November beans closed at USD10.69, up 32 3/4 cents; October meal closed at USD304.70, up USD11.60; October oil closed at 41.91, up 55 points. Soybeans closed 38 cents higher for week. Managed money increased their longs by 10,520 contracts on the week. Brazil remains too dry for early soybean planting. "Growers anticipate seeding delays of at least 3 weeks due to the expected late arrival of the monsoon. Last year Mato Grosso soybean got planted very early. This proved to be advantageous for the yield, since the critical pod set and bean-filling period coincided with the peak rainy season in January," say Martell Crop Projection.
December corn closed at USD5.13 1/4, up 17 1/4 cents; March corn closed at USD5.25 3/4, up 17 cents. Front month corn broke through what had hitherto proven to be tough resistance at USD5/bushel for the first time since October 2008. This afternoon’s weekly CFTC report showed managed money adding 33,313 contracts to their net long. Funds bought an enormous estimated 40,000 contracts today, with rumours circulating of one household name throwing USD1 billion into commodities overnight. A hard freeze in Canada is expected to reach the Dakotas by Saturday.
December CBOT wheat closed at USD7.39 1/4, up 20 cents; December KCBT wheat closed at USD7.68 1/4, up 17 3/4 cents; December MGEX wheat closed at USD7.73 1/4, up 19 3/4 cents. This afternoon’s CFTC report showed the Funds and Managed Money adding to their net longs in the CBOT wheat this week. Canadian frosts are causing quality concerns, whilst parts of eastern Ukraine and Russia still remain too dry for winter planting. Corn breaking through USD5/bu added support to wheat, although all of the week's gains were made during this session, wheat futures had been down on t he week prior to today.
Nov London wheat ended GBP3.50 higher at GBP165.75/tonne, with Nov Paris wheat up EUR5.00 at EUR233.75/tonne.
Paris wheat staged a very strange day, closing below EUR230 support last night, yet opening above EUR236 resistance this morning, before subsequently falling back to trade with the same old narrow trading range of EUR230-236.
Brussels issued export licences for 514,000 MT of soft wheat this week, little more than half of what was issued last week, although year-to-date issues are ahead of last season.
A strongly higher overnight CBOT market was the catalyst for firmer prices today, largely on the back of continued fund buying relating to frost forecasts for China and Canada over the weekend.
One unconfirmed report suggests that a major household name investment bank sunk a billion dollars into the overnight grains this morning. Certainly fund interest extended their already record longs in corn.
Parts of eastern Ukraine and Russia remain too dry for planting, with only a third of the intended acreage sow in the latter so far.
Similar problems don't exist in America or most of Europe, winter wheat plantings here will surely be significantly higher. Fund money seems to be ignoring that for the time being and concentrating on the now, but the blinkers will have to come off eventually.
Basis FOB Lower Rhine in euros/tonne:
Oct 220,00 unch
Nov 216,00 +1,00
Nov/Jan 11 214,00 +3,00
Feb/Apr 211,00 +2,00
May/1st h.July 209,00 +1,00
Aug/Oct 11 189,00 +1,00
The overnight grains all finished sharply higher with wheat up around 10-13c, corn 8-11c firmer and beans up around 15c.
Corn broke through the USD5/bu mark with consummate ease on reports of frost in northern China potentially damaging corn output there.
Frost is also on the cards for Canada, likely causing quality if not yield losses. As one pundit said "we are going to be swimming in feed grain in Canada this year."
QT Weather today refer to a "widespread crop ending hard freeze" across Northern Alberta southeastward to Central Saskatchewan with the mercury falling to 19-28F. A second hard freeze is forecast to push into the Dakotas on Saturday.
A weak US dollar will add support, as too will news that Brazilian rains may not arrive until second half October.
Parts of eastern Ukraine and Russia remain too dry for planting, with only a third of the intended acreage sow in the latter so far. Meanwhile the harvest is limping along painfully.
There are no such problems in America, indeed the only problem here is deciding what to plant next with many of the newswires already talking of a "fight for acres".
Some chatter suggests that this break through USD5/bu on corn will discourage farmer selling rather than encourage it. The flip side is that it may mean soybeans coming under a bit of selling pressure for many who can't store and/or not sell anything.
We do usually get a seasonal dip in the soybean market in October, but then again we normally do in corn too.
The funds remain well and truly in the driving seat, we can sort out the small matter of where are all the real end-users going to come from at these levels somewhere down the line.
Early calls for this afternoon's session: corn up 8-10c, wheat up 10-12c, beans up 14-16c.
Having bounced off the ceiling of EUR236/tonne two or three times, Paris wheat finally capitulated and closed below support at EUR230/tonne yesterday. Open interest in the Nov also fell by around 4,000 lots.
Here we go then I think, we've broken out of this narrow range, EUR230 now becomes resistance, the funds are finally starting to liquidate their inverse massive long position, the only way is down.
But no, the overnight eCBOT market snaps three days of wheat declines on frost forecasts for northern China corn areas and back up we go, Paris surges to a fresh two-year high of EUR238 at the open and the plucky French resistance is broken.
But no (again), shortly after trading at a fresh two-year high the market immediately falls back below EUR236 and settles back where we were a couple of days ago in the narrow EUR230-236 range.
Do you remember that entire series of Dallas when everything that happened was erased for the following series and dismissed as being "all a dream"?
Latest official figures show the Russian harvest limping along producing 51 MMT of grains to date from 74% of the forecast combinable area.
The region worst affected by the drought, the Volga district, has seen production slump to just 1 MT/ha.
Whilst most of the harvest is nearing completion in southern and central areas, it's not yet past halfway further east in Siberia.
So far the nation's wheat harvest has produced just 34.3 MMT at an average yield of 2.07 MT/ha off 74% of the forecast area. That would normally suggest a final crop of around 46 MMT, but high levels of abandonment could knock another 5 MMT or so off that yet.
Barley production currently stands at 7.5 MMT, corn at 1.1 MMT and rapeseed output at 500,000 MT. The sunflower harvest is only around 14% complete, producing 1.2 MMT so far.
Winter grain sowings currently stand at 5.8 million ha, around a third of what they would like to get into the ground.
We obviously aren't going to crash and burn just yet then, with corn having finally broken through the five dollar barrier overnight on forecasts for frost in northern China later next week.
Even though frost in northern China is normal for late September you understand, and even though Chinese corn demand has waned to the extent that the government only manged to find buyers for 14% of what they offered at this weeks auction.
Despite the news yesterday that US export sales were down across the board, and with Egypt cancelling wheat purchases, fund myopia is clearly in charge. Corn prices are now their highest since the last "crisis" in 2008 - despite a potentially record US harvest being upon us.
Wheat of course is going along for the ride, currently 16c higher in front month December. Yet I read on one US farmer message board yesterday "there is no shortage of grain, only a shortage of somewhere to put it" with US elevators exuding wheat from every orifice as they frantically try to find space for the impending flood of corn and soybeans.
Wheat, corn and soybeans that are all going to sit there for months, if not longer, as the funds sit on their "investment" rolling their longs.
As the posting I mentioned points out, one of the things that the last big rally achieved was to bankrupt a significant chunk of the long-term demand-base and place the livestock sector under "extreme stress".
Lessons have clearly not been learnt. So let's all go round on the roller-coaster a few more times.
CBOT Nov soybeans ended down 6 1/4 cents at USD10.36 1/4; Dec soymeal fell USD1.40 to USD296.30; Dec soyoil closed down 26 at 41.75; Soybean export sales of 668,600 MT were down 73 percent from the previous week. Meal sales, like soybean sales, were below trade expectations for the combined marketing years at 65,200 MT. Private exporters announced the sale of 170,500 MT of soybeans to China for 2010/11 delivery and 67,000 MT of soybean oil to unknown for 2010/11.
Dec corn ended up 3/4 cent at USD4.96; March corn closed up 1/4 cent at USD5.08 3/4. Disappointing export sales led the decline, they were down 88 percent from last week at 584,000 MT. The USD5/bushel mark is proving to be a pretty difficult nut to crack for front month December. Crude oil was sharply lower, which also weighed on corn futures today. Funds apparently added to their length, buying an estimated 3,000 contracts today.
Dec CBOT wheat closed at USD7.19 1/4, down 7 1/2 cents; Dec KCBT wheat closed at USD7.50 1/2, down 9 1/4 cents; Dec MGEX wheat closed at USD7.53 1/2, down 5 cents. Wheat futures closed lower for the third day in a row, weighed down by poor weekly export sales data. They came in at 484,600 MT for the 2010/11 marketing year and negative sales of 165,000 MT for marketing year 2011/12. Cancellations to Egypt were reported in both marketing years.
Nov London wheat closed GBP0.75 easier at GBP162.25/tonne, with Nov Paris wheat down EUR3.50 at EUR228.75/tonne.
French analysts Strategie Grains cut their EU-27 soft wheat production estimate to 127.2 MMT, they also reduced their estimate of the percentage of the crop suitable for milling to around 55%, from 66% last year and 68% two years ago.
However, due to the lower grade of this season's crop they also cut their export estimate to countries outside the bloc to 17.4 MMT from 18.7 MMT last month and 18.8 MMT last season.
Overall barley and corn production was also reduced to 52.4 MMT and 56 MMT respectively.
The UK wheat crop looks like coming in around 15-15.4 MMT based on ADAS yield estimates, an increase of 4-7% on last year. Meanwhile this year's rapeseed crop could come in as high as 2.4 MMT, 23% higher than last season's crop and comfortably beating the previous record UK production of 2.1 MMT in 2007.
Front month Paris wheat has now failed to break through the recent contract high of EUR236/tonne a few times, and closed below support at EUR230/tonne for the first time in a week.
US weekly export sales fell well short of expectations today, and included cancellations from business pre-booked to Egypt for the current 2010/11 marketing year and the next.
Russian and Eastern Ukraine concerns, whilst legitimate, seem to be fully factored in at these levels.
There seems to be a growing feeling of "how much more bullish news can there be" developing. A firmer euro/sterling, large spec long position and a likely price-induced sharp increase in global plantings just around the corner appear to suggest a correction is overdue.
There were no real signs of it in the overnight trade, no huge flashing warnings, just corn down 3c or so and wheat and beans mixed.
Crude oil is a dollar or so easier, but hey we're cruising on nicely upwards in general so what's the worry?
Well, first off we've got corn struggling to break USD5/bushel even though every man and his dog knows for a fact that the USDA's 162.5bpa yield is pie in the sky. If everybody is so convinced then what the problem getting up above five bucks? Maybe it's because the last time it hit five dollars (Oct 2008) it did nothing but go down afterwards?
As Duane Lowry says on Farm Assist: "the market is capable of extending beyond what is a reasonable price and once it determines it was unreasonable, we don't go back to it."
If you fancy another reason why this market is overdue a correction then take a look at how far up we've come in a short time. Take a look at today's USDA weekly export sales, particularly for wheat and note the cancellations to Egypt and the minus sign in front of sales for 2011/12.
Then pop over to have a look at the record spec length in corn, and imagine the scramble for the exit door as and when this market does start to turn.
Then ask yourself if current price levels are really justified. Wheat isn't really that much in short supply is it? The only thing in short supply is the volume of seed to fuel farmers' appetites to plant loads more of it this time round.
And where have all the buyers gone suddenly? The phones have gone eerily quiet.
In the UK, the Farmers' Weekly report that deadweight pig prices fell for the tenth consecutive week last week, whilst deadweight cattle prices are at their lowest since August 2008 as livestock farmers liquidate their stock.
Apart from the ethanol and bioethanol refineries, the other real mouths to feed seem to be leaving the building.
Yet again the activity of fund money has created a two-headed monster. Stories are circulating of elevators in the US who don't want to take delivery of wheat in case it is committed to futures and sits there unmoved for months whilst the funds swap pieces of paper with each other.
So the elevators will only offer very low prices for wheat, in the hope that they don't get booked. US farmers are up in arms that they can't sell their wheat at the "shop window" prices they see on the exchange. KCBT are the latest to come under fire from the CFTC for the lack of convergence with the cash market.
It would seem that few, if any, lessons have been learnt from 2008.
These rampant bulls need feeding every day, and today's weekly export sales report from the USDA might have a few testing their divine belief in the courage of their own convictions this afternoon.
Expectations for wheat sales of 700,000MT-1.4 MMT took a severe dent with sales of only 484,600 MT for the 2010/11 marketing year and negative sales of 165,000 MT for marketing year 2011/12, bring the combined total to not much more than 300,000 MT.
Featuring loudly in today's report were cancellations to Egypt of 263,700 MT for 2010/11 and a further 110,000 MT for 2011/12.
Net corn sales of 584,200 MT were also disappointing and at the low end of expectations, they were down 88 percent from the previous week.
Soybean sales of 668,600 MT were also down 73 percent from the previous week.
Based on an average UK rapeseed yield of 3.7 Mt/ha from ADAS, 12% better than average, the UK 2010 crop should come in around 2.4 MMT this season using Coceral's planted area estimate of 650,000 ha. That's 23% higher than last season's crop of 1.95 MMT, and comfortably beats the previous record UK production of 2.1 MMT in 2007.
The UK wheat harvest is now 95% done say ADAS, with yields down 3-5% at 7.5-7.7 MT/ha. With a planted area of around 2 million ha this season, that would suggest a wheat crop of 15-15.4 MMT. Allowing for the fact that what is left to cut is mostly in the wilds of Scotland, let's go with a nice round figure at the low end of the scale of 15 MMT.
A contribution of a million tonnes in round figures is what we can expect from our Scottish, Welsh and Northern Irish brethren.
That would seem to suggest that the NFU were indeed guilty of talking their own book again earlier in the week with their English crop estimate of 13.5 MMT. To the tune of half a million tonnes, coincidentally exactly the same amount that they were on the low side with in 2009.
A crop of 15 MMT would be an increase of 4% on 2009.
Similar calculations using a winter barley yield of 6.2-6.3 MT/ha and a spring barley yield of 5.0-5.2 MT/ha suggest a combined UK crop of only 4.8 MMT this season, a 29% fall on last year.
Basis FOB Lower Rhine in euros/tonne:
Nov/Jan 11 211,00
May/1st h.July 208,00
Aug/Oct 11 188,00
The harvest in Kazakhstan appears to have got off more lightly than neighbouring drought-hit Russia this year. The Ag Ministry say that the country will harvest 16 MMT of grain this year, 20% down on last season, but significantly better than the 13.5 MMT that was being predicted a month or two ago. They estimate that the country will still be able to export 8 MMT of grain in 2010/11. Wheat typically accounts for around 80% of the Kazakh harvest, implying a crop of 12.8 MMT this season, some 1.3 MMT more than the USDA's latest estimate. Of course, they could be lying.
Shares in Scottish-based dairy business Robert Wiseman are down by more than a quarter today after it said tough competition in the milk market will wipe GBP7 million off it's financial year operating profits to April 2011. A further GBP16 million will disappear in the FY ending in 2012, it added, following "recent intense competitive pressures across all sectors of the market."
Just after noon Wiseman shares stood at 360p - down 125.5p, or 26%, on the day.
Shares in Dairy Crest were also down sharply.
That doesn't bode too well for further milk price increases to help pay the rising feed bill does it?
Liverpool corn gluten feed pellets Nov/Dec 155, Jan/Apr 157.
Wheatfeed pellets deld Midlands Oct/Apr 151.
Liverpool rapemeal Nov/Apr 190, Nov/July 184 EMQ.
Liverpool citrus pulp pellets spot 137.
UK wheat DDGS deld Cheshire spot 185.
Nov Soybeans closed at USD10.42 1/2, up 7 cents; Oct soybean meal closed at USD294.50, up USD0.80; Oct soybean oil closed at 41.61, up 28 points. Private exporters announced the sale of 21,000 MT of soybean oil to Algeria for 2010/11. Brazilian farmers are waiting on rain before they can start planting the 2011 crop. Planted area is currently expected to be slightly up on last year, with output in the region of 68-70 MMT. Export sales estimates for Thursday range from 650,000 to 850,000 MT.
Dec corn closed at USD4.95 1/4, up 1/4 cent; March corn closed at USD5.08 1/2, up 1/4 cent. Front month Dec couldn't quite manage to break through the magical USD5/bu mark. This is the first time since October 2008 that corn has traded at this level. The high then was USD5.00, with prices ultimately falling away. The market is full of optimism that corn is the next "big thing" but at the same time wary of pushing into higher ground. Weekly export sales are out tomorrow. The range of estimates for the report is 750,000 to 850,000 MT.
Dec CBOT wheat closed at USD7.04 1/2, down 9 1/4 cents; Dec KCBT wheat closed at USD7.59 3/4, up 2 1/4 cents; Dec MGEX wheat closed at USD7.53 1/4, down 1 3/4 cents. Wheat futures closed lower for the second day as the basis continues to widen. Country elevators, choc-full of wheat, are aggressive sellers, trying to make room for the bean and corn harvest. Weekly export sales estimates for Thursday range from 850,000 to 1,250,000MT. Egypt bought 295,000 MT of wheat of which 55,000 MT was US origin.
Nov London wheat closed GBP0.50 higher at GBP163.00/tonne, with Nov Paris wheat up EUR1.50 at EUR232.25/tonne.
Both closed off session highs on profit-taking.
Egypt bought 295,000 MT of mostly French wheat in it's latest tender, although it did also take a cargo each of US and Canadian.
The euro and sterling were both higher, which capped upside potential, with Nov Paris wheat seemingly stuck between the EUR230-236/tonne level.
Spec interest is still running high, with the open interest in front month Paris in excess of 130,000 lots, or over 6.5 MMT.
The gap between what the futures market says the price of wheat is and the cash price continues to widen. That's particularly true in the US where country elevators are scrambling for room as the corn and soybean harvest gets underway.
My good chum Brad in Southern Saskatchewan was the first guy I know to flag up the exceptionally wet sowing conditions in the spring, where he was a good few weeks ahead of anybody else blowing the whistle and banging the drum.
Suffice to say then that Brad has form. You'll be interested to hear what he's got to say about the current situation this time round then I'm sure:
"Another gloomy day presents itself for us in western Canada. Another in a long litany for us. With at most 20% of the crop in store and little progress in the past fortnight, stress levels are rising.
"Crop areas already reduced with seeding abandonment and flooding are now proving impossible to harvest through most areas. Quality is taking a major thrashing. Any cereals or pulse crops put to swath are pretty much write offs save any salvage value of feed.
"Standing grains, some being ripe for several weeks amid continuous moist conditions, are breaking down, mildewed and even showing signs of sprouting. We still show little prospect from the forecast over the next ten days of making significant progress.
"The cool wet weather has also prolonged the maturing of late seeded crops of which there were many. So along with quality issues, the general frost predicted for this late week, will curtail some production as well.
"Last season we had 20% of our harvest to go heading into October. That was nerve wracking enough. This is ............well ??........some level worse than nerve wracking I suppose!"
So I guess you could say that things aren't going to swimmingly for Brad, which is odd given the amount of water that they've got over there. So to cheer him up I'm going to send him a little present. Here you go Brad. It's alright I know he's got a sense of humour, he's Canadian not American!:
My old chums at Harbro continue their stealth invasion of England with the acquisition of the mobile animal feed business, Midland Feed Services Ltd of Stratford-on-Avon, I hear.
"MFS will continue to operate as an independent business within the Harbro Group and will complement Harbro’s other mobile feed business, Feedmix Ltd, which operates extensively throughout Scotland and the north and east of England," say Harbro.
I've seen Braveheart you know, I know your game.
The overnights closed mostly a little firmer with beans 4-5c higher and wheat & corn up 1-2c.
Crude oil is more than a dollar easier, which may limit any attempts for the grains to rally too high today. The leaky pipeline between Canada and the US might be open again by the end of the week.
Corn is supported by ideas that final US yields will ultimately end up lower than the USDA's revised 162.5bpa estimate from Friday. Also talk that South Korea is replacing wheat purchases it isn't going to get from the Black Sea with corn instead.
Sowing of winter crops in Russia and Ukraine is still well behind schedule, with the window starting to close.
Frost potential in Canada is also seen as a supportive factor, although it unlikely to make much difference to wheat and canola yields it could cut quality.
They are still waiting for rain to arrive in Central Brazil so that they can begin planting. Some forecasts are starting to show rain arriving in the 10-14 day time frame.
Egypt is tendering for wheat again today, the inclusion of France in the list of suitable sellers probably means that US wheat won't get a look in, although the euro has improved against the USD since lst week.
Early calls for this afternoon's CBOT session: corn and wheat up 1-2c, beans 2-4c higher.
"Apparent similarities between today's rising wheat prices and the food-price crisis of 2007-2008 are just that: apparent, not real" - Maximo Torero, International Food Policy Research Institution.
"Well the rampant fund spec buying with complete disregard for the consequences in the quest for a fast buck is pretty similar, Maxi baby" - Nogger
"Apart from that bit" - Max
The NFU's estimate of a English wheat crop of 13.5 MMT this year has got me thinking. Where is this stuff grown, and where is it all going?
Less than a quarter of last season's UK wheat crop was grown north of the M62, with Scotland, the North East, North West and Yorks/Humber regions producing 3.45 MMT of the UK's 14.4 MMT output.
Based on my calculations though, these regions accounted for 44% of UK wheat consumption in 2009/10, and that is only factoring in 300,000 MT of UK wheat going into bioethanol production.
Scotland, the North East and the North West are already wheat deficient. By the 2011/12 season with Vivergo in operation, even if it only operates at 50% of capacity, the Yorks/Humber region is also set to consume more wheat than it produces.
If Vivergo and Ensus were to run at full capacity in 2012/13 then the north of England would be something like 4.6 MMT wheat deficient based on current production rates. That's more than double what the region currently produces.
By then only three regions in the UK will produce more wheat than they consume: the West Midlands, the South West/Wales and the South East. That's not good news if you are a northern wheat consumer, but it's pretty damn sexy if you grow the stuff.
Of course we may have another player in the market by 2013: Vireol's GBP200 million Grimsby facility (that is unless the length of time taken to build their "exciting new website" directly correlates to how long the plant will take to construct).
By 2013 the average northern wheat grower could see his crop being fought over like the video for Frankie Goes To Hollywood's "Two Tribes" - except there will be three of them in the ring.
Winding me up this morning is:
"Hello, are you the owner of this phone number?"
"Yes. It's either that or I'm a burglar. A very polite burglar mind. Or one with a pathological hatred of ringing phones."
"Ah, you funny man. Hello Sir, my name is Adam (funny name for a bloke in Mumbai), I'm from XX Market Research, I promise I will only take one minute of your time."
"Right, well get on with it Adam as the clock is ticking."
"Yes Sir, and how are you today, did you watch the football last night, it's a lovely day here with me what's it like with you? This really will only take a minute of your precious time, I promise you that Sir. But before we start can I just say that this call is being recorded for training purposes. Now then can you please confirm that you are the owner of this telephone line?"
"You've almost wasted your entire minute Adam mate, I'd get a move on if I was you."
"Yes, Sir, you funny man. Now then this will only take a minute, are you the owner of this phone line Sir?"
I make a noise like the end of Countdown, di di, di di, diddle doo and put the phone down.
Thirty seconds later "Adam" is back on the line, except he isn't called Adam now he's called Jack.
"Hello there Sir, my name is Jack, I'm from XX Market Research, I promise I will only take one minute of your time. And how are you today, did you watch the football last night, it's a lovely day here with me what's it like with you? This really will only take a minute of your precious time, I promise you that Sir. But before we start can I just say that this call is being recorded for training purposes."
Well train on this Jackie Boy...I give him a concise list of every expletive in the English language, repeating several of them just in case he didn't quite catch them the first time round, whist explaining don't tell me you're only going to take a minute and then take ten minutes explaining that you're only going to take a minute. Smashing the phone back onto it's cradle with such force that MrsN#3 comes rushing in to see if the ginger kid over the road has smashed another window with his wayward cricketing.
"Don't tell me to calm down, I'm calm, I've never been so balls bustard buggering calm in all my bustard buggering life HAVE I ADAM, OR JACK, OR WHATEVER YOU BUGGERING BUSTARD BALL BREAKING BUGGERING NAME IS? WELL HAVE I? COME ON CALL ME BACK AND TELL ME. NOW."
The NFU were out yesterday with an ENGLISH wheat production estimate of 13.5 MMT, only marginally up on last year despite a higher acreage.
"Despite increased plantings production, this year is expected to be very similar to last due to lower yields. Production will be down on the five-year average by around 400,000 tonnes," they say.
It may be worth considering that twelve months ago the NFU pegged the English wheat crop at 12.9 MMT and the UK crop at 13.9 MMT. Both estimates subsequently proved to be half a million tonnes too low.
They haven't yet put a figure on barley output, but one is expected in the next fortnight. By coincidence last year's September barley estimate was also around half a million on the low side.
The dry spring is being blamed for lower yields, it will be interesting to discover if they see that being replicated in Scotland, where the wheat harvest is ongoing.
September soybeans closed at USD10.25, down 1/4 cent; September soybean meal closed at USD290.00, down USD6.80; September soybean oil closed at 41.20, down 14 points. The NOPA crush report out this morning showed the crush at 122.4 million compared to trade estimates ranging from 116 to 124 million bushels. Last night's USDA report showed 38% of soybeans dropping leaves, up 19 points from last week, 22 points from last year and also ahead of average. Good/excellent also fell one point to 64%.
September corn closed at USD4.78, up 8 3/4 cents; December corn closed at USD4.95, up 11 1/2 cents. September corn contracts expired today with the December contract now the spot month. The USDA crop progress report last night showed corn at 11% harvested, up 5 points from last week and well ahead of last year and the five year average. Corn rated mature was at 52%, 40 points ahead of last year and 20 points ahead of average.
Sept CBOT wheat closed at USD7.04 1/2, down 9 1/4 cents; Sept KCBT wheat closed at USD7.59 3/4, up 2 1/4 cents; Sept MGEX wheat closed at USD7.53 1/4, down 1 3/4 cents. The Australians said that the 2010/11 wheat crop will hit 25.1 MMT this season. That's more than 3 MMT higher than they last predicted back in June and within a gnat's chuff of the all-time record of 25.2 MMT. It's also 2 MMT higher than the USDA said on Friday.
EU grains closed mixed Tuesday, with Nov London wheat GBP0.75 higher at GBP162.50, and Nov Paris wheat falling EUR1.25 to EUR230.75.
A strong euro depressed Paris futures, whilst London wheat garnered support from ideas that UK wheat is cheap relative to French material, and that final harvest results here will show quality didn't suffer too much during the late-July and August rains.
The Australian Bureau of Agricultural and Resource Economics, or Abare, pegged the wheat crop Down Under at 25.1 MMT. That's the latest in a series of upward revisions, and also the highest so far this season. Indeed that places the 2010/11 crop within 100,000 MT of the all-time record.
They also put exports at 18.4 MMT, their highest since 1996/97 and 2.4 MMT above the USDA's latest estimate.
In addition to that, the Argentine Ag Ministry estimate this year's wheat crop at 12-13 MMT, up around 60-70% on last year.
The NFU estimate that the English wheat crop could be as low as 13.5 MMT this year, and we still have little idea how much of that was sold as standing wheat.
The overnights are lower with beans down around 5-7c, wheat 5c or so easier and corn off 2-3c. Crude oil is around half a dollar easier.
ABARE surprised the market with a 25.1 MMT estimate for this season's wheat crop, they also upped their export estimate sharply. Their production number is now close to their all-time record output, and their export estimate is the highest in more than a decade.
Better than normal monsoon rains this season mean that India are hoping for a record 82 MMT+ wheat harvest come March/April.
The Argy Ag Ministry peg this year's wheat crop at 12-13 MMT, up around 60-70% on last year.
The USDA crop progress report last night showed corn at 11% harvested, up 5 points from last week and well ahead of last year and the five year average. Corn rated mature was at 52%, 40 points ahead of last year and 20 points ahead of average. Good/excellent condition was down a point to 68%. The crop is clearly "well forward".
Meanwhile, they showed 38% of soybeans dropping leaves, up 19 points from last week, 22 points from last year and also ahead of average. Good/excellent also fell one point to 64%.
China only sold 14% of the corn they had on offer at their weekly government auction, that's down on last week's 19% take-up rate and miles below the 90%+ that was being witnessed a few months ago.
Japan is back in it's usual weekly wheat tender, shopping for 147,000 MT of mixed origin, of which 66,000 MT will be US.
Spec longs continue to drive the market, ignoring the bearish and seizing upon the bullish.
September contracts expire today, so there could be some strange front-end closes tonight.
Early calls on this afternoon's CBOT session: beans down 5-7c, corn down 2-3c, wheat down 4-5c.
Basis FOB Lower Rhine in euros/tonne:
Oct 215,00 +5,00
Nov 212,00 unq
Nov/Jan 11 210,00 +1,50
Feb/Apr 209,00 +0,50
May/1st h.July 208,00 +1,00
Aug/Oct 11 187,00 unch
The Australian Bureau of Agricultural and Resource Economics, or Abare, say that the nation's 2010/11 wheat crop will hit 25.1 MMT this season.
That's more than 3 MMT higher than they last predicted back in June and within a gnat's chuff of the all-time record of 25.2 MMT. It's also 2 MMT higher than the USDA said on Friday.
It's all down to bumper production in the east, with output in NSW seen at a record 9.9 MMT, whilst production in Victoria will come in at a 27-year high of 3.4 MMT, they say.
Wheat exports will leap to 18.4 MMT, their highest since 1996/97 and 2.4 MMT above the USDA's latest estimate, they add.
Although there are inevitably downside risks to final production, there is also the potential for final output to come in even higher, they enthused.
UK inflation remained unchanged at 3.1% in August. That's more than was expected and well above the BOE's target of 2%, and means that poor old Mervyn "the swerve" King has to get his pen and paper out to say sorry to the Chancellor for the eighth month in a row.
Rising food prices was one of the reasons that inflation refused to come down, and certainly from that perspective I wouldn't be expecting a significant shift back towards the 2% target any time soon.
That could be construed as bullish for sterling as it may mean an interest rate hike sooner than the market has been expecting.
That got the pound back on the road to recovery, after an early slump following news that house prices fell to their lowest levels for 15 months in August.
That lent weight to some fears that the dreaded "double-dip" recession might still be on the cards for the UK and it's magic money printing machine.
We're down against the euro on talk that strong economic growth in Germany will help the euro-zone as a whole. The euro is also up to a two month high against the dollar on euro-zone growth optimism, that might weigh on Paris grains today.
September soybeans closed at USD10.25 3/4, up 1 3/4 cents; September soybean meal closed at USD296.80, down USD0.40; September soybean oil closed at 41.34, up 9 points. Soybean inspections for export were only 6.971 million bushels compared to 14.483 million bushels the previous week. Oil remains the strongest leg, after recent export sales. Egypt tendered today for up to 20,000 MT soyoil and sunflower oil.
September corn closed at USD4.69 1/4, up 5 1/2 cents; December corn closed at USD4.83 1/2, up 5 1/4 cents. Corn added to Friday's gains, continuing to bask in the afterglow of the tightest stocks/use ratio since 1995/96. Weekly USDA grain export inspections were 36.314 million bushels this morning compared to last week’s inspections of 39.580 million bushels. Bullish growth data out of China saw crude oil futures stay strong.
Sept CBOT wheat closed at USD7.13 3/4, up 9 cents; Sept KCBT wheat closed at USD7.57 1/2, up 10 1/4 cents; Sept MGEX wheat closed at USD7.55, up 12 1/4 cents. Wheat inspections for export were strong at 30.009 million bushels today, compared to last weeks 23.328 million bushels. The USDA crop progress report showed spring wheat harvested was at 83%, up 7 points from a week ago. The Canadian harvest is making slow progress, dogged by wet and cold conditions.
Nov London wheat closed GBP1.25 firmer at GBP161.75/tonne, with Nov Paris wheat up EUR1.50 at EUR232.00/tonne.
The trade is still struggling to decide whether Friday's USDA report was bullish or bearish for wheat,
US ending stocks were dropped more than expected, but they're hardly tight at 24.5 MMT. Meanwhile world ending stocks were actually increased by 3 MMT thanks to a fall in global consumption.
In Europe, 2010/11 production was lowered from 137.5 MMT to 135.1 MMT, yet consumption here too was decreased by 2.5 MMT, with reduced EU-27 exports increasing our projected ending stocks from just over 10 MMT last month to 13.4 MMT now.
The USDA clearly believe that current prices will sufficiently ration demand on an EU and global scale.
Although we've had no official confirmation, many reports now suggest that around half of Germany's wheat crop this season will only be suitable for feeding after six weeks of non-stop rain.
The market still has a bouncing on the ceiling look, although Russian plantings are still way behind schedule and the optimum time frame has already passed in some areas. Russian wheat requires 50 days of growing time to reach the optimal tillering stage of development before winter arrives, according to Martell Crop Projections.
The excellent Agrimony.com report that that was the volume of wheat traded on CBOT last month, the equivalent of nine times the entire annual US production of wheat.
Speculators seem to have got the hots for EU wheat too, and they aren't getting any shortage of encouragement from NYSE Euronext either who are keen to push the new found liquidity in agri commodities this side of the pond. This was the record volumes of wheat traded over here in both July and August.
936,000 Contracts or 119,000,000 MT
That's the size of the combined spec and index fund long position in CBOT corn, almost 50% of all open interest.
The overnight grains closed mostly steady, with beans around 5-6c firmer, corn up 3-4c and wheat just 1 1/4c up on soon to expire September, but as much as 12c higher on Dec.
Crude is higher and the dollar weaker, adding strength to the grains.
There is very little in the way of fresh news.
Corn is supported on spillover from Friday's USDA report, whilst the hike in soybean yields and production already seems to be forgotten.
Bullish trade data out of China is supporting commodities in general today.
Conditions in Russia and parts of the FSU are still to dry, with only 30% of the planned winter grain area ready for sowing, according to the Russian Weather Service.
Winter wheat harvesting in Saskatchewan in 70% complete, with wet and cold weather hampering progress.
Abare will report on Australian crop production tomorrow. The USDA will report on corn and soybean harvest progress and condition ratings after the close tonight.
Early calls on this afternoon's CBOT session: wheat up 10-12c, corn up 2-4c, beans 4-6c higher.
Crude oil has extended Friday's gains today on news that a major pipeline that carries around 70% of America's oil imports from Canada has sprung a leak and been shut off.
The pipeline, which was reportedly carrying the thick end of half a million barrels/day, was found to be leaking in underground Chicago on Friday.
Improved economic data out of China, where year on year crude consumption is already growing steadily, helped add to oil's gains - pushing it as high as USD77.50/barrel, it's highest in a month.
Basis FOB Lower Rhine in Euros/tonne:
Nov/Jan 11 208,50
May/1st h.July 207,00
Aug/Oct 11 187,00
There must be a normal one over there somewhere, but sadly this guy obviously isn't likely to feature on anybody's short-list:
Man kills six in Kentucky after 'rage at wife's breakfast eggs'
Harsh but fair some would say, or "she won't be making the same mistake again though will she?" But not me.
The US exported a record 886,300 MT of DDGS in July, bringing year to date shipments to 4.95 MMT, within sight of the 5.65 MMT exported in the whole of 2009.
The top home in July was China, taking almost 40% of the total.
Thanks to a booming ethanol industry, analysts expect the US to ship a record volume of around 8.5 MMT of DDGS in 2010.
Today is already shaping up to be "one of those days" with very little to get us all excited.
It is however National Cup Cake Week. David Bennett of Leeds is the newly crowned Cupcake Champion of Great Britain 2010 with a Banana & Mango concoction. I don't suppose Dave is much use in a fight though.
Tomorrow is the last day of trading for September contracts on CBOT. Friendless Sept wheat has already opened up a 40c gap between itself and next month December.
Ukraine insists that it will export 15-16 MMT of grains in 2010/11. It doesn't use the words "very slowly" in it's press announcement. The Ukrainian Grain Association said last week that 24 vessels loaded with 380,000 MT of grain hare still awaiting customs clearance, some since as long ago as July 26th.
"I can assure there are no artificially created delays. The point at issue is the vessels where the examination of the quality of grain has not been completed yet," Deputy Customs Chief Serhiy Semka said at a press conference in Kiev on Friday.
Our mate in Ukraine, agronomist Mike Lee, links to this interesting slant on the politics of what is really going on over there.
Some news reports suggest that half of this season's German washout wheat crop will only be feed grade, as opposed to 20% normally.
Rubber prices have bounced back (thank you, thank you) from five days of declines from multi-month highs on better than expected Chinese industrial growth. Prices fell last week on reports that the Chinese authorities were investigating the activities of at least one very large spec long.
Meanwhile Indian condom manufacturers are far from tickled over the rocketing price of latex, according to this report: Going up "India’s condom industry has about 10-15 players, of which, only three to four are big players," it explains. Shame. You'll need to be on a footballer's wages to afford them before long.
Gutted to see that the Mancs went for the easy option and dropped Rooney for Saturday's high profile game against the mighty Blue Boys. I mean all the expense those poor Evertonians went to, buying Bob Marley wigs in readiness to sing "No Woman, No Kai" in a show of solidarity for the lad.
He was probably "tied up with his solicitors" or something.
Maybe they will drop the "the one thing you can say about Man Utd is that we always play until the final whistle" now too?