Chicago Market MIxed, But Wheat Jumps To 4-Month Highs

18/10/13 -- General Comment: The USDA are back at work, and some data is starting to filter through. Any sales in excess of 100 TMT reported under the daily reporting system will now be relayed to the trade as normal. Missing weekly export sales reports will be released starting today, with the report for sales for the week ended Sep 26. We will get sales for the week ended Oct 3 next Thursday, and then sales for the weeks ending Oct 10 and Oct 17 the following Thursday, which means we should be up to date with export sales by the end of the month. The regular weekly crop progress reports will be out again on Monday night. The next WASDE report will be released on Nov 8. There' no commitment of traders report today, but that is expected to resume again next Friday. The weekly ethanol production report from the Energy Dept. missing from this Wednesday will come out on Monday.

Soycomplex: The USDA announced 222 TMT of US beans sold to China and 140 TMT sold to unknown for 2013/14 shipment under the daily reporting system. Soybean export sales for the week ended Sep 26 came in at 860,700 MT, with China taking almost half (408,100 MT) of that total. That takes sales for the marketing year to that date to 71% of the USDA's forecast for the season versus 64% a year ago at that time. The Argentine government forecast 2012/13 soybean production at 49.30 MMT off 20.0 million hectares. They said that plantings for 2013/14 will rise 3.25% to 20.65 million hectares. They didn't offer a production forecast yet. Note that Argentine corn plantings are only 12% done versus 28% a year ago. It's possible that a larger shift into soybeans from corn than the current forecast might be on the cards. Sunflower plantings are expected to drop 18% to 1.36 million hectares, as of Oct 10 only 16% of the Argentine crop is sown versus 36% a year previously. The trade is expecting the US soybean harvest to be past halfway through at around 55-60% done when the USDA report on that on Monday night. Looking into 2014, current price line-ups favour an increase in soybean plantings in the US next spring. Informa forecast the 2014 US soybean area at a record 83.9 million acres versus the 83.6 million that they forecast previously and up 6.7 million, or 8.7%, on the USDA's 2013 acres estimate of 77.2 million. That's a big increase, especially considering what is supposed to be coming from South America in the early part of 2014. Let's hope that the much touted Chinese "insatiable" appetite for soybeans doesn't disappear in the meantime! Nov 13 Soybeans closed at $12.91 1/4, down 2 cents; Jan 14 Soybeans closed at $12.89 3/4, up 1/4 cent; Dec 13 Soybean Meal closed at $410.10, down $2.90; Dec 13 Soybean Oil closed at 41.68, up 56 points. For the week beans were 24 1/2 cents higher, with meal up $6.70 and oil up 140 points.

Corn: It was another quiet session for corn. The USDA announced weekly export sales of 775,200 MT for the week ending Sep 26. That included 115,200 MT to China. Israel bought 80 TMT of Black Sea origin corn for Dec/Feb shipment. Malaysia seeks 60 TMT of corn for Jan shipment. Better than expected corn and bean yields are still being reported in the US. The trade is expecting the US corn crop to be around 35% harvested in Monday night's report. "The coldest weather of the season is coming to the Midwest. Hard freezes area predicted in the Upper Midwest on 3 successive nights Sunday-Tuesday bringing the growing season to a definitive end. Northern corn and soybeans have greatly benefited from prolonged warmth this fall, permitting late-planted crops to safely mature," said Martell Crop Projections. No significant damage is expected by the upcoming freeze. The Argentine government pegged the 2012/14 corn crop at 32.1 MMT off 6.1 million hectares, which is far higher than anybody else thinks. The USDA went 26.5 MMT last month for example. Reports out of Argentina suggest that domestic corn availability is tight, which would suggest that the Argentine government's estimate is indeed way too high. They forecast plantings in 2013/14 falling to 5.7 million hectares, a 6.6% drop, without issuing a production estimate. They said that plantings were 12% done as of Oct 10 versus 28% complete as at the same point a year previously. The Buenos Aires Grains Exchange said that corn plantings were 18.5% complete versus 13.6% a week ago and 31.8% a year ago. Informa said that they expect US farmers to plant 91.7 million acres of corn in 2014, down 1 million from their previous forecast and down almost 6% from the USDA's 2013 acreage estimate of 97.4 million. Dec 13 Corn closed at $4.41 1/2, down 1 1/2 cents; Mar 14 Corn closed at $4.54, down 1 1/2 cents. For the week Dec 13 corn was up 10 3/4 cents.

Wheat: Dec 13 Chicago wheat finally broke through the USD7/bushel mark and held, closing at the best levels for a front month since June. The Argentine government's first wheat production forecast of the season came in at a surprisingly low 8.8 MMT, well under the USDA's 12 MMT (which was already regarded as "old" and too high), but also below trade estimates from the likes of the Buenos Aires Grains Exchange, MDA CropCast, ODA and Agritel which are all in the 10.1-10.9 MMT range. With old crop ending stocks extremely tight, and domestic consumption estimated at 6.3 MMT, that doesn't leave a lot left over for export from a country that was once one of the top six wheat exporting nations in the world. Indeed, as recently as 2011/12 Argentine exported over 11 MMT of wheat. This potentially turns a short-term window of opportunity for American wheat into a full blown "leave the patio doors open all summer" moment as far as demand from Brazil is concerned. Whether this estimate is accurate or not, it certainly seems to imply that the USDA's September WASDE estimate that Argentina will export 6 MMT of wheat in 2013/14 is way too high, 4 MMT too high if we believe the Argentine government. Much of that surplus would have gone to Brazil, and they will now need to look elsewhere. Although they have bought Canadian and European wheat in the recent past, US origin is easily their favourite. Weekly export sales for the week ended Sept 26 were pegged at 837,800 MT, which was on the high end of the range of analyst's estimates and well above the 340,200 MT required to hit the USDA target for the season. Without a commitment of traders report to go on it's unclear what size of short position funds are left sitting on in CBOT wheat. Today's price action probably generated some more to head for the exits. Dec 13 CBOT Wheat closed at $7.05 3/4, up 19 3/4 cents; Dec 13 KCBT Wheat closed at $7.68 3/4, up 19 3/4 cents; Dec 13 MGEX Wheat closed at $7.60 1/4, up 15 1/4 cents. For the week Chicago wheat was up 13 1/2 cents, Kansas up 8 1/2 cents and Minneapolis 5 1/2 cents firmer.

EU Grains Jump On Argentine News - But Is It Real?

18/10/13 -- EU grains closed sharply higher, with Nov 13 London wheat up GBP3.65/tonne to GBP166.60/tonne, Nov 13 Paris wheat EUR5.00/tonne higher at EUR204.50/tonne and Nov 13 Paris rapeseed up EUR1.50/tonne at EUR378.00/tonne.

For the week, Nov 13 London wheat was up GBP3.60/tonne, with Nov 13 Paris wheat EUR5.25/tonne higher and Nov 13 Paris rapeseed EUR5.25/tonne firmer.

These were 3-month highs for London wheat and 4-month highs for Paris wheat. This was also the largest one day gain for London wheat since Aug 26. Some traders undoubtedly got spooked into covering their shorts today, some still believe that a deluge of new crop corn starting to come through on both sides of the Atlantic will ultimately drive the market back lower.

A surprisingly low government estimate for a wheat crop of only 8.8 MMT in Argentina this year, versus 8.2 MMT in 2012/13, is what caught the market's attention today (versus the old September estimate of 12 MMT from the USDA). Whilst one might normally take what the Argentine government say with a pinch of salt, particularly with an election coming up, there are concerns that there could be some truth in this particular forecast following frosts earlier in the year and persistent dryness issues throughout the growing season.

Now it may well be that this low estimate is an excuse to slap yet another limit on Argentine wheat exports next year, indeed the local milling industry have already asked the government to do this to help build their razor tight reserves. "What can we do when we've only had a wheat crop of 8.8 MMT? Our hands are tied, blame the weather," the government would argue to growers who have a long history of dissatisfaction with government interference in the wheat and corn export markets.

An export cap would also potentially also reduce soaring bread prices for the populace, in a country where inflation is unofficially said to be running at an estimated 25-30% versus the 10.5% reported by the national statistics agency.

The reason that today's news got the market all excited is that Brazil have been buying heavy volumes of US wheat lately. We know that they have had their own production problems in 2013, and that means that they are again likely to be large importers in the season ahead. Whether Argentina's crop will ultimately prove to be as low as 8.8 MMT or not, if the government are going to restrict exports as now looks likely, then Brazil will need to continue to import much of their wheat needs from outside the Mercosur trade bloc. And that probably means mainly from the US.

The Argentine government only estimated 2013/14 wheat exports at 2 MMT versus 3.1 MMT in 2012/13, and 11.4 MMT two years ago. The USDA estimated Argentine wheat exports in 2013/14 at 6 MMT last month.

The Buenos Aires Grain Exchange meanwhile were more stoic, estimating the 2013/14 Argentine wheat crop at 10.35 MMT, unchanged from their previous estimate and up 17.6% from a year ago, but that was largely ignored - it was the 8.8 MMT figure that grabbed the headlines.

Whilst the Argentine wheat crop does certainly appear to be smaller than the USDA said last month, the market is also virtually ignoring the fact that the Canadian crop is getting larger. The September USDA estimate of 31.5 MMT has subsequently been usurped by a variety of estimates, the latest of which from the Canadian Farm Ministry pegs output at a record 33.2 MMT.

Of course we won't have the opportunity of seeing some revised estimates for production in either of those two countries, or indeed any other, from the USDA now until the November WASDE report - and that's still three weeks away.

One final thing that the trade has not really been focusing on this week is the fact that Russian and Ukraine winter grain plantings, the sluggish pace of which were largely responsible for dragging this market off the lows, have picked up significantly in the past fortnight. How these late planted crops will come out of the winter however still remains to be seen.

Nevertheless, Russian winter grains have now been planted on 12.1 million hectares, or 74% of the originally planned 16.4 million. That's behind last year's pace of 15.1 million, but a lot better than was thought likely a couple of weeks past (plantings were at 8.2 million ha a fortnight ago). Ukraine now say that they may only miss their winter planting target by 500,000 hectares, far less than the 1.5 million feared a few weeks ago.

The Russian grain harvest now stands at 86.1 MMT off 88.3% of the combinable area. Wheat accounts for 52.2 MMT of that off 92.7% of plan. That would suggest that a wheat crop of maybe 55-56 MMT in bunker weight should be feasible this season. We can generally knock off a further 5-7% to convert this to clean weight. Last year's clean weight wheat crop was 37.7 MMT

Closer to home, FranceAgriMer say that French winter wheat is now 39% planted versus 23% last week and 18% this time a year ago. At 65% done, the winter barley crop is up from 43% last week and more than double the 31% sown this time in 2012. Corn harvesting however is only 6% complete versus 27% done in 2012.

On the international tender front, Israel bought 25 TMT of Black Sea origin feed wheat for Nov/Dec shipment, along with 80 TMT of Black Sea origin corn for Dec/Feb shipment. Tunisia bought 75 TMT of milling wheat and 67 TMT of durum wheat, both of optional origin for Nov/Dec shipment.

Changes In The World Corn Market In The Last 10 Years

18/10/13 -- Further to yesterday's report on how large of a shift away from US dominance of the global grain markets have we seen over the last ten years for wheat, here's the same information relating to corn.

One of the most striking things to note is that whilst the US share of world production has fallen a little from 41% to 37% in the last ten years, America's share of world trade has halved from 62% to 31%.

This is largely due to a threefold increase in exports from Brazil in percentage terms, and a 425% hike in volume terms, even though their share of world production has only increased by one percentage point between 2003/04 and 2013/14. Ukraine meanwhile has seen it's production more than treble, with exports rising from a negligible 1 MMT ten years ago to 18 MMT this season.

Changes In World Corn Production And Trade 2003/04 vs. 2013/14:

% of World
% of World
% of World
% of World

Argentine Wheat News Lifts Market

18/10/13 -- The overnight Globex grains see wheat trade 8-10 cents firmer by mid-morning, with corn up 2-3 cents and soybeans 3-5 cents higher.

There's a feeling that the USDA could announce export sales for both corn and soybeans of around 3 MMT, along with maybe 1.5 MMT or so for wheat accumulated during the US government shut-down. When these announcements will start to trickle through is still unclear.

The big news overnight is undoubtedly the Argy government pegging this year's wheat crop at only 8.8 MMT due to frost damage and dryness issues. Normally I'd take whatever they say with a pinch of salt, but I have a feeling that they may be pretty close to the truth with this one.

There's been talk of production below 10 MMT lately, although most public estimates have been in the 10.1-10.9 MMT region, apart from the USDA of course who went 12 MMT in the September WASDE report.

The Argy government pegged the 2013/14 barley crop at 4.5 MMT, a 12.8% drop on last year, but not too bad considering that plantings are down 22.7%. They forecast sunflower plantings for 2013/14 down 18% at 1.36 million hectares, with corn plantings down 6.6% to 5.7 million hectares and the soybean area up 3.25% to 20.65 million hectares.

They said that the sunflower crop was 16% planted as of Oct 10 versus 36% a year previously at that time. They said that only 12% of the corn crop was sown at the same date versus 36% in 2012.

Despite Brussels only passing 269 TMT of soft wheat export licences this past week, which off the top of my head is probably the low of the marketing year so far, cumulative exports are still way ahead of last year and the level needed to hit the USDA's projected record volume of 23 MMT this year.

The Argy news is enough to see European markets pressing onto new highs for the recent move. Nov 13 Paris wheat currently trades EUR2.50/tonne firmer at EUR202.00/tonne. A close there tonight would be the highest since the beginning of June on the weekly chart. London wheat is going along for the ride, with Nov 13 up GBP1.75/tonne to GBP164.70/tonne.

In other news, Russian winter grains have now been planted on 12.1 million hectares, or 74% of the originally planned 16.4 million. That's behind last year's pace of 15.1 million, but a lot better than was thought likely a fortnight ago.

The Russian grain harvest now stands at 86.1 MMT off 88.3% of the combinable area. Wheat accounts for 52.2 MMT of that off 92.7% of plan. That would suggest that a wheat crop of maybe 55-56 MMT in bunker weight should be feasible.

Canada's farm ministry are now forecasting a record wheat crop there of 33.2 MMT this year.

Ukraine's 2013 corn harvest now stands at 12.8 MMT off 46% of the planned area, say the Ministry.

If the cure for high prices is high prices, then surely the same must also be true for low prices? Dr Michael Cordonnier reports that Brazilian farmers in Mato Grosso will plant 9% less corn for the 2013/14 harvest. They will also plant cheaper hybrid varieties and reduce their fertiliser inputs. This will cut yields in the state by 20%, taking production down 27%, according to the Mato Grosso Institute of Agricultural Economics (Imea), he says.

The reason for the shift is prices of the 2012/13 corn crop in the state being below the cost of production, Dr Cordonnier explains. Mato Grosso is the largest corn producing state in Brazil, and the situation in Parana, the second biggest grower is similar, although not quite as dire, he adds.

Chicago Soybeans Rise On Ideas USDA To Report Large Sales

17/10/13 -- Soycomplex: US government employees at the USDA were back in work, although they announced that the October WASDE report, due last Friday, would not be released at all. Although others have been delayed in the past, this is apparently the first time in the history of the report than one has been cancelled entirely. Beans closed with decent gains on ideas that the USDA will announce a slew of export sales made during the shut-down within the next day or two. Trade ideas are that around 3 MMT of US soybeans have been sold during the closure. Taiwan's BSPA was confirmed to have bought 60 TMT of US beans for Feb/Mar shipment today. China sold 281,783 MT of the soybeans on offer in today’s government auction, 56.3% of what was offered. Wet weather continues to disrupt the US soybean and corn harvest, with estimates varying widely as to how far progressed things are. Hopefully we will get a crop progress report to clear things up on Monday night. "Weather conditions in the Midwest are set to turn sharply colder on the weekend. The first hard freeze of the season is expected Sunday morning in northern Iowa, Wisconsin, Minnesota, South Dakota and North Dakota. Late planted crops in the Northern Midwest have benefited from a prolonged stretch of warm weather, permitting crop development to advance. Soybean pod filling continued to progress in September, albeit at a slower pace than previously. Increasing September rainfall may also have benefited soybeans slightly. Time will tell if autumn warmth and increased fall rains made a positive difference in the yield," said Martell Crop Projections. Paraguay's President vetoed a proposal to slap a 10% export tax on soybeans. Funds bought an estimated 6,000 soybean contracts on the day. Nov 13 Soybeans closed at USD12.93 1/4, up 16 3/4 cents; Jan 14 Soybeans closed at USD12.89 1/2, up 14 3/4 cents; Dec 13 Soybean Meal closed at USD413.00, up USD9.20; Dec 13 Soybean Oil closed at 41.12, down 25 points.

Corn: Corn was flat, with front month Dec 13 only posting a 5 cents trading range on the day. The trade is expecting the USDA to report some decent export sales made during the past few weeks of shut-down with prices at 3-year lows, but it is also thinking that the USDA could also raise US 2013 corn yields closer to 160 bu/acre in the November WASDE report. Shanghai's JC Intelligence say that China has bought 1.2 MMT of US corn this month. Trade talk suggests that China bought 300,000 MT of US corn on Monday/Tuesday for Jan/Mar shipment. Mexico is also thought to have been actively buying US corn. The trade is thinking that overall maybe around 3 MMT of US corn has been sold for export during the shut-down. Would a hard freeze this weekend damage US corn? "Corn in Minnesota was 41% ripe by September 29th, the last official data from USDA, before the government shut-down. Delayed maturity in corn was reported also in northern Iowa, Wisconsin and South Dakota. Late planting dates and cool summer growing conditions were responsible for delayed maturity in corn. However, now it is 3 weeks later, suggesting even late planted corn in the Upper Midwest corn is ripe and safe from frost," said Martell Crop Projections. Ukraine’s agriculture Minister raised the estimate for October grain exports to 3.0 MMT from 2.2 MMT previously, with mention of strong corn exports. Dry and reasonably warm weather there this week should have allowed for good progress to be made with the corn harvest. The Russian corn crop meanwhile is almost a third of the way through, producing 4.1 MMT to date. That suggests possibly a much larger crop than the 9 MMT that the USDA forecast in September. Hungary said that it is expecting to harvest a 6.7 MMT corn crop this year, and increase of more than 40% versus 2012. Dec 13 Corn closed at USD4.43, up 1/4 cent; Mar 14 Corn closed at USD4.55 1/2, up 1/4 cent.

Wheat: Wheat closed around 2-4 cents higher across the three exchanges. MDA CropCast raised their Canadian wheat crop estimate by 1.5 MMT from last week to 32.8 MMT, a more than 20% increase on last year and an all time high. They cut their Argentine wheat production forecast by 0.7 MMT to 10.9 MMT, although that would still represent a near 8% increase on last year's crop if true. Other estimates are a bit closer to 10 MMT, although the USDA are still stuck at 12 MMT. Russia has harvested 51.8 MMT of wheat off 91.8% of the planned area. This time a year ago it had harvested 39.4 MMT. Winter grain plantings are up 2.4 million hectares in a week to 11.6 million, as growers worked tirelessly to get the crop, mostly winter wheat, sown. Ukraine's Ag Minister said that maybe only 500,000 hectares of the planned winter cropping area might not get sown, far better than the earlier feared 1.5 million hectares. India raised the price it will pay farmers for wheat next year to around USD228/tonne at today's exchange rate to ensure strong plantings for the 2014 harvest, which begin any time now. Despite China's COFCO saying yesterday that they only expected Chinese wheat imports of 3-5 MMT this season, less than the 6 MMT that they are already said to have bought, there were rumours today that they had been in for 4 cargoes of Australian wheat and another of US origin. Japan bought 112 TMT of US/Canadian/Australian milling wheat for Nov/Jan shipment. Tunisia issued a tender for for 92 TMT of soft wheat and 67 TMT of durum wheat, both of optional origin for Nov/Dec shipment. Brussels only cleared 269 TMT of soft wheat export licences this week, well below the 839 TMT granted last week. Even so year to date licences total 8 MMT versus only 4.7 MMT this time a year ago. Dec 13 CBOT Wheat closed at USD6.86, up 4 1/2 cents; KCBT Wheat closed at USD7.49, up 4 1/4 cents; Dec 13 MGEX Wheat closed at USD7.45, up 2 1/2 cents.

EU Grains Treading Water

17/10/13 -- EU grains closed mixed once more, with Nov 13 London wheat settling GBP0.25/tonne lower at GBP162.95/tonne, whilst Jan 14 was GBP0.15/tonne firmer at GBP164.60/tonne. Nov 13 Paris milling wheat settled up EUR1.25/tonne to close at EUR199.50/tonne. Nov 13 Paris rapeseed was down EUR1.00/tonne at EUR376.50/tonne.

Defra said that UK wheat plantings fell 18% for the 2013 harvest to 1.6 million ha. Despite yields rising 12% that still puts production 8.7% lower at 12.1 MMT. They said that the UK winter barley area was 19% lower, but spring barley plantings rose 46%. With yields up 6.2% , overall UK barley production was 29% higher this year at 7.1 MMT, they added. The overall OSR area was down 5.2% to 716k ha, with yield also falling 11% overall output was 16% lower at 2.1 MMT.

The UK oat crop was probably a 40-year high at 850 TMT to 1 MMT, Bloomberg reported yesterday. Output in 2012 was 627 TMT and UK milling demand is only 500 TMT meaning that the domestic market is "subdued" at best.

MDA CropCast raised their forecast for the Canadian wheat crop by 1.5 MMT from last week to 32.8 MMT, some 1.3 MMT higher than the USDA's September estimate and 20.6% up on last year. They cut their Argentine wheat crop forecast by 0.7 MMT however to 10.9 MMT, although that's still nearly 8% more than a year ago.

The Russian grain harvest is 87.6% done at 85.4 MMT. Wheat accounts for 51.8 MMT of that off 91.8% of the planned area. Winter grain plantings are improving significantly, at 11.6 million hectares that's up 2.4 million ha in a week, and now stands at over 71% of the original Ministry target. The Central Black Earth region is now finished, although that's around a month past the ideal planting window my sources tell me.

Ukraine's Ag Minister says that they will harvest a grain crop of "about" 60 MMT this year (a record). So far they've harvested over 46 MMT of grains off 82% of the planned area, including 23 MMT of wheat, he adds. He now indicates that there will be only 500,000 hectares of winter grains which will not get planted, far less than the previous estimate of 1.5 million.

Russian and Ukraine weather looks conducive to advancing the late wheat and corn harvest and also aiding winter plantings in the week ahead.

India said that it will raise the local procurement price for wheat in 2014 to 1,400 rupees/100 kg, which is around USD228/tonne to boost domestic plantings. This is despite the fact that they are still awash with a government surplus from the 2013 harvest and are in the midst of having to drop their sale price aspirations to below the cost of purchasing in 2013 (when storage and other costs are added) to generate exports. There are elections coming up you may not be surprised to hear.

It remains to be seen whether the temporary "kicking the can a little further down the road" so-called "resolution" to the US debt problem will encourage spec money back into the market in the short-term. It also is unclear as to what reports the USDA will now issue and when. A return to volatility can be expected in the days/weeks ahead.

The EU Commission said today that it is to drop it's anti-subsidy probe into "anti-dumping" imports of biodiesel from Argentina and Indonesia, which could be bearish for EU OSR demand going forward.

EU Rapemeal Prices

17/10/13 -- Rapemeal prices on the continent are little firmer today, following a steadier tone to last night's CBOT soymeal market which has followed through into overnight trade.

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


Changes In The World Wheat Market In The Last 10 Years

17/10/13 -- Comments made the other day by the HGCA's Jack Watts at their Outlook Conference earlier in the week got me thinking. How large of a shift away from US dominance of the global grain markets have we seen over the last ten years? So I thought I'd do a little bit of research, starting with wheat.

World wheat production has risen 28% since 2003/04, with global trade up 39% to 152 MMT. Yet during that time US wheat production is down 13% and US exports are expected to have fallen 6% by the end of the 2013/14 marketing year compared with 10 years previously.

In 2003/04 the US was responsible for 12% of global wheat production. That has now fallen to around 8%. Ten years ago they accounted for 29% of all world wheat exports, and now that is down to 20%.

At this stage you'd probably guess that a lot of the reason for that is production and trade increases from the likes of Russia and Ukraine, and you'd be right. It's also interesting to note though that Europe hasn't stood still during this time.

Europe produced 111 MMT of wheat in 2003/04, 20% of the world's crop. It still produces 20% of the world wheat crop, although now that volume has risen to 143 MMT, a 29% increase on output ten years ago. Part of the reason for that will be down to the fact that there are more members in the club of course - Hungary and Poland joined in May 2004 and Bulgaria and Romania in Jan 2007.

Looking at it from an EU perspective, we've gone from exporting 10 MMT of wheat ten years ago (9% of global trade) to an anticipated 23 MMT this year (and it may well be more) which is 15% of world wheat exports and an increase of 130%.

Russia's crop meanwhile has gone from being 6% of world production to 8%, but exports have risen exponentially. In 2003/04 they only accounted for around 3% of world wheat trade, this year that is expected to be 11% - in volume terms a 467% increase.

For Ukraine I've used the production and export numbers from 2004/05 as the 2003/04 winter wheat crop was slashed by around 75-80% compared with normal due to severe winter damage. Even so their wheat exports are up 150% in the last ten years and they now account for around 7% of the global wheat trade, as opposed to 4% in 2003/04.

Changes In World Wheat Production And Trade 2003/04 vs. 2013/14:

% of World
% of World
% of World
% of World
*Figures used for Ukraine are for 2004/05

Chicago Close - Wednesday

16/10/13 -- Soycomplex: Beans gained back what they lost on Tuesday as US Lawmakers closed in on a deal on the US borrowing limit. A solution would mean a resumption of the regular USDA drip-feed of data concerning export sales and the like, although it is currently unclear whether we will ever see the October WASDE report. The USDA will apparently decide by the end of the week whether to release this report or hang fire until November. Nevertheless, the trade is expecting to discover substantial bean (and possibly meal sales too) to China during the government shutdown. Some analysts are saying that China bought up to 3 MMT of US beans and 800 TMT of US meal over the last few weeks. Sales of both for 2013/14 were already well ahead of the schedule needed to hit the USDA's forecasts for the season. Lanworth estimated the 2013/14 global soybean crop at 286.0 MMT, unchanged from previous estimate, but above the USDA's September WASDE forecast of 281.7 MMT. Brazil is finally turning wetter in central areas as monsoon rains begin. Lingering dryness in parts of Argentina may mean less corn and more soybean acres. Soyoil appears to finally be gaining traction after hitting a more than 3 year low earlier in the month, supported by yesterday's NOPA crush figures. No weekly export sales report is expected tomorrow. Nov 13 Soybeans closed at USD12.76 1/2, up 9 1/2 cents; Jan 14 Soybeans closed at USD12.74 3/4, up 8 3/4 cents; Dec 13 Soybean Meal closed at USD403.80, up USD1.40; Dec 13 Soybean Oil closed at 41.37, up 71 points.

Corn: Corn was slightly lower, despite a widely rumoured sale of 300 TMT of US corn to China. That's not a huge deal in the overall scheme of things, especially with some suggesting that this year's US corn yields could ultimately average close to (or even above) 160 bu/acre. Some are saying that China has bought 1.2 MMT US corn for Feb onwards shipment during the past couple of weeks. Lanworth cut their world corn production estimate by 1 MMT to 952 MMT, and versus the USDA's 956.7 MMT forecast last month. Brazil's crop was downgraded from 74.1 MMT to 73.8 MMT, although that's still above the USDA's estimate of 72 MMT. UkrAgroConsult estimated Ukraine's corn crop up 36% at 25.5 MMT, which is a record although below most other trade forecasts (the USDA went for 29 MMT last month). Based on harvest progress so far, 11.36 MMT off 41% of the planned area, the Ukraine analysts are probably closer to the truth than the USDA. The Russian corn harvest if 31% complete at around 4 MMT. Dry weather is forecast for Ukraine and Russia for the next week, which should enable good progress to be made with the corn harvest there. The German Stats Office said that their corn crop will fall from last year's record 5.5 MMT to 4.07 MMT on a combination of late plantings and unfavourable yields. Israel seeks 80 TMT of optional origin corn for Dec/Feb shipment. Black Sea origin would be the likely favourite for that. It would seem that the US Energy Dept has also run out of funding, as there was no weekly ethanol production data from them today. Dec 13 Corn closed at USD4.42 3/4, down 3/4 cent; Mar 14 Corn closed at USD4.55 1/4, down 1/2 cent.

Wheat: Wheat closed lower on all three exchanges. Some commentators are describing US winter wheat conditions as "exceptional" and "the best in years" on the back of good rains in the Southern Plains. Newswires reported that China's COFCO this morning estimated their 2013/14 wheat imports at "only" 3-5 MMT, even though they are already said to have contracted to take around 6.0 MMT (mostly from the US and Australia) and trade forecasts of a requirement closer to 10 MMT this season. The market believes that the Argentine wheat crop will probably come in closer to 10 MMT than the USDA's September estimate of 12 MMT. Agritel forecast output there at 10.1 MMT, The Buenos Aires Grain Exchange say 10.36 MMT and ODA 10.5 MMT. With old crop stocks non-existent, and domestic consumption generally at around 7 MMT, they are likely to limit exports in 2013/14. That should mean continued Brazilian buying of US wheat. UkrAgroConsult forecast the wheat crop in Ukraine at 21.0 MMT, up 48% versus last year. Barley output there is seen at 7.2 MMT, a rise of nearly 11% on last year. Russia's wheat harvest stands at 51.5 MMT off 91% of plan, dry weather there across the next week should enable that to pretty much be wrapped up. It will also aid winter plantings in both Russia and Ukraine, which are finally catching up a little. Russia bought 29,970 MT of intervention grains today, taking the weekly total purchased to 58,050 MT. They are expected to buy 2-3 MMT on the local market by the end of the year, although the prices that the government are looking to pay aren't overly attractive now that the market has moved up a little. Dec 13 CBOT Wheat closed at USD6.81 1/2, down 4 1/4 cents; Dec 13 KCBT Wheat closed at USD7.44 3/4, down 11 1/2 cents; Dec 13 MGEX Wheat closed at USD7.42 1/2, down 7 3/4 cents.

EU Grains End Mostly A Tad Lower

16/10/13 -- EU grains closed mixed but mostly a tad lower on the day, with Nov 13 London wheat settling GBP0.15/tonne weaker at EUR163.20/tonne, whilst Jan 14 was down GBP0.50/tonne at GBP164.45/tonne. Nov 13 Paris milling wheat was EUR1.25/tonne lower at EUR198.25/tonne whilst Nov 13 Paris rapeseed jumped EUR6.00/tonne to EUR377.50/tonne.

The Russian grain harvest now stands at 84.8 MMT off 87% of the planned area, that includes 51.5 MMT of wheat (off 91% of plan), 15.4 MMT of barley (off 89%), 4.0 MMT of corn (off 31%) and 4.7 MMT of sunseed (off 35%).

Of at least as much interest, if not more, is that winter plantings for the 2014 harvest have progressed 2.1 million hectares in a week to 11.2 million hectares (68.5% of the original target). The weather forecast for the days ahead is conducive for further significant fieldwork advancement.

Rusagrotrans said that Russia's grain exports in October will fall to 1.8-2.2 MMT, versus 2.88 MMT in September, but could pick up again in November now that better prices are achievable.

The Russian government bought just under 30 TMT of 2013 grains, mostly wheat but also including around 7,500 MT of barley, for their intervention fund again today.

Customs data shows that the UK imported over 255 TMT of wheat in August, bringing the 2013/14 year to date cumulative total to almost 584 TMT versus 358 TMT in the same period in 2012/13. Imports are however expected to drop off sharply from now onwards, as was suggested by the HGCA at yesterday's Outlook Conference.

China's COFCO pooh-poohed talk of wheat imports of up to 10 MMT this season, with a forecast of only 3-5 MMT - a volume which they are thought to have already have bought more than. Talk of potential drought damage to developing winter wheat there has also been played down.

Whilst the trade is still starved of information from US government bodies, a report on Reuters today suggested that a decision will be made by the end of the week whether or not the USDA will release their October WASDE report originally scheduled for last Friday.

It was also interesting to hear the HGCA note that we are switching from an era of relative transparency in the US grain markets, to one of more information coming from less reliable international sources as the global balance of power shifts.

Russia, Ukraine, Kazakhstan and India for example now control a much larger percentage of global wheat exports than they did ten years ago, whilst China (supposedly) accounts for some very large percentages of world wheat and corn inventories.

EU Rapemeal Prices

16/10/13 -- Rapemeal prices on the continent are mostly a touch easier today, after Chicago soymeal values fell USD5/tonne last night.

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


Chicago Close Tuesday

15/10/13 -- Soycomplex: Beans closed modestly lower in directionless trade as many operators sit on the sidelines owing to the lack of fresh information from the USDA and others. The market did get some export inspection numbers from the Grain Inspection, Packers and Stockyards Administration (GIPSA). For beans they were a better than expected 47.4 million bushels (expecting 27-43 million). Dr Cordonnier estimated the 2013/14 Brazilian bean crop at 88.0 MMT and the Argentine crop at 55 MMT, both unchanged from his previous estimates. He said that Brazilian planting is about 5-7% done and in Argentina it's around 5% done. Oil World estimated the Brazilian soybean area at a record 29.0 million ha, up from 27.7 million last year. They forecast the Argentine soybean area at 19.7 million ha versus 19.1 million last year. Dr Cordonnier estimated the 2013 US soybean yield at 41.0 bu/acre, and forecast the harvest at 40-45% complete. Chinese analysts forecast soybean imports in October at 4.6 MMT, rising to around 6.5 MMT each in Nov and Dec. The NOPA US crush for September was low, but above expectations at 108.6 million bushels versus the anticipated 106.4 million. Nov 13 Soybeans closed at USD12.67, down 6 cents, but with holding above the recent lows; Jan 14 Soybeans closed at USD12.66, down 5 3/4 cents; Dec 13 Soybean Meal closed at USD402.40, down USD5.00; Dec 13 Soybean Oil closed at 40.66, up 27 points.

Corn: Corn closed around 6 cents higher on short-covering and unwinding of spreads. Weekly export inspections from GIPSA for corn came in at at 21.7 million bushels versus the expected 23-31 million. Dr Cordonnier estimated the 2013/14 Brazilian corn crop at 72.0 MMT and the Argentine corn crop at 25.0 MMT, both unchanged from his previous estimates. He said that 15% of the Argentine corn crop has been planted. Oil World estimated the Brazilian corn area falling from 15.9 million hectares last year to 15.4 million this time round, with Argentina's dropping from 4.6 million to 4.3 million. There's talk that dryness in Argentina could eventually see a greater shift out of corn and into beans. Dr Cordonnier pegged US corn yields at 154.0 bu/acre, unchanged from his previous estimate. He forecast that 30-35% of the US corn crop has been harvested. Ukraine has harvested more than 44.5 MMT of grains off 81% of the planned area, corn accounts for 11.36 MMT of that off 41% of plan. That suggests that early season hopes for a crop approaching 30 MMT may have been a bit optimistic. Russia's corn crop is 29.8% harvested at 3.8 MMT. Customs data shows that Brazil exported 15.7 MMT of corn in the first nine months of this year (Jan/Sep), up more than 66% on the same period in 2012. The top home was South Korea (2.6 MMT), followed by Japan (2.5 MMT), but the figures also included 1.0 MMT exported to the US. The weekly US ethanol production report is expected to be released tomorrow. Last week's production was 868,000 barrels/day, nearly 900,000 bpd is needed to meet the USDA target for 2013/14. Dec 13 Corn closed at USD4.43 1/2, up 6 1/2 cents; Mar 14 Corn closed at USD4.55 3/4, up 6 cents.

Wheat: Wheat closed around 6 cents lower on all three exchanges. Weekly export inspections came in at 25.3 million bushels, below the expected 27-35 million. There's talk of India lowering it's price ambitions on wheat exports, which could cap market upside. Russia's wheat harvest is past 90% done at 51.2 MMT. Winter grain plantings have only been completed on 10.5 million hectares, 3.8 million lower than this time a year ago and only 64% of the original target. Ukraine has got 6 million hectares (73%) of it's targeted area sown, down 1.2 million on a year ago. Brazilian customs data shows that they imported 589 TMT of wheat last month, with 83.5% of it (492 TMT) coming from the US (and none from sold-out Argentina). Jan/Sep imports stand at 5.24 MMT, with 2.52 MMT being supplied by Argentina and 1.96 MMT coming from the US. There's talk that Argentine millers are asking the government to impose a cap on exports for 2013/14 to build reserves. They are expected to begin harvesting a crop of around 10 MMT in Argentina around the second half of November. Newly planted winter wheat on the US Plains has seen plenty of rain to get it established ahead of winter. In some cases it's said to have seen too much rain as there's talk of some crops having to be replanted having got flooded out. Japan is tendering for 112,031 MT of milling wheat for Nov/Jan shipment of a mixture of US, Canadian and Australian origin. Russia has kicked off it's new crop intervention purchases program today, buying just over 28 TMT of mostly wheat on the domestic market. Dec 13 CBOT Wheat closed at USD6.85 3/4, down 6 3/4 cents; Dec 13 KCBT Wheat closed at USD7.56 1/4, down 5 1/4 cents; Dec 13 MGEX Wheat closed at USD7.50 1/4, down 6 1/4 cents.

London Wheat Higher, Supported By Defra Production Estimate

15/10/13 -- EU grains were mixed but mostly firmer, with Nov 13 London wheat up GBP0.85/tonne at GBP163.35/tonne and Nov 13 Paris wheat EUR0.75/tonne higher at EUR199.50/tonne. Support for London wheat came from yesterday's estimate from Defra that the 2013 UK wheat crop was only 12.1 MMT. Many in the trade had been working on a figure closer to 12.5 MMT.

"A significant decline in planted area was not able to offset a partial recovery in yield. Dry and warm weather during the summer allowed crops to compensate to some extent for a difficult growing season, but performance across the regions was variable," they said.

With UK wheat imports seen more than halving to 1.4 MMT, total availability in 2013/14 is seen down 11% to 15.7 MMT, despite the high level of carry-in from last season. Domestic wheat consumption in 2013/14 will be interesting. They forecast that at 13.8 MMT, with demand from the animal feed sector falling by more than 1 MT, or 15%, to 5.8 MMT. They left demand from the Human and Industrial sector almost unchanged from last year, saying: "Conservative bioethanol (usage) forecasts have been included as although both plants expect to operate during the season, activity during the first quarter has been limited."

It's possible that they are under-estimating the demand side of the coin, even with large volumes of imported corn already lined up to be shipped into the UK in 2013/14 and barley priced at a substantial discount to wheat.

The HGCA's Jack Watts, speaking at their Outlook Conference today, was noted to have said via Twitter that "the rebound in UK wheat quality in 2013 makes the crop much more usable and shifts any supply concern into the feed wheat market." This probably explains the strength being displayed by London wheat relative to the French and US markets recently. It also tells us why domestic milling wheat premiums are so low.

Russian growers have managed to plant 10.5 million hectares of winter grains, less than two thirds of the original target and 3.8 million fewer than this time a year ago. Ukraine has planted 6 million hectares of winter grains (73% of the aim) versus 7.2 million a year ago. Wheat accounts for the majority of that at just over 5 million hectares (76% of plan). In addition to a lower than expected planted area, there must also be question marks over the short period of development time left to these late planted crops to establish themselves before the harsh Russian/Ukraine winter sets in, as well as noting the far from ideal soil conditions into which many of these crops have been sown.

The 2013 Black Sea harvest rumbles slowly on meanwhile. Russia has harvested 84.2 MMT of grains off 86.3% of the planned area, including 51.2 MMT of wheat off 90.4% of plan. Ukraine has harvested 44.5 MMT of grains (off 81% of the planted area). The corn harvest there stands at 11.36 MMT off 41% of the planned area. The Kazakh harvest is at almost 20 MMT off 95.7% of plan. All these volumes are in bunker weight, but are still well up on year ago levels.

Strong demand from Brazil is underpinning the US wheat market. South America's largest wheat buyer imported 589 TMT of wheat in September, and 492 TMT of it came from the US. Their own wheat crop is in trouble again this year, so neighbouring Argentina's harvest can't come soon enough. Old crop stocks in the latter are so tight though that domestic Argentine prices are said to be double those internationally, and there's now talk of Argentine millers requesting the government to limit wheat exports in 2013/14 to 2-3 MMT to help replenish pipeline stocks. There's a mid-term election there looming on October 27 as well.

There's talk that China has been buying US wheat lately too, but no official confirmation of course due to the US shutdown. Cumulative US wheat export sales were already running at 69% of the USDA forecast for 2013/14, versus the 5 year average of 47%, prior to the October 1 government shutdown. There's now also talk of dryness problems in Chinese winter wheat areas.

There's an air of optimism that a deal, even if a relatively short-term one, could be done to resolve the US debt ceiling/budget impasse within the next 24-48 hours. If one does go through then there could be a slew of data to come from the USDA, which could mean some significant price movements in the grains sector in the coming days/next week.

Even if they chose to sit on the October WASDE report that should have been released last Friday, they should have all the information about them to release details of export sales and shipment volumes almost straight away. Might we even get a crop conditions/harvest progress report on Monday night?

Chicago Little Changed On Data Darkness

14/10/13 -- Soycomplex: Beans managed a modest rebound from Friday night's 20-month low as widespread Midwest rains are seen disrupting harvest activity. A Reuters survey estimated on average that the US 2013 soybean harvest is 45% complete. The range of estimates was a wide 35-72%, which highlights once more the degree to which the trade is stumbling along blindfolded without the USDA data to go on. Also missing was Friday's CFTC data. The trade estimates that funds are long around 110-120,000 soybean contracts. China imported 4.7 MMT of soybeans in September, down 5.4% from a year ago and down 26.2% versus August. Jan/Sep imports are at 45.75 MMT, up 3.3% versus the same period in 2012. CNGOIC estimated China's soybean crop at 12.5 MMT, down 4.2% from a year ago. The Buenos Aires Grains Exchange estimated Argentina’s 2013/14 soybean planted area at a record 20.2 million hectares, up 2.5% from a year ago. Safras e Mercado weekly said that Brazilian soybean planting is 6.7% complete versus 2.8% a week ago, 9% a year ago and 6.2% on average. Rain is moving into Brazil's top producing state of Mato Grosso, which is what growers there have been waiting for. "The GFS model predicts good rainfall in Mato Grosso and the tropics at large over the next several days. If rain materialises, as expected, soybean planting would move aggressively forward," said Martell Crop Projections. Whilst the USDA reports are absent, trade remains subdued, volume is relatively light and the daily trading ranges are narrower than normal. Nov 13 Soybeans closed at USD12.73, up 6 1/4 cents; Jan 14 Soybeans closed at USD12.71 3/4, up 5 1/2 cents; Oct 13 Soybean Meal closed at USD423.20, up USD1.20; Oct 13 Soybean Oil closed at 40.19, up 8 points.

Corn: The corn market also managed modest gains, in its case rebounding from a 37 month low. China's CNGOIC estimated corn production there at a record 215 MMT, up 4.6% versus last year and 4 MMT higher than the USDA currently say. A Reuters survey estimated the US 2013 corn harvest at 31% complete. The range of estimates was 25-40%, the average estimate a week ago was 20% complete. A year ago the corn harvest was 79% complete and the 5-year average for this time is 42% complete. Trade estimates are that funds sit on a large net short position in corn of around 150,000 contracts, leaving the market vulnerable to a correction if we get a bullish surprise when the USDA finally re-open for business. On the other hand a bearish surprise could send the market plunging to new lows. For example, Ag Resource today estimated the 2013 US corn yield at 160.0 bu/acre versus 155.3 bu/acre from the USDA last month. Safras e Mercado said that the Brazilian summer corn crop is 42.1% planted versus 43.2% a year ago. An EPA administrator indicated that they have not made a final decision on bio-fuel blending requirements for 2014 and that last week's leaked report looking to cut the mandate was merely part of a draft proposal. "Argentina weather conditions have turned warmer and wetter in mid October, improving corn planting conditions. Strong showers have finally developed in Cordoba, Buenos Aires and Santa Fe, ending a long drought in the top corn producing areas. Most farms received 25-50 mm of rainfall last week, 1-2 inches, though localised thunderstorms caused heavier rain. This was sufficient rainfall for corn planting to begin in earnest," said Martell Crop Projections. Dec 13 Corn closed at USD4.37, up 3 3/4 cents; Mar 14 Corn closed at USD4.49 3/4, up 3 1/2 cents.

Wheat: Wheat closed virtually unchanged on all three exchanges. CNGOIC estimated this year's Chinese wheat crop at 122.2 MMT, up 1.1% on last year and 1.2 MMT more than the USDA. China increased the state support price for wheat in 2014 to a very healthy CYN2,360/tonne, which is around USD386/tonne to encourage production. The trade estimates, in the absence of any CFTC data, that funds have cut their net short position in wheat from near record levels to around 18-20,000 lots. CBOT wheat doesn't appear to have enough of a bullish story to break through USD7.00/bu, not with corn shaping up like it might test USD4.00/bu that's for sure. Winter wheat conditions on the US Plains look far better than they did this time a year ago. Strong demand for US wheat from Brazil is providing underlying support. Wheat harvesting in the Brazilian state of Parana is said to be about halfway through. They are only expected to harvest a crop of around 1.7 MMT, 18% less than last year, despite planted area being 25% higher due to severe frost losses. The FAO estimated Russia's 2013/14 grain crop at 87.4 MMT, up 25.6% on last year, although below the Russian Ministry's 90 MMT forecast. The FAO have the Russian wheat crop at 51.5 MMT, up 36.6% on last year. They see 2013/14 Russian grain exports up by a third at 20 MMT, including 14.5 MMT of wheat, 2.6 MMT of barley and 2.7 MMT of corn. Russian grain exports last week fell to 380.5 TMT from 406.1 TMT the previous week. Ukraine's grain exports were up to 580 TMT from 458.3 MMT the previous week. Wheat accounted for 265.1 TMT of Russia's weekly exports and 415.6 TMT of Ukraine's. Dec 13 CBOT Wheat closed at USD6.92 1/2, up 1/4 cent; Dec 13 KCBT Wheat closed at USD7.61 1/2, up 1 1/4 cents; Dec 13 MGEX Wheat closed at USD7.56 1/2, up 1 3/4 cents.

EU Wheat Mixed To Start The Week

14/10/13 -- EU grains closed mixed to start the week with Nov 13 London wheat settling GBP0.50/tonne lower at GBP162.50/tonne, whilst Jan 14 was unchanged at GBP163.75/tonne. Nov 13 Paris milling wheat settled down EUR0.50/tonne to close at EUR198.75/tonne. Nov 13 Paris rapeseed was up EUR0.75/tonne at EUR373.50/tonne.

London wheat gained more than any other commodity in the grains sector last week, up 2.68%, comfortably eclipsing Paris wheat (up 2.44%), Minneapolis wheat (up 1.14%) and Chicago wheat (up 0.76%), so it was maybe time to give up a bit of those gains.

Last week's rise seem to be down to short covering, and the fact that maybe there isn't actually that much UK feed wheat around, now that the rubbish left over from last year has largely been blended away. Much more of this year's crop has made milling standard than a year ago, even if the final production number of 12.1 MMT (according to Defra today) was down 9% on last year's output, and the smallest wheat crop since 2001. The 2013 UK barley crop meanwhile came in 29% higher than last year at 7.1 MMT - the biggest year since 1997 - they added.

The Czech Stats Office reported that grain output there this year was up 22% from 5.645 MMT in 2012 to 6.898 MMT in 2013. That was helped along by wheat yields up 32%, barley yields up 10% and OSR yields 25% higher.

The Ukraine grain harvest now stands at 44.5 MMT off 81% of plan. Corn production now accounts for more than 10 MMT of that total. Winter grain plantings in Ukraine have moved on very well in the past fortnight now that the weather has turned drier. It remains to be seen however how well the crop germinates and becomes established ahead of winter dormancy.

Ukraine grain exports this past week have also picked up, to total 580 TMT, versus 458.3 TMT the week before. Wheat accounted for 415.6 TMT of that, along with 152.1 TMT of corn.

That means that they exported more grains than Russia's 380.5 TMT in the past week (incl 265.1 TMT of wheat).

Russia are expected to begin buying grain for their depleted intervention fund tomorrow.

The FAO estimated the Russian grain harvest at 87.4 MMT versus 69.6 MMT last year. Wheat will account for 51.5 MMT of that versus 37.7 MMT in 2012, they said. Grain exports in 2013/14 will rise to 20 MMT versus 15 MMT in 2012/13, they added.

Kazakhstan has now harvested 19.83 MMT of it's 2013 grain harvest off 95% of the planned area. They expect to harvest 20 MMT in bunker weight versus 12.8 MMT in clean weight last year.

Morocco is tendering to buy 330,000 tonnes of wheat from the EU. Iraq, Bangladesh and Jordan are also tendering for optional origin wheat on the international stage.

Australia's wheat crop seems to be getting bigger. Yields are said to be much better than last year, although proteins may be a problem.

EU Rapemeal Prices

14/10/13 -- Rapemeal prices on the continent are little changed on old crop, and a bit weaker on new crop to start the week.

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


Monday Morning News Snippets

14/10/13 -- The IMF chief Christine Lagarde says that the world economy could go into recession unless US politicians get their fingers out pronto. Did you see her on the news last night? I couldn't decide if it was a man, a woman or an alien. She's also the same colour as a polished Georgian yew writing bureau. With a wig on. She reminds me of someone. I've got it, it's that old woman in Tenko, always covered in scabs and been exposed to the sun for far too long. Snap.

Did you know that Nov 13 soybeans closed at the lowest for a front month since Feb 2012 on Friday? Did you also know that London wheat posted the best gains of the week out of the grains sector last week, rising 2.68%. Paris wheat added 2.44%, Minneapolis wheat 1.14% and Chicago wheat a mere 0.76% by comparison.

In the news this morning is that China imported 4.7 MMT of soybeans in September, down sharply on 6.37 MMT in August. Year to date (Jan/Sep) imports now stand at 45.75 MMT, up 3.3% versus a year ago.

The poor old Chinese peasant farmer, you really have to feel sorry for him don't you? Erm, well not really you don't. The Chinese government have just announced the support price for wheat in 2014 will be CYN2,360/tonne. How much is that, you ponder? It's around USD386, or EUR285, or GBP242. That would seem to indicate that they are pretty keen to encourage farmers to keep growing wheat next year. Does that mean that the 2013 silos are lower than they are cracking on? Or does it means that there'll be a mountain of the stuff in 2014? Or both? They're not likely to tell are they.

Sticking with the Far East. CNGOIC said this morning that the Chinese corn crop will come in at a record 215 MMT this year, up 4.6% versus last year and 4 MMT higher than the USDA currently say. How do I know what the USDA currently say? Because I printed them all off before they shut their website down, that's how. Up here for thinking and down there for dancing etc. CNGOIC have this year's wheat crop at 122.2 MMT, up 1.1% on last year and 1.2 MMT more than the USDA. They forecast soybean output at 12.5 MMT, down 4.2% versus 2012, but a bit higher than the USDA's 12.5 MMT.

Agrimoney this morning say that up to 1 MMT of rice might have been destroyed by the cyclone that struck the east coast of India at the weekend. From memory (my usual reference source for this sort of thing is guess who? The USDA, that's right), almost all of the wheat crop is grown in the west and north of the country. "Don't worry about your wheat, that's safe. Would you like to try for the speedboat?" as Jim Bowen would say.

Australian Crop Forecasters estimate the wheat crop Down Under at 25.9 MMT, up almost 18% on last year, and higher than ABARES (24.5 MMT), the IGC (25.0 MMT) and the USDA's 25.5 MMT. The harvest is underway, with early results suggesting yields much higher than last year, although protein levels are a bit low.

CBH Group say that they expect to handle around 12.7-13.0 MMT of grains this harvest in the state of Western Australia, versus a previous estimate of 11.5-12.6 MMT. They typically handle around 90% of the state's grain output, so the upwardly revised estimate suggests increased production prospects.

APK Inform say that Ukraine shipped 580 TMT of grains in the past week, including 415.6 TMT of wheat and 152.1 TMT of corn.

The Buenos Aires Grain Exchange is forecasting an Argentine soybean area of 20.2 million ha this year, up 2.2% versus 2012.

There are an assortment of international wheat tenders pending from Iraq, Bangladesh, Jordan and Morocco (the latter being for EU wheat only).

London wheat currently trades GBP1.20/tonne higher at GBP164.20/tonne on front month Nov 13 - potentially it's highest close since the last day of July.

Kazakhstan has now harvested 19.832 MMT of grains in bunker weight off 95.2% of the planned area. Last year's clean weight harvest was 12.8 MMT.

Chicago Mixed, Possible Biofuel Target Changes Press Corn And Beans Lower

11/10/13 -- Soycomplex: We should have had the Oct WASDE report from the USDA today, but we didn't get it due to the partial government shutdown in the US. For what it's worth, the trade was said to be expecting an average 2013 US soybean yield of 41.548 bu/acre and production at 3.156 billion bushels versus 41.2 bu/acre and 3.149 billion from the USDA in September. US 2013/14 soybean ending stocks were estimated at 167 million bushels versus the USDA's September estimate of 150 million. For world 2013/14 carryout the average trade estimate was 72.164 MMT versus the USDA's September estimate of 71.540 MMT. With no USDA data to go on, the big talking point was a proposed "moving of the goalposts" by the US Environmental Protection Agency concerning the current mandate, established by 2007 law, that 18.15 billion gallons of fuel from renewable sources must be included in fuel sold in the US (mainly utilising corn-based ethanol, but also including "advanced biofuels" produced from soyoil) is cut to 15.21 billion gallons. The leaked EPA proposal has not been publicly released, and would still need to be approved by the White House, but the implications are clearly bearish for soybean and soyoil demand in the US - the latter recently slumped to 3 year lows in Chicago and closed with heavy losses again tonight. Amidst a soybean harvest that some think could be as much as 50% done by Monday, with spec money still thought likely sitting on net long position in beans, and the lack of USDA information keeping traders in the dark, then it's perhaps not surprising that the market sold off today. Meanwhile, the president of the World Bank said that the US is just "days away from a very dangerous moment" as Thursday's debt ceiling deadline approaches. There's talk that China has been buying US beans this week, but no confirmation of course. "Brazil’s top soybean state Mato Grosso received scattered heavy rainfall this week, perhaps marking the beginning of the monsoon season. The rainy season typically begins in October, but the exact date may vary. Last year soybean planting did not begin in earnest until late October from a delayed monsoon," said Martell Crop Projections. Nov 13 Soybeans closed at USD12.66 3/4, down 21 1/4 cents; Jan 14 Soybeans closed at USD12.66 1/4, down 19 1/4 cents; Oct 13 Soybean Meal closed at USD422.00, down USD2.40; Oct 13 Soybean Oil closed at 40.11, down 93 points. For the week front month beans were down 28 1/4 cents, with meal USD9.30 easier and oil up 12 points.

Corn: The news concerning the leaked EPA proposal was bearish for corn. The agency may call for the use of 13 billion gallons of conventional corn-based ethanol in the US next year, versus the current mandate of 13.8 billion this year, it is thought. The mandate was supposed to rise to 14.4 billion for 2014. Taken at face value, this could mean a drop of almost 300 million bushels in corn used for ethanol usage from the current USDA estimate of 4.9 billion bushels. We also have a corn market under pressure from the ongoing US harvest and continued "better than expected" yield reports. If the USDA had been open for business today, then the trade was expecting them to release a revised US 2013 corn yield estimate of 156.533 bu/acre versus their September estimate of 155.3 bu/acre. Production was expected to come in at 13.802 billion bushels versus the USDA's September estimate of 13.843 billion. This slightly lower figure was due to an anticipated near 1 million acre drop in harvested area to 88.142 million acres. Note that the range of production estimates was a very wide 13.483–14.150 billion bushels. Just imagine how far apart various trade estimates might be if we have to go another month before we get any more data from Washington. US 2013/14 ending stocks were estimated at an average of 1.923 billion bushels, from within an also fairly wide range of estimates of 1.644–2.160 billion and the USDA's September estimate of 1.855 billion. World 2013/14 carryout was seen at 151.567 MMT versus the USDA's September estimate of 151.420 MMT. Macquarie Bank today pegged US corn yields at 158.1 bu/acre. "A hard freeze is not predicted in the northern Midwest corn and soybeans Sunday morning, though frost is expected in northwestern Iowa, Nebraska and South Dakota. The weather forecast continues very wet in the Upper Midwest, where 1-2 inches of rain is expected. One wave of showers is moving into the Northern Plains this morning; a second wave would quickly follow. Corn and soybean producers in the northern growing areas may welcome a heavy soaking rain, needed to replenish parched fields, even though the harvest would be set back for a few days," said Martell Crop Projections. Dec 13 Corn closed at USD4.33 1/4, down 5 cents; Mar 14 Corn closed at USD4.46 1/4, down 4 3/4 cents. For the week Dec 13 corn fell 10 cents.

Wheat: The wheat market continues to do a decent job of paddling it's own canoe, whilst fund money continues to cover in shorts and world demand remains brisk. Slumping corn values in the midst of a record harvest are capping upside gains though. India announced a 30 TMT milling wheat sale to the UAE, their first successful venture into publicly declared international markets since August. Indian wheat stocks at government warehouses were said to stand at 38 MMT as of September 1st, more than double the Ministry target of 17.1 MMT. They begin harvesting again in March, with production expected to be "at least as good" as 2013's crop of 92.5 MMT. Russia said that they'd harvested 50.6 MMT of wheat in bunker weight off 88.8% of the planned area. They also said that winter grains have now been planted on almost 10 million hectares, just over 60% of the original expected area. Ukraine said that as of Oct 10, they'd planted 5.1 million ha of winter grains, versus 6.7 million this time a year ago. Wheat accounts for 4.4 million ha of that, around two thirds of original expectations. As of Oct 7, Ukraine had planted 3.6 million ha of winter wheat, so they've managed to progress at around 266k ha/day since then. At that rate they could be all done in little over a week if the weather holds. Ukraine and Russian conditions are still improving, and the forecast is dry and warmer for the next 5-7 days. In their first estimate for this season the Buenos Aires Grains Exchange forecast the Argentine 2013/14 wheat crop at 10.35 MMT, up 18% versus 2012/13. The wheat planted area was estimated at 3.62 million ha versus 3.37 million a year ago. Old crop wheat in Argentina is extremely tight, with local millers said to be prepared to pay USD500/tonne for readily available wheat, double the price they are paying for late November availability once the harvest gets underway. US winter wheat conditions are looking up. "Generous rains are expected in Kansas, Oklahoma and Texas, improving field moisture for hard red wheat planting. Compared to last year field conditions are much wetter," said Martell Crop Projections. It's highly unlikely that there will be any crop progress data from the USDA on Monday, if there was it would probably show much better winter wheat conditions than a year ago. Dec 13 CBOT Wheat closed at USD6.92 1/4, up 6 3/4 cents; Dec 13 KCBT Wheat closed at USD7.60 1/4, up 4 3/4 cents; Dec 13 MGEX Wheat closed at USD7.54 3/4, up 3 3/4 cents. For the week CBOT wheat was up 5 1/4 cents, with KCBT 10 cents firmer and MGEX rising 8 1/2 cents.