export sales report is expected to come in at around 300-500 TMT. Mar 15 CBOT Wheat closed at $5.11, down 2 3/4 cents; Mar 15 KCBT Wheat closed at $5.52 3/4, down 6 1/4 cents; Mar 15 MGEX Wheat closed at $5.66, down 10 cents.
EU Grains Stumble
04/02/15 -- EU grains stumbled mostly lower, failing to add to yesterday's decent gains. Fresh news was generally lacking.
At the close, Mar 15 London wheat was down GBP0.60/tonne at GBP123.45/tonne, Mar 15 Paris wheat was unchanged at EUR186.50/tonne, Mar 15 Paris corn was up EUR0.50/tonne at EUR154.50/tonne and May 15 Paris rapeseed was EUR2.00/tonne lower to EUR352.25/tonne.
The President of the Russian Grain Union forecast the country's Feb wheat exports at 150-200 TMT due to the new export duty, substantially less than the 500-600 TMT predicted by Rusagrotrans yesterday.
The Russian Ag Ministry have said that they are likely to make adjustments to the new export duty in the next week or two, without indicating what that might entail.
The aim would appear to be to encourage more farmer sales to the state intervention fund, which has been woefully under-subscribed to of late. Since purchasing began in September the government have only picked up around 350 TMT of grains at intervention out of a stated target of around 2.5 MMT.
Concerns over the state of Russia's winter wheat remain high, despite official assurances that all is reasonably well with the crop.
SovEcon estimated Russia’s 2015 grain crop at 86.0 MMT, down 17.3% versus 104 MMT last year.
Meanwhile in Ukraine, the Minister of Farm Policy said that the cost of the spring planting campaign is up by 150% versus a year ago. There are "serious issues" facing cash-strapped producers in funding the purchase of seeds and other inputs, he said.
Libya made no purchase in their tender for 50,000 MT of optional origin milling wheat due to payment issues, according to Reuters.
Turning wheat into bioethanol hasn't turned out to be quite such a lucrative idea as some would have hoped. ABF have announced a GBP98 million write-down in value of its Vivergo joint venture with BP and DuPont due to falling crude oil prices and the weak euro. Up the coast from Vivergo, the UK's other major bioethanol plant, Ensus, has now temporarily closed.
Chicago Grains Jump On Short-Covering, Rising Crude Oil
03/02/15 -- Soycomplex: Beans and meal closed with good gains on the back of a "risk on" mentality across the whole of the grains sector, helped by a suddenly resurgent crude oil market. Today's rise in prices may have triggered some short-covering amongst the fund community who are sitting on an unusually large short in beans. Dr Cordonnier estimated the Brazilian bean crop at 93.0 MMT, unchanged from previous estimate, still a record volume although 2.5 MMT less than the USDA's January estimate. He goes for 56 MMT in Argentina, also a record, and in this case 1 MMT more than the USDA said a month ago. Crop conditions in Argentina generally look very good where soybeans are flowering and beginning to set pods, said Martell Crop Projections. A Brazil crop tour estimated Brazil’s soybean crop at 93.2 MMT versus a previous estimate of 96.1 MMT. The USDA attaché in Brazil estimated the Brazilian bean crop at 93.0 MMT, with exports at 47 MMT (versus the USDA's own official forecast of 46 MMT). Informa estimated the Brazilian bean crop at 93.5 MMT (unchanged) and went for 57 MMT in Argentina versus 55.5 MMT previously. Mar 15 Soybeans closed at $9.87, up 27 1/2 cents; May 15 Soybeans closed at $9.93, up 26 3/4 cents; Mar 15 Soybean Meal closed at $340.60, up $12.70; Mar 15 Soybean Oil closed at 30.80, up 39 points.
Corn: The corn market closed with strong gains, helped by soaring crude oil values, which have now gained 19% in the past 3 sessions, closing above $53/barrel tonight. Dr Cordonnier estimated this year's Brazilian corn crop at 74.0 MMT, unchanged from his previous estimate and 1 MMT below the USDA. He increased his Argentine corn crop forecast to 22.0 MMT versus a previous estimate of 21.0 MMT, and now matches the USDA figure. Informa now has the Brazilian corn crop estimated at 72.8 MMT versus a previous estimate of 72.25 MMT. In Argentina they go 23.0 MMT versus a previous estimate of 22.0 MMT. They have the South African corn crop estimated at 13.0 MMT, down from a previous estimate of 13.5 MMT. In Argentina, "the majority of corn has already pollinated under favourable wet weather conditions, locking in a favourable yield," said Martell Crop Projections. Agritel forecast Russia's 2014/15 corn exports at around 3 MMT versus 1.2 MMT currently. "The EIA will be out with their weekly ethanol report tomorrow, it should be interesting to see how ethanol plants have reacted to a tight margin environment," said Benson Quinn. Last week's production was 979,000 barrels/day, up 1,000 bpd from the previous week. ADM estimated 2015 US ethanol exports at around 800 million gallons, which is similar to last year. Mar 15 Corn closed at $3.85 3/4, up 16 cents; May 15 Corn closed at $3.93 3/4, up 16 cents.
Wheat: The wheat market took off on short-covering triggered by reduced US winter wheat crop ratings from the USDA. They cut the proportion of Kansas wheat rated good to excellent from 49% at the end of December to 46%, raising poor/very poor from 9% to 13%. Oklahoma good to excellent fell from 54% to 41%, and poor/very poor was up from 12% to 13%. Egypt's GASC bought two cargoes of French wheat and three of Romanian origin in their tender. US wheat didn't figure, but the market didn't seem to care about that today. Current low levels seem to have flushed out quite a few other buyers. Iraq seek 50,000 MT of optional origin wheat. Jordan are in the market for 100,000 MT of hard wheat for Aug/Sep shipment. Japan are tendering for 112,920 MT of US and Canadian wheat for March-April shipment. South Korea's NOFI seek 55,000 MT of optional origin feed wheat for June shipment. Turkey are in the market for 60,000 MT of durum wheat. Saudi Arabia bought 690,000 MT of optional origin wheat over the weekend too. Stats Canada are due out with their Dec 31 stocks estimates tomorrow. The average trade guess for all wheat is 25 MMT, down 17% on a year ago. Canadian barley stocks are estimated at 4.9 MMT, down 27% on a year ago. There's already some talk of the Russian Ag Ministry making adjustments to their newly introduced wheat export duty in the next couple of weeks. Agritel consider Russian wheat exports more or less finished for the season, but Russagrotrans forecast these at 500-600,000 MT this month. Mar 15 CBOT Wheat closed at $5.13 3/4, up 21 cents; Mar 15 KCBT Wheat closed at $5.59, up 24 1/2 cents; Mar 15 MGEX Wheat closed at $5.76, up 22 cents.
EU Grains Rise On Increased Export Hopes
03/02/15 -- EU grains posted some decent gains for once, aided by increased export hopes and another clean sweep for Europe in Egypt's latest tender.
At the finish, Mar 15 London wheat was up GBP3.30/tonne to GBP124.05/tonne; Mar 15 Paris wheat was EUR3.50/tonne higher at EUR186.50/tonne; Mar 15 Paris corn was EUR2.25/tonne firmer at EUR154.00/tonne; May 15 Paris rapeseed was up EUR5.50/tonne to EUR354.25/tonne.
Egypt's GASC bought 300,000 MT of wheat for Mar 1-10 shipment in their latest tender, comprising of 120,000 MT of French and 180,000 MT of Romanian origin.
The EU Commission raised their forecast for EU soft wheat exports by 2 MMT to 30 MMT, which would just top last season's record 29.989 MMT. All wheat exports are now seen at 31 MMT, which is 1 MMT higher than the USDA's January forecast.
Turkey are tendering for 60,000 MT of durum wheat. Jordan are in the market for 100,000 MT each of hard wheat and feed barley.
France are reportedly currently loading 60,000 MT of feed wheat bound for Bangladesh, the largest such consignment in around 14 years. The UK are also said to be loading 50,000 MT of feed barley in Portbury destined for Japan.
Agritel estimated Russia's 2014/15 wheat exports at around 18 MMT. They'd already shipped out 17.3 MMT by Jan 21, so if they are correct then that would indicate that very little wheat will now be exported from Russia between now and the end of the season. Their new punitive export duty kicked in on Feb 1 you will recall.
Agritel see Russia now starting to major on corn exports, shipping out around 3 MMT by the end of the season versus only 1.2 MMT currently.
Rusagrotrans on the other hand forecast that Russia will export 1.1-1.2 MMT of grains in February, about half of which will be wheat.
Russia's intervention purchase programme struggles along quietly, picking up less than 20,000 MT of grain today, despite the new wheat export duty.
The USDA's FAS in Australia estimated this year's wheat crop there at 23.2 MMT, down 14% on a year ago and 800,000 MT below the current official Washington figure. They pegged this year's Australian barley crop at 7.3 MMT, which is 7% below a year ago. They forecast wheat exports at 17 MMT, an 8% decline versus 2013/14, with barley shipments at 4.5 MMT, a 30% drop on a year ago.
