24/12/10 -- Twas the night before Christmas, when all through the house, every man and his dog was bullish, and so was their mouse - Clement Clarke Moore (1779 - 1863).
London wheat finished a predictably quiet pre-holiday shortened session with Jan GBP0.25 higher at GBP197.50/tonne and new crop Nov up GBP1.00 to GBP166.25/tonne. Apart from January, the other three old crop contract months all closed at GBP200/tonne or higher for the first time ever.
Jan Paris wheat closed the session EUR1.75 higher at EUR249.75/tonne, whilst new crop Nov gained EUR0.50 to EUR220.00/tonne. Paris rapeseed, corn and malting barley were all flat to higher too.
Nobody wants to sell this market short, even at these levels. It's perhaps extremely telling that the bulls are fully prepared to sit on their longs across the holiday period, rather than cash in profits ahead of a four day shutdown in the case of London wheat.
Volume was light as you might expect. With US markets closed a day earlier than Europe for the festive break, there was little fresh impetus apart from carryover sentiment from yesterday.
Drought worries in southern Russia still haven't been resolved in the Stavropol, Krasnodar and North Caucasus regions.
Meanwhile there's an ongoing drought in the North China Plain, which has received no important rain for 90 days, according to Martell Crop Projections. Henan, which accounts for around a third of China's substantial winter wheat output, is expected to begin cloud seeding before long in an effort to break the drought, according to media sources.
The likelihood of further yuan appreciation in the New Year may spur further Chinese buying of grains, as they seek to rebuild stocks depleted by substantial government auctions during 2010 in a desperate bid to keep spiraling food price inflation under control.
The probability of increased money flows into the agri commodities-sector once we get into January looks set to see further price appreciation ahead.
Best wishes for a healthy, happy and peaceful Christmas. Nogger.
23/12/10 -- Soybeans
Jan soybeans set a new 27-month high, up 20 3/4 cents at USD13.49 1/2; Jan soymeal was up USD7.30 to USD360.00; Jan soyoil closed up 62 point to 56.59. Export sales were much better than last week at 827,810 MT. The primary destination was China (637,300 MT). Argentina looks set for another difficult couple of weeks as temperatures sizzle at 98-105 degrees for thirteen of the next sixteen days, according to QT Weather.
March corn closed up 5 cents to USD6.14; May corn closed up 5 cents ar USD6.22. Corn was up for the seventh session in a row. Export sales were robust at 906,077 MT. Argentina corn yield potential is being limited by dry field conditions, deep-layer drought reflects a very dry spring. November was particularly dry in the Argentina grain belt with less than 20% of normal monthly rainfall, says Martell Crop Projections.
March CBOT wheat was down 1/2 cent to USD7.83; March MGEX wheat was down 1 1/2 cents to USD8.68; March KCBT wheat was up 1/2 cent to USD8.45. The USDA confirmed that private US exporters sold 100,000 MT of wheat to Iraq. Algeria also purchased 200,000 MT of optional origin durum wheat. The USDA also reported weekly export sales of 590,500 MT of old crop wheat plus a further 6,500 MT for delivery in 2011/12.
23/12/10 -- EU wheat closed higher Thursday with Jan London wheat up GBP1.00 to GBP197.25/tonne, and new crop Nov GBP0.25 higher at GBP165.25/tonne. Jan Paris wheat rose EUR0.75 to EUR248.00/tonne and Nov climbed EUR0.25 to EUR219.50/tonne.
You wait all this time for one little duck, then two come along at once. July London wheat closed at GBP204/tonne and May also managed a close above the magical GBP200/tonne mark also today finishing at GBP201.00.
March wheat traded at GBP200/tonne, closing just GBP0.25/tonne below that level otherwise we'd have been looking at three little ducks. Meanwhile front month January set another couple of records, trading up to GBP198.40/tonne, the highest for a front month ever. It also set another new all time high close for a front month.
The USDA confirmed that private US exporters sold 100,000 MT of wheat to Iraq yesterday, with them also apparently booking 150,000 MT of Australian wheat.
Despite being a reported seller of wheat last week, Turkey are said to now be in the market for 1 MMT of protein wheat on an import levy free basis.
Algeria has also been a wheat buyer this week, booking "at least" 200,000 MT, meanwhile the USDA today reported weekly export sales of 590,500 MT of old crop wheat plus a further 6,500 MT for delivery in 2011/12.
Current prices certainly don't seem to be putting too many buyers off.
23/12/10 -- Can we safely throw the record books in the bin now? With London wheat slipping into uncharted territory with front month January having closed at a hitherto unseen GBP196.25/tonne last night and July closing above GBP200/tonne for the first time for any contract ever.
The six million dollar question now must be where do we go from here of course. Perhaps amazingly there is a notion that UK wheat is still cheap, even at these levels, relative to French grain.
So before I do put those record books into the bin, a quick check back tells me that at the end of August Paris wheat was running at a premium over London of around GBP45/tonne. Last night that differential had narrowed to a little over GBP14/tonne. Even so that is still a larger gap than the one we had at the end of 2009 - GBP10.70/tonne.
For what it's worth the pound has been in a range of 1.10 to 1.20 against the euro for most of the year. By the way the exchange rates used in my little calculations above were 1.12 at the end of 2009, 1.20 at the end of August and 1.1750 last night.
Despite the widely publicised problems within some eurozone countries, the one advantage that they have over us here in the UK is that they aren't a one man band. Strength in the economies of some of the larger and more robust nations, can help offset weakness elsewhere.
In the case if the UK of course, we are very much more in charge of sailing - or sinking - our own ship.
A morning's Christmas Shopping on Tuesday told me that the High Street isn't doing very well at all. I was shocked to see how quiet everywhere was just a few days before the big day. Whether we can blame it all on the weather or not I'm not sure, but the point is that the retail sales figures that will start to filter through in the new year aren't likely to make good reading.
Will we make it all back in the January sales? Somehow I don't think so, not with the impending VAT increase and rising utility bills against a background of increased job uncertainty.
I envisage a raft of poor economic data for the UK in the first half of 2011, coupled with increased unrest from students and council workers just for starters. The impact of the recent harsh wintry weather will also filter through presenting a "double whammy" to the economy of reduced consumer spending and further budget cuts down the line as the cost of trying to keep the country running through the snow bites local authority spending even more.
That paints a bearish picture for the pound, and the possibility of the spectre of the dreaded "double dip" recession.
Meanwhile UK wheat (and rapeseed too) exports are tearing away and consumer demand seems to have been relatively unaffected by the price increases that we've seen in the second half of the year.
Scraping last night's Chicken Piri Piri off the record books, I can see that wheat usage in the UK from the animal feed sector has been relatively stable at around 6.5 MMT per annum during the past ten years. Even in 2007/08, the only previous occasion that we've seen prices at these levels, wheat usage in this sector only fell by 10% to around 6 MMT.
In contrast, demand for Human & Industrial use has been creeping up steadily, and that rise is set to become more precipitous as more demand from our new bioethanol chums kicks in.
There has clearly been some resistance from the livestock sector to the steep rise in feed costs, in many cases this has meant feeding their own forage at an accelerated rate. The harsh wintry conditions have exacerbated the problem, meaning that there could be an unexpected spike in feed demand at the tail end of the winter. Whether they can afford to pay for it is another matter. Maybe the supermarkets will have a whip round?
Meanwhile the traditional turnout time of Easter falls quite late in 2011, with Good Friday not until April 22nd. There will be plenty of cattlemen looking to break that tradition and turf them out earlier than that - if conditions allow it.
A weak pound, strong exports and a hard winter, combined with enough uncertainty over wheat prospects from Russia, Ukraine and the US paint a scenario for higher prices during the first half of 2011.
If you put a gun to my head right now I'd go for London wheat peaking around May time at somewhere in the region of GBP225/230.
22/12/10 -- Soybeans
Jan 11 soybeans closed at USD13.28 3/4, up 2 1/2 cents; Jan 11 soybean meal closed at USD352.70, up USD0.10; Jan 11 soybean oil closed at 55.97, up 41 points. Strikes and weather concerns in Argentina supported prices, as too did crude oil rising above USD90/barrel. Private exporters announced the sale of 110,000 MT of soybeans to China for 2011/12 delivery. Celeres estimate Brazilian soybean planting at 97% complete. Weekly export sales for tomorrow are expected to be 700,000 – 900,000 MT.
Mar 11 corn closed at USD6.09, up 6 3/4 cents; May 11 corn closed at USD6.17, up 6 3/4 cents. Corn closed at more than two year highs on weather concerns in Argentina. Private exporters announced the sale of 116,000 MT of corn for 2010/11 delivery to an unknown destination, along with 110,000 MT of soybeans to China. Weekly export sales for tomorrow are expected to be 850,000 – 1,050,000 MT.
Mar 11 CBOT wheat closed at USD7.83 1/2, up 18 1/2 cents; Mar 11 KCBT wheat closed at USD8.44 1/2, up 18 cents; Mar 11 MGEX wheat closed at USD8.69 3/4, up 12 cents. Iraq bought 100,000 MT of HRW wheat from the US. Turkey are said to be shopping for 1.0 MMT of what could likely be US or Australian wheat for shipment in the spring. Weekly export sales for tomorrow are expected to be 500,000 - 700,000 MT.
22/12/10 -- Jan London wheat closed GBP2.25 higher at GBP196.25/tonne and new crop Nov was up GBP1.2 to GBP165.00/tonne. Jan Paris wheat closed up EUR2.50 at EUR247.25/tonne, whilst new crop Nov climbed EUR1.00 to EUR219.25/tonne.
It was a new highest ever front month close for London wheat, whilst July too set an all time high for any contract of GBP202.00/tonne. Paris wheat also closed at contract highs, whilst Paris rapeseed is closing in on the magical EUR500.00/tonne mark, with Feb finishing at a contract lifetime high of EUR491.50/tonne.
Iraq bought 250,000 MT of wheat from the US and Australia in its latest tender, despite soaring prices, meanwhile the world's largest importer Egypt continues to buy on a weekly basis.
China may need to import more wheat in 2011 than normal after the North China Plain received no important rain for 90 days, due to a strengthening La Nina. In addition the government's recent decision to cap flour prices by selling wheat to local millers at heavily discounted prices will leave a hole in state-owned stocks.
Brussels reported that they had issued soft wheat export licences for 316,000 MT this week. That brings the year to date total to 10.9 MMT, well ahead of year ago levels.
The German Statistical Office report winter wheat plantings there virtually identical to last year at 3.26 million hectares. Winter barley sowings are down 6% to 1.23 million ha and winter rapeseed plantings have declined by just 1% to 1.45 million ha, they say. The latter figure is better than earlier reports had suggested.
22/12/10 -- An interesting report on Reuters this morning says that Chinese farmers have cut rapeseed plantings this year by 20% in the country's top four growing regions of Hubei, Anhui, Hunan and Jiangxi.
A survey commissioned by "several futures companies" found that government subsidies and minimum set prices for other grains may have encouraged local farmers to shy away from rapeseed in favour of winter wheat or left land idle for rice or cotton planting in the spring.
You probably won't be surprised to hear that the results of the survey contrast sharply with official data, which shows the Chinese Ministry of Lying par for the course modest 1% increase on last year.
21/12/10 -- Soybeans
CBOT March futures, settled up 10 1/2 cents at USD13.37 1/2; Jan soymeal traded ISD1.10 higher at USD352.60; Jan soyoil ended 58c points higher at 55.56. Oil World say that a range of 43-48 MMT for Argentine soybean production may be more accurate than the current USDA estimate of 52 MMT. Argentine workers at crushing plants near Rosario are reported to have have gone on strike. Brazilian weather has been generally favourable for crop development.
Mar 11 corn closed at USD6.02 1/4, up 2 3/4 cents; May 11 corn closed at USD6.10 1/4, up 3 1/4 cents. Funds were reported to have bought somewhere in excess of 2,000 to 3,000 contracts today. Argentina remains too dry, with a potential negative impact on corn output there. China only sold 190,000 MT of the 1.8 MMT reserve corn offered at today's auction.
Mar 11 CBOT wheat closed at USD7.65, down 4 1/2 cents; Mar 11 KCBT wheat closed at USD8.26 1/2, up 1/2 cent; Mar 11 MGEX wheat closed at USD8.57 3/4, down 1 3/4 cents. The Australian wheat crop still has huge question marks over it regarding quality. Japan bought 65,000 MT of Australian wheat today. Dryness in the US Plains is still a concern.
21/12/10 -- London wheat closed almost universally higher with Jan up GBP2.00 at GBP194.00/tonne and new crop Nov GBP1.75 higher at GBP163.75/tonne. Paris wheat closed with Jan up EUR3.75 at EUR244.75/tonne and Nov climbing EUR2.25 to EUR218.25/tonne.
This was the highest close for a London wheat front month in history.
Defra revised this season's UK wheat production estimate up slightly to 14.9 MMT. We're going to need all of that at the rate that exports are going.
The head of the Russian Grain Union suggested yesterday that their export ban may extend beyond July 1st. The only surprise from that quarter would be if it was to end on July 1st if you ask me. He's already talking of fertiliser shortages in the spring and we know that winter wheat plantings are down sharply too.
The Chinese government have agreed to sell off 1.5 MMT of it's own wheat stocks to local millers in return for a cap on flour prices in the run up to the Lunar New Year in February. That's still quite a long way off yet, and more subsidised sales may be needed in a country that consumes around 9 MMT of wheat every month.
Drought is also a problem in northern wheat growing areas there, that may mean that they need to replenish stocks in 2011 via increased imports, according to trade gossip.
The Australian wheat harvest is ongoing, but there are all sorts of reports relating to quality issues there including vomitoxin.
Meanwhile, in North America drought from Mexico is expanding up into the US Great Plains. The last important rainfall in western Kansas was in September, according to Martel Crop Projections. Kansas accounts for around a quarter of all US wheat production.
21/12/10 -- The Ukraine Ministry report that less than 7% of winter crops are in poor condition, significantly less than year ago levels. Winter wheat is rated an impressive 57% good and 37% satisfactory. Barley is rated 44% good and 46% satisfactory, with OSR pegged at 54% and 36% respectively.
20/12/10 -- Soybeans
Jan 11 soybeans closed at USD13.15 1/4, up 16 1/2 cents' Jam soybean meal closed at USD351.50, up USD3.70; Jan 11 soybean pil closed at 54.98, up 85 points. Weekly export inspections of 44.6 million bushels were considered supportive this morning, more than 10 million larger than the same week a year ago. The outlook for Argentina is for the most part hot and dry.
Mar 11 corn closed at USD5.99 1/2, up 3 cents; May 11 corn closed at USD6.07, up 2 3/4 cents. Corn finished at its highest closing price since July 2008. Export inspections today of only 27.02 million bushels were disappointing fron a bullish perspective. The projected weekly average needs to be around 38.0 million bushels to meer current USDA projections,
Mar 11 CBOT wheat closed at USD7.69 1/2, up 12 3/4 cents: Mar 11 KCBT wheat closed at USD8.26, up 14 1/4 cents: Mar 11 MGEX wheat closed at USD9 1/2, up 17 1/2 cents. Again better quality wheat gained relative to CBOT grain. China say that they have ordered local millers to cap flour prices, which may restrict local wheat levels.
20/12/10 -- Jan London wheat closed GBP1.50 higher at GBP192.00/tonne and new crop Nov was up GBP2.50 at GBP162.00/tonne. Jan Paris wheat closed up EUR4.75 at EUR241.00/tonne, whilst new crop Nov climbed EUR3.25 to EUR216.00/tonne.
In the UK we are now within just GBP0.50 of the highest close for a front month contract of all time, GBP192.50/tonne set on 25th Feb 2008. Another milestone today was the July future closing at GBP200.00/tonne.
Continuing with the local theme, the RPA said today that 14,970 MT of barley was sold out of UK intervention last week, leaving 136,000 MT still available for purchase.
Snow and freezing temperatures continue to dog the UK with lows of around minus 14/15C forecast overnight. Late pre-Christmas demand for feed seems to have kicked in over the weekend after another widespread dusting of the white stuff.
Even those livestock farmers who thought that they'd have enough of their own forage to see them through until spring now seem to be worrying over how quickly their stocks are diminishing.
The Russian Grain Union's president said that their grain export ban may extend beyond the existing July 1st deadline. Surprise, surprise. He also forecast that it might be cold this winter. Winter grain plantings are down 14%, he added.
Conflicting reports are coming out of Australia, with some saying that recent wheat crop downgrades have been over estimated. Others suggest the opposite, only time will tell.
20/12/10 -- The overnight grains began the week in bullish mood, with beans and wheat ending around 10-12c higher and corn up 4-5c.
Crude oil is around half a dollar higher and the US dollar broadly unchanged.
The outlook for Argentina is for the most part hot and dry. Weekend rains totalled 1-3 inches in Santa Fe and Santiago del Estero, 0.50-1.25in. in Entre Rios, and 0.15-0.60 in Cordoba, Buenos Aires and La Pampa, say QT Weather.
The week ahead will see rains continue in the far north, with heat rebuilding and no rain until Thursday in the south. Temperatures will remain above normal reaching 95-
100 degrees most areas, they add.
Mixed reports continue to come out of Australia, with some suggesting that the 50-60% downgrades to wheat in the east might be overstated.
China has asked it's millers producers to cap flour prices until Chinese New Year in February. There are some ideas that this will lead to reduced demand for wheat, as we appear to be seeing with soybean demand after restrictions were introduce on soyoil prices.
Early calls for this afternoon's CBOT session: beans up 10-12c, wheat up 8-10c, corn up 3-5c.
Bearing in mind that a long holiday and month & year end is looming further profit-taking could be on the cards this week. Even if we do close higher tonight, then there's always turnaround Tuesday to look forward to tomorrow.
20/12/10 -- Just days after the Russian Ministry confirmed that almost their entire sherbet crop had been wiped out by drought, the Australian Wine Gum Board have said that heavy rains in the east of the country would see supplies of the fruity chew drop to the lowest levels since the war.
"Farmers had been hoping for a bumper wine gum crop until the rains started," they said. However, non-stop rain since July has led to almost the entire crop being downgraded to "those black ones that nobody likes," they say.
It's just the latest in a series of devastating blows to have been dealt to the global confectionery market recently, said one analyst.
"Only last month the Ivory Coast's entire output of coffee cremes was wiped out after accidentally being left on the dashboard of a Ford Fiesta in full sunlight for three days," he added.
One UK sweet shop owner was recently dragged from his shop and almost beaten to death with a Curly Wurly after locals accused him of profiteering after he increased the price of a Milky Way from 27p to 29p "totally without warning".
The government have appealed for calm, and have assured elderly people that there are sufficient supplies of extra strong mints on hand to get them through the winter.
The sick will also be issued with one packet of Tunes each, which they will be asked to suck very slowly with the wrappers still on, in line with government guidelines until the situation improves, said a Whitehall official.
More as we get it...
20/12/10 -- A bankrupt Russian poultry firm, responsible for producing more than half the chicken in the Kursk region of the country, ordered the wholesale slaughter of more than a million chickens over the weekend after they ran out of money to buy feed.
According to this report in the Moscow Times, they then posted video footage of the mass inhumane slaughter on YouTube in a bid to obtain state aid. I've a feeling that the state aid they are likely to get may come in a .45 calibre* format:
I think I'll just have the salad
* Which reminds me that I read that the Russian State Circus have just fired their human cannonball act. They'll find it hard to replace a man of his calibre methinks.
20/12/10 -- Wandering around a small nearby village greengrocers/general store at the weekend my eye was caught by several large clear polythene sacks containing some greenish "pellets". The largest "pellet" I've ever seen in fact at around 50mm across.
The very helpful young man was delighted to assist. "We sell these bottles of extra virgin rapeseed oil, and that's the waste by-product," he informed us thrusting a brochure into my hand.
It made pretty impressive reading too. The "briquettes" are made in Yorkshire, from rapeseed grown in Yorkshire and only release the same CO2 back into the Yorkshire atmosphere that it recently sucked out of it.
They also have twice the energy of logs and burn twice as hot and for three times as long, they say. They produce no soot and virtually no ash, and what they do produce can be spread onto the garden as fertiliser, they add.
A 12.5kg bag is retailing at GBP8, similar to smokeless coal, that's GBP640/tonne. Not bad for a "waste" product, and more than three times better than selling it as an expeller in meal form into the feed trade.
I bought a sack and tried a few out last night, just out of interest, and they burned quite well. Does that mean I'm turning into Drax?
Incidentally, the cold pressed oil comes in at GBP4.95 for a 250ml bottle, that's around GBP21,500/tonne by my calculations.
Obviously there are some substantial costs involved in terms of bottling/pelleting and distribution not to mention scale, nevertheless the figures make interesting reading.