With a crop of 16mmt Argentina was the world’s fifth-largest wheat exporter last season, according to the USDA.
How things have changed in twelve months. The country will this year have the smallest wheat crop since 1989, according to the Buenos Aires Cereals Exchange.
Argentine farmers have now just about finished harvesting wheat, and the results can only be described as very poor indeed.
According to the Exchange this season's crop will now only total 8.7mmt.
A combination of lower plantings due to political tinkerings with export taxes, a season-long drought and a lack of fertiliser application due to high prices have hit wheat farmers badly. The crisis has been compounded by the world economic slowdown, as farmers turn to the government for help, only to find that the cupboard is bare.
The country's most severe drought since 1961, which has also affected agriculture in neighbouring Uruguay, Paraguay and southern Brazil, has also wiped out many of the country's cattle herds.
Argentina of course is also a major beef producer, famous for its range-fed cattle.
The drought has killed an estimated 300,000 head of cattle and caused at least $600 million in farm losses in Santa Fe alone.
"The situation is terminal," said one rancher. "We are in God's hands. Our water reserves are gone."
EU wheat futures closed higher Friday with Paris March milling wheat up EUR2.25 at EUR148.50/tonne. London May feed wheat closed up GBP1.25 at GBP116.00/tonne.
DEFRA cut its estimate for the UK's 2008 crop by almost a quarter of a million tonnes pegging the final UK crop at 17.23mmt. Whilst this could be construed as mildly supportive, the exportable surplus is still huge.
Strategie Grains now estimate the UK 2009 wheat crop at 15.85mmt, down slightly on last month's estimate, and now 8% lower than 2008's crop.
Indeed 8-10% lower now seems to be a fairly general rule of thumb for most of the wheat crops in the northern hemisphere, with US plantings forecast down by this amount by the USDA Monday. The overall EU-27 crop and the Russian crop are also seen falling by a similar amount.
Very cold temperatures in the US may have done some winter kill damage over the last couple of months, but in Europe the threat is currently seen as minimal.
Forex is all over the place at the moment. The pound started the week at $1.51, before plunging to $1.45 where it stayed for most of the week, then rallying late to within sight of $1.50 only to fall back to $1.47 by the close Friday. At least against the euro we seem to have stabilised in the 1.10-1.12 range.
Corn climbed steadily higher throughout the session Friday with March corn closing just 2 cents off the days highs at $3.91, up 25 3/4 cents. Informa Economics pegged 2009 corn plantings at 82.7 million, more than 3 million below last season's 86 million acres. Drought in Argentina and Brazil continues to threaten corn crops there, whilst Arctic-like temperatures in the US may boost corn demand for feed. Nearby crude oil futures earlier this session were lower on the day, but closed higher.
Beans also closed just a couple of cents off session highs, with March finishing at $10.20, up 25 1/2 cents. Drought and searing temperatures in Argentina are now becoming a very serious threat. China reminded everyone that it hasn't gone away just yet, buying 116,000mt of US beans according to the USDA, in addition a further 125,000mt was sold to unknown destinations. Informa Economics pegged 2009 U.S. soybean plantings at 80.8 million acres, down 0.7 million from it's December estimate of 81.5 million.
March CBOT wheat settled at $5.78 1/4 , up 9 1/2 cents supported by spillover strength from the other grains. Successive days of Arctic-like winter cold in the Midwest impacting the dormant wheat crops there provided bullish support to wheat futures. Monday's USDA winter wheat plantings remain supportive, but recent very poor export sales kept a lid on wheat's attempts to rally too far.
National Bank of Commerce trained in Berkeley, Illinois and Bank of Clark County of Vancouver, Washington were first fence fallers in the 2009 Grand US National Banking Steeplechase.
Both banks were closed by regulators on Friday. There were 25 fallers in last years race, up from only three in 2007.
The favourite for this year's race is the heavily backed, Bush trained, Toxic Bank.
Bank of America, trained in Washington by Ben Bernanke is second favourite. A flood of late money for him, $138 billion to be precise, would make this a popular winner as everybody in the US seems to be on him.
Henry Paulson's runner, Citigroup, is also well fancied, but carries a lot of weight for a 197 year old.
Meanwhile the Bernie Madoff trained entry, Ponzi Scheme, was withdrawn under orders, so if you backed him you've lost your money I'm afraid.
President Bush has gone up in my estimations by slapping a 300% import tariff on Roquefort cheese, in a two fingered salute to what the Septics lovingly refer to as the "cheese-eating surrender monkeys" just days before he leaves office. Well in, Bushy.
Israel are on the verge of agreeing a ceasefire I see, now that they have got their noses in front. What's the score in this "perfectly justified we are only defending ourselves" match 1100-13? Quite close then? What a surprise that they should come up with that one ten minutes before Obama takes office.
And this toxic bank thing. Who in their right mind would want to open an account with them? On second thoughts, I might just so I can see what their debit card looks like!
I see Boy George has gone down then? Phnar, phnar. That's like putting a kid in charge of a sweet shop. Not much of a punishment if you ask me, they should try playing him Karma Chameleon over and over for fifteen months, now that really would teach him a lesson.
If Channel 4 and Five merge will they become Channel 9 or Channel 4 1/2? These are the kind of things that keep me awake at nights.
Research shows that having no sex on a first date is the secret to a successful relationship apparently. The theory is that men who are willing to wait a bit are seen as being more reliable. As many of you probably know Nogger has a considerable reputation as a caring and sensitive lover. I always wait, at least until the lady has counted the money.
PS - yes I do realise that the "bad bank" won't be like a normal bank. Cheers.
Twenty-nine weeks into proceedings, the EU has issued export licences for 12.07mmt of soft wheat so far this marketing year, well ahead of 3.47mmt at the same time last season, whilst total all-grain exports have almost doubled to 17.93mmt.
Import licences for wheat are running at 4.5mmt, 0.8mmt ahead of last year. Most significantly though, import licences for all-grains total 7.86mmt, well down on 16.77mmt a year ago.
This reflects a switch back into wheat for animal feed consumption and away from imported corn and sorghum that began twelve months ago when world wheat prices peaked.
eCBOT grains closed higher, with soybeans once again leading the way, as the weather situation in South America goes from bad to worse.
Soybeans closed the overnight session around 15c higher, with wheat and corn both around 8c firmer.
Certainly there looks like there is little relief in store for Argentina over the weekend with no rain in the forecast for the main growing areas (circled in red):
It's not all roses in North America either, with freezing temperatures there also threatening crops.
Whilst soybean sales to China continue at a strong pace it looks like any downside will find support. It should be borne in mind however that the Chinese are normally active buyers at this time of year, building stocks ahead of the Lunar New Year holiday. Once that is upon us they usually disappear completely from the market.
Early calls for this afternoon's CBOT session: Corn Up 7-9c, Wheat Up 6-8c, Soy Up 12-15c.
Northeast Biofuels became the latest firm in the troubled US ethanol industry to file for Chapter 11 bankruptcy protection Thursday.
The company's 100 million gallon plant in Fulton, New York has suffered design flaws and construction delays, leaving it unable to make debt repayments.
Northeast Biofuels becomes the latest casualty in the industry over the last twelve months along with VeraSun Energy, the largest publicly traded ethanol maker, Greater Ohio Ethanol, Gateway Ethanol and Beatrice Biodiesel having also filed for bankruptcy.
Somali pirates have released the Danish vessel Future and its 13-man crew after a ransom payment was parachuted to the hijackers, more than two months after it was seized the TASS news agency reported on Friday.
The cargo vessel accompanied by a Russian warship is now on the way to Oman, where the crew will be replaced and sent home by plane.
Pirates seized an unprecedented 49 ships and held nearly 900 crew members for ransom worldwide last year.
The parents of a baby killed by drinking tainted milk in the Chinese melamine scandal have accepted just 200,000 yuan (£24,000) in compensation from Sanlu Group, according to media reports.
Their baby died on May 1st after suffering kidney failure after drinking the milk.
The couple accepted the money on condition that they didn't sue Sanlu, after being told that the "going-rate" for death compensation in poverty-stricken Gansu province was normally just 40,000 yuan (around £5,000).
Sanlu's former chairwoman and general manager, Tian Wenhua, is awaiting sentencing and faces a possible death penalty for her involvement in the scandal.
According to the federal statistics office (DESTATIS), the winter rapeseed area in Germany for the 2009 harvest has reached 1.46 mln ha which is 7% above the 1.36 mln ha planted for the 2008 harvest.
In an extraordinary disparity, winter temperatures in the US have plunged as low as minus 55 degrees, whilst Argentina swelters with temperatures of up to 105. Winter wheat crops ibn the US are under threat from winter kill, whilst soybeans and corn in South America wilt under blazing skies and scant rainfall.
In the US readings of 20 to 30 below zero are common for northern Iowa, western Wisconsin, Minnesota, and the eastern Dakotas. There is still a good deal of wind to go along with that cold, so we continue to see wind chill values in the 35 to 55 below zero range in the coldest areas.
In Chicago itself Thursday's high was minus one. To highlight how rarely temperatures fall this low: of the 50,404 daily high temperatures on record in 139 years of official weather observations, only 44 of them have been at 1 below or lower.
US temperatures are forecast to warm up in the early part of next week, before much colder air comes pouring back into the northwestern Corn Belt and the northwestern Plains by next Thursday.
In Argentina, the hottest and driest summer in over four decades has already reduced the wheat crop to the smallest since 1989. With little respite in the forecast there are now serious fears for soybeans and corn, with crops suffered “irreversible” damage, forecaster Somar Meteorologia said.
Things aren't much better in neighbouring Brazil, where this seasons cron crop could now be as low as 47mmt, 19% down on last season, according to Sao Paulo-based Terra Futuros, the country’s biggest commodities brokerage.
The damage to some southern Brazilian soybean crops can’t now be reversed either because they require rains at the same time as corn and didn’t get enough fertilizer during the dry spell, Terra Futuros added.
An environmentalist group have wasted no time issuing a writ against the pilot of the downed US Airlines aeroplane that crashed into the Hudson River yesterday.
The plane's pilot, Chesley "Sully" Sullenberger, was hailed by passengers as a hero, but the environmentalist disagree.
Citing "untold suffering on a dozen or so fish and at least three water boatmen" the group called the the incident "a heinous crime against innocent aquatic life".
There's nothing like hitting the ground running is there? Never can a US president-elect have had so much on his plate on Day 1 in office.
As fears of much greater than originally anticipated credit losses at top US banks mount, the new Obama regime are said to be considering widespread sweeping steps to kick-start lending.
There is talk of the creation of a so-called "Bad Bank" which would take on billions of dollars worth of troubled securities, reducing bank write-offs and freeing up cash.
If some of the likes of Bank of America and Citigroup are questionable, then everybody is questionable. Nobody knows where the bodies are buried. Are the book value of assets actually worth the paper they are written on? It seems to be a case of "if in doubt, do nowt."
It's becoming increasingly apparent to Obama and his advisers that the removal of all the mutual mistrust in the marketplace, is the only way to get lending back on an even keel.
Interesting times lie ahead. Expect action sooner rather than later.
The Baltic Dry Index closed at 908 Thursday, well above Decembers low of 666. Even so that is still 92% down from its all-time record high of 11,793 points set in late May 2008.
The index, which measures costs for shipping dry bulk commodities such as coal, iron ore, steel and grains is still trying to find its correct level, weighed down by a credit squeeze and waning demand for global trade.
Conditions may become clearer when China, the world's biggest importer of iron ore, completes price negotiations with suppliers for its new annual contract beginning February, some analysts say.
Others are not so optimistic. Last week, Great Eastern Shipping Co. Ltd, India's biggest private ocean carrier, cancelled orders for two new mid-sized dry bulk carriers it had placed with China's Cosco Shipyard Group.
The firm said it had cancelled the orders "with a view to reducing risk in the current highly uncertain business environment."
State-run Shipping Corp. of India Ltd (SCI), India's biggest shipping firm, has most recently laid up one more of its dry bulk carriers, the 12-year-old Maharashtra, that was due for dry docking and special survey. In December, SCI had laid up the 23-year-old dry bulk ship Lok Maheshwari, which was also due for dry docking and special survey.
Grains are firmer on the overnight eCBOT market, supported by a weaker dollar and continuing weather concerns. Latest eCBOT prices now available on the right hand side of this blog.
Yesterday's weekly US export sales for soybeans were very strong, with China once again taking the majority of kit, as the continue building domestic stocks.
Latest figures show that the Chinese imported 3.3mmt of soybeans in December and are forecast to import a similar amount this month.
Chinese Lunar New Year is not very far away however, when they often disappear completely from the market.
By contrast, export sales for corn & wheat were disappointing. However, drought in South America is supportive for corn as well as soybeans.
For wheat, the last couple of weeks of export sales have been extremely poor, but temperatures as low as minus 55 (including wind chill) are certainly plenty low enough to cause winter kill to any crops unprotected by a layer of snow in the Plains and western Midwest.
Russia keep mopping up most of the export orders, but at least that means that they are taking something off the table and eventually their surplus will be eroded. Won't it?! Although Russian wheat is reportedly $5-7 cheaper than EU wheat there are some logistical problems in buying Russian grain, which may push some business our way.
The dollar is weaker across the board as fears of much greater than originally anticipated credit losses at top US banks mount.
The pound is also up against the euro, ahead of Eurozone trade balance deficit data due later today.
Live forex rates now also available on the right hand side of this blog.
EU wheat futures closed little changed for once Thursday with Paris March milling wheat down EUR0.25 at EUR146.25/tonne, and London May feed wheat down GBP0.25 at GBP114.75/tonne.
Egypt bought 83,000mt of Russian and US wheat in a tender, Japan bought largely US wheat. Other tenders kicking around from the likes of Syria and Pakistan will probably go in the direction of Russia too.
So Europe needs to remain ultra-competitive to pick up some of these export orders to dispose of our exportable surplus before next season's crop arrives.
Talking of which Strategie Grains dropped their forecast slightly for the 2009/10 crop to 132.3mmt in the EU-27, 8mmt down from the current season's crop.
Frigid temperatures in Eastern Europe put some winter wheat under threat from winter kill, but damage is not expected to be too widespread due to a decent snow covering, according to analysts.
Corn futures closed slightly lower, pressured by the USDA reporting just 216,000 tonnes of corn export sales for the week ending January 8, which was below trade estimates of 300-500,000 tonnes. Corn demand continues to lag as the ethanol industry faces stiff competition, and negative crush margins, with crude oil below $40/barrel. South American weather is the only friend corn has got at the moment, with time running out for crops in Argentina & Brazil. Respected analyst Michael Cordonnier says that the Brazilian corn crop could only yield 48 million tonnes from 58.6 million tonnes last year, according to media reports. March corn at closed $3.65 1/4, down 1 1/4 cents
Beans were easily the strongest leg of the complex, off and running from the start after the USDA reported weekly export sales of 1,361,561 tonnes for the week ending January 8, well above trade estimates of 450-550,000 tonnes. China took 861,800 tonnes of that, which is a pretty significant volume. The weather in Argentina is becoming pretty dire, and it seems that current production estimates may well fall very far short of the mark. In Brazil things are a little better, that didn't stop Michael Cordonnier dropping his production estimate to 55 million tonnes from 60 million last year, adding that things could end up around 50 million if the dry pattern continues through March. March soybean settled at $9.94 1/2, up 23 cents
CBOT wheat finished lower, with the USDA providing little for the bulls by reporting wheat export sales for the week ending January 8 of just 87,922 tonnes, well below trade estimates of 200-400,000 tonnes. Extremely cold weather in the US Plains and western Midwest provided some support on fears of winter kill. March CBOT wheat finished at $5.68 3/4, down 5 1/2 cents.
The ECB has cut interest rates in the Euro Zone by the half percent widely anticipated by the market. Rates in Europe now stand at 2%, one half percent higher than here in the UK.
This is the ECB's the fourth cut a little over three months.
The forex markets were little moved by the announcement, which was largely already priced in. The pound was worth 1.11 against the euro at 2pm GMT.
eCBOT grains closed mixed, with beans rallying late in the session to post 4-8c gains, having been behind for most of the morning. Corn and wheat closed in negative territory, with corn down 1-2c and wheat off 3-4c.
It's pretty much a case of same old, same old really. We've had weather scares in South America before many times, but the hottest summer since 1955 and reports of 300,000 head of cattle being on deaths door due to drought are something different.
China is not so much lurking in the wings as rampaging around the stage at the moment, booking nearly half a million tonnes of US soybeans already this week. That seems to be keeping spot prices particularly buoyant.
Japan has bought wheat in a tender, 90,000mt of it US origin, and Pakistan is inviting tenders for 150,000mt optional origin wheat, whilst Syria is in the market for 200,000mt also optional origin wheat.
Strategie Grains have revised their estimate of EU-27 wheat production for 2009/10 down half a million tonnes to 132.3mmt. That is 8mmt lower than the 2008/09 crop.
The Philippines government have rejected local fed millers proposals to allow them to import corn tariff-free, instead the government themselves say they will import 200,000mt corn for sale it to millers & producers there.
Early calls for this afternoon's CBOT session: Corn futures are expected to open 1 to 3 lower; soybeans 3 to 6 higher; wheat 2 to 4 lower.
Strategie Grains say that EU soft wheat output in the coming season will total 132.3mmt, down half a million tonnes from their estimate of 132.8mmt in December, and 8mmt lower than the 2008/09 crop.
Is it just me, or is this the biggest load of misconceived, do-goody, save the planet whilst we all starve to death bollox Europe has ever come up with?
Weren't people dying in bread queues less than a year ago? Or is that alright because that was in places like Egypt, Nigeria, Haiti and the Philippines?
Well it could be coming soon to a store near you if these environmentalist loonies get their way.
The legislation has one more hurdle to pass before becoming law in a vote at the Council of Ministers. Pray to God it won't get passed, but in your heart of hearts you know it will.
Why don't we go the whole hog and force our farmers to get shire horses out to plough the fields, turning England back into one giant Constable painting?
Windmills would pop up all over the place in our green and pleasant land. The lentil-loving sandal-wearing hippies would be in Nirvana.
If we run out of carrots we can bring them in by donkey from Kenya, perhaps?
Everybody can bake their own bread out of GM-free flour imported in panamax vessels (discharged via a horse and cart of course, we wouldn't want to offend anyone) from China at a cost of £20,000/tonne.
Once 85% of us have starved to death there'll be enough organic butternut squash soup left for everybody else. Sorted.
After extensive market research into the viability of the market, spam is to be launched on an unsuspecting Chinese public.
"We did comparisons to similar products on the market in terms of flavour and texture. We found that people thought that Spam was pretty modern compared with local brands" according to the Product Manager for China Milanoj Chen.
The launch will be accompanied by a blaze of advertising on television and in the print media, in the next few days.
Not much fresh so far overnight. eCBOT futures are a little lower at 8am GMT. Updated prices appear on the right throughout the morning.
Japan has bought 157,000mt wheat in a tender this morning, 90,000mt of it US origin, and the rest a mixture of Canadian and Australian wheat.
Pakistan is seeking 150,000mt optional origin wheat in a tender.
The weather in Argentina continues hot & dry, with temperatures forecast to get even hotter, with highs of 104 degrees forecast for the weekend. President Christina Fernandez de Kirchner, addressed the farmers of Argentina on Wednesday and has offered aid in the midst of the worse drought in living memory in the hottest summer since 1955.
Crude is lower overnight at $36.72/barrel. US Energy Department data yesterday saw oil stocks at Cushing, Oklahoma - the delivery point for the contract - reach a record 33m barrels. Gas stocks also rose more than expected, but the biggest surprise was distillate stocks increasing by more than 6 million barrels. Distillates includes heating oil and diesel.
The euro is lower, close to a five week low against the dollar ahead of today's ECB announcement on interest rates. A cut of a half percent is already priced into the market. Keep up to date with the latest movements with live forex rates to the right of this blog.
ABF posted a sharp rise in revenues in the 16 weeks to January 3 climbing by 21% from the same period the previous year.
HSBC and UBS may be liable for as much as $3.2 billion of losses linked to Bernard Madoff in a dispute over the duties of financial custodians at funds in Luxembourg and Ireland, reports Bloomberg.
DSG International, which owns Currys and PC World, said like-for-like sales dropped 10% in the three months to 10 January. Sales at Argos are also down, falling 7.5% in the 18 weeks to 3 January, whilst sales at Homebase fell 10.2% in the same period.
Steven Jobs, Apple's chief executive, announced Wednesday that he would take a medical leave of absence from the company until the end of June. His health problems turned out to be "more complex than originally thought."
Also on a jobs theme....
Nortel Networks Corp, North America's biggest telephone equipment maker, has filed for bankruptcy. In the mid-2000, at the height of the company's success, shares in Nortel were worth more than C$1,100 each, on Wednesday they were worth 15 Canadian cents.
Meanwhile, mobile handset maker Motorola said Wednesday that it would cut 4,000 more jobs in 2009, in addition to 3,000 it announced in December.
Oh no Moto.
CBOT wheat closed with March 3 1/2 cents up at $5.74 1/4/bushel on fears that seriously low temperatures in the Plains may cause some winter kill. With temps last night getting down to minus 35 degrees in North Dakota, there is certainly room for some damage to unprotected crops. Various export tenders seem likely to indicate that tomorrow's USDA weekly export sales report will be an improvement on last week, but then again it couldn't get any worse. US exporters have shipped 17.7 million metric tonnes of wheat from June 1 to Jan. 8, or 65 percent of the grain expected by the USDA to be shipped in current marketing year. That was ahead of the five-year average of 60 percent, government data shows.
Corn futures closed modestly higher with March corn ended up 4 cents to $3.66 1/2 per bushel. Effectively futures redressed a little of the balance following two days of very steep declines. There are undoubtedly crop losses in Argentina and Southern Brazil, the extent of these is maybe still underestimated by the trade in my opinion.
Beans closed higher nearby with Jan up 8 1/2 cents at $9.78/buishel. South America continues to be a worry, and Chinese buying underpins. China bought 424,000mt of US soybeans on Monday alone. Meanwhile Argentina struggles under it's hottest summer since 1955, with temps into the mid-90's and forecast to increase next week. Rainfall meanwhile is around 25% of normal.
EU wheat futures closed modestly higher Wednesday in a quiet trading session, for once, with currency and outside markets relatively steady.
Paris March milling wheat closed +EUR1.00 at EUR146.50/tonne, and London May feed wheat ended up GBP0.75 at BP115.OO/tonne with just 79 lots traded all day.
There was really very little activity to report, Tunisia bought 142,000mt optional origin wheat in a tender, but that will most likely come from the Black Sea.
Syria and Egypt are in the market for their usual amounts of wheat over the next few days.
Various Eastern destinations are also likely to book wheat & corn this week.
There is really very little to get carried away about.
Shares in Bunge Ltd dropped sharply Wednesday, after the company issued an announcement warning of poor Q4 results.
Shares fell 14% to $41.61 after the company issued a statement saying: "Weak fourth quarter results were impacted by soft demand for soybean meal and oil due to challenging economic conditions in our end markets and substitutions of other agricultural commodity products,"
Crude oil was back under pressure late Wednesday afternoon after the US Energy Dept stocks data pegged distillates inventories rising 6.4 million barrels amid weak demand.
US retail sales fell 2.7% in December, more than double analyst's expectations, further confirming what we knew already - the US is in a deep recession.
Crude oil fell around $2 to below $36/barrel, despite statements by Saudi Arabia that it will cut production levels even lower than last month's OPEC mandate.
You know things are getting bad when even the Saudi's are starting to get jittery about the magnitude of oil's demise.
Overnight temperatures hit minus 38 degrees in North Dakota last night, prompting fears of winter kill for any unprotected wheat.
Winds of up to 25 miles/hour added to the discomfort, driving temperatures down as low as minus 55 including the wind chill factor.
Actual lows tonight are forecast in the minus 20-30 degrees region, before warming up into the weekend and through next week.
Longer-term however, more very cold weather is predicted for the Plains and western Midwest starting around Jan 23rd.
Further east, temperatures in Chicago are forecast to drop below zero tonight, and remain below zero through until Friday morning, giving the windy city its first calendar day of sub-zero temperatures since 1996.
US exporters sold 454,000mt soybeans to Chinese buyers Monday according to the USDA's FAS Program, correcting their earlier report that 399,000mt had been sold.
This should certainly bump up the weekly export sales due to be announced tomorrow at 13.30GMT.
Soybean and corn crop estimates in the Southern Brazilian state of Parana have been cut heavily by drought, according to the state's agricultural secretariat, or Seab.
Soybean output in Parana, Brazil's second highest soybean producing state, will be 10.2mmt, say Seab, more than 20% down on its previous estimate of 12.8mmt.
Corn production the coming first season (Brazil has two corn crops per year) will now total 5.9mmt, down 32% on Seab's original estimate of 8.7mmt.
These significant reductions point ominously to serious losses south of the border in Argentina where the drought has, if anything, been even more severe.
As part of the country's drive to be self-sufficient in poultry production by 2012, Russian poultry giant Prioskoil says it plans to increase production to 300,000mt of poultry by the end of 2009, a 50% increase on the 200,000mt the company produced in 2008.
Capacity at the company's two plants will increase in total to 350,000mt they say.
Prioskoil is the largest complete poultry enterprise in Russia, and also produces 180 million hatching eggs per year.
Russia recently announced cuts to it's poultry import quota of 300,000 in 2009.
With the nature of Russia's relatively unsophisticated and inefficient livestock sector, this expansion will utilise more grain within Russia than if meat was imported from the West.
Just 24 hours after news emerged that Brazil's second largest poultry packer Sadia had lost more than $400 million on currency trading, Brazilian beef giant Arantes Alimentos Ltd, has filed for protection from creditors under legislation equivalent to the US Chapter 11 bankruptcy laws.
The company lawyers made the announcement on Tuesday, sending shock waves through the farming industry, in the wake of the problems at poultry giant Sadia.
The company has estimated debts of US$650 million, and its application will be studied by a judge, if granted they have 60 days to present a plan of recovery to the court.
eCBOT grains closed firmer now that the bulk of the bad news from Monday's USDA report has been absorbed by the market.
Attention now is again back on Argy weather, and that is remaining hot & dry as corn starts to pollinate & soybeans flower. With temperatures up to 5F above normal, and only isolated showers in the forecast between now and Sunday, little relief is on the way.
Export demand for soybeans from China is also helping keep beans as the market leader of the complex.
Various tenders are scattered around the marketplace with Tunisia tendering to buy 142,000mt of optional origin wheat, Syria shopping for 200,000mt soft wheat and the Philippines are in for 100,000mt feed wheat.
The Philippines are also looking for soymeal, as too is South Korea. They are also tendering for corn, and Japan is expected to buy US wheat in a routine tender tomorrow.
The dollar has levelled of after yesterdays rapid appreciation, and crude oil has stabilised which is also helping the grains sector.
Early calls for this afternoon's CBOT session: Corn Up 3-5c, Soy Up 12-15c, Wheat Up 4-6c.
Barclays says it will cut 2,100 jobs from its UK banking business, in addition to the same number of jobs it cut on Tuesday.
Merrill Lynch will make one of the biggest single staff reductions in the history of London’s Square Mile as it prepares to cut 1,900 jobs in the capital. The company and its new owner Bank of America is set to slash 30 per cent of the combined workforce in London due to the merger and the global economic downturn.
The Deutsche Bank issued a surprise profits warning Wednesday, saying that it has turned in a loss of around 4.8 billion euros ($6.38 billion) in the final three months of 2008 alone.
Jaguar Land Rover has announced it is cutting 450 staff. Three hundred managers will be made redundant while 150 salaried agency staff will also lose their jobs.
The administrators of music, games and DVD chain Zavvi have announced it is closing a further 18 stores with the loss of 353 jobs.
International pharmaceutical firm Pfizer is to cut up to 240 jobs from its UK workforce, the company has announced.
UK-based Newcastle Building Society has announced that it is set to make up to 150 redundancies as a result of continued unprecedented market conditions.
Retailer JJB Sports has said it may be heading for a full-year loss of up to £10m after seeing sales fall in "extremely difficult" trading.
Close Brothers say that investors and banks exposed to UK commercial property face massive losses and debt refinancing bills over the next four years, warning this may cause a second credit crunch.
Housebuilder Taylor Wimpey has warned of further job cuts after revealing a slump in sales. The firm axed 1,900 workers last year and with little sign of an end to the home loan crisis, bosses are braced for more pain.
VeraSun Energy Corporation, the second largest US ethanol producer has idled three plants with a collective production capacity of 330 million gallons pa.
The plants at Bloomingburg, Ohio; Albion, Nebraska; and Linden, Indiana were idled in late December after corn prices rose and end-product prices stagnated with crude oil at $40/barrel. The company said that there is no estimate on when plants would resume operations.
Pacific Ethanol Inc. announced last week that it was suspending output at its plant in Madera, California. On Jan. 7, Aventine Renewable Holdings Inc. said it had halted construction of its refinery in Aurora, Nebraska. In December AltraBiofuels Inc shut production at its plants in Cloverdale, Indiana, and Coshocton, Ohio.
This is yet another indication of how frail the US ethanol industry is, with the cost of production outstripping selling prices, even with the government's 45c/gallon tax-break that ethanol producers enjoy.
Lately the industry, through the Renewable Fuels Association (RFA), pleaded for a bailout worth a billion dollars in order to sustain current projects. Furthermore, RFA suggested that the forthcoming Obama-administration should come up with a $50 billion federal loan guarantee programme to attract more investment in the ethanol industry.
VeraSun filed for chapter 11 bankruptcy protection at the end of October, and has subsequently incurred the wrath of US farmers by defaulting on corn purchased at substantially higher prices than the current market.
Despite Russia saying that it has turned the taps back on, no gas has yet made it through Ukraine pipelines to neighbouring countries like Bulgaria, Slovakia and Moldova, according to media reports.
Russia says that Ukraine is syphoning the gas off for its own use, Ukraine says that the volume is insufficiently low, and that the pipeline route Moscow wants the gas to take, makes it physically impossible.
It's a highly complex problem, so to help you understand it more clearly, here's a map of the route Russia would like to use on the left, and Ukraine's suggestion on the right:
Bunge Limited has announced that it is lowering its earnings expectations for the full year ended December 31, 2008. The company's revised preliminary earnings estimate is approximately $1.06 billion, or $7.70 per share.
"Weak fourth quarter results were impacted by soft demand for soybean meal and oil due to challenging economic conditions in our end markets and substitutions of other agricultural commodity products," the company said. Adding: "Farmers were reluctant sellers of crops in expectation of higher prices, while credit constraints affected the Brazilian farm sector and limited sales of fertilizer. Fertilizer segment performance was also impacted by foreign exchange losses of approximately $225 million from the 18% devaluation of the Brazilian real on U.S. dollar-denominated financing of working capital during the fourth quarter. Unlike in agribusiness, where inventories are marked to market, offsetting gains in fertilizer inventories are expected to occur in future quarters when these inventories are sold."
eCBOT grains are firmer in overnight trade Wednesday morning, with beans up 14-16c, corn around 3c firmer and wheat up 1-2c.
Argentine weather is the main driving force, with temperatures this week 5 degrees Fahrenheit above normal, and set to climb further next week. The country is set for its warmest summer in 55 years, according to media reports.
Rains meanwhile continue sparse, mostly dry conditions with just a few light showers in the forecast Friday through to Sunday. Further ahead there is no more than an inch in the forecast through until the end of January.
Crude oil is a little firmer after Saudi Arabia announced that it would cut production by more than the OPEC mandate, in an effort to shore up prices. US stocks data due out later today will be closely watched.
China meanwhile continues to be an active buyer in the soybean market, purchasing 399,000mt of US beans Monday, according to the USDA.
Various tenders kicking around should ensure that weekly export sales released tomorrow show an improved performance from corn & wheat compared to last weeks lows.
The dollar is a little weaker against the pound and euro on speculation that retail sales & manufacturing data, due later, will show the recession worsening.
EU wheat futures edged higher as the dollar firmed, theoretically improving EU wheat on the export market.
March Paris milling wheat closed up EUR2.75 at EUR145.50/tonne, and May London feed wheat ended up GBP1.25 at GBP114.25/tonne.
In tender news Egypt's GASC bought 60,000mt of Russian wheat and Saudi Arabia's government bought 400,000mt of Canadian wheat.
Whilst this isn't hugely bullish for EU wheat it does once again take some competitors wheat off the export market.
Russia also has some logistical problems of it's own to contend with according to media reports. They might be the cheapest shop in town, but if they aren't open and you want the stuff tomorrow then you need to go elsewhere.
Golden Sacks said they they are fairly friendly to wheat in a report, citing strong world demand and reduced 2009 production. Their 12-month price forecast for Chicago wheat is $7.70 a bushel, significantly higher than current levels of $5.75-$6.00/bushel.
The Australian and Argentine crops are now in the bag. Attention now must focus on the northern hemisphere again. With plantings estimated 9% lower in the US, 8% lower in the EU-27 and 10% lower in Russia and Ukraine the 2009 crop is unlikely to be as large as last season.
In addition, crop conditions in Europe are certainly worse than a year ago, with crops in many countries planted late and in cold, poor conditions. Throw in some yield losses due to weather & reduced fertiliser applications and things could look very different a year from now.
Corn traded lower, still struggling to shrug off the bearish impact of Monday's USDA report. The viability of the US ethanol industry has always looked shaky, with crude oil at $40/barrel and the world in a massive economic slump, it looks very shaky. This was partially reflected in Monday's, report upping quarterly and year-end stocks and reducing exports. March corn closed at $3.62 1/2, down 18 1/4 cents.
Beans closed higher, reversing some of Monday night's steep losses. South American weather is still a concern, Monday's USDA numbers were not as bearish for beans as they were for corn, and Chinese demand underpins. January soybean closed at $9.69 1/2, up 15 1/2 cents.
Wheat futures closed fractionally higher, whilst Monday's old-crop stocks data was bearish, plantings for new-crop were undeniably bullish at 4m acres below last year. Very cold temperatures on the Plains and Midwest are a threat to winter wheat this week, meanwhile dryness in Texas saw NASS drop their good/excellent rating for winter wheat crops two points to just 17%. March CBOT wheat at $5.70 3/4, up 1 cent.
Strong contributions from the company’s holdings in fertiliser manufacturer, The Mosaic Co., helped drive a 25% gain in earnings at Cargill in the second quarter. Net income in the second quarter ended Nov. 30 was $1.19 billion, up from $954 million in the same period a year ago. For the first half of fiscal 2009, earnings totaled $2.68 billion, up 43% from $1.87 billion in the first six months of fiscal 2008.
Try mentioning that next time a monster rent account lands on your desk!
During the period Cargill opened a rapeseed crush facility in Montoir, France, a joint venture with a French cooperative, which it says will draw primarily on locally grown rapeseed to produce a variety of oil and meal-based products for the French food, animal nutrition and biodiesel industries.
Discount supermarkets gained an increased market share in the run-up to Christmas, with Aldi's sales leaping 25.4%, Iceland's by 13.4%, Morrisons by 9.7% and Asda's by 7.2% in the 12 weeks to Dec 28 figures released today show.
Established market leader Tesco only saw growth of 4% in a grocery market growing at 6% per annum. Tesco's market share slipped from 31.3% a year ago to 30.7%.
Market share in % 12 wks to 12 wks to 12 wks to
28/12/08 30/11/08 30/12/07
Tesco 30.7 30.9 31.3
Asda 16.9 16.8 16.7
Sainsburys 16.2 16.0 16.3
Morrisons 11.9 11.8 11.5
Somerfield 3.5 3.7 3.7
Waitrose 3.7 3.6 3.7
Aldi 3.2 3.1 2.7
Lidl 2.4 2.4 2.3
Iceland 2.0 1.8 1.8
After a relatively buoyant last few days it's back to square one for the pound after new data showed that the UK trade deficit with the rest of the world widened to its largest ever in November.
Britain's trade gap now stands at a whopping 8.330 billion pounds, the largest since records began way back in 1697.
The pound fell below $1.46 on the news, also dropping back below 1.10 against the euro.
eCBOT grains closed mixed Tuesday, with beans higher and wheat & corn lower.
Beans closed 16c higher on nearby Jan, but just 3-6c firmer further forward.
Corn closed around 7c lower, with wheat down around a couple of cents.
On the bearish side we have a strong dollar, weak crude and increased US stocks.
Bullish factors are South American weather and sharply lower wheat plantings for this season's crop.
There are various tenders kicking around with Egypt planning to buy at least 55,000mt of wheat in a tender today, Japan seeking 157,000mt of milling wheat in a tender on Jan. 15, of which 90,000mt is U.S. wheat. Pakistan is looking for bids to import 150,000mt by Jan. 31.
South Korea is seeking to buy 55,000mt of corn taking 110,000t of U.S. or South American origin yesterday.
The Philippines says it may import up to 1mmt of wheat in 2009, a ten-fold increase on 2008 purchases, due to high domestic corn prices.
Early calls for this afternoon's CBOT session: Corn futures are expected to open 6 to 8 lower; soybeans 2 to 5 higher; wheat 2 to 4 lower.
Russia's state gas monopoly Gazprom says that it turned the taps back on to supply Europe with gas via Ukraine pipelines earlier today.
But Gazprom says that the cheeky chappies in Ukraine are keeping the gas for themselves, with it's transit lines remaining closed.
Gazprom is quoted as saying that "the amount of Russian gas pumped into Ukraine's pipeline network must strictly correspond to the amount of gas flowing out of Ukraine."
Ukraine meanwhile has repeatedly denied that it is stealing gas, it is merely "using some of the Europe-bound gas as fuel for its pumping stations."
I think we can safely say we haven't heard the last of this one.
Brazil's largest poultry processing company Sadia SA Brazils saw it's shares fall by almost a third after media reports that it had lost more than $400 million in currency trading after a sudden and unexpected devaluation of the Brazilian real.
The companies chief financial officer was dismissed on Friday, and the company CEO subsequently resigned.
Sadia is also Brazil's second largest meat processor with 12 meat and poultry processing plants in Brazil.
The market seems slow to react to possibly the single most significant piece of information to emerge from yesterdays USDA report. That of sharply lower wheat plantings.
Not only was the acreage estimate lower than expected, it was much lower than even the lowest trade estimate at 42.09 million acres.
Quarterly wheat stocks at 1.422 billion bushels, 58 million more than the average estimate, and final carryout at 655 million bushels seem to be what the trade is concentrating on for now.
What people seem to be ignoring, or overlooking, is even though carry-over stocks are projected significantly higher this year, the stocks-to-use ratio is up only slightly from last year’s record low and is still well below the ten-year average.
The current stocks-to-use level provides a very small cushion for marketing year 2009/10 should production problems arise.
An arise they almost surely will.
With a 9% lower acreage in the US mirroring a similar 8% decline in Europe according to Strategie Grains' latest estimates, and Russian output forecast 10% or more lower, there is zero room for a serious weather problem in the northern hemisphere in 2009.
And that is before we start looking at lower yields on the back of reduced fertiliser inputs.
The UK's largest supermarket, Tesco, which takes one in every eight pounds spent in UK shops, reported today it's worst Christmas since the last recession in the early 90's.
For the seven weeks to Jan. 10 Tesco reported a slim 2.5 percent rise in UK sales.
It's performance contrasts sharply with that of Aldi, who reported a total UK sales surge of more than 20% in December, as cash-strapped consumers traded down in the face of the credit crunch.
Forget "Peak Oil" we are talking "Weak Oil" now. The much-talked about price inverse known as contango is getting out of control, with Feb crude currently more than $6 lower than March. This is the steepest contango on record. There is currently around a $22 premium for Feb '10 crude over Feb '09. This is seriously abnormal.
US storage facilities are full to bursting, supertankers are being chartered to sit idle, loaded up with oil that nobody wants, waiting for a miracle to happen. Oil is effectively bidding for storage.
What happens when all the supertankers are full?
What happened last month when the Jan contract expired was that spot prices fell through the floor. Long-holders got squeezed out on the last day, unable to take delivery due to storage problems at Cushing, Oklahoma - the delivery point for West Texas Intermediate Crude.
As we all probably know by now, Wednesday is stocks day, with the US Energy Dept expected to show US crude stockpiles increasing by around 2.2 million barrels last week when the release their figures tomorrow.
Gasoline stockpiles are expected to show a 1.5 million barrel increase.
Why bother making biodiesel at these levels, in this sort of scenario? The flip side of that, for us here in Europe, will be a reduction in supply of by-products like rapemeal.
The pound is down heavily this morning, which will negate much of the benefit that might have been derived from sharply lower CBOT prices, when shippers come to price up their domestic price-lists later today.
Figures from the British Chambers of Commerce and the National Institute for Economic and Social Research show that the UK economy shrunk the most in at least twenty years during the fourth quarter, and that home sales dropped to the lowest since the measure began in 1978.
“The situation is dire, and the Monetary Policy Committee is running out of bullets,” said David Frost in an interview.
With interest rates at just 1% and falling, he's not wrong there. The pound was worth $1.4690 against the dollar in early trade, down heavily from the dizzy heights of $1.53 just a few days ago.
Corn & wheat are a bit lower still, after posting limit losses last night, whilst soybeans have stabilised somewhat, turning modestly higher.
Latest eCBOT prices this morning see beans around posting double digit gains, with wheat and corn 6-8c lower.
Yesterday's USDA data was very bearish for corn, and that has led to follow through selling this morning. Sharply lower demand from the ethanol sector is finally showing up in the USDA data.
The trade is still, rightfully, concerned about crop losses in South America, particularly Argentina, where the forecast remains mostly dry with just a few light showers with temperatures 86-94F.
For now, the trade seems to be ignoring the fact that the wheat data was really very bullish for new-crop, with all positions closing 56-60c lower last night. A 4 million acre reduction in plantings, double what was expected, doesn't warrant that in any shape or form.
Egypt plans to buy at least 55,000mt of wheat in a tender today, Japan is seeking 157,000mt of milling wheat in a tender on Jan. 15, of which 90,000mt is U.S. wheat. Pakistan is looking for bids to import 150,000mt by Jan. 31.
South Korea is seeking to buy 55,000mt of corn taking 110,000t of U.S. or South American origin yesterday.
Australian ASX March milling wheat is A$12 lower at A$278, mirroring last night's Chicago fall. The harvest in the east is now complete, with maybe 15% or so remaining to be cut in Western Australia.
Well, this has to be on of the most amazing sessions, and sets of figures, of all-time.
As I have been saying for a while, for me the most important figure today was the US wheat planted acres.
The USDA delivered a set of truly stunning numbers, with carryout for all three commodities significantly higher than had been expected.
The 2008 winter wheat plantings, ie what is/has gone in the ground for the 2009 summer crop, figure was in my opinion awesome. The figure was way below the average trade estimate by a "country mile" as we say here in England.
But despite it all futures closed sharply lower. Limit lower in fact on just about everything.
With crude oil well down, this might be correct for corn, and soy, but for wheat with the kind of acreage news we've had today it seems like today's losses have been overdone.
March corn closed at $3.80 3/4, down 30 cents; January soybean settled at $9.54, down 83 1/2 cents; March CBOT wheat finished at $5.69 3/4, down 59 3/4 cents
EU wheat futures closed sharply lower Monday in a volatile session as traders struggled to come to terms with some very, very conflicting stories.
In my opinion, today's USDA report was one of the most stunning in recent history. The figures were truly out of this world.
The details of the report are to be found elsewhere on this blog, for now we will deal with the situation as regards the EU crop.
It was a very volatile session, with EU whest trading higher early before the USDA report came out. After that all hell broke loose, with the numbers coming in stunningly bearish for corn and soybeans, but actually quite bullish for wheat.
The market had to struggle between the very bearish corn numbers, the quite bearish figures for soy, and the conflict of interests for wheat. Although the old-crop ending stocks for wheat were bullish, the new-crop plantings were very bearish indeed.
On top of this the dollar was strongly firmer, and crude oil sharply weaker.
March Paris milling wheat closed down EUR6.25 at EUR142.75/tonne,. May London feed wheat ended down GBP2 at GBP113.00/tonne.
Kenn From Krusoe and Waynne Kerr.
There are two NN's in Kenn apparenntly, annd possibly inn Waynne but we arenn't sure onn that onne.
Does annybody knnow him? He's gonne downn in NNogger Blog history by beinng the first personn ever to sennd me a snnotty email sayinng "please remove me from your spamlist."
Well, Kennnn, you will be pleased to knnow that I have removed you from my "spamlist" I guess that's onne personn who wonn't be takinng advanntage of the "Buy Nnogger a beer" optionn thenn.
You clearly cann't please all of the Dannes anny of the time.
Meannwhile welcome to Jaime Nolan Miralles, clearly a mann of discernnmennt & taste, who writes:
Could I have the privilege of taking Kennnnnnnnnn's place. Can you add me to your e-mail list for your wheat postings.
The early call on CBOT, after the release of the USDA numbers is: corn to open 10-15 cents lower, soybeans down 15-20 cents and wheat down 7-10 cents.
The corn and soybean numbers are undoubtedly a bit bearish.
For corn in particular, stocks are seen building due to cutbacks in demand from the ethanol sector and lower exports.
The soybean numbers were not quite so bearish, and we still have the threat of further crop losses in South America, however beans could get dragged down by corn.
For wheat it's a game of two halves, the ending stocks are higher than anticipated, and pressure from corn will weigh on old-crop. For new-crop however the figures were rather bullish showing a much larger than expected reduction in plantings for the 2009 crop to be harvested in the summer.
Crude oil is almost $2.50 lower at $38.37/barrel, so that may also have an influence this afternoon. The market is also still concerned about Friday's weak employment data.
The main changes to world 2008/09 production in today's WASDE report from the USDA are:
Chinese corn production increased by 5.5mmt to 165.50mmt.
Argentine corn production reduced 1.5mmt to 16.5mmt.
Argentine wheat production reduced 1mmt to 9.5mmt.
Argentine soybean production reduced 1mmt to 59.5mmt.
EU-27 wheat production reduced 390,000mt to 150.51mmt.
All wheat plantings for the 2009 crop were 42.098 million acres, substantially lower than the average trade guess of 44.178 million acres, and around 4 million below last season's 46.181 million. The lowest trade estimate for wheat plantings was 42.920 million acres, so this number from the USDA was almost 1 million acres lower than anybody else anticipated, and also double the decrease that had been estimated at 9% down as opposed to the 4.5% expected.
Wheat ending stocks were 655 million bushels, against average expectation of 600 million bushels, and compared last year's 306 million.
The final 2008 corn crop was pegged at 12.010 billion bushels, slightly above the average estimate of 11.982 billion bushels. In November, the USDA put corn at 12.020 billion bushels, and 2007's crop was a record 13.074 billion bushels.
Corn ending stocks were 1.790 billion bushels, substantially higher than the average estimate of 1.489 billion bushels.
The final 2008 output was 2.959 billion bushels, versus the average trade guess of 2.910 billion bushels, and compared to November's guess of 2.921 billion and the 2007 total of 2.676 billion. Analysts’ estimates ranged from 2.879 billion to 2.940 billion bushels, so this figure was higher that anyone had anticipated.
Soybean ending stocks were 225 million bushels compared to the average estimate of 186 million bushels.
In yet another example of officialdom gone mad, Cadbury's are being forced to put a warning on their Dairy Milk chocolate bars that the product does, astonishingly, contain milk.
Cadbury's say that the warning is "in case people who are allergic to milk do not realise that there is milk in Cadbury Dairy Milk bars."
Sweet baby Jesus is all I've got to say on that.
I can't see it getting off the ground myself.
Recession, what recession? More helicopters is what we need, and we need them fast. The Chinese government unveiled plans today to construct a $1.2 billion helicopter factory Tianjin, east of Beijing.
Are they going to make them out of all that spare melamine they suddenly find they've got on their hands I wonder?
eCBOT grains are largely firmer, but off earlier highs, trimmed by falling crude oil and a strong dollar.
At 7.30GMT soybeans are 8-14 cents firmer, having posted gains in the 20's earlier in the session, as the weather outlook for South America turns drier than forecast last week.
Mostly dry conditions with just a few light showers Wednesday and Thursday, returning to dry conditions again Friday, with temperatures normal to above normal, is the revised forecast for Argentina.
Argy corn is about to start pollinating and soybeans flowering in the next couple of weeks.
The Argy winter wheat crop has already been slashed by drought from 16mmt to around 9mmt across the last few months. This clearly highlights that the recent dryness is not just a recent development. This situation has been ongoing for the last 8 months or so. If you recall Argy winter wheat plantings were reduced, in part by drought (plus other political factors), when the crop went into the ground back in May/Jul.
Corn and wheat on eCBOT are unchanged to a couple of cents firmer, wheat having been around 7 cents higher, with corn as much as 5 cents firmer.
South Korea is seeking to buy 110,000 metric tons of corn for feed production in a tender.
The Australian wheat harvest is finally in the bag in NSW, producing a crop of around 6.5mmt, significantly higher than last season's drought ravaged 1.8mmt. Despite the increased crop, Australian wheat is higher this morning following CBOT's strong close Friday night with ASX January A$5 higher at A$292.50/tonne.
Crude oil back below $40 at $39.70 is what is keeping the grains in check this morning, after the entire sector posted strong gains Friday night. Despite swingeing cut in production by OPEC, demand continues to slump and stocks keep rising.
A firmer dollar is also tempering gains in the grains sector. The euro is under pressure with the ECB expected to cut interest rates in the Euro Zone later in the week. At 8am GMT the pound stands at $1.5060 against the dollar and 1.1275 against the euro.