Congestion Problems In Rouen

The port of Rouen handled 6.35 MMT of grain in 2008, according to it's website (here), but congestion is causing problems in France's leading grain port I hear.

The recent decision by the world's leading wheat importer, Egypt, to only accept vessels of 60,000 MT panamax size is a major problem for Rouen as it can't accommodate vessels that large.

Things have got so bad that the leading grain storage facility at the port, the Senalia silo, is full and has stopped taking further deliveries of grain.

That potentially leaves the grain trade with a major headache, as Senalia is the sole delivery point for Euronext milling wheat futures.

What happens if you want to make delivery but they haven't got the room? That certainly might cause some erratic behavior with the January future over the next few weeks until the situation is resolved.

CBOT Closing Comments

Soybeans

January soybean futures closed at USD10.12, down 10 cents; January soymeal futures at USD305.40, down USD2.00; January soy oil futures are at 38.33, down 31 points. Informa increased their estimate for the 2009 US soybean crop to 3.42 billion bushels, up from 3.333 billion last month and 102 million above the USDA's November figure. The did however cut their 2010 planting estimate to 77 million, down 500,000 from the area sown in 2009.

Corn

March corn futures closed at USD3.97 ¾, up ¾ cent; May corn futures at USD4.08 ½, up ¾ cent. Informa reduced their estimate for the 2009 US corn crop from 13.64 billion bushels to 12.97 billion. They increased their estimate for 2010 US seedings to 89.5 million acres, 3.1 million more than the area sown in 2009, and the second largest area on record. China have reduced the import levy on ethanol from 30% to 5%, under pressure to green up it's act, that might lead to increased demand from the world's largest polluter.

Wheat

March CBOT wheat futures closed at USD5.28, up 9 ½ cents; March KCBT wheat futures at USD5.24 ¼, up 9 ¼ cents; March MGEX wheat futures at USD5.35 ¼, up 6 cents. Informa said that US farmers will reduce winter wheat area by almost 4 million acres - from 43.31 million to 39.45 million - the lowest for a decade. This is likely due to disenchantment with the low price and slack demand for wheat, and also the lateness of the US corn and soybean harvest in some states this year.

EU Wheat Closing Comments

EU wheat futures closed with very little change Friday with Paris January milling wheat up EUR0.25 at EUR128.25/tonne, and London January feed wheat up GBP0.20 at GBP104.20/tonne.

The trade appears to be slipping quietly into festive mode, and it seems unlikely that there will be much in the way of action now until 2010.

Heavy snow fell across large areas of western Europe Thursday/Friday, with widespread coverage down the eastern side of the UK. That will help protect winter wheat from frost as temperatures dip below freezing.

Snow also fell in eastern Europe and Ukraine, easing winterkill concerns in some areas.

Export business is slow with the UK only managing to ship 582,000 MT of wheat and 323,000 MT of barley in the first four months of the marketing year. The EU has only granted export licences for 7.8 MMT of soft wheat 24 weeks into the MY, 28% down on the 10.8 MMT granted at the same time last year.

Strategie Grains say that the EU-27 will produce 3.6 MMT more soft wheat in 2010 than we did this year, and 1.9 MMT of that will come from the UK. EU-27 barley output is seen down 3 MMT, and corn production up 1.7 MMT. Durum wheat output is also seen higher, up 500,000 MT.

eCBOT Close, Early Call

The overnight grains closed a little firmer, but well off session highs, with beans around 4 cents higher and wheat & corn 2-3 cents higher.

A weaker dollar led to what turned out to be only a very modest correction from last night's steep losses.

Crude oil is up close to USD75/barrel after news emerged that Iranian forces had surrounded an Iraqi oil well.

China has bought 116,000 MT of US soybeans for the 2010/11 marketing year, the USDA have reported today.

China, under pressure from the green lobby, has lowered the import tariff on ethanol from 30% to 5%, which may stimulate some demand for the fuel from the Far East.

The IGC forecasts global wheat production for 2010/11 down by 23 MMT to 645 MMT, but there might be some more pain to get through first.

India's winter wheat plantings are at 23.1 million hectares, fractionally higher than a year ago, but still leaving around 5 million ha to sow to meet government targets.

More heavy rain is in the forecasts for southern Brazil and northern/eastern parts of Argentina. In Brazil certainly they will be wishing it might stop sometime soon. Asian rust will be hoping it doesn't.

Gold is down to a one month low on profit-taking and year-end book-squaring. The dollar is down, but off intra-day lows set earlier this morning.

Early calls for this afternoon's CBOT session: corn called 1 to 3 higher; soybeans called 3 to 5 higher; wheat called 1 to 2 higher.

New Malting Barley Variety In Town

Syngenta's newest malting barley arrival to make the HGCA's Recommended List is Propino, which they say is the highest yielding spring malting barley variety in the UK.

Propino joins it's big brothers, the evocatively named Tipple and Quench, in the seed catalogues this spring.

Do they pay money to people to come up with these names or do they just go down the pub and pick one from a hat?

What about a variety called Ginger-haired Stepson (nobody wants it) or Big Issue (hardly anyone buys it)?

It's easy this, I can think of loads. Herpes, Boomerang, Millstone, Titus Bramble, Betamax. How many more do you want, and when do I start Syngenta?

I had a dog once called Minton, just so that every time it was naughty I could say "Bad Minton". And I can't even begin to tell you the story behind what our other dog was called...

Ukraine Winter Seeded Area Up On Year Ago

The Ukraine State Statistics Committee say that farmers have planted 3.7% more winter grains for the 2010 harvest than a year ago.

They must think that they know something we don't, as they must be one of the few nations on the planet to think they've spotted an opportunity in the barley market.

Ukrainian farmers have decided to inexplicably increase barley plantings, up from 15.3% of seeded area last season to 18.6% this time round. Good luck with that one Ukraine, but I think that you might be better off sticking to the Eurovision Song Contest.

Wheat's share of the sown area is down slightly from 78.8% to 77.9%.

Indian Finance Minister 'Mad As A Box of Frogs' - Analyst

Market analyst claims that the Indian Finance Minister, Pranab Mukherjee, is as mad as a box of frogs have been angrily denied.

When questioned by reporters if there was any truth in the reports, Mukherjee said "no". Angrily.

So there we have it, a split decision on the sanity of Pranab Mukherjee. He thinks he's OK.

More as we get it....

Next week on Nogger's Blog we investigate rumours that India's junior agriculture and food minister K.V. Thomas can't fight his way out of a paper bag.

Indian Food Inflation At Decade High

Indian food price inflation has soared to a decade high of 19.95 percent in the week to December 5. A Parliamentary panel investigation blames to Government, citing the "inability to import on the part of the public sector agencies is also suggestive of the abject failure of the Government's market intervention policies to meet demand-supply gaps in essential commodities".

The finance ministry are singled out for their "failure to make timely interventions and squarely address the burning issue (inflation) with due seriousness".

The Finance Minister, Pranab Mukherjee, tried to reassure reporters that he was on the case and that he did, in reality, have a clue what he was doing.

"The government has taken a number of important measures to improve the domestic availability of essential commodities and to moderate their prices to help the common man from the pressure of inflation," he said.

I for one, and I suspect many others too, remain unconvinced. The government are said to be still "considering" whether to lower the minimum tender price for state-owned wheat from around USD300/tonne.

Figures on farmers' progress with winter wheat plantings are expected later today.

EU Rapemeal Prices

Guide prices basis FOB Lower Rhine in euros/tonne:


Dec N/A
Jan 145,00 -1,00
Feb 140,00 -1,00
Feb/Apr 135,00 -2,00
May/1st h Jly 120,00 -2,00
Aug/Oct 10 117,00 -1,00
Nov/Jan 11 124,00 -1,00
Nov/Apr 11 125,00 -1,00

EU Wheat Exports 28 Pct Down

Almost halfway through the marketing year the EU has granted export licences for 7.8 MMT of soft wheat, 28% down on the 10.8 MMT granted at the same time last year.

The figures make pretty gruesome reading, total GRAIN exports are even further behind, 40% down at 9.6 MMT.

Unfortunately this situation is mirrored here in the UK where July-Oct wheat exports are half that of twelve months ago at 582,380 MT, whilst wheat imports are actually up by over 100,000 MT to 526,730 MT. That means that we've imported almost as much wheat as we've exported!

I've cancelled my order for a Nintendo Wii and asked Santa for a bioethanol refinery for Christmas instead, I suggest that you all do likewise.

Ukraine Harvest Finished

The 2009 harvest in Ukraine is finally just about finished, producing a crop of 48.5 MMT in bunker weight (before screening/cleaning), say the Ag Ministry.

Of that, 21.7 MMT was wheat, 12.7 MMT barley, 10.7 MMT corn and 1 MMT rye. Farmers have also gathered a rapeseed harvest of 1.8 MMT, say the Ministry.

They haven't as yet issued any clean weight figures, but have recently been working on 3.75% less, implying a grain crop of around 46.7 MMT, 12.4% down on last year's 53.3 MMT.

That would also suggest final wheat output of around 20.9 MMT, 5 MMT or 19% down on last season's record output.

Just Before You Slash Your Wrists

The IGC are forecasting world wheat production to decline to 645 MMT in 2010/11, a third year of falling output, and stocks will go down as well.

Great, it's not even 2010 yet and already we are wishing it was 2011.

Full story here

Things That Really Annoy Me #2

I was up and down like a bride's nightie yesterday. Two new pizza menus, one from the Chinese, the Thompson Local, a parcel for next door then double glazing.

Double glazing salesmen, who do they think they are? As I work from home I assume that our house is the only one with a car on the drive at 10 o'clock in the morning, so they target our house.

"Hello Sir, I'm from Pastic Wondows, the local experts in double glazing. We were just in your area and wondered if you'd considered how much money you could save, blah, blah, blah."

Well they can't be that much of an expert if they haven't spotted that we've already got double glazing can they?

The people that fitted that were a hoot. We took the extended credit option then cancelled the direct debit after five months. When they rang up to ask what was going on, I told them that the salesman had said it paid for itself after six months.

Honest, it's true.

Chinese Crop Figures As Honest As Tiger Woods In A Brothel

Nogger's favourite website Agrimoney.com carries a very interesting article today, suggesting what I've always suspected, that official Chinese crop production figures are about as honest as Tiger Woods in a brothel.

With corn and wheat crops well over a hundred million tonnes each every year, 10% overestimated is a hell of a lot of kit. Multiply that up over a number of years and we are talking telephone numbers.

It's not the first time I've mentioned this subject on here. China will supposedly have over 60 MMT of wheat in 2009/10 ending stocks, according to the USDA. That's more than the US, Russia, the EU-27 and Canada combined, and almost a third of all the wheat stocks on the planet. It's also supposed to have more than a third of global corn ending stocks.

A mate of mine married a Chinese girl once. It was when I worked in Liverpool, his name was Albert and he'd never even had a girlfriend until he was well into his 30's. Whenever the lads in the office would be having a little moan about their WAGs Albert would always pipe up with "well I wouldn't know, I'm a single man myself" or something similar. So he got the nickname Singlebert. Then one day he announced that he'd met this girl in Chinatown and got her pregnant and he was going to have to get married. Whereupon his nickname changed to Singlebert Humpachink.

It's true, honest. Truer than the Chinese crop figures anyway.

CBOT Closing Comments

Soybeans

January soybean futures closed at USD10.22, down 37 ½ cents, January soymeal futures at USD307.40, down USD9.50, and January soy oil futures at 39.05 cents, down 1.70 points. Outside markets drove the complex lower, as did year-end book squaring. Soybean export shipments of 1,663,100 MT were mostly to China at 1,303,900 MT. That proves that they are still about, although they are widely expected to switch to South America early in 2010.

Corn

March corn futures closed at USD3.97, down 13 ¼ cents, May corn futures were at USD4.07 ¾, down 13 ¼ cents. The sharply higher U.S. dollar and lower gold prices had a major impact on commodities despite good export sales today Weekly export sales for corn at 1,227,100 MT - a marketing year high - were well above trade expectations. Wheat and bean sales were in line with expectations.

Wheat

March CBOT wheat futures closed at USD5.18 ½, down 18 ¾ cents; March KCBT wheat futures at USD5.15, down 15 ½ cent and March MGEX wheat futures at USD5.29, down 15 cents. Japan bought 126,000 MT of wheat - 86,000 MT of that will be US origin. Weekly export sales of 345,000 MT were in line with estimates of 300,000 to 400,000 MT. The main homes were Japan (138,000 MT), Indonesia (68,000 MT) and Nigeria (66,000 MT).

EU Wheat Closing Comments

EU wheat drifted lower again Thursday with January Paris milling wheat futures ending down EUR1.00 at EUR128.00/tonne, and London January feed wheat trading down GBP0.60 at GBP104.00/tonne.

Strategie Grains say that EU corn production will rise to 57.7 MMT in 2010 from 56.0 MMT this year. Meanwhile soft wheat production will increase by 3% to 133 MMT they say, that's at the expense of barley output which is seen down 6% to 58.7 MMT.

They are probably on the low side for EU wheat production. They peg UK wheat output at 1.9 MMT more than in 2009, that's around 13% up. OK, I know we've got Ensus and maybe Vivergo starting up, but I just don't see it working.

UK YTD wheat exports are only 582,380 MT, well below the 1.18 MMT exported at this point in 2008/09. There is far too much reliance being placed on the biofuel industry bailing out the UK wheat longs in my opinion.

eCBOT Close, Early Call

The overnight grains closed lower across the board, pressed by a firmer US dollar. Beans finished around 7 cents lower, with corn down 5 and wheat down 9-10.

While the Fed left rates unchanged as expected, the announcement that liquidity measures would expire in February 2010 is being seen as a big positive for the greenback, which is up around 1.3% on the day against the euro and 1.5% against the pound.

Whilst not entirely unexpected, Greece getting another downgrade from S&P is also knocking the euro.

Weekly export sales for corn at 1,227,100 MT - a marketing year high - were well above trade expectations. Wheat and bean sales in line with expectations. Soybean shipments of 1,663,100 MT were again mostly to China at 1,303,900 MT.

Strategie Grains say that EU corn production will rise to 57.7 MMT in 2010 from 56.0 MMT this year. Meanwhile soft wheat production will increase by 3% to 133 MMT they say, that's at the expense of barley output which is seen down 6% to 58.7 MMT.

Japan bought 126,000 MT of wheat - 86,000 MT of that will be US origin. Taiwan purchased 58,000 MT of US soybeans overnight too, and private exporters reported another 116,000 MT of US beans sold to China.

The Arg Ag Ministry say that this season's soybean area will be 300,000 less than they previously estimated at 18.2 million hectares. They seem to think that less corn acreage will be switched to beans than most other pundits believe. Even so 18.2 million is easily a record.

There is some talk of excessive rains in southern Brazil possibly leading to an upswing in Asian rust incidences.

Early calls for this afternoon's CBOT session: corn called 3 to 5 lower; soybeans called 6 to 8 lower; wheat called 8 to 10 lower

USDA Weekly Export Sales

For the period December 4-10 the USDA today report the following sales/export activity:

Soybeans

Net sales of 934,700 MT were a little above estimates for sales of 750,000 to 850,000 MT. The main takers were China (668,500 MT), Mexico (91,700 MT) and the Netherlands (77,400 MT). There were also net sales of 10,000 MT for delivery in 2010/11 which were for Japan.

Exports of 1,663,100 MT were to China (1,303,900 MT), Turkey (88,800 MT), the Netherlands (77,400 MT), Mexico (43,700 MT) and Italy (34,100 MT).

Corn

Net sales of 1,227,100 MT were a marketing-year high and well above estimates ranging from 550,000 to 750,000 MT. Mexico (291,800 MT), Japan (278,000 MT), Egypt (180,000 MT), South Korea (152,000 MT), Costa Rica (97,500 MT) and unknown destinations (92,800 MT) were the main buyers.

Exports of 776,500 MT were a bit above the prior 4-week average. The primary destinations were Japan (303,300 MT), Mexico (107,700 MT), Ecuador (63,400 MT), South Korea (54,300 MT), Guatemala (42,700 MT), Panama (31,200 MT) and Cuba (27,500 MT).

Wheat

Net sales of 345,000 were in line with estimates of 300,000 to 400,000 MT. The main homes were Japan (138,000 MT), Indonesia (68,000 MT) and Nigeria (66,000 MT).

Exports of 338,100 MT went mainly to Indonesia (68,000 MT), Israel (55,500 MT), Mexico (53,400 MT), Japan (28,500 MT), Guatemala (28,200 MT) and Haiti (20,900 MT).

EU Soymeal/Pellet Prices

Guide prices basis CIF Rotterdam/Amsterdam in USD/tonne unless otherwise stated:


Brazil pellets 48%

Afloat 428,00-426,00
Dec 426,00
Jan/March 410,00
May/Sep 360,00

Argentine pellets 44/45%

Afloat 420,00
Jan 415,00
Jan/March 408,00
May/Sep 350,00

Dutch Hipro 49%

Dec 438,00 FOB
Jan 438,00 FOB
Feb/Apr 426,00 FOB
May/Jul 376,00 FOB
May/Oct 377,00 FOB

Argentine Hipro 49%

Afloat 432,00-428,00
Dec 426,00
Jan/March 420,00
May/Sep 367,00

EU Rapemeal Prices

Guide prices basis FOB Hamburg/Lower Rhine in euros/tonne;


Dec 150,00
Jan 146,00
Feb 141,00
Feb/Apr 137,00
May/1st h Jly 122,00
Aug/Oct 10 118,00
Nov/Jan 11 125,00
Nov/Apr 11 126,00

Ukraine: Where The Gullible Deserve To Be Gulled

The Ukrainian State Statistics Committee report that grain stocks in the country (excluding very small scale operations) stood at 20.9 MMT on Dec 1st. Of that total supplies of the three main grains stood at: 9.4 MMT of wheat, 4.6 MMT of barley and 4.7 MMT of corn.

The Ag Ministry reported that Nov 30th grain exports this marketing year (started Jul 1st) were 11.3 MMT (incl 5.7 MMT wheat; 3.54 MMT barley and 1.93 MMT corn).

With an annual domestic grain consumption of 27 MMT, it seems clear that exports simply can't continue at the existing rate before stocks become exhausted.

The official Ministry estimate for grain exports in 2009/10 still stands at 20 MMT, although some private estimates are as high as 24 MMT. Where is it all going to come from, and keep the people fed?

My calculations suggest that they need three quarters of their 20.9 MMT stocks to see them through until the next crop year, leaving little more than 5 MMT to export between Dec 1st and then. And they exported close on a million tonnes of that between Dec 1st and Dec 10th alone!

Blimey, who'd want to be Ukrainian? It's 15 below zero. The Russian gas man is knocking at the door. You've just had to drop your pants to the IMF for USD2 billion to pay him what you already owe. That's on top of the USD11 billion that you've already had. And now you're having to sell the food off your own table just to pay the interest on what you owe already. You're not exactly going to be rushing down to the local farm shop to buy fertiliser and pesticides either are you?

A cold, long and hungry winter lies ahead.

I hope that the IMF aren't expecting their money back anytime soon. Ditto all the grain exporters owed VAT by the government. A report I read on a message board recently about business in Ukraine sums it all up. It said that in Ukraine the prevailing attitude is that the gullible deserve to be gulled.

It seems like there's been a lot of that going on recently.

Argentina: Ag Ministry Cut Soybean Acreage Estimate

According to the Ag Ministry Argentine farmers will plant 18.2 million hectares of soybeans this season, 0.3 million less than their previous forecast, with plantings 64% complete so far.

The revised acreage estimate is 600,000 ha less than the USDA's current prediction, and 800,000 ha below that of the Buenos Aires Grain Exchange.

Even so, the Ministry estimate would still be a record, easily beating the 16.6 million ha sown in 2007/08.

They clearly see less of a switch into soybeans from corn than the BAGE, pegging corn area this season at 3.16 million ha, a drop of less than 10% on last season. The BAGE have corn acres falling substantially to 1.875 million ha, 45% down on year ago levels, partly after soil conditions were largely too dry to plant in September and October.

The ongoing conflict between farmers and the government, and lower input costs for soybeans, are also likely to have been a significant factor.

With the country likely to be only barely self-sufficient in wheat this season, with a crop of around 7 MMT, maybe a tad more, it seems that the Ministry are using a bit of artistic licence in calling the corn crop higher than it actually is. Lying is another way of putting it.

Having periodically slapped export bans (or quotas as the government like to call them) on both corn and wheat in the last couple of years, Argentine farmers are acutely aware both those commodities are likely to be short supply again this season. Therefore earnings potential from those crops is likely to be severely curtailed, as exporters who can't export don't buy.

Whilst the hefty export tax on soy still remains in place, despite all the farmers' protestations, the crop still offers significantly higher potential returns than planting corn.

The Ministry say that 76% of the corn crop has been planted to date and that the crop "is in good or excellent condition" - but then again you wouldn't expect them to say anything else would you?

In this case 76% of the crop might in reality be as good as it gets.

Ukraine: Abrupt Temperature Change May Have Harmed Winter Wheat

A dramatic and abrupt fall in temperature, combined with a lack of early season moisture, may have harmed winter wheat crops in Ukraine, says Gail Martell of Martell Crop Projections.

The transition from active growth to dormancy was abrupt, as temperatures fell an astonishing 75 degrees F between December 1 and December 14, says Gail.

Wheat was not well established in the fall because of extremely low field moisture. Weather data and satellite imagery indicated that both surface and subsurface moisture during August and September were the lowest in recent years, according to Foreign Agriculture specialist Mark Lindeman.

Rain showers finally arrived in October. However, wheat growth was still sub-standard on a late November satellite image of crop vegetation. Late arriving rainfall may have reduced development time, causing sparse vegetation and lower yield potential, Gail concludes.

CBOT Closing Comments

Soybeans

January soybean futures closed at USD10.59 ½, up 4 ½ cents, January soymeal futures at USD316.90, up USD0.10 and January soy oil futures at 40.33 cents, up 0.69 points. China keep buying US beans, in the past four marketing days alone they've purchased 638,000 MT of soybeans for 2009/10 delivery. Whilst they will inevitably switch to South America before too long, they need to otherwise current USDA export predictions will prove woefully inadequate. Weekly export sales estimates for tomorrow's USDA report range from 750,000 to 850,000 MT

Corn

March corn futures finished the day USD4.10 ¼, up 2 ¾ cents, May corn futures were at USD4.21, also up 2 ¾ cents. Crude oil was sharply higher today which helped, as did spillover support from beans. Tomorrow's weekly export sales estimates range from 550,000 to 750,000 MT.

Wheat

March CBOT wheat futures closed at USD5.37 ¼, up ½ cents, March KCBT wheat futures at USD5.30 ½, up 4 cents, and March MGEX wheat futures at USD5.44 ¼, up 7 cents. Weekly wheat export sales projections for tomorrow range from 300,000 to 400,000 MT. Egypt bought mostly Russian wheat in a tender once again today. Current 2009/10 US ending stocks are estimated at a 10-year high, and global stocks are at an 8-year high, according to the USDA.

EU Wheat Mostly Lower

EU wheat futures were mostly lower Wednesday with January Paris milling wheat futures falling EUR0.50, at EUR129.00/tonne, and London January feed wheat dropping GBP0.90 to GBP104.60/tonne.

The pound was firmer against the US dollar, which did little to help the cause of UK wheat. UK wheat exports to the end of October at 582,380 MT are only half of what they were a year ago.

More demand is needed, a bioethanol plant on every street corner might help.

Egypt were back in the market, buying 360,000 MT of wheat today, unfortunately only 60,000 MT of that was EU wheat (French). No surprises to hear who picked up the rest of the order - that's right Russia.

If we can gain some small crumb of comfort, the Russian wheat was all at USD192.75/tonne, less than a dollar below the price paid for French wheat.

It is also interesting to note that the new regulations recently introduced by the state-owned wheat buyer GASC already appear to be not throwing up the savings hoped for. Under the new conditions the minimum tender size must be 60,000 MT and the goods can only come from one single port.

Nidera offered French wheat at USD3.87/tonne cheaper from a two port load option, whilst Invivo were at a USD5.20/tonne discount for two ports.

Invivo were also more than USD2/tonne cheaper for a 30,000 MT French cargo than the price GASC paid Glencore for a 60,000 MT shipment.

CBOT Closing Comments

Soybeans

January soybean futures closed at USD10.55, unchanged; January soymeal futures at USD316.80, up USD0.60, and January soy oil futures at 39.64 cents, up 0.01 points. The USDA announced private exports of 290,000 MT of soybeans sold to China, for 2009/10 delivery. Some reports suggest that December could be a record month for Chinese soybean imports, exceeding the 4.7 MMT brought in in June. Celeres say that soybean planting in Brazil is 91% complete.

Corn

March corn futures closed at USD4.07 ½, down 1 cent, May corn futures at USD 4.18 ½, down 1 cent. Harvest is normally at 100% this time of year compared to the 92% reported by the USDA yesterday. Those states that are still significantly behind normal harvest dates are the same states that have had weather issues most of the fall; Illinois at 90%, Michigan at 89%, Minnesota at 91%, North Dakota at 60% and South Dakota at 92%.

Wheat

March CBOT wheat futures finished at USD5.36 ¾, down 6 ¾ cents, March KCBT wheat futures at USD5.26 ½, down 7 ½ cents,and March MGEX wheat futures at USD5.37 ¼, down 10 ½ cents. The combination of large stocks and slow export demand are a bearish influences on prices. Fund interest seems to have waned in wheat, at least until the new year, without that it is difficult to see wheat rallying much from here.

EU Wheat Futures End Generally Slightly Lower

EU wheat futures mostly slid a little Tuesday with January Paris milling wheat futures falling EUR0.50, at EUR129.50/tonne, and London May feed wheat dropping GBP0.05, at GBP110.20/tonne.

It was another desperately dull day with only 114 lots trading in London, clearly everybody has shut up shop for Christmas.

The UK exported 144,211 MT of wheat in October, bringing YTD exports to 582,380 MT, well below the 1.18 MMT at this point in 2008/09. Spain remains our largest buyer taking 301,676 MT so far this marketing year.

Those figures show just how far behind last year's pace we are. Hurry up Ensus is all I can say to that.

There is no global shortage of wheat, and demand is so-so at best, in addition competition is fierce. Russia seemingly have any amount available, of any quality you want, all priced to sell.

Unless, or until, the Black Sea run out or get frozen out the rest of us will end up fighting for the scraps.

Ukraine Grain Merchants Owed Huge Amounts Of VAT Refunds

The Ukraine government owes grain merchants in the country enormous sums of money in VAT refunds, according to a report on WorldGrain.com.

They say that 3.5 billion (GBP270 million) in the local hryvnia is outstanding, and that Louis Dreyfus Commodities Ukraine have got so fed up with the situation that they've stopped buying grain at local elevators.

Under Ukraine law VAT paid on grain exported from the country is refundable, and as we know they exported a record 25.2 MMT of grain in the 2008/09 marketing year, and a further 12.2 MMT has already left it's shores in 2009/10.

There's just one teeny weeny problem, the government have run out of cash. They've recently had to beg USD2 billion from the IMF just to keep the wolf from the door, after reneging on promises to get their internal house in order. They've already had already had USD11 billion from the IMF this year, who then wisely suspended the release of any more cash in October. They've subsequently relented, throwing the country another USD2 billion to pay the gas bill.

When things are this desperate, the matter of VAT refunds to grain merchants becomes small beer.

It seems that domestic cereal prices are now being driven lower as the only price most trading houses are prepared to now pay for grain discounts the VAT that they know they probably aren't going to get.

The flip side of that is that prices are now so low that many farmers can't afford to pay for fertiliser and pesticide inputs this coming season. It's going to be a long hard winter.

EU Soymeal/Pellet Prices

Guide prices basis CIF Rotterdam/Amsterdam unless otherwise stated in USD/tonne:


Brazil pellets 48%

Afloat 431,00-425,00
Dec 425,00
Jan/March 402,00
May/Sep 357,00

Argentine pellets 44/45%

Afloat 417,00
Jan 416,00
Jan/March 402,00
May/Sep 348,00

Dutch Hipro 49%

Dec 443,00 FOB
Jan 442,00 FOB
Feb/Apr 426,00 FOB
May/Jul 375,00 FOB
May/Oct 376,00 FOB

Argentine Hipro 49%

Afloat 444,00-431,00
Dec 430,00
Jan/March 418,00
May/Sep 363,00

Ukraine Grain Exports Up 10 Pct Despite Lower Crop

Despite reduced output this season grain exports out of cash hungry Ukraine are running at record levels, 10% above last season's pace.

The Ag Ministry say that 12.2 MMT of grain has been exported so far this marketing year (Jul 1 - Dec 10), of which wheat accounts for 6.1 MMT (2008: 5.9MMT), barley 3.6 MMT (4.3 MMT) and corn 2.3 MMT (0.85 MMT).

An additional 1.43 MMT of rapeseed has also been exported, they add.

Revised figures suggest that this season's grain harvest will total 46.2 MMT in clean weight, 13.3% down on last season's record 53.3 MMT.

The official Ministry estimate for total exports this season is still 20 MMT (25.2 MMT last year). Some pundits are predicting that this figure will rise to closer to 23-24 MMT, that certainly looks possible given the current pace of exports. The question is are they robbing Peter to pay Paul?

Ukraine's own domestic grain consumption is estimated at 27 MMT, sure there will have been a carryover from last season's bumper crop, but what about the state of the crops in the ground right now for harvesting in 2010?

Air temperatures over the weekend feel as low as -16-17 °С in the north east of the country close to the Russian border, with lows elsewhere of -8-10 °С. The USDA's latest snow cover map here shows virtually no protection at all from these freezing temperatures, making winterkill a real possibility, although we are unlikely to get any official confirmation of this any time soon.

With an election looming in January, truth might be a bit thin on the ground. The existing Tymoshenko government are hardly going to say: "hey guess what, we've been exporting more grain than our stocks warrant, because we're desperate for cash. The IMF don't fancy our credit rating much, so we've been raising cash by selling the only thing we've got of value. Sorry about the lack of food. Vote for us!"

CBOT Closing Comments

Soybeans

December contracts went off the board mid-session, which explains some of the strange closes today. January soybean futures closed 20 cents at USD10.55. December soymeal futures expired at USD326.50, up USD12, while the new front month January contract closed USD9.70 higher at USD316.20. December soyoil futures expired at 39.40 cents, up 18 points, while the new front month January contract closed 6 points higher at 39.63 cents. Bean export inspections for the week ending December 10 were on the low side at 53.608 million bushels. NOPA say that the Nov soybean crush was 160.3 million bushels, that's up 5 million from October, and almost 7 million more than what had been expected.

Corn

December corn futures expired at USD3.92, up 2 ¾ cents, while the new front month March contract settled at USD4.08 ½, up 4 cents. The USDA today reported 116,000 MT of US corn sold to unknown. The USDA also reported 28.088 million bushels of corn were inspected for export, which fell towards the low end of trade estimates. After the close they indicated that the US corn harvest had limped from 88% complete a week ago to 92% done as of Sunday.

Wheat

December wheat futures at the CBOT, KCBT, and MGEX all expired higher on their last trade day. Chicago SRW finished 5 ¾ cents up at USD5.25. Kansas City HRW finished 8 ¾ cents higher at USD5.26. Minneapolis spring wheat finished 5 ½ cents higher at USD5.33. The new front month March contracts all finished higher as well. Spillover strength from beans and corn helped wheat, as too did a lower dollar. Export inspections of 13.035 million bushels of wheat were towards the low end of expectations.

EU Wheat Closing Comments

EU wheat futures closed mostly moderately higher with January Paris milling wheat futures trading up EUR1.25 at EUR130.00/tonne, and London May feed wheat closing up GBP0.35 at GBP110.25/tonne.

There are some concerns developing that very cold weather pushing in from the east might cause some crop damage.

Temperatures across Ukraine, the Volga region of Russia and the FSU plunged to 12 F across the weekend, yet large parts of this area have scant to no snow coverage at all. This makes winterkill a serious threat.

A very dry September/November period led to poor establishment, which is never a good thing in a cold climate, says Gail Martell of Martell Crop Projections.

For now however, export demand remains poor, with Egypt further muddying the waters by announcing even more stringent terms and conditions to it's standard wheat tenders.

These include a minimum vessel size of 60,000 MT and a strict one loading port rule, which hasn't been favourably met with by the trade.

Currency fluctuations and the influences of outside markets still remain a major factor, as too does the participation (or otherwise) of fund activity in the grains sector both here and in the US.

Egypt Rewrites The Wheat Rule Book - Again

After revelations earlier in the year that anything vaguely resembling wheat was good enough to clear Eygptian customs, things appear to have moved full circle.

Once-upon-a-time 54,000 MT of horse manure casually sprinkled with 1,000 MT of some moldy old feed wheat left over from three years ago would fly through as high grade milling wheat. Egypt now has some of the toughest contractual criteria in the world.

It's currently a buyers market, and Egypt as the largest wheat buyer in the world can afford to be picky.

New rules introduced last month dropped the maximum amount of bug damage from 2% to 1%.

Now the state-owned wheat buyer GASC is moving the goalposts again, insisting that the minimum tender quantity is 60,000 MT (they've previously been perfectly happy buying 30,000 MT cargoes), and also stipulating that vessels can only load from one single port.

The largest exporter of wheat to Egypt is Russia, with France the second biggest. Ukraine have long since been kicked into touch as consistently failing to deliver on quality. Australian and US wheat get a look in periodically, although freight isn't as cheap as it was from those destinations. Germany too feature from time to time.

GASC appear to believe that the recent changes will provide a cost saving, and make it easier to police the quality of imports.

The French aren't too keen, their major grain export facility of Rouen can't physically handle 60,000 tonners. Indeed only two ports can, according to Reuters - La Pallice and Dunkirk - and both of those involve increased shipping costs.

Even Russian exporters are saying that they'd frequently prefer to export in smaller lots, and that the new rules could push the rates for 60,000 MT vessels disproportionately high.

For now at least GASC aren't listening, but they may be forced to reconsider once faced with a situation where 30,000 MT tenders are significantly cheaper than 60,000 MT tenders. After all, cash talks - and cash was how this whole thing got started in the first place.

eCBOT Close, Early Call

The overnight grains all closed a little lower, with beans corn and wheat all down 2-3 cents.

The dollar is flat and crude oil is below USD70/barrel. The market feels a bit better than it did last week after Abu Dhabi stepped in with a USD10 billion loan for Dubai World, and Citigroup says it's going to repay USD20 billion of US government bailout money.

The USDA are today reporting 116,000 MT of US corn sold to unknown. Tonight they will reveal how much corn is still left to be harvested, it was 12% as of last Sunday.

Today sees December contracts disappear off the board for corn, wheat, meal and oil.

NOPA say that the Nov soybean crush was 160.3 million bushels, that's up 5 million from October, and almost 7 million more than what had been expected.

Over 80% of Australia's second highest wheat producing state of NSW is gripped by drought, according to the state government. That's sped the wheat harvest to an early finish, but has also affected production and crop quality.

Indian wheat plantings are in line with last season, but 20% behind the five year average at 21.7 million hectares.

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

The Most Beautiful Girl In Farming?

That's what the headline in the appropriately named Meat Trade News is calling 22 year old babette Izzy Whittaker.

Judge for yourselves

Izzy has recently started working for breeding company Cogent, featuring in their recent Sexed Semen Roadshows, apparently.

As I'm sure you are well aware, Nogger is no stranger to the fairer sex, all my ex-wives have been women for a kick off. Izzy does indeed look rather fetching, although I'm sure that she's modest enough herself not to personally claim the crown of "the most beautiful girl in farming".

Note that Cogent's spokesman is tantalisingly called Hugh Pocock, surely he could have tweaked his name slightly by deed poll just for me? I'd have altered my Christian name to Hip and left it at that.

A more complicated alternative option would have been to change it to Chicken Kung and add a question mark at the end of my surname. I could then get myself a job in a Wigan Chinese restaurant, so I could both introduce myself and proffer the chef's daily recommendation all at the same time. I'm a marketing genius me.

Then there's the option of naming your first born son Limpo so that everyone starts the day with a laugh whilst the teacher marks the register. And you get the name of a new highly contagious African medical condition all rolled into one. The possibilities are endless.

EU Rapemeal Prices

Guide prices, basis FOB Hamburg/Lower Rhine in euros/tonne:


Jan 142,00
Feb 138,00
Feb/Apr 134,00
May/1st h Jly 120,00
Aug/Oct 10 116,00
Nov/Jan 11 122,00
Nov/Apr 11 123,00

Coceral EU 2009/10 Crop Production Estimates

Coceral peg the 2009/10 EU-27 wheat crop (excluding durum) at 130.8 MMT, a reduction of 7% on last season's 140.9 MMT.

Durum wheat adds a further 8.3 MMT to the pot, giving us a total EU all wheat crop of 139.1 MMT, 7.5% down on last year's 150.5 MMT crop.

Wheat production in the UK is seen at 14.2 MMT, 18% lower than last year's 17.4 MMT. For my Irish readers, wheat production in the Republic only mustered 490,000 MT, more than 50% down on 2008/09's 1 MMT.

EU-27 soft wheat consumption in 2009/10 is seen rising slightly to 118.0 MMT, although exports are expected to fall meaning that carryout will rise a tad from 16.1 MMT to 16.7 MMT - of that 1 MMT will end up in intervention, say Coceral.

We also produced 62.2 MMT of barley with which to adorn the intervention sheds of Europe, 5% less than the 65.6 MMT knocked out in 2008/09. The UK accounted for 6.7 MMT of that (4.2 MMT of it spring barley), up half a million from last season. Ireland was at 1.1 MMT, down slightly on 1.3 MMT a year previously.

EU-27 barley consumption is seen up slightly to 54.5 MMT from 54.2 MMT, but higher opening stocks are seen pushing carryout to 20.0 MMT from 16.2 MMT a year ago. Of that intervention stocks will increase from 1 MMT to 4.5 MMT, they say.

Rapeseed production came in at 21.2 MMT, an 11% increase on the 19.1 MMT produced in 2008/09. The UK produced 1.9 MMT of that, very similar to last season. Top producer Germany knocked out a crop of 6.3 MMT this year for a 21% increase on 2008/09's 5.2 MMT. France also saw output sharply higher at 5.6 MMT, up 19% from 4.7 MMT a year ago. Poland came in third at 2.4 MMT (from 2.1 MMT last season).

Australia: Over 80 Percent Of NWS Gripped By Drought

The New South Wales Minister for Primary Industries and Rural Affairs, Steve Whan, says that 80.8% of the state is in drought, 14.8% is marginal, and just 4.4% is considered satisfactory.

The State Government said over the weekend that it would extend aid measures to farmers affected by the drought. These include a 50% subsidy for those needing to transport feed and water to keep their animals alive, as well as many being forced to sell or slaughter animals prematurely.

The drought was described by one farmer as "one of the worst in the last 140 years" - with some destocking completely.

The drought also means that the grain harvest is already over in many areas, in one of the earliest finishes on record in some places, Whan added.

ABARE cut it's wheat production forecast for the state to 5.1 MMT last week, 26% down on last year's 6.9 MMT, and 19% lower than what had been expected as recently as September.

As well as quantity, it looks like quality could also be a problem this season. To add insult to injury, a resurgent Australian dollar is a big problem when you rely so heavily on exports. That means that domestic prices are also particularly depressed Down Under.

Despite an anticipated wheat crop of 22 MMT this year, Australia only consumes around 7 MMT per year domestically. In addition she only consumes around half of the anticipated 8.3 MMT barley crop.

Some reports I am reading suggest feed wheat prices in the low A$150's delivered (around GBP86), with feed barley values as low as A$100 delivered - that is the equivalent to just GBP55!