Evening Report (VIP) -- January 29, 2013

January 29, 2013 09:35 AM
 

CME GROUP TO REDUCE TRADING HOURS FOR GRAIN, OILSEED MARKETS... CME Group today issued a release saying the exchange remained "committed to the integrity of our deep and liquid grain markets and listen intently to feedback from all of our customers. We regret that recent comments in press reports this week were not representative of that commitment."

CME Group continued that since extending trading hours in May 2012, it has received "significant customer feedback from a broad cross-section of market participants, including through a formal survey we implemented last week." CME continued that while the survey is still underway, "we have enough of your responses to be able to decide to reduce trading hours for our grain and oilseed markets, pending CFTC approval." As there are differences of opinion as to what the reduced hours should be, CME Group is still vetting alternatives with its customer base.

Further, CME Group said it was open to considering a market pause to allow participants to digest USDA report data "if all exchanges and trading venues would do the same. We would support a halt, as long as it was unified for all venues, as that would best benefit all customers by ensuring the necessary market liquidity needed for effective price discovery during this time."

 

MONTHLY STATE WEATHER/CROP BULLETINS REFLECT DETERIORATION IN HRW WHEAT CROP... State statisticians in Kansas, Oklahoma and Nebraska released monthly crop and weather bulletins yesterday, which reflect continued deterioration in the condition of the HRW wheat crops due to ongoing drought conditions. Texas and Colorado statisticians did not release reports.

The Kansas report states that "limited moisture in most areas caused the condition of the winter wheat to decline during January." It rates the condition of the crop 14% "very poor," 25% "poor," 41% "fair," 19% "good" and 1% "excellent."

The Oklahoma report notes that continued drought has resulted in poor conditions for all fall planted crops, which resulted in further deterioration of the winter wheat crop. It rates the condition of the crop 30% "very poor," 39% "poor," 26% "fair," 5% "good" and none "excellent."

The Nebraska report states the condition of the wheat crop remains well below year-ago levels as topsoil moisture was rated short to very short across most of the state. It rates the condition of the crop 15% "very poor," 35% "poor," 42% "fair," 8% "good" and none "excellent." Click here for a full digest of the state reports.

 

AG CANADA PEGS 2013 WHEAT ACREAGE UP, CANOLA LOWER... Agriculture and Agri-Food Canada today said it expects farmers in Canada to increase the area seeded to all wheat and barley in the spring of 2013 compared to last year, while area seeded to canola and most of the remaining crops will see a small decline. The market analysis branch of Agriculture Canada cautioned, however, that the actual area seeded will be influenced by expected net returns per acre, current prices, expected delivery opportunities, spring planting conditions, crop rotation requirements, on-farm stocks as well as world events.

Pro Farmer Canada Editor Mike Jubinville warns, "The Ag Canada estimates are not based on a farm survey... rather the results reflect a first stab guesstimate on acreage and production for 2013. The validity of the numbers should not be taken as absolute numbers at this time, but rather the trend shifts in proposed acreage intentions as they are seen today."

Ag Canada pegs seeded all wheat acreage at 25.326 million, which would be up from the 23.828 million last year. Canola acreage is pegged at 21.251 million, which, if realized, would be down from last year's record of 21.531 million acres.

Jubinville says his conversations with growers over the winter have signaled an even steeper decline from last year will be seen to "somewhere down below 20 million."

 

CONSULTANT TRIMS ARGENTINE SOYBEAN CROP PEG... South American crop consultant Dr. Michael Cordonnier has lowered his estimate of Argentina's soybean crop by 1 MMT to 52 MMT due to "worrisome" dry weather. "The forecast does not hold much promise for a change in the pattern back to more normal rainfall any time soon," he says. "Since the soybean planting was so spread out this year, the earlier planted soybeans should still be able to produce a normal type of yield. It's the later-planted soybeans that could be in trouble if the current dry pattern persists... I don't think this is a disaster in the making because a significant portion of the crop will still do fine. A significant trimming of the crop, though, is a definite possibility."

Dr. Cordonnier says producers are still trying to wrap up planting of the Argentine corn crop -- especially in far northern areas. He says the earlier planted crop is doing fine, but the later- planted corn could be impacted if dry conditions continues. He left his estimate unchanged, but says it might be too negative; but the weather needs to improve.

Dr. Cordonnier also left his Brazilian crop estimates unchanged, but says he has considered raising the bean estimate for several weeks, but has waited as there are still too many uncertainties. "While the wet weather may cause additional problems for the early maturing soybeans in Mato Grosso, the additional moisture is good for later-maturing soybeans all across central Brazil," he states. "I am definitely worried about the dry weather pattern in southern Brazil... As of last week, the crop was still rated in good condition, but that could change if this dry pattern persists and the critical time for the soybeans in the state is still ahead."

Dr. Cordonnier 2012-13 Soybean Estimates

Est.
Maximum
Minimum
2011-12

in million metric tons

Brazil
81.0
84.0
78.0
66.5
Argentina
52.0
55.0
50.0
41.0
Paraguay
9.0
9.3
8.0
4.0
Bolivia
2.2
2.5
1.8
2.2
Uruguay
2.0
2.3
1.7
1.6
Total
146.2
153.1
139.5
115.3

Dr. Cordonnier 2012-13
Corn Estimates

Est.
Maximum
Minimum
2011-12

in million metric tons

Brazil
70.0
73.0
65.0
72.5
Argentina
22.5
26.0
20.0
21.0
Paraguay
2.0
2.4
1.7
1.9
Bolivia
0.7
0.8
0.6
0.7
Uruguay
0.4
0.5
0.3
0.4
Total
95.6
102.7
87.6
96.5

 

SIGNIFICANT BRAZILIAN SOYBEAN EXPORTS STILL WEEKS AWAY... Dr. Cordonnier says while vessels have already arrived at the ports in southern Brazil, significant exports are still weeks away as early harvested soybeans have gone to processors to supply soybean meal needed by the livestock industry. "I would be surprised if the first vessels load before Feb. 10 and it might be later depending on the harvest pace for the early maturing soybeans," he says. "There have already been estimates that the wait time to load soybeans during the peak export season in southern Brazil (March and April) might be as long as 45 days."

Germany-based Oil World today said transportation problems in South America may shift business back to the U.S. in the next one to three months. And keep in mind that port-worker strikes have turned into an annual event, also potentially keeping the window for U.S. exports open for a while longer. But... Brazil will have record supplies available for export this year, taking the pressure off the U.S. to supply the globe with soybeans by spring.

 

ENSO REMAINS 'NEUTRAL'... The Australian Bureau of Meteorology says ENSO indicators in the tropical Pacific remain at neutral levels and model predictions indicate this neutral pattern is likely to continue into the southern hemisphere autumn (northern hemisphere spring). Click here for more.

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