Masham Micronized Feeds

EU Wheat Comments

22/02/12 -- EU grains finished mixed but mostly higher. Mar 12 London wheat closed down GBP2.25/tonne to GBP164.75/tonne and Mar 12 Paris wheat climbed EUR0.25/tonne to EUR212.00/tonne.

Today was a day of consolidation after some fairly sizable losses yesterday. EU weather concerns have switched from winter kill to drought. Large parts of the US have also experienced a unseasonably dry winter, whilst virtually no rainfall at all during Sep/Oct/Nov means that a third of Ukraine's winter crops will need replanting in the spring.

The trade is anticipating significant increases in corn and wheat plantings from the USDA's Ag Forum which starts tomorrow. Ending stocks of both for the season ahead should also increase, with corn carryout potentially doubling. Their thoughts are less likely to be bearish for soybeans though, with plantings seen a million acres lower, reducing carryout to around 250 million bushels from 275 million this season.

There's a major winter storm coming for very dry areas of US Upper Plains on Feb 26-27 and maybe again Mar 2-3, say WXrisk.com. That will help replenish depleted soil moisture ahead of spring plantings of wheat, corn and soybeans but plenty more is needed.

"The soil profile is dry through a very deep layer. Thus, much more precipitation is needed in the Upper Midwest before corn is planted, usually the first week of May," say Martell Crop Projections.

Ukraine's Ag Minister says farmers there need to resow nearly 3 million ha of winter grain areas and nearly 0.5 million ha of winter rapeseed this spring. They estimate the 2012 grain harvest in a fairly wide 42-50 MMT range (from a record 56.7 MMT in 2011). Of that wheat is expected to account for 15-16 MMT, around 30% down on last year.

Ukraine and Russia will stay cold over next 8 days, with a possible big snow event for eastern Ukraine western Russia March 2-3, say WXrisk.com. That looks like continuing to disrupt grain exports out of the Black Sea.

Western & central Europe and the UK will be largely warm and dry for the next 7-10 days, which will spread East into Eastern Europe by days 9-10, say WXrisk.com. Of the "Big 3" EU grain producers, Germany is currently the only one with adequate field moisture, say Martell Crop Projections. "France has grown dry over the past 7-8 weeks receiving only scanty precipitation in the farm belt," they add.

Meanwhile, much of the heavier rain that fell across the UK today was confined to northern and western areas, with only lighter showers for the Home Counties.

There are probably enough weather-related question marks in amongst that lot to underpin the market for now.

CBOT Comments

21/02/12 -- Soybeans: Mar 12 Soybeans closed at USD12.71, up 3 1/2 cents; Nov 12 Soybeans closed at USD12.62 1/4, up 1/4 cent; Mar 12 Soybean Meal closed at USD330.20, down USD2.30; Mar 12 Soybean Oil closed at 54.06, up 66 points. Beans managed to close in positive territory despite the negative influence of sharply lower corn and wheat, with funds said to have bought around 2,000 soybean contracts on the day. Private exporters announced the sale of 250,000 MT of new crop soybeans to China. Outside markets offered some support with crude closing above USD106/barrel for the first time since April 2011 when Libya was in turmoil. Tensions with Iran are the reason this time round.

Corn: Mar 12 Corn closed at USD6.29 1/2, down 12 1/4 cents; Dec 12 Corn closed at USD5.63 3/4, down 4 1/2 cents. Funds sold an estimated 12,000 contracts on the day in anticipation of the USDA reporting a significant increase in potential US spring corn plantings on Friday. The largest acreage since WWII is what the trade is pricing in. If we were to get a return to trendline yields, as the USDA projected in last week's baseline numbers, then we'd be in for a huge crop come the autumn. That would see 2012/13 ending stocks at much more comfortable levels. In other news private exporters announced the sale of 110,744 MT of corn to unknown.

Wheat: Mar 12 CBOT Wheat closed at USD6.33, down 11 cents; Mar 12 KCBT Wheat closed at USD6.77, down 12 1/2 cents; Mar 12 MGEX Wheat closed at USD8.16 3/4, down 5 1/2 cents. Chicago wheat traded 17 cents lower at one stage, but managed a minor recovery late in the session. Rabobank peg the US wheat planted area at 57 million acres, half a million more than the USDA currently project. Some rain is in the forecast for dry areas of the northern Plains starting Thursday. Algeria are tendering for 125,000 MT of optional origin wheat and Egypt may be back in the market again later in the week if prices fall much further.