As the euro continues to plunge lower than Kerry Katona's IQ, European wheat is making inroads to all sorts of unusual destinations and far flung corners of the world.
Bunge have sold 30,000 MT of French wheat to Mexico for loading at the end of this month, according to reports. That highlights just how uncompetitive US wheat has become, and the advantage of having a currency only marginally more desirable than the Zimbabwe dollar.
Feast or famine Spain (usually the UK's top wheat export home) has had more than it's fair share of rain this winter, helping it to expect a bumper grain harvest this summer. The country expects a winter grain crop 13.4% higher than last season at 15.17 MMT say the Ag Ministry, with soft wheat output increasing by 18% to 4 MMT and barley production up by 17%.
Wheat output might be seen higher in Europe this year, but it's expected to be lower just about everywhere else of any significance (apart from those lovable surrender monkeys Argentina). Talking of people who love to take a dive in the penalty box, German analysts F O Licht say that 2010/11 global wheat production will fall to 653.9 MMT from 675.4 MMT in 2009/10.
The sausage-munching firm say that world barley production will also decline from 149.7 MMT to 140.8 MMT in the coming season. Global corn output is seen increasing from 786.6 MMT to 795.2 MMT, they add.
The "back of a fag packet" USDA are out on Tuesday with their May stocks estimates. The trade is estimating 2009/10 soybean US ending stocks to fall from 190 million bushels last month to 180 million this time round. Corn stocks are seen declining slightly to 1.861 billion, with wheat carryout also a tad lower at 946 million bushels - that's a hefty 25.75 MMT.
They will also have a stab at predicting ending stocks for 2010/11 too, with soybean inventories seen recovering to around 340 million bushels, with corn expected at 1.9 billion and wheat staying at similar levels to the current MY at 953 million.
The Argy soybean harvest is now 77% complete, according to those pathological liars the Ag Ministry. The corn harvest is 63% done and the sunflower harvest just about over, they add. Winter wheat planting kicks off this month, with big increases on the cards. No stranger to cards, the Argies.
Talking of liars, the Indian Farm Ministry say that monsoon rains will arrive on time and be normal this year. Blimey, they have enough trouble sussing out what's happened in the past, but now they can see into the future as well. Look out for these lads in a forthcoming edition of Dr Who. They still insist that 2010 wheat output will be higher than last season, bless. Shouldn't these people be in a home or something? (Prison more likely - Ed)
May soybeans settled 5 3/4 cents higher at USD9.51 1/4 per bushel; July soymeal ended unchanged at USD278.40; July soyoil settled 32 points, higher at 38.44. Crude was down heavily again, and outside influences like the DJIA also weighed. There was an element of a rebound from last night's sharp losses. as the trade now starts to look to next week's USDA report. Informa Economics estimated 2010 soybean acres at 78.5 million compared to the USDA's March estimate of 78.098 million.
May corn ended up 3/4 cent to USD3.64 3/4 per bushel, and July corn closed up 3/4 cent at USD3.72. It was a relatively quiet end to frenetic week, outside influences like the stock market, US dollar and crude oil have weighed on corn. Even so, with US plantings at around 75% complete, corn has performed quite well under the circumstances. Informa Economics pegged 2010 US corn acres at 89.6 million, higher than the USDA's March estimate of 88.941 million.
CBOT July wheat ended 2 1/4 cents higher at USD5.10 1/2; KCBT July wheat settled 1 1/2 cents higher at USD5.21; MGE July wheat finished 4 1/2 cents higher at USD5.41 1/2. Temperatures in the low thirties will pose a risk for wheat in western Kansas and Nebraska and the Dakotas over the weekend. Large shorts in wheat leave the market vulnerable to seemingly unprompted short-covering. Informa peg this season's winter wheat crop at 1.466 billion bushels - just under 40 MMT - that's 57 million bushels lower than 2009's production. They estimate average yields at 46 bu/acre, that might be optimistic based on the findings of the Kansas wheat tour earlier in the week.
May London wheat ends GBP0.55 easier at GBP102.75/tonne, and May Paris wheat up EUR1 at EUR134.00/tonne.
Phew, what a week! The currency markets have been all over the place, with sterling fluctuating between 1.53 against the dollar at the beginning of the week to under 1.46 by Friday morning.
Now that the UK election is out of the way, it seems like we may see some more stability enter the market if the leading protagonists can thrash out some sort of deal.
The weekend papers will be full of it, that's for sure, but watching the news tonight I feel that we might see some sort of Tory-Lib Dem alliance by the early part of next week. If so, that might lead to some sort of sterling stabilisation by the middle of next week.
Uncertainty is what the market doesn't like.
Whilst the euro remains acutely weak, some export inroads will continue to be made into more 'unlikely' homes.
Recent rains across most parts of Western European were much needed.
In the UK crop development is around 7-10 days behind normal, according to ADAS.
Barley offers into UK intervention picked up again last week - before the lower May price kicked in - with 12,532 tonnes being put up, total offers now stand at 153,168 tonnes after withdrawals/rejections.
The USDA has cut it's estimate for Indian wheat production for 2010 to 79 MMT from it's previous estimate of 82 MMT.
“The initial optimism regarding the 2010 wheat crop following favourable growing conditions through mid-March was tempered by a sudden significant rise in temperature, which affected proper grain development, lowering yield prospects,” they said.
Extreme heat during March and April in northwest India damaged maturing wheat in Uttar Pradesh, Punjab and Haryana the report said.
...sort of, but will the old one be in the mood to vacate his position? He's clung onto a post he wasn't even elected to man for so long now, why should he leave after this little setback? That reminds me of a song we know doesn't it children...
Every time just like the last
On his ship, tied to the mast
To distant lands
He's sent our pounds
Never a frown, with Gordon Brown...
Cue more tiresome playground squabbling, in-fighting, my Dad is bigger than your Dad and "is your Nick coming out to play Mrs Clegg?" stuff.
Certainly the forex market doesn't seem to like the look of it that's for sure, the pound is at it's lowest levels in a more than twelve months against the dollar.
May soybeans closed 22 3/4 cents lower at USD9.45 1/2; soymeal ended USD4.50 lower at USD278.40; July soyoil settled 81 points lower at 38.12. Beans came under heavy selling pressure late in the session as the US stock market collapsed. The dollar was very strong and crude oil acutely weak as nervousness over the knock-on effects of the Greek problems spread. As their harvest wraps up, Brazilian analysts CONAB and the IBGE both upped their production estimates to 67.9 MMT, and the Argentine harvest is now well advanced at almost 75% done. Weekly export sales from the USDA were a bit disappointing, although China did buy both old and new crop beans.
May Corn futures closed at USD3.64, down ¾ cent; December Corn futures were at USD3.84 ¾, down 4 ½ cents. Spillover weakness from soybeans pressured corn late on, although weekly export sales were a marketing year high at 1,850,800 MT for old crop. The trade had been expecting sales of around a million tonnes, so today's numbers are pretty impressive, especially as they fall on top of the previous week's total of 1,430,700 MT. China frustratingly wasn't confirmed as buying more US corn than the 115,000 MT that the USDA had already confirmed last week.
July CBOT Wheat closed at $5.08 ¼, down 3 ¾ cents; July KCBT Wheat was at USD5.19 ½, down 4 ½ cents; July MGEX Wheat at USD5.37, down 6 ½ cents. The Wheat Quality Council completed their tour of Kansas today, pegging final yields at 40.7 bu/acre. That is down on last season's final yields of 42 bu/acre, and considerably lower than the trade had been expecting. That puts final output in the state that accounts for around a quarter of all US winter wheat at 333.5 million bushels, almost 10% lower than last season's 369.6 million bushels.
London wheat ended GBP0.80 higher at GBP103.50/tonne Thursday, with Paris wheat up EUR3.75 at EUR133.00 as the pound and euro both nosedived.
All markets were extremely nervous in the continued fallout from the unfolding Greek tragedy, and uncertainty over the implications for the rest of Europe. Stock took a hit, with the Dow Jones Industrial Average falling almost 1,000 points at one stage, before rebounding nearer the close to end with losses of just under 350 points.
Even so, that's the worst one-day drop since February 2009. Lots of stories are around at the moment to explain the huge movement. Some suggest a trade accidentally authorised for a sell order for USD16 billion, instead of USD16 million worth of e-minis.
Computer generated stop loss selling is also said to have maybe been partially to blame. Stock in one US firm, Accenture, made history by plunging from an opening price of USD41.78/share to just one cent (!!) before closing at USD41.09/share.
UK wheat rose as the pound shed around 2.5% on the day against the dollar, the euro was also sharply lower.
That won't do export hopes any harm.
Trade talk suggests that the UK's 'burdensome' wheat stocks are a lot more difficult to get price from farmers' grasps than many had thought. One certain merchant is apparently kicking ass on farm and outbidding just about everyone else for what wheat is left available for sale. Who might that be? I couldn't possibly say as I never use the F word.
Keen to have a slice of any cake that's going, party-pooping Kazakhstan are turning their attention to the bioethanol market as the next big thing.
Their Minister of Agriculture says that the country will expand it's existing bioethanol capacity to two billion litres "in the nearest future". That's five Ensus's running at full tilt to you and me. Not that the one Ensus we've got runs at full tilt yet, let alone another four of the buggers as well, but you get my drift.
Well, Akylbek Kyrishbaev as the Kazakh Minister of Agriculture is called - blimey that's a mouthful isn't it missus? Yes, where was I, erm, Aky my old mucker as I call him reckons that they can use fallow agricultural land to ramp up wheat production to the required levels to fuel the expansion. Nice pun, Nogger.
Kazakhstan currently has just the one wheat refinery, which processes around 220,000 MT of wheat per year into gluten, starch and bioethanol. Another five Ensus's would require around a further 5-6 MMT of wheat. That's wheat that they'd rather like to export having just networked like crazy to get themselves in with those wheat-loving document-forgers the Egyptians.
If they can't ramp production up to the required levels, then it potentially takes some wheat back off the export market to be used domestically for bioethanol production. But if anyone can sort it Aky can.
I say, I say, I say. What do you call an Egyptian who doesn't take back-handers? Asif. That's a cracker that one. I can't believe that I haven't been snapped up for a summer season at Cleethopes yet, I really can't.
The USDA's weekly export sales report said that 1,850,800 MT of old crop corn was sold by US shippers last week - a marketing-year high - with further nominal net sales of 30,400 MT for delivery in 2010/11.
Teasingly China showed up as only taking the 115,000 MT of old crop corn that we already knew about, although our old mate 'unknown destinations' also bought 240,100 MT. If that was China it still falls short of the ten cargoes talk that had been getting bandied about, although today's report only covers sales for the period April 23-29. So anything sold since last Thursday won't show up until next week.
The trade had been expecting sales of 950,000 – 1,200,000 MT, so today's numbers are pretty impressive, especially as they fall on top of the previous week's total of 1,430,700 MT. That's more than three million tonnes sold in the last fortnight, not bad going I'm sure you'll agree.
For the record soybean sales came in at 283,200 MT for delivery in 2009/10 and 209,100 MT for delivery in 2010/11. That was well below estimates were for combined sales of 700,000 – 1,100,000 MT. China took 180,000 MT of old crop and 168,000 MT of new crop.
Wheat sales were also a bit disappointing at 150,200 MT for delivery in 2009/10 and 134,100 MT for delivery in 2010/11. Estimates were for combined sales of 250,000 – 400,000 MT.
Crude oil is back below USD80/barrel for the first time since mid-March, after the US Energy Dept said that US crude stocks rose by 2.76 million barrels last week. That's much more than the 0.6 million barrel increase forecast, and makes it thirteen weeks of rises out of the last fourteen by my reckoning.
China is considering relaxing a barrier on imports of US soyoil in the wake of the ban on Argentine imports, according to a report on Bloomberg. If they did, that might slacken US soybean exports off a little, although it may have more of an impact on South American soybean sales at this time of year.
The USDA are out at 13.30 BST with their latest weekly export sales report. This one will be of more interest and importance than normal, with some reports suggesting China may have bought much more than the two cargoes of US corn that the USDA have confirmed so far. If China don't show up as a big buyer then we could see corn drop sharply tonight, with an estimated 75% of the crop likely to be in the ground by the end of the weekend.
A cold snap forecast for large parts of the US this weekend might only cause minimal crop damage. It's probably come too early to affect newly planted corn, and might not push far enough south to hit winter wheat heading in Kansas.
Rabobank Australia are forecasting the 2010/11 wheat crop there at 21.8 MMT, around the same level as last season and considerably higher than the Commonwealth Bank of Australia's estimate of 20 MMT earlier in the week. An increase in rapeseed planting will push output above 2 MMT this year, say Rabobank (from 1.9 MMT in 2009/10).
There's more talk circulating that China's rapeseed crop will be cut back quite sharply by drought this year. Not that they are likely to confirm this officially of course.
Day two of the Kansas wheat tour appeared to confirm day one's findings, that despite crop conditions being sharply higher than last season, final yields may strangely struggle to meet 2009's average of 42 bu/acre. Day two yields averaged 39.9 bu/acre, down on the 40.7 bu/acre seen the day before, giving an average for the two days so far of only 40.3 bu/acre.
Ag Canada said that 2010/11 wheat ending stocks will fall to 5.7 MMT from 7.1 MMT in 2009/10, that's 100,000 MT lower than their previous estimate. Barley stocks will also decline to 1.8 MMT from 2.2 MMT (and 2.1 MMT estimated previously).
The pound is in danger of slumping below 1.50 against a resurgent safe haven status US dollar, as fallout from the Greek mess spreads like volcanic ash. Today's election is understandably making the waters even muddier than usual. Meanwhile however, sterling looks positively gazelle-like compared to the poor old euro, pushing 1.18 despite having a gammy left peg and a crippling old war wound. We haven't been that high since last August.
May Soybeans closed at USD9.68 ¼, down 8 ¾ cents; May Soybean Meal at USD279.70, down USD5.80; May Soybean Oil at 38.64, up 28 points. South American production keep rising and US plantings are off to a very good start.
May Corn futures closed at USD3.64 ¾, up 4 ¾ cents; December Corn futures at USD3.89 ¼, up 2 ¼ cents. US seedings are well above schedule, weak crude was also a negative influence, All eyes will be on tomorrow's export sales report, will it confirm more sales to China.
May CBOT Wheat closed at USD5.01, up 1 ¼ cents; May KCBT Wheat at USD5.15 ½, up 1 ½ cents; MGEX Wheat at USD5.34 ¼, up 2 ¼ cents. Crop tours in top US wheat producing state of Kansas suggest that yields may not be as promising as first thought, Frost is also in the forecast for this weekend.
May London wheat closed GBP1.50 lower at GBP102.50/tonne, with May Paris wheat down EUR1.25 at EUR129.25/tonne.
A weak euro helped prices from falling too much today, but certainly bearish underlying fundamentals seem unlikely to provide anything in the way of other supportive influences.
Drier than normal weather conditions look like providing some kind of near-term support, although Bank Holiday rains have eased some worries.
Reports indicate that there may be some problems brewing in France, with barge owners striking for more money, plus an apparent breakdown at a major grain exporting facility in Rouen.
The Spanish PM Jose Luis Rodriguez Zapatero says that media reports that the country will need a Greek-style bailout from fellow euro zone members are "complete madness".
Wasn't Papandreou saying the same thing not that long ago?
The Kansas Wheat Quality Council concluded day one of their annual wheat tour yesterday pegging yields in the state at 40.7 bu/acre. That's surprisingly lower than last year, when their first day estimate was 41.3 bu/acre.
The results are particularly surprising given that the USDA rated Kansas wheat 70% good/excellent on Monday night, up from 53% a year ago when final yields came in at 42 bu/acre.
Early indications are that late-planted wheat in the state looks set to disappoint. Kansas is of course the top US wheat producing state, and accounts for around a quarter of all winter wheat production in the US.
Tour members are back out scouting the crop today and tomorrow and will issue a final yield estimate on Thursday night.
May Soybeans closed at USD9.77, up 1 ¼ cents; Nov Soybeans at USD9.63, down 3 ½ cents; May Soybean Meal at USD285.50, up USD2.80; May Soybean Oil at 38.36, down 29 points. Planting progress was at 15% last night, almost double the five year average of 8%. Crude oil was also sharply lower which weighed on price levels. Harvesting is well advanced in Brazil and Argentina.
May Corn futures closed at USD3.57, down 5 ¾ cents; December Corn futures were at USD3.83 ¾, down 5 ¾ cents. Corn planting is very well advanced, according to the USDA. Emergence of the crop was pegged at 19%, up from 7% last week, 4% last year, and the 9% five year average. At the moment it seems like the greatest threat to this early-planted crop would be a May freeze. There may be one on the cards this weekend.
May CBOT Wheat closed at 4.99 ¾, up 9 ¾ cents; May KCBT Wheat at USD5.14, up 10 cents; May MGEX Wheat at USD5.32, up 8 ½ cents. Weather forecasts call for temps in the low 30's by the weekend, which prompted some short-covering. CBOT couldn't quite manage to close above USD5/bushel, which may weigh ultimately. Australia may only have a 2010/11 wheat crop of 20 MMT according to the Commonwealth Bank of Australia.
May London wheat closes GBP0.30 higher at GBP104.00/tonne, May Paris wheat ends EUR0.50lower at EUR130.50/tonne. Aug Paris rapeseed ends EUR1.50 higher at EUR303.00/tonne, and Jun Paris corn EUR0.50 lower at EUR143.25/tonne.
A dry April was somewhat broken over the weekend, although some parts of Europe could still do with more rain. Early crop production forecasts are tending to err on the side of caution, with marginally lower output currently seen from the leading EU-27 producers like France, Germany and Poland.
It's still early days yet though, with 2009/10 wheat and OSR production in particular finishing sharply higher in those countries than was estimated this time twelve months ago.
The currency markets are also a major feature at the moment, with the euro and sterling both looking weak. That should help underpin further weakness of EU grains.
The pound looks set to remain volatile ahead of the impending election.
Or every time that the President of Iran gets a mention on the 10 O'Clock News does it sound like Huw Edwards is asking his manservent to fetch his coat? Mahmoud Wheresmedinnerjacket? You have a listen tonight.
The old English saying, which for the benefit of my foreign readers means "keep your coat on until you are sure summer is here." Or something like that, in short May can and often does spring (nice pun) a surprise or two.
Certainly there was a marked difference in temperatures here between dog walking duties on Saturday morning and Monday morning.
A quick flick through Metcheck this morning shows my local forecast for this week cooling right down, with next Monday (10th) showing a daytime high of just 6C, with a lunchtime "feels like" that day of -5C!
Similarly in the US we have a forecast high for Chicago today of 77C, according to Accuweather, yet a big cool down over there pegs this Saturday's high at just 52C.
"A review of Chicago weather records reveals it's not unprecedented that May's pattern would take a turn in the wake of a warm, dry spring open. Seven of 8 years which have followed mild spring opens - 88 percent of them - have gone on to experience below normal overall May temperatures," says WGN's website.
QT Weather say that "by Thursday, snow will be falling from Saskatchewan to W Nebraska and eastward to Minnesota." By Saturday they see temperatures falling to "33F as far south as Liberal, KS near the OK border…not quite cold enough for HRW damage but some light damage may be seen in the normally colder locations."
There's plenty of time between now and Saturday for things to take a turn for the worst too.
No, not Middlesboro. The Environment Agency have stepped in to have a quiet word with Ensus apparently, according to this article here, and unless the problem gets sorted than the EA could close the plant down, it says.
Pretty serious stuff, and you'd have thought something that the plant's designers might have thought about before they began the project. They've already had to cough up a hefty chunk of 'compo' for failing to complete the project on time. Will they now be having to dig deeper and get the cheque book out again to fund the doubling in height of the stacks from the driers? And will that kill a little bit more of the planet before we finally save it, I idly wonder to myself?
Why not set up an enormous series of fans to simply blow the smells in the direction of Iceland? Right, that's that one sorted, what's next?
...could you get taken to court for serving a cup of tea that was too hot. Starbucks are in hot water after a customer was served a cuppa that was "unreasonably hot" - what using boiled water you mean?
Crikey the negligent buggers, the poor plaintiff suffered "great physical pain and mental anguish," according to court documents.
I'll be keeping my chocolate fingers crossed for Starbucks, poor McDonald's took a USD2.86 million hit back in 1994 when a woman claimed she'd scalded herself on their coffee.
I found some chips in my salt from there once, do you think that's worth pursuing?
It's all over my lapsang souchong
A nervous sterling has dipped below 1.52 against the dollar in early trade with just a couple of days left to go to this week's election.
Poll results generally seem to point to a hung parliament, although one in the Telegraph appears to indicate an outright Tory victory.
As well as pre-election uncertainty we have data due later today on UK manufacturing, money supply, UK consumer confidence and mortgage approvals.
Looks like we could be in for a roller coaster week.
"More bluntly, if Papandreou's dog drops a deuce in a box and he presents it to the ECB claiming that it's worth $10 billion, the ECB will in fact issue $10 billion in real, honest-to-God Euros against that box - no matter how badly it smells."
Pithy insight into the the Greek debt problems and the associated implications for the euro: here
May Soybeans closed at USD9.75 ¾, down 13 ¾ cents; Nov Soybeans at USD9.66 ½, down 9 ¼ cents; May Soybean Meal at USD282.70, down USD8.60; May Soybean Oil at USD38.65, up 7 points. The USDA said that soybean plantings are 15% complete, compared with the five year average of 8% done. The Brazilian harvest is just about over at 97%, whilst Argentina is also well advanced at 67% complete. Weekly US export inspections came in at a low 7.2 million bushels.
May Corn futures closed at USD3.62 ¾, down 3 ½ cents; December Corn futures were at USD3.89 ½, down 2 ¾ cents. There were no more China corn purchases announced today. All eyes will be on Thursday's USDA export sales report to see exactly how much they did or didn't buy last week. The USDA advanced corn plantings from 50% done last week to 68% complete as of Sunday. That's much better than the five year average of 40% and should augur well for yield potential.
May CBOT Wheat closed at USD4.90, down 1 ¾ cents; May KCBT Wheat at USD5.04, down 1 ½ cents; May MGEX Wheat at USD5.23 ½, down 2 ½ cents. Spring wheat planting is ahead of schedule at 60% planted versus 47% for the five year average with emergence also ahead at 23%. Winter wheat crop conditions fell slightly to 68% good/excellent, down one point from last week. Wheat export inspections were improved at 17.6 million bushels, 7.5 million bushels above last week.
May Paris wheat closed EUR1 lower at EUR131/tonne, with London wheat closed for the May Day holiday.
Unsurprisingly it was a subdued days trading activity, with Paris rapeseed unchanged in all positions except Nov10 which was EUR0.25 easier. Paris corn was also mostly unchanged.
Dry weather concerns have eroded somewhat, with rain falling across many parts of Europe over the weekend, although parts of Ukraine and Russia are still dry.
A modest pick up in consumer demand, coupled with subdued farmer selling, seems to be underpinning the market at the moment. A weak euro is also a supportive factor.
Iraq bought 200,000 MT of Canadian wheat over the weekend, according to the state-run Grain Board.
Plantings in the US continue to run well ahead of last year, and also significantly above the five year average. Spring wheat sowings are 60% done the USDA said tonight, compared with 47% normally. Corn plantings are seen at 68% complete versus 40% normally, they added.