Ukraine Rapeseed Plantings Down Sharply
16/12/10 -- Winter rapeseed plantings in Ukraine are down by almost a quarter to 1.08 million hectares, according to the state statistics committee. The reduction was doubtless largely caused by the hangover from this season's summer drought when rapeseed should have got planted in the autumn.
Rapeseed production has fallen sharply in the last few years from a peak of 2.9 MMT in 2008/09, just 1.5 MMT was harvested this year. In 2011 that could dip below 1.2 MMT by the looks of things.
So Europe will have to look elsewhere to cover it's anticipated rapeseed deficit in 2011/12 it seems. That's OK, as they were most unlikely to be able to conform to the new sustainability criteria rules anyway. The problem is virtually nobody else can either. Yikes!
Further reading: Achtung Baby!
CBOT Close
15/12/10 -- Soybeans
Jan soybeans ended 1/2c higher at USD12.96 1/2; Jan soymeal traded up USD3.90 at USD346.10; Jan soyoil ended 89 points lower at 54.20. China was in the market today for 110,000 MT of soybeans for 2011/12 delivery. Funds were estimated to have been net buyers of 2,000 soybean contracts on the day. Weekly export sales for tomorrow are expected to be around 600-850,000 MT. The Senate passed a motion to extend tax credits for biodiesel and ethanol, but it still needs to get through the House of Representatives.
Corn
Mar 11 corn closed at USD5.84 1/4, down 3 cents; May 11 corn closed at USD5.92 1/4, down 2 3/4 cents. Estimates for tomorrow's weekly export sales report range from 600 to 1100 thousand MT. The Senate passed legislation to continue with the Bush era tax credits on biofuels, which should bolster demand for corn from the ethanol sector if it now gets passed by the House. Funds sold an estimated 5,000 contracts on the day.
Wheat
Mar 11 CBOT wheat closed at USD7.64 3/4, up 1 1/2 cents; Mar 11 KCBT wheat closed at USD8.11 1/4, down 3 3/4 cents; Mar 11 MGEX wheat closed at USD8.42 3/4, down 3/4 cent. Egypt and Jordan bought US wheat today, although the former also bought French grain. Weekly export sales estimates for tomorrow range from 400 to 700 thousand MT. The Australian weather outlook is improving.
EU Wheat Close
15/12/10 -- Jan London wheat closed GBP0.75 higher at GBP190.00/tonne and new crop Nov was up GBP1.20 at GBP159.20/tonne. Jan Paris wheat closed up EUR2.00 at EUR238.00/tonne, whilst new crop Nov climbed EUR1.75 to EUR213.75/tonne.
Egypt bought 230,000 MT of wheat in it's tender today, with just over half of that being French grain at USD323.85/tonne. That adds to the 180,000 MT of French wheat they bought last week. Clearly EU wheat hasn't priced itself entirely out of the market just yet.
The rest of the Egyptian tender went the way of US origin wheat. Elsewhere Jordan also bought 150,000 MT of US wheat today.
With global prices riding very high, potential sellers the world over are rooting down the back of the settee to see if there's any wheat left down there.
Turkey have apparently just found 610,000 MT of milling wheat hiding down the back of their settee, no wonder they were looking uncomfortable. Their state-owned grain board intend to sell that off in the near future, they say.
The cash-hungry Argentine government meanwhile have already authorised 5.5 MMT of their currently being harvested wheat to be exported in 2010/11, and anticipate allowing a further 1.7 MMT to leave it's shores on top of that before the season ends.
Australia's prospects seem to have improved as the weather there finally dries up in the east. The jury is still out on quality, but they seem pretty confident that yields will be bumper. After all, rain does make grain they say. NSW will have the largest grain crop in the history of the state, or indeed any other Australian state, according to ABARE.
Morning Muse
15/12/10 -- We've had turnaround Tuesday, today is shaping up like apathetic Wednesday so far, with very little fresh news to get excited about.
The overnight grains aren't doing much, and already the market has a kind of half knocked off for Christmas feel. Which sounds like a good excuse to go Christmas shopping to me, which is exactly what I'm going to do shortly.
Before that a quick look around tells me that beans are 3-4c higher on the overnight Globex market, with corn flat to down 1c and wheat up one/down one. Front month on corn and wheat is now March as December expired yesterday.
There doesn't seem to be a lot of change on the currency front either with the pound hovering around 1.18 against the euro and 1.5730 against the dollar.
Iraq is tendering to buy at least 100,000 MT of any origin wheat. Egypt are also back in the market for assorted origin wheat.
China only sold 21% of the wheat on offer at it's regular weekly auction, but at least that was better subscribed than this week's corn and soybean tenders. They now plan to attempt to auction off the same soybeans that nobody wanted on Tuesday on Friday.
China says that the north of the country, where a significant portion of the nation's winter wheat is grown, is suffering from "moderate" drought.
As the harvest in Western Australia winds down, things are speeding up in the east as the heaviest showers die away and things warm up.
The Australian Oilseeds Federation pegs this season's rapeseed crop at 2.1 MMT, up 10.5% from 1.9 MMT last year, but says that up to 14% of that may not be suitable for crushing due to rain damage, according to a report on Bloomberg.
Ratings agency Moody's say that they may cut Spain's Aa1 credit rating later today. Haven't they made their mind up yet? Do they just call a meeting with a few sarnies and take a show of hands on it?
Other stories of interest that you might have missed from yesterday:
South Korea bought four cargoes of Indian/South American soymeal, US origin was too expensive.
Pirates attack an Italian-owned grain vessel off the Gulf of Oman Link
German biodiesel producer EOP declares insolvency Link
Chicago Close
14/12/10 -- Soybeans
Jan 11 soybeans closed at USD12.96, down 6 1/2 cents; Dec 10 soybean meal closed at USD344.50, down USD0.30; Dec 10 soybean oil closed at 54.80, down 30 points. Dec contracts expired today. Argentine weather is seen improving, but is far from out of the woods yet. In the US, yesterday's November NOPA soybean crush was disappointing at 148.9 million bushels.
Corn
Dec 10 corn closed at USD5.74 1/2, down 3/4 cent; Mar 11 corn closed at USD5.87 1/4, down 1 1/4 cents. Fresh news was limited, profit-taking was probably the order of the day. Mexico said that it would have a crop of 24.2 MMT this year, some 20% up on last season, curtailing import requirements from the US. Some production concerns remain for Argentina however.
Wheat
Dec 10 CBOT wheat closed at USD7.21, down 19 1/4 cents; Dec 10 KCBT wheat closed at USD7.98 1/2, down 27 1/4 cents; Dec 10 MGEX wheat closed at USD8.31 1/4, down 27 1/2 cents. Drier weather forecasts for eastern Australia clawed back some of the differential between CBOT and higher grade MGEX wheat. Egypt is tendering for 55-60.000 MT of HRW and SRW wheat for last half February shipment.
EU Wheat Close
14/12/10 -- Jan London wheat closed GBP1.00 lower at GBP189.25/tonne, with new crop Nov also GBP1.00 easier at GBP158.00/tonne. Jan Paris wheat ended EUR5.50 lower at EUR236.00/tonne, with Nov down EUR4.00 at EUR212.00/tonne.
The market continues to attempt to reconcile the strong pace of EU and UK exports against sluggish demand from the feed sector at these levels. Also we have the issue of year-end profit-taking and book-squaring ahead of the holiday season.
Customs data released today pegs UK wheat exports for the first four months of the marketing year at almost 1.2 MMT. Virtually Defra's entire target for the whole of 2010/11 and more than double last year's pace. EU exports meanwhile are running 37% ahead of year ago levels.
Inflation figures coming out of the UK today, and the outlook for further to come on rising unemployment and imminent fuel and VAT price increases in 2011 as the government's austerity measures start to bite, paints a bleaker picture.
Cheap meat and dairy product imports into the UK, as producers elsewhere up slaughterings on the back of soaring feed prices may be temporarily insulating UK consumers from the reality of the situation.
In Europe, a short-term abundance of these products as producers exit the industry is also depressing prices, for now.
How much longer this can continue for remains to be seen. From a supply point of view there is unlikely to be any respite on the cards for another six or seven months yet. Be sure though, the longer these prices continue the more acute the downwards correction will feel when it does come.
UK Wheat Exports Full Steam Ahead
14/12/10 -- Customs data out today reveals that the UK exported almost 325,000 MT of wheat in October. Despite frantic tugging on the emergency cord, that's only 70,000 MT less than in September, and now brings the marketing year to date total to almost 1.2 MMT.
That's just 100,000 MT shy of Defra's anticipated exportable surplus for the whole of the 2010/11 period just a third of the way through the MY.
How much further down the track this runaway train is going to career is anybodies guess. If it was to continue at this pace we'd be looking at a shocking 3.5-3.6 MMT by the end of June.
Now nobody is suggesting that that will happen, but the more realistic figure of 2 MMT that many in the trade have been talking about for the past month or so is perhaps now starting to also look too low.
From what I have been hearing November wasn't exactly a quiet month on the export front either. We could easily be looking at 1.6-1.7 MMT having been shipped out by the end of the calendar year, with fully six months of the season still remaining.
Could this prompt some sort of US-style regulation on UK (and/or EU) grain exports? After all, right now nobody actually knows the size of the existing commitments for the rest of the season do they? At least not collectively.
Nah, that sounds like far too sensible an idea to me, lets carry on muddling along in the dark with out of date information. It's always worked up until now.
