CBOT Closing Comments

Soybeans

September beans closed at $9.61, down 21 cents, and November at $9.22 down 19 ½ cents. Private analysts' forecasts for higher production than last month's USDA predictions are emerging daily. Linn Group became the latest to release their estimate of 3.304 billion bushels and a yield of 43.0 bu/acre. Last month's USDA estimate was 3.199 billion bushels and 42.6 bu/acre. US weather conditions are cool, but not cold enough for a frost threat yet.

Corn

September corn closed at $3.00 ½, down 10 ½ cents, and December at $3.06 ¼, down 9 ½ cents. Corn set fresh lows for 2009, and are now within 10 cents of the 2008 low of $2.90/bushel. Above normal rainfall is predicted for the Midwest and Northern Plains into September 9th. Cooler than normal temperatures are expected from September 11th to 17th for the Midwest and Eastern Corn Belt and then moving south into the Delta but no one is forecasting a frost yet for anytime in that period. Linn Group pegged this season's crop at 13.019 billion bushels, using an average yield of 162.7 bu/acre.

Wheat

September CBOT Wheat at $4.44, down 7 ¼, cents. As with corn, wheat set new 2009 lows. The outlook for sharply higher corn production than what had been expected just a few months ago is weighing on wheat. Especially as this season's wheat crop looks like it is lower in quality than last year, making more of it destined to compete in the feed market. Above normal rain is forecast for the Northern Plains, Midwest and eastern Corn Belt from September 9th to the 14th, which will do little to help the spring wheat harvest, and probably damaging quality further.

EU Wheat Continues To Slip

EU wheat futures prices continued to slip lower Friday weighed on by large post-harvest stocks.

The EU issued export licences for 276,000 MT of soft wheat for the week ended Sept 1st, taking the total granted for this new marketing year so far to 2.86 MMT. That's slightly higher than the 2.79 MMT granted for export by the ninth week of the marketing year twelve months ago.

The problem is going to be trying to maintain this pace for the remaining 43 weeks of the season, in the face of stiff competition from Russia, Ukraine and the US.

The UK wheat harvest is 90% complete according to ADAS, with yields averaging 7.8-7.9 MT/hectare. Quality is generally good, they say.

The winter barley harvest is over they say, and the spring barley crop is around two-thirds cut.

Over 60% of this season's oat crop has been harvested, winter OSR is finished and spring OSR about half-done, they conclude.

eCBOT Close, Early Call

The overnight markets closed with very little change either way. Stocks and crude oil appear to have stabilised following sharp declines earlier in the week. The dollar is on a slightly weaker footing too.

US data just released shows 216,000 jobs disappeared in July, and that the unemployment rate rose to 9.7% in August. Economists had estimated that the US economy lost 225,000 jobs in July and were looking for an unemployment rate of 9.5%.

The US weather outlook remains largely favourable for the next couple of weeks, although the lateness of the crops means that frost could still be a threat in the second half of the month and through a large part of October too for corn.

Still, for now at least, we are looking at bumper corn yields as predicted by Informa yesterday. We are also going to see a record soybean harvest and likely all-time high plantings to follow in South America.

Allendale are just out pegging corn yields at a record 164.08 bu/acre and soybeans at 43.10 bu/acre. The previous highest corn yield was 160.4 bu/acre. Last month's USDA was 159.5 bu/acre and 41.7 bu/acre respectively.

The Indian government say that monsoon rains there are now 'only' 22% behind normal June 1st-Sept 3rd. Although that's better than last week, it's still the worst since 1972.

South Korea bought 55,000 tonnes of US corn overnight.

Early calls for this afternoon's CBOT session: corn called 2 to 3 lower; beans called 2 to 4 lower; wheat called 1 to 3 lower.

Racist Abuse Allegations Rock 2 Sisters Poultry Plant

A senior shop steward has been suspended after complaining to management about a worker being abused at the 2 Sisters Food Group poultry plant in Smethwick, near West Bromwich.

Around 60 morning shift workers who staged wildcat strike action on Wednesday were suspended by the firm which has now refused to hold talks with Unite union representatives, according to the Birmingham Post.

Russian Harvest Latest

According to the agriculture ministry, Russia had harvested 65.2 MMT of grains in bunker weight as of Sept 1st.

That's 22.5% down on the 84.2 MMT harvested at the same time last year. So far yields averaged 2.6 MT/ha, they say.

The wheat harvest currently stands at 41.2 MMT, 18.4% down on 50.5 MMT last season, and the barley harvest stands at 14.8 MMT, down 29% on the 20.8 MMT cut this time last season.

Market Titbits

The Indian government are still looking for the key to the warehouse with all their millions of tonnes of wheat in it. They thought that they put it in the drawer over there with the knives and forks, but it seems to have disappeared. They now think that they must have left it in their trouser pocket before the missus took them down to the Ganges for a wash. They are confident that it will turn up next week though. In all the confusion they are hoping that everyone will have forgotten that they originally said that they were going to let 3 MMT go, talk now is that just one million tonnes will be released.

Things are getting "desperate" in Northern Ireland, not that ADAS will be too bothered, it's their own fault. Only 10% of spring barley and 20% of the winter wheat has been cut, according to the Farmer's Weekly, as incessant rain sweeps in from the Atlantic.

There's a bit of talk of some Australian wheat estimates getting trimmed back to the 18-21 MMT mark, with serious lack of rain in parts of NSW and Queensland. Some reports mention fields that aren't going to make it being turned over to livestock. There doesn't seem to be any problem in West Australia though, which accounts for more of the nation's wheat than any other state.

Anecdotal reports suggest sharply higher OSR plantings in the UK for the 2010 crop. With growers generally very unchuffed with wheat prices for the second harvest in succession, it's no great surprise that they should be carefully weighing up their alternatives. There are of course also rotational benefits to be had from sowing rape after a couple of years of wheat.

Informa are forecasting a US corn crop of 13.304 billion bushels and a soybean crop of 3.372 billion bushels, if the weather holds. The latest government maps continue to show no imminent freezes (32F or below) for the Corn Belt. As previous studies have shown, there is no correlation relating a “cold summer” to an “early frost” Allen Motew of QT Weather reminds us. However, despite a near term warm-up, growing degree-day units will “run out of time” he warns. He says that he'll be keeping his eyes glued to the maps into the first few days of October, as it will take a near miracle not to have a freeze by then.

Naked Farm Girls

That's got your attention hasn't it?

"Only the wellies stayed on when eleven young (female) farmers decided to pose naked for a 2010 calendar to raise money for charity," says the Farmers Guardian.

Eleven? This was in Devon mind (keeping it in the family has a whole new meaning down there), where half the population are so inbred they clearly don't know how many months there are in a year.

Unless of course the photo shoot had been inconveniently timed to coincide with a Man Utd v Liverpool game, leaving the rest of the population of the county in the pub watching their traditional local derby.

“The only down side of the day was being pooed on by the cow I was standing with," guffaws Miss September.

That reminds me of a story involving Mrs Nogger#1, but we'd better not go there.

You want to see the pictures don't you? You're so bloody transparent...

Go on then

UK Harvest Latest

According to ADAS "settled weather prevailed over the eastern side of England" this week, enabling the wheat harvest to reach 90% done.

Settled weather? I suppose that constant non-stop rain lashing down day after day is 'settled' in a weird ADAS sort of way. No wonder Indian monsoon rains are low, it's all falling over here.

Odd bits and bobs remain to be harvested in the north and Scotland, they say. Falling slightly short of adding 'it serves those soft buggers right for farming in such a hostile place'.

To save you the trouble of having to read the full report I'll pr├ęcis it here:

The harvest is now finished in the south east, the breadbasket of England, that's all we're bothered about. The Huns up north have probably got stuff left to bring in, but bugger them. How they must kick themselves every day that they don't farm the rich fertile lands of the mystic East, home to top class football from the likes of Peterborough United and Norwich City. Look at the beautiful featureless scenery, peppered by gangs of illegal Romanian gypsies hand-picking carrots, if you look really hard you might see a tree. Hahahahaha, we've got it all down here.

CBOT Closing Comments

Soybeans

September beans ended at $9.82, down 27 ¼ cents, whilst November closed at $9.41 ½, down 9 ½ cents. Informa Economics is predicting soybean yields to be at 44 bushels to the acre, significantly higher than the USDA's last estimate of 42.6bu/acre. Export sales were a combined total of 1,048,886 MT substantially above the high end of trade estimates at 750,000 MT.

Corn

September corn closed at $3.11, down 2 ½ cents, with December at $3.15 ¾, down 3 ½ cents. Informa Economics forecast this year's corn crop at 13.304 billion bushels , using a yield at 168 bushels to the acre. Both numbers are significantly higher than last month's blind stab in the dark from the USDA of 12.761 billion and 159.5 bu/acre. Export sales today were a combined total of 938,885 MT near the high end of trade estimates.

Wheat

September wheat closed at $4.51 ¼, down 5 ¾ cents. Export sales today were a combined total of 406,707 MT in the centre of trade guesses with accumulated shipments at 4,466,179 MT, (148.8 million bushels). USDA projects 2009/10 exports at 950 million bushels. The marketing year for All Wheat is between the first week of June and the last week of May. The dollar was firmer today discouraging foreign purchases. Egypt purchased a small amount of US wheat this week but most of the tender went to France and Russia. A serious drought in central Argentina and the government tax policy on exports has led to a major decrease in wheat acres that are said to be the lowest in 110 years at 2.8 million hectares.

EU Wheat Mixed

EU wheat futures ended mixed, closing a low volume day with November Paris milling wheat up EUR0.25 at EUR126.50/tonne and London November feed wheat down GBP0.75 at GBP96.50/tonne.

The bears certainly have it at the moment with bullish news hard to come by. Egypt bought 330,000 MT of mixed French/US and Russian wheat yesterday, but the inclusion of at least some wheat from France hardly had any impact at all.

Although global wheat production is down on last year, output is still high at around 659 MMT this season. The northern hemisphere crop is largely in, and although yields are generally lower, quality is higher.

Very soon market attention will switch to southern hemisphere crops. In Argentina wheat plantings are the lowest for many years, in Australia the jury is still out on yields depending on El Nino.

But for now it appears that another large crop in Europe, the US and the FSU will weight on the market.

eCBOT Close, Early Call

The overnights closed mostly a little steadier, helped by a weaker dollar, firmer crude and a mini rebound from recent losses.

Beans closed around 8-9 cents firer, with corn and wheat mostly a cent or two steadier.

Weekly export sales were strong for beans, coming in at 1,048,900 MT, compared to pre-report estimates of 550,000 to 750,000 MT. Despite reports that China will shut the book soon, they took almost 450,000 MT of new crop and there was also more than 300,000 MT sold to 'unknown'.

Wheat and corn sales were in line with trade expectations at 406,700 MT and 938,900 MT respectively.

There's no sign of a US weather threat for at least the next fortnight.

South Korea purchased 55,000 tonnes of corn overnight, and Japan took 127,000 MT of mostly US wheat. Egypt spread their business around yesterday between the US, France and Russia, the US wheat was the cheapest on a FOB basis, around $4-5 under Russian and $7 under French.

Argentine wheat planting is complete at 40.5% down, corn and sunseed planting has just begun and a large increase in soybean area is waiting in the wings.

Brazilian farmers have sold 13% of next year's crop already, according to Celeres.

Early calls for this afternoon's CBOT session: corn called steady to 2 higher; soybeans called 4 to 8 higher; wheat called 1 to 2 higher.

USDA Weekly Export Sales

The USDA reported weekly export sales for the period Aug 21-27 2009 as follows:

Wheat: total net sales of 406,700 MT were almost all old crop, against trade estimates of between 375,000 and 525,000 MT. Last week’s sales were 652,700 MT.

Corn: total net sales of 938,900 MT were split 344,900 MT old crop and 594,000 MT new crop, versus pre-report estimates of 700,000 to 900,000 MT. Last week’s sales were 973,000 MT.

Soybeans: total net sales of 1,048,900 MT were entirely new crop (new crop sales were negative 58,800 MT), compared to pre-report estimates of 550,000 to 750,000 MT.

The main taker on new crop beans was, you guessed it, China at 447,000 MT, followed by "unknown" at 309,500 MT, Mexico (139,700 MT), and Iran (63,000 MT).

Physical exports for beans came in at 608,400 MT, up 95 percent from the previous week and up noticeably from the prior 4-week average. The primary destinations were China (332,700 MT), Taiwan (85,300 MT), Israel (48,200 MT), Mexico (39,500 MT), and Turkey (29,300 MT).

Actual export for wheat were 435,400 MT and for corn 1,045,000 MT.

Canadian Crops Pegged Sharply Lower - AAFC

Agriculture and Agri-Food Canada (AAFC) peg 2009 wheat production (excluding durum) at 19.1 MMT, 17.3% down on last year's 23.1 MMT. Yields this season will average 2.48 MT/ha, down 18% on last year's 3.03 MT/ha.

Durum output is projected at 4.5 MT they say. That's 1 MMT, or 18%, down on last year's 5.5 MMT.

Barley production is seen at 8.9 MMT, 25% down on last season's 11.8 MMT. Corn output is forecast at 9.5 MMT, 10% lower than the 10.6 MMt produced last year.

Canola output is forecast to reach 9.5 MMT, 25% down on 12.6 MMT a year ago.

Spanish Barley Crop 35% Down, Wheat 34% Lower

Spain’s agriculture ministry has revised lower it's estimate for this year’s barley crop to 7.3 MMT, That's 35% down on last season's crop of 11.3 MMT. Most of the country's barley is spring-sown, accounting for 6.3 MMT this year, down from 9.6 MMT last season, they say.

Soft wheat output is also revised lower to an estimated 3.7 MMT, 34% down on last year's 5.6 MMT.

Durum wheat production is revised up slightly at 1.3 MMT, from 1.1 MMT last season.

Corn output is now seen at 3.4 MMT, down from 3.6 MMT in 2008.

Fascinating News

Strange but true Selfridges are to start selling viagra ice-cream apparently. Story here. I was going to say I'll have a 69 with nuts and a chocolate flake please Mister, but I won't.

Talking of Flake's, Wispa it quietly but Cadbury's workers are to tell their bosses to stick their Creme Eggs where the sun don't shine having voted 8-1 for strike action at Cadbury's UK plants at Bourneville, Chirk, Marlbrook and Somerdale over breaching a long-standing pay deal.

According to the Telegraph Glaswegian men buy more extra large condoms than anywhere else in the country. Fascinating trivia. They don't mention if they do them in deep fried Mars bar flavour, but growth is also reported in Cambridge, Manchester and Cardiff.

Thursday Morning Snippets: I've Just Googled Yelena Skrynnik

Argy farmers won't extend their current strike action past Friday, according to one of the farm union leaders. Exactly how many farmers he speaks for and how long it will be before the next inevitable strike is unclear.

Apparently there has been some speculation in the Argy media that the government, conscious that Argy farmers will plant a record number of soybean acres this coming season, might decide to cash in and actually increase the tax on soybeans from the existing 35%. Naturally foxy femme fatale Cristina Fernandez de Kirchner denies that completely. She's a bit like the Arsene Wenger of politics: "I don't know if we are raising the how you say taxes on soybeans, I was looking in the mirror fixing my hair/trying on some new shoes/distracted by the ball boys at the time."

Argy wheat planting is finished at 2.8 million hectares, according to the Buenos Aires Cereals Exchange. That is the lowest planted area on record, and more than 40% down on last season. Corn planting for the 2010 harvest has just about kicked off, plantings are expected around 20% down.

In China 8 million hectares are still affected by drought and the flood season has now passed, according to the official State Flood Control and Drought Relief Office.

In India, despite various promises to release government-owned wheat stocks onto the market, nothing has been forthcoming so far. It's intriguing why this should be the case, given that they supposedly had 31 MMT of the stuff at the end of July. Maybe they are struggling to find any of that stock that's actually still fit for human consumption?!

After introducing a limit on how much domestic sugar stocks large manufacturers can hold, there is also talk of bringing in a similar restriction on soybean stocks in Madhya Pradesh, the state at the centre of the Indian soybean processing industry.

Russian Agriculture Minister Yelena Skrynnik (I've just Googled her, she looks a bit like Anne Diamond at the end of a pie-eating contest - probably a pork pie-eating contest I'd wager) is standing by her forecast of a grain crop of only 85 MMT this year, down 21.4% on last season. She also raised her estimate of grain losses due to drought from 11 MMT to 13 MMT, saying that 4.5 million hectares have been destroyed. Ms Skrynnik is a female politician, you can make your own mind up from those two bits of information alone.

Egypt bought 330,000 MT of wheat in a tender yesterday. Of that 180.000 MT was French wheat, from three separate sellers all at $175/tonne FOB. In addition they also bought 60,000 MT of US wheat at $168 FOB and 90,000 MT of Russian wheat at between $172-173.72/tonne FOB.

Bunge, Glencore and Invivo were the sellers on the French wheat, Toepfer sold the US wheat and Cargill, Dreyfus & Global Intertrade were the Russian wheat sellers. Egyptian Traders didn't get a look in then obviously?

CBOT Closing Comments

Soybeans

September beans finished at $10.09 ¼, down 4 ¾ cents, and November at $9.51, down 4 ½ cents. Good weather over the next week should aid in crop development before above normal precipitation enters the Midwest and Northern Plains. Any threat of frost seems to have gone away for the time being at least. Brazilian analysts Celeres said that the country will produce a record 64.7 MMT of beans in 2010. Assorted early guesses for Argentina are also record with Oil World saying 52 MMT. China only found takers for 10,000 MT of soybeans in it's weekly auction today. Trade estimates for tomorrow’s export sales range from 550,000 to 750,000 MT.

Corn

September corn closed at $3.13 ¼, up 1 cent and December at $3.19 ¼, unchanged. Whilst no early frost is in the forecast the market continues to decline. Above normal rainfall is predicted for the Midwest and Northern Plains from Sept 7th to the 11th, with cooler temps entering the picture from the 9th to the 15th. FC Stone issued their latest forecasts on US crop production last night, pegging the US corn crop at 13.020 billion bushels with a yield of 162.7 bu/acre. Both numbers are significantly higher than last month's USDA estimates of 12.761 billion and 159.5 bu/acre. Trade estimates for tomorrow’s export sales range from 700,000 to 900,000 MT. Last week’s sales were 973,000 MT.

Wheat

September wheat closed at $4.57, down 2 ¼ cents. Egypt purchased 330,000 MT of wheat for first half October delivery and 60,000 MT of that business was sourced in the US. Spring wheat harvest remains behind normal, especially in North Dakota, the number one spring wheat state. Above normal rainfall predicted for September 7 to the 15 will continue to cause difficulty for North Dakota wheat producers. SovEcon have increased their estimate on Russian grain production this season to 97 MMT, of which wheat output will now be 60 MMT, they say. Whilst both those numbers are down on last year, they are above early season expectations. Export sales estimates range between 375,000 and 525,000 MT. Last week’s sales were 652,700 MT.

EU Wheat Ends Flat To Lower

EU wheat futures closed yet another uninspiring session flat to slightly lower in what is becoming a bit like watching and rewatching the same episode of Strictly Come Dancing over and over again.

Paris November milling wheat futures closed flat at EUR126.25/tonne, whilst London November milling wheat futures ended down GBP0.7 at GBP97.25/tonne.

There is simply very little fresh news to impart. Read the regular reports from the usual suspects and it's all the normal doom & gloom: burdensome stocks, lack of demand etc, etc.

The harvest is largely over in most of Europe now, and generally quality seems better than last year and yields a bit lower.

Egypt bought 180,000 MT of French wheat in a tender today, from three separate sellers all at $175/tonne FOB. In addition they also bought 60,000 MT of US wheat at $168 FOB and 90,000 MT of Russian wheat at $172-173.72/tonne FOB.

eCBOT Latest, Early Call

The overnights are currently mixed, mostly a little lower, with front-month beans 3 cents higher, and the rest 5-7 cents lower. Corn is a cent or so weaker, with wheat 1-2 cents easier.

The US weather outlook has a slightly more benign feel to it, with no sign of frost for at least the next fortnight. The longer that stays the same, the more chance we have of a bumper harvest.

FC Stone issued their latest forecasts on US crop production last night, pegging the US corn crop at 13.020 billion bushels with a yield of 162.7 bu/acre. Both numbers are significantly higher than last month's USDA estimates of 12.761 billion and 159.5 bu/acre.

They also said that soybean production will come in at 3.266 billion bushels using a yield of 42.6 bu/acre. The production number is a bit higher than last month's lucky guess from the USDA of 3.199 billion bushels, and the yield figure is exactly the same.

Brazilian analysts Celeres said that the country will produce a record 64.7 MMT of beans in 2010. Assorted early guesses for Argentina are also record with Oil World saying 52 MMT.

China only found takers for 10,000 MT of soybeans in it's weekly auction today, nowhere near as good as yesterday's near 2 MMT of corn sold.

They will continue to subsidise both corn and bean sales in an attempt to free up some storage ahead of the impending harvest, they say.

SovEcon have increased their estimate on Russian grain production this season to 97 MMT, of which wheat output will now be 60 MMT, they say. Whilst both those numbers are down on last year, they are above early season expectations.

Dryness in Queensland and parts of NSW have led one or two private forecasters to cut their wheat production estimates there to around the 21 MMT mark.

Global stock markets are still trying to recover from a severe case of the jitters Monday when the Chinese market fell out of bed. The DJIA closed 185.68 points lower last night. Crude is hovering around $68.50/barrel ahead of this afternoon's stocks data from the US Energy Dept.

Early calls for this afternoon's CBOT session: corn called flat to 2 lower; November soybeans called 5 to 7 lower; wheat called 2 to 3 lower.

Saudi Arabia To Lease Crop Land From Pakistan

Saudi Arabia says it is in negotiations with Pakistan to lease an area of farmland twice the size of Hong Kong to grow wheat, fruit and vegetables.

Saudi recently abandoned a drive to become self-sufficient in wheat, saying that the plan wasn't viable with the cost of irrigation and the country's inhospitable climate.

The country, which consumes around 2.6 MMT of wheat a year, now plans to rent half a million acres of farmland from Pakistan, said Tauqir Ahmad Faiq, regional secretary at the ministry of agriculture.

There has to be more than a few moral questions to be asked here. A country with a population of 173 million, that is struggling to feed itself, where you can buy a new kidney for $1500, renting farmland to an oil-rich neighbour.

You can just picture farmers being evicted from their land to make way for the the Saudi Food Co monster. Envisage the starving masses peering over the fence into this massive oasis of food destined for the tables in Riyadh.

"Bugger off you lot, there's no water to drink here. That's Saudi water in that reservoir. We've sold them the next five years rainfall on a GAFTA 109 cash-upfront basis."

Pound Takes Another Bath

The friendless pound has fallen as low as $1.6117 against the dollar and 1.1341 against the euro this morning. That's close to it's lowest levels in six weeks against the greenback, and eight weeks against the single currency.

This seems to be partly due to a sudden bout of risk aversion, after global stock markets have taken a tumble, and also a reaction to yesterday's news that we are paying back more money than we are borrowing.

From a long-term economic perspective, this is a balance sheet improvement, but for the short-term, it's hardly a recipe for economic growth.

It should scarcely come a surprise that people are saving less with base rates at half a percent, and using any money that they might have floating around from lower mortgage payments to pay off high-interest debt like credit cards.

The government would prefer us all to go out and use that newly-printed money to buy a new fridge.

If you want to stimulate public spending Gordon, all you have to do is send Mrs Nogger#1 a few extra credit cards in the post, job sorted. Christ that woman could spend. Only on essentials mind, Gucci slippers, Prada mobile phone holders, that sort of thing. Still, she was good to the kids, there's not many come home from school to find they've got individually monogrammed solid gold napkin ring holders when they eat their chicken nuggets and micro chips.

I do have to say though, I was a bit upset when she left. She just popped out for a pint of milk one morning and never came back. I wouldn't have been too bothered but I'd already put the corn flakes out. Bitch.

Still, all the lads at the local rugby club seem to like her. She's very friendly they say, a do anything for anyone sort of a girl, which is nice.

Russian Port Exports First Rapeseed For Five Years

The Russian port of Novorossiysk exported it's first cargo of rapeseed for five years, says Artis-agro Export Ltd, one of the largest Russian exporters of vegetable oils, oilseeds and grains.

The 18,500 MT cargo completed loading on August 29, bound for Belgium they say.

According to the announcement, the vessel was loaded using the port's direct rail-car to ship system. This system of loading allows transshipping of grain cargoes which port terminals do not normally accept, and guarantees the quality of delivered cargoes, they say.

SovEcon Increase Russian Grain Production Estimates

SovEcon, the Russian research agency, has increased it's estimate for grain production in the country this season to 97 MMT, up from their previous forecast of 90-95 MMT, due to better than expected output in Siberia.

This represents a reduction of around 10% on last season's crop of 108.1 MMT.

Wheat production is now seen at 60 MMT, up from their previous estimate of 56.8-59.0 MMT, around 6% down on last year's crop of 63.7 MMT.

The wheat estimate is substantially higher than the USDA's figure, which was cut from 60 MMT to 55.5 MMT just last month.

The figures also blow the official Agriculture Ministry’s out of the water for the second year running, they still have the country's grain crop estimated at only 85 MMT.

More than 70 MMT of grain has been been harvested so far, according to the Russian Grain Union. They say that quality this season is better than last year, which seems to be being replicated across large parts of Europe and the FSU too.

Russian Grain Union President Arkady Zlochevsky is urging the government to subsidise grain exports this year on the basis that would increase sales, and allow them to continue doing so as and when they join the WTO.

With subsidies Russia could export around 20 MMT of grain this marketing year (from 22 MMT in 2008/09), without them this would fall to 15-16 MMT, he says.

India, Again

"India - Late rains to pare damage to most summer crops" is one headline on the wires this morning. Better rains in the second half of August mean that crop losses won't be as bad as first thought, spins the Indian Agriculture Secretary.

Rains to Aug 31st are now 'only' 23% below normal he proudly boasts, adding that this will moderate crop losses this year.

He skips over the fact that this would still be the worst monsoon season since rains were 24% below normal in 1972.

He also neatly dodges the fact that any amount of rain won't help crops that haven't been planted at all. Only 3.4 million hectares of summer rice has been sown in the worst affected state of Uttar Pradesh, last year it was 6 million.

Sugar cane and soybean plantings are also sharply lower.

The government have announced that they will release one million tonnes of wheat from state-owned reserves onto the domestic market "to give relief to consumers battling with rising prices of food grains" within days.

They promised to release three million tonnes a couple of weeks ago, but nothing ever happened. One million tonnes represents approximately five days of national usage.

FC Stone Crop Estimates

FC Stone issued their latest musings on US crop production tonight, pegging the US corn crop at 13.020 billion bushels with a yield of 162.7 bu/acre. Both numbers are significantly higher than last month's blind stab in the dark from the USDA of 12.761 billion and 159.5 bu/acre.

They also said that soybean production will come in at 3.266 billion bushels using a yield of 42.6 bu/acre. The production number is a bit higher than last month's lucky guess from the USDA of 3.199 billion bushels, and the yield figure, strangely, is exactly the same as the US Department of Ambiguity.

CBOT Closing Comments

Soybeans

September beans closed at $10.14, down 86 cents, and November at $9.55 ½, down 24 cents. All the news was bearish today. Last night's USDA crop progress report pegged 69% of the crop at good/excellent. A hangover from the Chinese stock market taking a nose-dive plus tittle-tattle that state-owned Chinese entities would be allowed to default on loss-making commodity derivative contracts spooked a market that has become heavily reliant on Chinese business. If that wasn't enough the US weather outlook seems to have turned a little bit milder and Brazilian analysts Celeres said that the country will produce a record 64.7 MMT of beans in 2010.

Corn

September corn finished at $3.12 ¼, down 14 cents, with December at $3.19 ¼, down 10 ½ cents. Weak crude and a firmer dollar set a bearish tone along with spillover weakness from beans. The USDA crop ratings last night were a bit better than expected, and the weather in the US seems to be throwing up few short-term threats to production. if frost stays away then we seem set to be in for a bumper crop, the second highest on record.

Wheat

September wheat closed at $4.59 ¼, down 11 ¾ cents. Weakness in the other pits, lower crude oil and equities and a firmer dollar all weighed on wheat. Spring wheat harvest advanced 16% for the week, according to the USDA last night, bringing the August 30 total to 38% complete. North Dakota, the largest spring wheat producing state, is 3 weeks behind normal harvest at 22% complete compared to last year at 78% and the five year average of 76%. Overall the crop improved 3 points from last week.

EU Wheat Renews Downwards Tack

EU wheat futures renewed their downwards tack, after a week which saw prices buck the trend by around GBP5/tonne.

Paris November milling wheat closed down EUR0.75 at EUR126.25/tonne, whilst London November feed wheat traded down GBP2.00 at GBP98/tonne.

Sharply weaker Asian stock markets Monday, when the UK was shut, spilled over into trade Tuesday meaning that London had to cram two days losses into just one session.

Now that the EU wheat harvest is drawing to a close, some sellers are drawing their horns in hoping for better prices to come.

In the east however sellers still seem willing to take pretty much any bid that's on the table. Ukraine has already exported 3.6 MMT of grain in the first two months of the marketing year which only began in July 1st.

Egypt's GASC said that it is looking to buy 55,000-60,000 MT of US, Australian, German, Argentinean, Canadian,or French wheat this week.

In a similar tender to last week they are also looking for 30,000-60,000 MT of Russian, Kazakh, Ukrainian or Syrian wheat.

eCBOT Close, Early Call

The overnight session closed mixed, mostly lower. Wheat and corn finished with losses of around 2-4 cents, whilst front-month beans closed 7 3/4 cents higher other months were mainly around 2 cents lower.

Yesterday's sharp sell-off in the equities market which started in Shanghai is still being digested, as too is talk that state-owned Chinese entities "reserved the right" to default on loss-making commodity derivatives trades.

On the weather front, the immediate freeze threat seems to have passed for now, although crop development still lags and will inevitably drag the harvest into periods of more serious potential losses later in the month.

"One of the coldest meteorological summer’s ever for the Corn Belt ended yesterday as another few days of record cold were seen across North Dakota, Nebraska, Minnesota, Iowa, Missouri, Wisconsin, Illinois and Michigan, says Allen Motew of QT Weather.

"Freeze conditions have occurred during this period only in non-agricultural northern areas of Minnesota, Wisconsin and Michigan while no freezes will occur again any time soon. The next cold outbreak does not begin until Sept 12-13," he adds.

China has sold almost 2 MMT of corn at today's government auction, easily it's best performance yet.

Drought and cold temperatures are a concern for corn and soybean production in China.

Lack of monsoon rains are seen dragging Indian soybean output sharply lower.

Japan is looking for 127,000 MT of mostly US wheat in a routine tender this week.

Early calls for this afternoon's CBOT session: corn called 2 to 3 lower; soybeans called mostly 2 to 5 lower; wheat called 3 to 5 lower.

Irish Eyes Aren't Smiling

It's been another washout summer across much of the Emerald Isle, and Irish farmer's eyes certainly aren't smiling as they struggle to get the harvest in, with livestock farmers facing a serious fodder shortage, according to media reports.

Many farmers have already started feeding their winter feed after heavy and persistent rains have forced them to house stock by night, or in some extreme cases all day and night.

Some have resorted to selling stock to preserve feed supplies, or are already buying in silage at EUR20-30/bale.

Almost a third of farmers don't have adequate stocks of forage for the coming winter, a survey of Teagasc advisers has indicated. The worst-hit areas of the country are northwest Cork, west Limerick, Galway, west Tipperary, Cavan and the north-west they say.

Chinese Whispers

The soybean market got a little spooked yesterday after leading Chinese financial magazine Caijing carried an unsubstantiated report that state-owned companies could be allowed to default on loss-making commodity derivatives trades.

With China the main export home for US soybeans by a country mile, accounting for three-quarters of last weeks 2 MMT of export sales, an attempt to walk away from commitments would have serious repercussions on the US market.

With CBOT soybeans currently close to their highest levels in twelve months, there perhaps isn't too much incentive to default on beans.

In addition measures introduced after China walked away from soybean contracts in 2004 mean that a bond is now required, further reducing the likelihood of defaults unless prices fell substantially from current levels.

On top of that China is about to begin it's own soybean harvest, and reports from top producing Heilongjiang province are that the crop could be as much as 30% down this year on a combination of drought and cold weather.

It would seem that there may be more of a temptation to default on energy and/or metals contracts. Defaults on energy futures would however inevitably have an indirect impact on soybean prices too if crude oil went into another tailspin.

Oil World Ups Rapeseed Production Estimates

Oil World has revised its global rapeseed production forecast for 2009/10 to 56.5 MMT. That's over 2 MMT up on it's previous forecast of 54.3 MMT, although still a little behind 2008's 57.8 MMT.

Output in the EU-27 is now seen at 20.3 MMT, they say, up sharply from 18.4 MMT a month ago and 18.9 MMT last year.

China's production is raised to 12.8 MMT (previously 12.4 MMT; 2008/09 11.5 MMT).

Elsewhere Canadian output is now pegged at 9.9 MMT (10.2; 12.6), Ukraine 1.7 MMT (1.5; 2.9) and in Australia 1.7 MMT (1.8; 1.9).

Global use should reach 57.7 MMT (56.6; 55.5) and ending stocks 5.7 MMT (5.0; 7.0) they say.

Ukraine Exports 3.6 MMT Grain July/August

In the first two months of the marketing year dollar-hungry Ukraine has exported 3.6 MMT of grain, according to the Ukrainian agrarian confederation. That's slightly lower than last season's record 3.8 MMT, but still sharply higher than in previous years.

August's exports were 1.93 MMT, 13.5% up on July's 1.7 MMT.

I guess that this reinforces the view that they'll take any price on offer to get foreign mazoola into the country as quickly as possible.

Ukraine exported a monster 25.3 MMT of grain in the marketing year marketing year July08/June09, according to UkrAgroConsult. This season exports are seen falling to around 17-19 MMT.

Indian Take Away

I've been doing some research over the long weekend into the situation brewing in India, and it's likely impact on crop production there.

With monsoon rains down by 26% so far this season (starting June 1st) most analysts estimates are that final rainfall could finish up around 20% down this season.

That seems to assume that rainfall will be plentiful in this the last month of the rainy season. Not everybody is convinced, September normally only provides 20% of total monsoon rains. In addition some forecasters are saying that the El Nino effect could also mean a premature end to the monsoon season.

Checking back through the records there are only three years in the last thirty when monsoon rains in India have been 15% or more below normal: 1979, 1987 and 2002.

In each of these years, not only did summer crop production fall significantly, winter output was also sharply lower.

There hasn't been a year in the last thirty when monsoon rains were 20% or more below normal.

With reservoir levels low (only 42% of capacity), threatening electricity shortages as well as irrigation of winter crops, there is a school of thought that planting rapeseed this year may provide a more viable option for Indian farmers than wheat.

Rapeseed demands less water for one, and for two it's price is more closely aligned to that of soybeans, providing potentially higher returns for India's cash-strapped farmers.

Another factor being discussed is that the late arrival of the monsoon (June was the driest in over 80 years) means that many paddy fields were planted with late-sown varieties of rice. Many of these fields would normally go on to be planted with winter wheat, but because the rice harvest will be delayed getting wheat in here will be problematic, and at the very least impact on yields.

In the most recent drought year of 2002, soybean production fell 22%, rice 23.5%, corn 15.3% and wheat 9.3%. Total food crop production was 24 MMT lower.

Since 2002 the population of India has grown by an estimated 250 million people. Think about that, there's four times the size of the entire population of the UK more mouths to feed in India than there was just seven years ago.

USDA Crop Progress Report

Last night's USDA crop progress report released after the close in essence paints a picture of a large immature crop, in good condition but lagging in development.

This late maturity is partly a result of a late planted crop and also the cool and wet summer that much of the Midwest has had this year.

Corn seems to be further behind than soybeans, with 75% at the dough stage and 32% denting. This compares to the five year averages of 88% and 60% respectively. Only 5% of the crop is mature the USDA say.

For beans 93% are setting pods, only slightly down on the five year average of 96%.

Condition ratings for both crops are very promising with beans and corn both rated 69% good/excellent.

The spring wheat harvest is miles behind normal at just 38% done compared to 79% normally. In North Dakota, the biggest producing state and the last to plant this year due to extreme wetness, the harvest is only 22% complete.

As with beans and corn though, crop conditions are great at 75% good/excellent.

It would seem overall that beans are 1-2 weeks behind normal development, with corn and wheat maybe 2-3 weeks behind.

For now it all hinges on the weather, if corn and beans can make it through to harvest without any significant frost damage then we will undoubtedly have bumper crops on our hands. Certainly a record soybean harvest and the second highest ever on corn, are a distinct possibility.

Whilst the wheat crop looks good, protein content is said to be low this year, meaning that a much larger percentage than normal may be destined to compete with corn in the feed sector.

CBOT Closing Comments

Soybeans

September soybeans closed at $11.00, down 35 ¾ cents, and November at $9.79 ½, down 31 ½ . Tonight's USDA report showed that 93% of the soybean crop is setting pods, the same as last year at this time and just 3 points behind the 5 year average. Soybean ratings did not change from last week with 8% of the crop rated poor/very poor and 69% of the crop rated good/excellent. That sounds pretty bearish to me.

Corn

September corn finished at $3.26 ¼, up 5 ¼ cents, and December at $3.29 ¾, up ¾ cent. The USDA reported that crop maturity remains behind last year and the five year average with 75% of the crop in the dough stage and 32% of the crop dented. Good progress was made from the previous week however. Corn in the dough stage last week was at 57% and corn in the dent stage was at 18% a week ago. Kansas, Missouri and Iowa are ahead of last year but behind the five year average for this date. USDA-NASS stated 5% of the crop is mature. 10% of the corn crop is rated poor/very poor and 69% of the crop is rated good/excellent, a 1 point decline in both categories.

Wheat

September wheat closed at $4.71, up 4 cents. The preliminary crop progress reported 38% of the spring wheat harvested compared to 22% last week. The harvest remains far behind last year and the five year average of 79%. Spring wheat condition ratings improved 3 points this last week with 5% poor/very poor and 75% good/excellent. Yields are reported above average but because of the cool and wet weather protein levels are down.

EU Wheat Futures Decline Monday

EU wheat futures edged lower Monday in a relatively quiet trading session, with UK markets closed for the public holiday.

Paris November milling wheat closed down EUR1.50 at EUR127.00/tonne.

End of month book-squaring was a feature, whilst last week's IGC production and stocks numbers still weigh.

A sharply lower US market, pressured by weak equities and crude oil did little to help.

There is already some talk that the current low level of global wheat prices may encourage more plantings of oilseeds such as OSR and soybeans for the 2010 crop.

German Grain Company KTG Withdraws From Market

Germany's largest farming company KTG Agrar AG are to withdraw from selling newly harvested wheat, rapeseed and soon to be cut corn, preferring instead to store their crops and wait for higher prices, according to a report on Reuters.

The company is one of just a few publicly-listed farmers in Europe, says it farms around 25,000 hectares and expects to produce around 320,000 MT of grains and oilseeds this year, of which about 25% are organic.

Bemoaning the fact that eastern Europe sells their crops at "more or less any price in the market" at this time of year, KTG will sit tight and wait for better money to be available November/December their CEO told Reuters.

KTG are clearly doing alright thank you very much, reporting half year profits up by more than 50% to EUR2.4 million.

NFU Points Finger At DFB Board

Much of the blame for the collapse of milk co-operative Dairy Farmers of Britain can be lain fairly and squarely at the door of the board of directors, say the NFU.

A statement on the NFU website, falls short of calling them a raggle-taggle bunch of numpties, but only just.

In it, NFU Director General Richard Macdonald says: "The creditor's report makes for depressing reading. I'm sure that many farmers won't be surprised to learn that the underlying causes of DFB's problems appear to include a flawed business plan, poor management and bad decision making."

Adding: "Farmers will be looking for somebody to blame for the pain and losses they have experienced and many of our members have questioned the integrity, professionalism and ability of DFB executives and council members in light of its collapse."

Concluding that: "The report shows no evidence of wrong-doing but makes it clear that the main responsibility for the long line of bad decisions, aborted projects and lack of any clear strategy within DFB rests with the board and the executive team."

Full sorry story here: Numpties R Us

Just In Case You Are Wondering...

Today is a public holiday in the UK, but not on the continent or the US. That means that London wheat won't be trading, but the Paris LIFFE/Euronext markets are open, as of course is eCBOT and CBOT.

The widget will be showing price updates from the open exchanges throughout the day.

Overnights Lower Monday Morning

The overnight grains are lower, despite US temperatures setting record August lows across large parts of the northern Midwest.

Instead the trade seems to be focusing on ideas that tonight's USDA crop report will show further improvement in condition ratings for corn and beans.

There could also be an element of month-end profit-taking on beans, although if anything will buck the trend it will be front-month September which is tighter than, erm well, a very tight thing.

For new crop though, I think you have to be bearish on beans, today's prices will only encourage large-scale planting in Brazil and Argentina. Reminiscent of what happened with wheat two years ago.

On the balance of probability the Argy drought must be broken sometime. Whilst El Nino might be a threat to Australian wheat, it could be just what the doctor ordered in South America and help break the drought in Argentina.

If it does then we are almost certainly looking at record production in Argentina this year, and potentially similar in Brazil. With beans at $10 compared to corn at only a little over $3 what would you plant? Especially given that input requirements for beans are so much less, and we know that your average Argy farmer isn't going to have a bank account bursting with cash after back-to-back wheat disasters and last season's awful soybean crop.

If you're still in doubt take a look at the charts on the widget, comparing wheat and corn with soybeans. It's clear which product has got out of sync with the others and is overdue a correction to get it back into line.

Corn now is starting to look reasonably priced with September currently at $3.20/bushel, surely a dip below $3 would be a buying opportunity?

For wheat there is a very strong seasonal trend for the market to rally at this time of year once the spring wheat harvest is in.

US Weekend Temperatures Dip To 27F

Sunday night temperatures in the northern Midewest plunged as low as 27F in the intriguingly named Embarrass, Minnesota, says Allen Motew of QT Weather. Elsewhere in N Minnesota 31-34F was the norm.

Monday, temperatures will also drop for a third day in a row producing potentially damaging frost at near all-time August lows in Wisconsin, Minnesota, N Iowa and N Illinois, he says. Monday morning’s lows will be near freezing in Central Wisconsin, producing a combo of frost and fog.

An unseasonably cool air mass will remain across northern Illinois and northwest Indiana through tonight. A ridge of high pressure will build into the region tonight allowing for winds to diminish and mostly clear skies. The combination of the unseasonably cool air mass, light winds, and clear skies will allow for chilly conditions tonight that will approach or break the record lows for the date, adds Allen.

For Chicago, the record low temperature for Aug 31st is 47 set back in 1872. The current forecast low for Monday morning is 45.

Record low temperatures for the month of August will be reached Monday morning across parts of the Corn Belt as readings dip to greater than -16 to -20 degrees below normal. The coldest conditions will center over Iowa, Wisconsin and NW Illinois.

For the week ahead, temperatures will average -3 to -9 degrees below normal across the Corn Belt while the northern Plains and Canadian Prairie is much warmer than normal ahead of the next cold outbreak, he says.

The next potential frosts will be across the Canadian Prairie and Dakotas, Tuesday and Wednesday, Sept 8-9 and Saturday/Sunday, Sept 12-13, he concludes.