London Feed Wheat Hits Fresh Lows

London feed wheat futures recorded new lows with November hitting 128.00 pounds a tonne, the lowest level for the contract since late November 2007.

The contract is set to close the week lower for the 5th time in a row as pressure from this year's large harvest continues to hang over the market

Benchmark November on Euronext milling wheat futures was down 1.25 euro or 0.65 percent at 190 euros a tonne, offsetting Thursday's thin rise.

The contract was also influenced by the 1.3 percent fall in November maize at 187.00 euros a tonne on the outlook of high feed wheat supplies.

The spread between the two contracts was around 10 euros, in favour of maize, at the start of the month.

Oil prices fell more than 2 percent on Thursday, capping the market's worst month in more than three years, as weak U.S. economic data reinforced worries about shrinking demand in the world's top energy consumer. Crude stands almost a dollar easier at $123.10/barrel at 13.30BST.

eCBOT Close/Early Call

eCBOT closed with corn 1-3 cents easier, beans mostly down 10-12 cents and wheat up 3 1/2 cents.

It's all about Midwest weather and Meterlogix are forecasting Midwestern states may get as much as 1 inch (25 millimeters) of rain next week.

"There just isn't any bullish news from the supply side, the prospect of a bigger-than-expected soybean crop is gaining," said one trader.

There are also signs that China will step away from the import market as the Olympics approach.

China may ask edible oil refiners including Wilmar International Ltd. to process and package 100,000 tons to 200,000 tons of reserve soybean oil for sales during the Beijing Olympic Games this month, said Tommy Xiao, analyst at Shanghai JC Intelligence Co.

"Domestic vegetable oil supply is very sufficient, and demand stays depressed," the China National Grain and Oils Information Center said in a daily report. Weak demand and the expected arrival of previously ordered soybeans have prompted traders to limit purchases of the commodity to only one or two cargoes this week, Shanghai JC said in a separate report.

Earliest calls are for corn futures to open 1 to 2 lower; soybeans 7 to 9 lower; wheat 1 to 3 higher.

Bank's Profits Drop 99 Percent As Slump Bites

Alliance & Leicester today reported a 99 per cent plunge in half-year profits after huge losses at its investment arm due to the credit crunch.

The bank, which is set to be bought for £1.3 billion by Spanish giant Santander, said that the pre-tax profits for the six months with June 30 were £2 million, compared to £290 million in the same period last year.

A &L said its treasury division made an operating loss of £272 million after the value of a range of complex investments plummeted due to the turmoil in the financial markets.

Chief executive David Bennett said that with worsening economic conditions threatening to impact further on the bank's value a takeover by Santander was the best option for the business.

"The proposal from Santander provides both greater stability and greater certainty in uncertain times," he said.

Mobile pelletiser makes fuel-from-straw feasible

FWi -- A mobile pelletising unit being developed by a Staffordshire company could finally make smaller-scale pellet production feasible for farmers. That means they could produce fuel for their own use from rape or cereal straw by burning it in a biomass boiler and also sell the pellets locally.

So far the unit is still in prototype form, but Christopher Scott from maker Pelheat says that the first production machines should be on sale before the end of the year.

Existing pelletisers tend to be large, static, semi-industrial units costing from £50,000 upwards, he says. The Pelheat version, on the other hand, is mounted on a small trailer and can be towed behind a car or pick-up.

The process involved is fairly simple, too, with material passing through a hammer mill, then into a hopper from where it is augered into a pellet mill that makes either 6mm or 8mm diameter pellets. Water or oils can be added at this stage to make the pellets bind.

The smallest model will be powered by a 24hp Perkins engine and has a typical throughput of 200kg of pellets an hour. Cost is expected to be about £20,000. Larger units, involving a 50hp engine and 600kg/hour throughput are also in the pipeline. Getting the straw into the machine simply involves unrolling a round bale and feeding it in by hand, says Mr Scott. Almost anything with a moisture content below 15% can be pelletised, including wheat and barley straw, oilseed rape cake (what's left after the oil has been extracted), dry woodchips, sawdust, miscanthus, canary or switch grass.

There are a number of biomass boilers on the market that could burn the pellets and the unit wouldn't take long to produce the 10t or so that would typically be needed to heat a farmhouse for six hours a day and four months of the year with a 50kW burner. But the real benefit will come from selling the fuel locally to other biomass boiler users.

UK: Wheat harvest well under way on early land

FWi -- Combines are rolling again across parts of the country, with wheat harvest getting underway on the early land.

In Kent, Martin Boulden had finished his oilseed rape and winter barley, and was cutting Gerald winter oats today (30 July). Rape yields had been variable, and the barley and oats had averaged 7.4t/ha (3t/acre). We'll be doing some Claire winter wheat later today, he said.

Bill Harbour was also ready to start on his Xi19 wheat, having finished some disappointing rape near Faversham, Kent,

However, three varieties of rape produced a similar, average, yield, at Adrian Dixons Northbrook Farm, Micheldever, Hants, coming in at 3.7t/ha (1.5t/acre). Oil contents were high at 44-45.5%.

In Wiltshire James Dean was combining his rape today, having finished the winter barley. His Flagon winter barley suffered from poor screenings but the Cassata did better, with both varieties yielding 7.4t/ha (3t/acre).

Suzuka winter barley had yielded very well at Jonathan Booths Ranby Hall, Market Rasen, Lincs, averaging 10.2t/ha (4.1t/acre). His winter wheat was still about a week away, he said. Its looking very promising.

USDA Weekly Export Sales Report

The USDA's Weekly Export Sales Report for w/e 24th July 2008 was released at 13.30BST today. Here's a note of what they had to say (expectations in brackets):

Wheat 726,400 MT (350-550,000 MT)

Corn 07/08 63,100 MT; 08/09 825,800 MT (550-950,000 MT)

Beans 07/08 271,600 MT; 08/09 436,000 MT (250-450,000 MT)

Meal 07/08 20,500 MT; 08/09 83,400 MT (50-100,000 MT)

Oil 12,400 MT (5-20,000 MT)

Ukraine Ups Grain Output Estimate Again

Despite recent flooding on some southern parts of the Ukraine the Agriculture Ministry there has increased it's 2008 total grain output estimate to 44-47 million tonnes. Up from last week's revised estimate of 43 million tonnes.

Prime Minister Yulia Tymoshenko stated today while opening the Government's meeting. "Despite bad weather conditions observed recently in Ukraine's western regions, Ukraine will receive the forecasted grain yield", the Head of Government emphasized.

She said that 23.4 million tonnes of grain have already been gathered in Ukraine, i.e. 50 percent of the expected yield. "These figures are very encouraging", the Prime Minister noted. According to the Premier, ten regions have already got past the one million tonne boundary as to grain harvesting; the Luhansk and Cherkasy regions are approaching it.

As UKRINFORM reported, earlier the Agricultural Policy Ministry had forecasted the grain yield for 2008 at the level of 40 million tonnes, and later increased it to 44 and 47 million tonnes.

The 2007 grain harvest in Ukraine produced 29.3 million tonnes.

eCBOT Close/Early Call

Having traded either side of unchanged for most of the morning eCBOT session a late sell-off ensued in the last half hour to send most products to close at or near session lows.

August beans closed 4c lower, but other active months ended with losses of around 9c. Wheat dipped late to close around 2c easier and corn around 5c lower.

Crude has dipped just under the $126/barrel mark, around 80c under last night's close.

Early calls on this afternoon's session are: Corn futures are expected to open 3 to 5 lower; soybeans 7 to 9 lower; wheat 1 to 2 lower.

USDA Weekly Export Sales Report Expectations

The USDA's Weekly Export Sales Report for w/e 24th July 2008 is released at 13.30BST today. Here's a note of what the trade is expecting:

Wheat 350-550,000MT

Corn 550-950,000MT

Beans 250-450,000MT

Meal 50-100,000MT

Oil 5-20,000MT

HGCA Planting Survey Results

According to the HGCA in 2008 UK farmers planted the following:

* Wheat – 2,068,000 hectares (up 14.5 per cent)
* Spring Barley – 565,000 hectares (up 14.3 per cent)
* Winter Barley – 415,700 hectares (up 10 per cent)
* Oats – 131,500 hectares (up 3.4 per cent)
* Oilseed rape – 590,100 hectares (down 1.8 per cent)

Oil, Dollar Drive Commodity Prices - Economists

Commodity prices - and resulting food prices - are rising sharply, driven by a combination of factors that include high oil prices spurring biofuels growth, a weak dollar and world production and consumption trends, according to an analysis by Purdue University agricultural economists.

In a Farm Foundation commissioned report released recetnly, the Purdue economists - Phil Abbott, Chris Hurt and Wally Tyner - highlight key factors gleaned from examining 25 recent studies plus their own analysis. Their conclusion: a complex combination of factors are fueling agricultural commodity price increases and rising food costs.

Tyner, an expert on energy and policy issues, says the price of oil is an important factor that has increased the demand for biofuels. "About $3 of the corn price increase is due to the higher oil price and $1 to the ethanol subsidy," he said.

As high oil prices spur demand for biofuels, the increased corn production stimulates demand for fertilizer, diesel, propane and other agricultural inputs. Prices for these inputs have also risen due to the "demand pull" from more corn being produced and subsequently the "cost push" due to the fact that petroleum products are key ingredients in many of these inputs.

Another key factor - the weak dollar - is linked to the rise in all commodity prices. "The link between the U.S. dollar exchange rate and commodity prices is stronger and more important than many other studies imply," says Abbott. "Whatever impacts the dollar will influence food prices."

An expert on international trade and macro factors, Abbott points out that oil and agricultural commodities are priced in dollars. When the U.S. dollar falls, as it has for the last six years, then these goods become cheaper for others in the world to buy, which increases demand.

"The dollar has depreciated 45% from its peak in 2002 through 2007," says Abbott. "Over the same time the value of agricultural exports had increased 54 percent, and are projected to go much higher."

When asked how long these current high prices would last, the economists indicated two factors might be most significant. "Based on this analysis, high commodity prices will persist as long as high oil prices remain and as long as the dollar stays weak," says Tyner. "Lower oil and a stronger dollar would bring pressure on commodity prices to fall."

Many studies point to the pace of global consumption being higher than global production as an important driver of commodity prices. In eight of the past nine years, consumption has grown faster than production. Unlike many who see China and India as major contributors to rising food commodity prices, the Purdue economists argue that is not the case. "It's countries who trade that set the price. China and India are agriculturally self-sufficient and largely do not trade agricultural commodities," says Tyner.

When it comes to the price of oil, however, Tyner says that's another story. "While China and India are not the root cause of food demand, the opposite is true for oil, as China especially has a huge and growing appetite for oil."

Nationwide warns of recession as house price drop doubles

Times Online -- Nationwide, the UK's biggest building society, today gave warning that a recession could be on the way after the average house price in the year to July plunged to a three-year low of £169,316. The average price of a home is now £15,000 lower than in July last year.

Nationwide said that over the course of this year, house prices have fallen nine months in a row, and in July declined by 1.7 per cent, more than double June’s 0.8 per cent fall.

Yesterday, it emerged that 1.7 million homeowners in the UK face falling into negative equity if house prices plunge by an expected 17 per cent.

Standard & Poor's (S&P), the credit rating agency, said that 70,000 homeowners already have mortgage debt higher than the value of their homes.

However, S&P expects the price of an average house to fall by a further 17 per cent into next year, plunging one in six homeowners into negative equity.

Overnight developments in the grains markets

eCBOT is showing very little change so far with wheat and beans 1-2c firmer and corn 1-2c lower.

All three commodities opened lower on last night's CBOT session, but following the release of the crude oil stocks data, moved steadily higher throughout the session as the intra-day chart for corn below shows:

With very little fresh fundamental news about the markets are following crude.

Australia: WA drenched, wettest July in 13 years in parts

(Weatherzone) -- Widespread rain once again drenched much of WA on Wednesday, lifting rain totals for July above average across most western and southern regions.

Heavy falls hit the west coast early Wednesday morning as a front moved in from the Indian Ocean. Bickley received 79mm by 9am, their heaviest rain in seven years. Nearby Mundaring's 64mm was their highest fall in five months but heaviest July fall in seven years.

The front also brought strong winds to the southwest of the state with gusts reaching 98 km/h at Cape Leeuwin at around 7am.

The rain will ease during Thursday as the front heads into SA but another front will bring further rain to southwest WA during the weekend.

In the Central Wheat Belt, Goomalling has now received 120mm this month, around double the long term average and wettest July in 13 years. The welcome rain has significantly boosted the states crop prospects.

Crude Steadies; Stocks News Mixed

(RTTNews) - Oil prices rebounded on Wednesday after the weekly inventory report showed a surprise drop in gasoline supplies. Light sweet crude for September delivery moved to $123.07, up 87 cents on the session. Prices hit as low as $120.80 in the mid-morning before rallying as high as $123.75.

Crude oil inventories were down less than expected in the recent week, according to data released Wednesday by the Energy Information Administration. Stockpiles decreased by about 100,000 barrels in the week ended July 25. Experts were looking for a drop of about 1.5 million barrels.

However, motor gasoline inventories decreased by 3.5 million barrels last week. This came as a surprise to experts, who were looking for a build of about 400,000 barrels. Distillate fuel inventories increased by 2.4 million barrels, which was slightly more than expected.

Crude oil prices plunged again on Tuesday and reached a 12-week low. Light sweet crude for September delivery closed at $122.19, down $2.54 on the session. Prices moved as low as $120.42, oil's lowest mark since early May.

The September contract fell below its 50-day moving average with Tuesday's decline. The next key psychological support may be found at the $120 mark. Crude has not traded below that level since May 7.

Oil has plunged for the last few weeks and given back more than $25 from the record levels $147.27 reached on July 11. Worldwide demand has deceased with prices well into previously unseen levels. September crude has closed lower in eight of the last 11 sessions.

UK: Combines busy trying to beat the thunderstorms

FWi -- Combines have been out in force over the weekend, with many farmers trying to get as much in the barn before forecast thunderstorms stop play.

Martin Howlett started the first of his Sequel winter barley at Deer Park Farm, Callington, Cornwall, yesterday, averaging a pleasing 6.2t/ha (2.5t/acre) With thunderstorms forecast this afternoon we wanted to crack on and get as much in as possible, he said.

In Shropshire Andrew Craig had finished his winter barley, and was just starting on the oilseed rape. The barley has come off exceptionally well, he said. The 53ha (130 acres) of Carat and Saffron feed barley averaged 9.4t/ha (3.8t/acre) over the weighbridge. We even had one field which hit 9.9t/ha (4t/acre) - I couldn't believe it.

Oilseed rape yields continue to vary, ranging from 2.5-4.3t/ha (1-1.75t/acre) at Peter Wombwell's Rectory Farm, Saffron Walden, Essex. I should think we averaged about 3.3t/ha (1.3t/acre), he said.

In Cambridgeshire, Anthony Morbey was about three-quarters of the way through his oilseed rape, and was not impressed with the results. It is not fantastic - we might average 2.5t/ha (1t/acre), which is low, he said.

But Alistair Pinkerton was pleased with above-average yields of 3.5t/ha (1.4t/acre) in Hertfordshire, where he finished cutting the rape at midnight last night. He was planning to Roundup his Xi19 winter wheat this afternoon, which would then be ready to combine in about a week.

Cranswick plc - First Quarter Trading Statement

- Turnover increased by 17 per cent to £599 million
- Pre-tax profit up 8 per cent to £35.3 million*
- Earnings per share rose 11 per cent to 55.9 pence*
- The dividend was raised 10 per cent to 19.9 pence per share
- Strong sales increases in both food and pet businesses
- Continuing investment in facilities
- Board confident of further successful development

*including exceptional gains

The current financial year has started in line with the Board's expectations.

Sales in the first quarter have increased by 10 per cent compared with the same period last year to £161 million. This represents an increase of 13 per cent on a like-for-like basis, excluding the animal feed business which was disposed of during the first quarter of the prior year,

Food sales showed an increase of 12 per cent, with volume growth across all categories. In the pet business, sales were 34 per cent higher.

Raw material cost increases have been incorporated into selling prices on a phased basis during the first quarter. Whilst further inflation cannot be ruled out, the Board remains confident of the Group's prospects for the future."

Lloyds TSB profit slumps 63%, misses expectations

LONDON (MarketWatch) -- U.K. bank Lloyds TSB said Wednesday that its first-half net profit fell 63% after weak markets hurt investments at its insurance arm while impairment or "bad debt charges" surged in its wholesale and international business.

The group reported a net profit of 576 million pounds ($1.14 billion), compared to 1.54 billion pounds a year ago. Operating profit for the period was down 70% to 599 million pounds and fell well short of the 773 million pound consensus forecast.

Total impairment losses at the bank rose 31% to 1.1 billion pounds, mainly driven by the wholesale and international banking business, while the rise in U.K. retail impairments was a more modest 4%, reflecting the impact of lower house prices.

Lloyds said it expects U.K. house prices to fall between 10% and 15% in 2008 and that a decline in the middle of that range could add around 100 million pounds to impairment charges in the second half of the year.

Lloyds has a relatively small exposure to risky debt compared to some rivals and said write-downs on its portfolio of asset backed securities were 62 million pounds. It's also written-down 170 million pounds of payment protection it held with bond insurers.

Its insurance arm suffered from the market volatility over the last several months, leading to 505 million pounds of losses, mainly reflecting a fall in the valuation of its annuity portfolio.

Pilgrim's Pride struggles with feed prices

Pilgrim's Pride, the largest chicken producer in the US, has posted a significant net loss in its 3rd quarter earnings, which it says is a result of rising feed costs.

The company reported a net loss from continuing operations of $48.3 mln on net sales of $2.2 bln for the quarter which ended 28 June, compared to a net profit of $63.3 mln on total sales of $2.1 bln during the same quarter in 2007.

"Like other producers, we simply have not been able to keep pace with the extreme price volatility in the grain markets," said Pilgrim's Pride president and CEO Clint Rivers.

Total feed ingredient costs in the quarter rose $266 mln (41%) compared to 2007, estimating that its total feed ingredient costs for fiscal 2008 will rise $900 mln.

"Over the past six months, we have made some very tough, but necessary, decisions to position our company as a stronger, more efficient competitor," said Rivers, but adding that at present there are no further plans consolidate or sell any other facilities. He did acknowledge, however, that such decisions may be necessary in the future.

In March the company axed 1,100 jobs and closed seven US facilities.

Tyson chickens out in third quarter

(AP) -- The rising price of grain and slow chicken sales have slammed US food giant Tyson Foods Inc. The company saw third-quarter earnings plummet from $111 million in 2007 to $9 million this year. According to the company, the cost of grain increased by $140 million in the third quarter and is expected to be up $550 million for fiscal 2008.

As we reported previously, Tyson is looking to emerging markets to offset losses at home. In the past two months, Tyson has taken a 51% stake in Mumbai-based Godrej Foods Ltd. and a 60% stake in the Chinese poultry processor Xinchang Group. At the same time, it's been trimming the fat closer to home. In June Tyson announced it would divest Lakeside Farm Industries Ltd. and Lakeside Packers, two of beef processing, cattle feed yard and fertilizer assets, based in Alberta, Canada, to XL Foods Inc. for $106 million.

Tyson isn't alone in seeking growth overseas. Difficult conditions in North America have sparked a wave of cross-border deals in the meat industry.

Tyson has contracts with retailers and restaurants at fixed prices. The company has been bound by agreements that locked in lower prices for those big customers while grain prices have skyrocketed.

Tyson now aims to negotiate new contracts with fast-food chains and other big buyers of its products in the coming months. Instead of lasting a year, Tyson wants the new contracts to run for 90 days so the company can more quickly adapt to cost changes.

Tesco to build biomass plant in Goole

Tesco is to build Britain's first straw-powered biomass plant in Goole, North Humberside.

Tesco has just won planning permission for the combined heat and power plant, which will power its distribution depot on the Junction 36 industrial estate.

The small-scale operation will generate five megawatts of electrical power - enough energy to run eight Tesco superstores. All excess electricity will be sold back to the national grid.

Tesco bosses say the aim is to reduce the supermarket giant's carbon footprint.

David North, Tesco's community and government director, said: "We have set ourselves stretching targets to reduce the carbon intensity of our business, and energy from renewable sources is a key part of our strategy.

"We have identified five sites that would be suitable for further biomass technology, and are making big investments in wind turbines too."

Building work at the distribution centre will begin shortly, and the power plant will be operational later next year.

Straw - which will be provided by local farmers - is a renewable material rather than a fossil fuel, and the minimal carbon dioxide emitted is equal to the amount it has absorbed while growing, effectively making the energy carbon neutral.

The supermarket estimates that it will have recouped the £12 million set-up costs within six years. After this time, energy generated by the plant will cost Tesco less than is currently charged for grid electricity.

The plant will work by burning straw, which powers a steam turbine, generating electricity.

The particulates are then bag-filtered to keep them from escaping into the air. The only waste from the process is a fine fly-ash, which can be used in other industries, such as brick-making.

Aussie Wheat Closes A$9.50/ton Lower

Aussie wheat futures have closed sharply lower Tuesday, with benchmark Jan ASX closing A$9.50/ton lower.

Promising July rains are encouraging traders to think that at crop of 23-25 million tonnes is not a pipedream after two years of drought a trader said.

A corrective move lower overnight from what traders described as overextended rally by Chicago wheat was all that was needed to send futures lower.

With technical selling, lack of buyers or fresh fundamental news its hard to find anything to get overly positive about with wheat, traders say.

Cat In S Korea Infected With Deadly H5N1 Strain Of Bird Flu

SEOUL (AFP)--A cat found dead in a South Korean city was infected with a virulent strain of bird flu, the first mammal in the country known to have had the H5N1 virus, health officials said Tuesday.

They said it was the first report of a cat having had the virus since a case in Thailand in 1996, but there was little risk to humans as there has never been a known transmission of the virus from a cat to other mammals.

"It is quite rare for a cat to be infected by the avian flu virus," Cho Hyun-ho, a deputy director of the National Veterinary Research and Quarantine Service, said.

Cats and dogs aren't usually susceptible to the virus so quarantine officials don't usually check them, but restrict checks to animals that have regular contact with birds.

The cat was found dead in April in Gimje, about 250 km south of Seoul.

"It probably had eaten a sick bird or came in very close contact with chickens or ducks," an unidentified quarantine inspector told the South Korean Yonhap news agency.

"Still, it's a shame to waste it," said the inspector flicking through the ever-popular "101 Ways To Stir Fry Your Pet" - Nogger

Overnight developments

eCBOT grains stand lower this morning with beans down 21-24 cents, corn 3-4 cents lower and wheat down 4 cents.

Soybeans are easier after last night's USDA crop condition report showed an improvement of one point in the good/excellent category.

Corn is also lower after crop conditions there also saw a modest increase.

Wheat is lower as reports emerge from Australia of an improving crop outlook there.

Crude oil hovers around unchanged at $125.24/barrel.

The pound is little changed from last night at $1.9937.

CFTC Meeting Tues Makes Wheat Specs Nervous

CBOT wheat traders are said to be "nervous" about a meeting of the CFTC's Agricultural Advisory Committee scheduled for Tuesday. The meeting will address concerns about a lack of convergence between cash and futures prices.

The CFTC will hold hearings with the Agricultural Advisory Committee regarding the failure of the CBOT July futures contract to converge with the cash market at it's expiration.

They're looking for solutions, and any solution won't be bullish wheat since they have no control over cash prices, which were $1.50- 2.00 lower than the futures at expiration. If prices are to converge, futures will be heading lower, said Louise Gartner of Spectrum Commodities.

USDA Crop Condition Report Highlights

After the close Monday the USDA released it's latest US crop condition/progress report as of Sun 27th July.

Corn good/excellent was set at 66%, up one point on last week and in line with expectations of unch/+2%. This is 8 points higher than 2007. Progress of course lags with 59% silking compared with 81% on the 5 year avg and 7% at the dough stage vs 19% on the 5 year avg.

Soybean conditions good/excellent are also up one point from last week to 62%, again in line with expectations. Interestingly crop progress is lagging but perhaps not as much behind as corn. 62% of the crop is blooming vs a 5 year avg of 79% and 21% of the crop is setting pods vs a 5 year avg of 38%.

Spring wheat good/excellent is down 3 points from last week to 60%.

The winter wheat harvest is seen at 79% complete, slightly behind the 5 year avg of 86% done.

Ukraine: 22 Killed, 20,000 Evacuated As Storms Cause Floods

KIEV (AFP)--Storms and floods in western Ukraine have killed 22 people, including six children, and forced the evacuation of 20,000 others, the government said Monday.

Fifteen people were killed in the Ivano-Frankivsk region in southwest Ukraine while seven people were killed in the Chernivtsy region, the emergency situations ministry said in a statement.

Rescuers have also evacuated more than 19,800 people from their homes because of the severe storms and floods that have also hit northeastern Romania, the ministry said.

More than 40,000 houses and 34,000 hectares of farmland remained partially flooded Monday, while more than 900 bridges and hundreds of kilometers of roads were damaged. One hundred villages were without electricity, the ministry said.

Earlier reports pegged 85% of the Ukraine rapeseed harvest already completed and approximately 50% of the grain harvest done. It is unclear at this stage what the impact of the floods might be on eventually grain output but it seems minimal.

According to USDA data the Ivano-Frankivsk region is responsible for only 2% of national wheat output, with the Chernivtsy region accounting for just 3% of total production. As these regions are in the south of the country it seems likely that much if not all of the harvest would already have been completed before now.

Video link here

UK harvest continues despite the forecast of rain

FWi -- Farmers are pressing on with harvest despite the forecast for shower in many parts of the country Tuesday/Wednesday.

Adrian Howell started cutting Astrid oilseed rape at 7% moisture last night in Sutton Bridge, Lincs. It is 11% moisture today but were pressing on because it talks of rain, he said. Quality looks promising and yield is very pleasing at 4.5t/ha (1.8t/acre).

In North Weald, Essex, Andrew Kerr had finished harvesting his barley, and was waiting for the rape to ripen. Barley yields seem to be fairly reasonable at 6.2-8.6t/ha (2.5-3.5t/acre) รข?? and in West Essex there doesnt seem to be much left to cut, he said. His 17ha (42 acres) of Pearl grown for seed averaged 7.4t/ha (3t/acre). Were quite pleased with that.

Although Mr Kerr said rape yields in the area were poor, further south in Hampshire Tim Sykes was very pleased with his Komando, yielding 4.5t/ha (1.85t/acre) with an oil content of 45.7%.

Winter barley and oilseed rape were both yielding well at Peter Frances Conis Dean Farm, Ashford, Kent. His Pearl and Cassata barley averaged slightly better than last year at 7.4t/ha (3t/acre), and the Castille rape was better than expected at over 3.7t/ha (1.5t/acre).

In Corsham, Wilts, James Stafford had started his Astrid oilseed rape, which looked very patchy and was averaging 2.7t/ha (1.1t/acre) so far.

The week ahead in agriculture

(Ag Web) -- Weather watching.

Periodic rains and a lack of heat in the Corn Belt forecast so far have proved to be crop friendly in the view of markets. If weather forecasts don't shift this coming week, that will continue market thinking that things are okay in farm country and the corn and soybean crops are not shrinking.

Crop ratings.

If Monday's crop condition ratings show another increase for corn and soybeans, it will back up market thinking that weather is definitely helping crop prospects. After the gyrations in the spring wheat condition ratings, it will be interesting to see what USDA says on that front Monday.

Weekly Export Sales.

With China's new-crop soybean purchases nearly on their own putting the weekly sales totals ahead of trade expectations for the week ended July 17, traders will watch for a repeat performance in next Thursday's data.

End of the month.

Not only could weather affect markets next week, but the end of the month looms as another potential time for some extra market moves as traders reposition themselves for the month ahead. Outside markets will also still play a role in grain futures activity.

Something I Didn't Know About America - Did You?

I was reading an article across the weekend about the state of the US economy and the outlook for the rest of the year. During the article a couple of times the term "rebate checks" was used. Every heard of them?

Of course the Septics mean cheques not "checks" but it still got me wondering what are they on about.

Apparently the rebates, which provided up to $600 per taxpayer, $1,200 for couples and $300 per child younger than 16, are the centerpiece of a $168-billion economic stimulus package that President Bush signed in February -- an effort in line with the tax cuts his administration has tirelessly promoted over his eight years in office as the nation's economy has stalled.

The idea being, everyone gets a little windfall and goes out spending, thereby helping the economy.

The reality this year seems to be spending their modest windfalls on bargain-rate clothes, groceries, utility bills, mortgage payments and gas tanks that increasingly seem to verge on empty.

The point being what happens when the money runs out? After all this amount of money isn't a life-changer is it? The outlook doesn't seem great.

According to one Merrill Lynch analyst "Just like consumers, who are insulating their windows and making fewer trips to the malls, we are adjusting our economic forecast to the new high-oil price reality not to mention the latest round of trauma in the mortgage markets. Though fiscal stimulus [rebate checks] will provide a lingering boost to 3Q we expect GDP to plummet 2.5% in 4Q and see a similar decline in 1Q. In all, we have shaved our 2009 GDP forecast to -0.5%, a full percentage point lower that where it was previously, while 2008 is broadly unchanged at 1.5%.

"The scenario we ran last May, when we shocked the model with higher oil prices, now appears to be playing out as predicted. With rebate check delivery winding down, there is now little shielding the consumer from the full force of $4+ gasoline, deflating real estate and equity markets and rising unemployment. The new reality means a deeper downturn for consumers, higher headline inflation, more belt-tightening from businesses and a mammoth profit squeeze. It also keeps the odds squarely in favor of more rate cuts from the Fed, in our view.

"Once the last of the rebate money is spent, in either July or August, consumer spending is expected to roll over, and hard. The oil shock we're experiencing is on par with the spike in the mid-1970s and consumer spending will see a similar downturn, in our view. The unemployment rate will probably crest at about 7.0% in mid-2009, a half percentage point higher than our previous outlook. We're expecting a 3.0% decline in PCE in 4Q 2008 and 1Q 2009 does not promise to be much better.

"The deeply disappointing retail sales report this week only serves to underscore how far behind the curve consumer is financially and a grim foreshadow of what lies ahead once the rebate checks are all spent. Flat spending was all consumers could muster in July with three quarters of the $106 billion total rebate checks in their bank accounts."

So there you go, it doesn't seem like the American patient is going to get better anytime soon. Reeling in on spending will inevitably include a lowering in crude oil consumption.

As recently tax hikes filter through to Indian, Chinese and Malay consumers too it looks like the cure for high oil prices has been high oil prices.

With corn, soybeans and rapeseed all seeming to be inextricably linked to the price of crude, maybe these are all going to go lower if oil continues to fall, no matter what the fundamentals for the grains and oilseeds complex.

For a chart of recent soybeans vs crude price movements click here to see just how closely they are linked (crude is the blue line). Link

Worried US banks sharply reduce business loans

(International Herald Tribune) -- Banks struggling to recover from multibillion-dollar losses on real estate are curtailing loans to American businesses, depriving even healthy companies of money for expansion and hiring.

Two vital forms of credit used by companies — commercial and industrial loans from banks, and short-term "commercial paper" not backed by collateral — collectively dropped almost 3 percent over the last year, to $3.27 trillion from $3.36 trillion, according to Federal Reserve data. That is the largest annual decline since the credit tightening that began with the last recession, in 2001.

The scarcity of credit has intensified the strains on the economy by withholding capital from many companies, just as joblessness grows and consumers pull back from spending in the face of high gas prices, plummeting home values and mounting debt.

"The second half of the year is shot," said Michael Darda, chief economist at the trading firm MKM Partners in Greenwich, Connecticut, who was until recently optimistic that the economy would continue expanding. "Access to capital and credit is essential to growth. If that access is restrained or blocked, the economic system takes a hit."

Companies that rely on credit are now delaying and canceling expansion plans as they struggle to secure finance.

Drew Greenblatt, president of Marlin Steel Wire Products, figured it would be easy to get a $300,000 bank loan to finance a new robot for his factory in Baltimore. His company, which makes parts for makers of home appliances, is growing and profitable, he said. His expansion would add three new jobs to an economy hungry for work.

But when Greenblatt called the local branch of Wachovia — the same bank that had been aggressively marketing loans to him for years — he was distressed by the response.

"The exact words were, 'We're saying no to almost everybody,' " Greenblatt recalled. "This is why God made banks, for this kind of transaction. This is going to slow down the American economy."

Earlier this year, credit extended by banks to companies and consumers was still growing at double-digit rates compared with three months earlier, according to an analysis of Federal Reserve data by Goldman Sachs. By mid-June, bank credit was declining at an annualized pace of more than 6 percent.

That is a drop of nearly $150 billion, an amount much larger than the value of the tax rebates the government has sent to households this year in an effort to spur economic activity.

Ukraine to Harvest 3MMT Rapeseed in 2008 - Up 280%

As of July, 25, Ukrainian agrarians had harvested 2.495 mln tonnes of rapeseeds, reported Stepan Kapshuk, General Manager of Ukroliaprom Association.

According to him, agrarians had harvested rape within 83% of the sowing area. The expected harvest this season totals 3 mln tonnes, he said. This is 0.5 mln tonnes higher than previous estimates and an increase of 280% on 2007 when the Ukraine rapeseed harvest was 1.1 mln tonnes.