18/02/11 -- World agri-weather highlights from the excellent Martell Crop Projections:
- Dry forecast in US hard red winter wheat; drought will worsen; Midwest snow nearly gone, more predicted this weekend for S Dakota, Minnesota, Wisconsin, Michigan; heavy rain slated for Eastern corn belt Monday
- Brazil Mato Grosso soy potential good, wet February favours late pod filling; Goias too dry; hot temps in Rio Grande do Sul; no damage, soil moisture very good; Parana expecting more rain, high soy yield expected
- Argentina beneficial showers occurred last night; first rain in a week; Cordoba rather dry this month, needs the rain; 90s F have returned to grain belt; may be offset with strong thunderstorms, heavy rain
- Southern Europe scattered showers, helpful where they occurred; drought worsening in France, northern Spain, Hungary, former Yugoslavia, Bulgaria; hardly any rain the past 6-8 weeks; welcome rain coming if you trust forecast
- More rain in Australia deserts, unusual wet pattern; February saw heavy rain return to southern New South Wales, Victoria, South Australia; summer crop conditions good, plenty of rain and no heat
- Spotty showers yesterday in North China Plain; wheat still stressed for moisture Shandong and Henan, top 2 provinces; Northeast China Jilin and Heilongjiang still below freezing; less cold than week ago in this corn/soy area
- India dry yesterday; recent rains improved wheat in north, northwest; Pakistan likewise got a boost from generous February rain, new weather disturbance moving in from the west; temperatures have moderated, good for winter crops
- Dry and very cold in Russia yesterday; Volga, Black Earth afternoon temps below zero F; snow is insulating wheat, no damage suspected; Black Sea wheat not real cold, snow expected Stavropol; Mideast wet, favourable for wheat
18/02/11 -- The market closed sharply lower after China raised it's bank reserve requirements by another half percent today. It's also a three day weekend in America, which probably encouraged some profit-taking this afternoon.
Soybeans -- Mar 11 soybeans closed at USD13.68, down 36 1/2 cents; Mar 11 soybean meal closed at USD362.00, down USD10.70; Mar 11 soybean oil closed at 56.49, down 176 points. Soybeans were down around 48 cents for the week. Fund liquidation of their excessive long position ahead of the weekend was maybe behind tonight's decline. Cancellations as China and others switch to South America perhaps also caught the market off guard.
Corn -- Mar 11 corn closed at USD7.09 3/4, down 3 cents; Dec 11 Corn closed at USD6.12 1/2, down 2 3/4 cents. Corn was easily the strongest leg of the three, with tight US stocks and strong demand from the ethanol sector underpinning prices. Mexico bought another 156,100 MT of corn today, the USDA said. On the week as a whole Mar corn did at least manage to close with modest gains, up 3 1/4c.
Wheat -- CBOT March wheat fell 28 1/2c to USD8.22 1/4 a bushel; KCBT March wheat lost 23 1/2c to USD9.29 3/4; MGEX March wheat declined 25 1/2c to USD9.55 1/2. Wheat ended between 45 and 62 cents lower on the week. Spotty showers occurred yesterday in the North China Plain, although wheat is still stressed for moisture in Shandong and Henan - the top two producing provinces, say Martell Crop Projections.
18/02/11 -- Has some interesting views on life, and occasionally the grain markets too sometimes. He's got his own blog you know, which gets as many hits currently as it took me four months of solid blogging to acquire, you tight bastards. See Nogger's dog's blog here.
I realise that this is quite a big picture of me (not at all interesting) and only a small picture of him (maybe moderately more interesting), so I apologise in advance for that, but it's the only one I have to hand. He also has quite an interesting search engine all of his own called poohgle. It's Google, with a kind of doggie twist (if you are extremely fortunate a white doggie twist). More of a log than a blog perhaps.
He overhears things occasionally too and repeats them. I wish he wouldn't, but what can I do? Still, I'm sure you won't go telling anybody.
18/02/11 -- EU wheat closed mixed with London wheat mostly higher and Paris wheat lower. Mar London wheat closed GBP1.50 higher at GBP205.00/tonne and new crop was up Nov GBP0.90 to GBP174.05/tonne. Mar Paris wheat fell EUR1.25 to EUR262.75/tonne, with Nov down EUR0.75 to EUR234.75/tonne.
It was a strange old day with Mar London wheat opening GBP4/tonne lower at GBP199.50, the first time it had traded below GBP200/tonne since Jan 21st. It rebounded fairly quickly from that, but still traded in negative territory for most of the day.
Exactly how London managed to finish higher is frankly beyond me, the fact that it is cheaper than Paris wheat is the only hint of an explanation I can offer. Other than that the cards look stacked heavily against it from my side of the table.
Firstly, quality wheat is what there is a world shortage of, not feed wheat. Quality wheat is what North Africa and the Middle East are buying. Nobody wants British feed wheat at these levels, within the EU Danish wheat is far more competitive.
Secondly, We've just rescinded the EUR12/tonne import duty on feed wheat coming into the EU, and thirdly Australia has plenty of much cheaper feed wheat to export, some it it possibly to us.
On top of that the pound was higher today as the market starts to warm to the idea that inflationary pressures will start to push UK interest rates up pretty soon.
Meanwhile UK livestock numbers are falling as producers exit the industry, or at least take time out, faced with soaring feed bills and generally slug-like price rises for their end product.
To round off the whole little lot, US wheat futures have taken a late turn for the worst (probably too late in the day to influence EU prices) ahead of a three-day weekend. As I type this report, just before the closing bell in Chicago, CBOT wheat is 27c lower
Unless things change dramatically over the weekend, London looks set to open sharply lower on Monday morning I'd say.
18/02/11 -- The overnight grains were lower with wheat down around 12c, corn around 6c easier and beans falling 20c or so.
Corn had hit a fresh 2 1/2 year high in early Globex trade before China took the wind out of the bulls sails by raising it's bank reserve requirement by 0.5% for the second time this year, in another attempt to curb rising inflation.
It's a long weekend in the US with Monday being President's Day, thus record or near record fund length in wheat, corn and beans may encourage some money to be taken off the table today.
India says it has planted a record wheat area this year, and is expecting a bumper crop. China has bought 125,000 MT of Australian feed wheat, bringing it's total purchases to date from that quarter to 375,000 MT.
The USDA have confirmed the sale of 100,000 MT of US HRW wheat to Turkey, it is not clear if that is additional business to the 150,000 MT sale made earlier in the week. Mexico have also bought another 156,100 MT of corn, they add.
There are rumblings coming out of Ukraine that a recent unseasonably warm spell, quickly followed by a return to sub-zero temperatures, may have caused some crop damage.
China's wheat growing areas have seen crop conditions improve slightly this week, but some serious precipitation still needed to get this crop home.
Heavy rains are disrupting the Brazilian soybean harvest, but a record 70 MMT or higher crop now seems assured. Argentina is more likely to have a crop of around 47-49 MMT according to most analysts estimates, some 5.5-7.5 MMT down on last year.
Early calls for this afternoon's CBOT session: beans down 18-20c, corn down 6-8c and wheat down 10-12c.
18/02/11 -- London wheat has opened with front month March down GBP4/tonne, dipping below the magic that is GBP200/tonne for the first time since 21st January.
The overnight Globex market is 10-12c lower and the pound sharply higher, both of which are putting pressure on UK grain.
French wheat is also down, although not by as much, currently EUR1-2 lower. Brussels issued export licences for 356,000 MT of soft wheat this past week, an improvement but still not enough to hit the USDA's forecast for the 2010/11 marketing year.
18/02/11 -- The pound is up above 1.62 against the dollar and close to 1.1950 against the euro this morning as pundits bet on rising inflation forcing the Bank of England's hand on interest rates sooner rather than later.
High profile (I was going to say shameless self-publicist, but that would be unkind) MPC member Andrew Sentance made comments at a dinner last night that suggested that other committee members were coming round to his way of thinking.
The minutes of this months MPC meeting are out next Wednesday and they will be "more interesting than normal," he apparently said. (He may have been misquoted of course and could have said "more interesting than Norman" - referring to former bushy-eyebrowed Chancellor and boring old fart Norman Lamont).
A report in the Telegraph recently quoted two former MPC members as saying that they would have voted for a rate increase themselves last week if they were still on the committee. It seems that last week's unchanged vote may have been more of a split decision than previous ones.
You can follow the pound tick by tick on the stunningly excellent Grainportal.com, which is where the chart pictured comes from.
17/02/11 -- Soybeans: beans rebounded sharply from the losses of the past couple of days closing with gains of 38-40c. Trade rumours that China’s Ministry of Commerce may be considering cutting import taxes got the market all excited as fund bought an estimated 19,000 contracts on the day. Weekly export sales were a tad disappointing at 396,400 MT, and new crop cancellations were also a concern.
Corn: corn hit fresh contract highs today and are now very close to all-time highs set back in the euphoria of 2008. Export sales were at the upper end of trade estimates at a combined total of 1,168,700 MT, prompting funds to buy an estimated 15,000 contracts on the day. Strategie Grains cut their EU-27 corn crop estimate by 300,000 MT to 58.3 MMT.
Wheat: CBOT March wheat rose 13 3/4c to USD8.50 3/4 a bushel whilst KCBT March jumped 23 1/4c to USD9.53 1/4 and MGEX March climbed 23 1/2c to USD9.81. Export sales were strong at 726,300 MT against expectations of 400 - 600 TMT. EU soft wheat export licences cam in at 356,000 MT, a big step up from last week, but less than needed to meet USDA targets.
17/02/11 -- EU wheat futures closed higher, rebounding from steep losses over the past couple of days with Mar London wheat up GBP2.50 to GBP203.50/tonne, and new crop Nov also up GBP2.50 to GBP173.15/tonne. Paris wheat closed with Mar EUR2.50 higher to EUR264.00/tonne and Nov rising EUR1.50 to EUR235.50/tonne.
Strength came from overnight and afternoon gains in US grains, and ideas that sharp losses over the past couple of days may have been overdone.
French analysts Strategie Grains trimmed their 2011 EU grain production estimates slightly from last month, although all are up on last year. Soft wheat output was pegged at 135.5 MMT, down 0.1 MMT from last month but up 8.9 MMT from last year.
Barley production fell 600,000 MT from January to 55.2 MMT, although that still represents an increase of 2.3 MMT on 2010. Corn output is now seen at 58.3 MMT, compared with 58.6 MMT last time and 55.2 MMT last year.
There is talk of dryness in central and southern France, northern Spain and Italy.
Brussels brought forward it's decision on abolishing EU feed wheat and barley tariffs by a week to today, and agreed to lobbying from feed groups to waive both for the remainder of the season.
Opinion is divided as to whether this will open the door for a flood of cheaper foreign imports (particularly Australian feed wheat) or not. Certainly there is interest for them closer to home from China and Malaysia/Indonesia, however given the unusual size of surplus feed wheat Down Under this year and the slump in freight rates some of that excess is indeed likely to find it's way to southern Europe I feel.
17/02/11 -- The overnight grains closed firmer with beans up around 12-13c, wheat 8-10c higher and corn up 7-9c.
Consolidation from the recent break in prices was evident. Outside markets are offering few clues with the dollar, crude and equities little changed.
Weekly export sales were strong, with corn topping 1 MMT for the third week running. Wheat also came in above expectations, but "unknown" new crop cancellations dragged beans a bit lower than trade ideas.
South American weather looks largely non-threatening, the trade is becoming resigned to a record Brazilian soybean crop and the inevitable switch away of Chinese interest.
Europe has removed it's duty on feed wheat and barley imports, which could pave the way for lower grade Australian, and possibly Ukraine wheat to make some inroads. Ukraine have recently increase the volume of wheat and corn it will allow for export in the current marketing year, and are talking about possibly removing quotas on corn altogether.
The USDA have announced the sale of 101,600 MT of corn to Japan.
China say that the winter wheat area under threat from drought has reduced slightly.
Strategie Grains have trimmed their EU 2011 wheat, barley and corn crop production estimates slightly from last month, although all three are showing increases on last season's output.
Early calls for this afternoon's CBOT session: beans up 10-12c, what up 8-10c, corn up 7-9c.
400 - 700 TMT
400 - 600 TMT
800 TMT - 1.1 MMT
17/02/11 -- Rapemeal prices have arrested their recent steep decline following seed prices sharply lower.
Here's the latest guide prices for EU rapemeal, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
17/02/11 -- Brussels have apparently brought forward their vote on whether to temporarily scrap the existing import duty on feed wheat and barley and passed the motion this morning. Full story on Agrimoney: EU bows to Spanish call to axe grain import duties
Cool, we can now save the planet by creating bioethanol from wheat shipped all the way from Australia.
17/02/11 -- Last night's CBOT market gathered a bit of upside momentum late in the session (although still closing lower) which has carried through to the overnight Globex market this morning. Wheat currently trades around 5c higher, with corn up 3-4c and beans 4-6c better.
After a couple of days of hefty shake-outs we'll probably see London and Paris wheat open a bit higher this morning I feel, aided by the overnight market. Whether they can maintain that momentum remains to be seen. The EU wheat market is looking tired.
Paris wheat may garner support from last night's news that French wheat did get a look-in at Egypt's latest tender late on last night.
It's London wheat that I'd expect to struggle the most. We've got a firmer pound on the back of potential interest rate rises before too long faced with rising inflation. We've also got the spectre of imports coming in if the existing duty gets scrapped next week and slack domestic demand with prices over GBP200/tonne.
On a global scale La Nina seems to be rapidly weakening, which appears to returning us to more like normal weather conditions around the world. Thank God.
Later today we've got the USDA out with their weekly export sales data and tonight we'll know how much wheat Brussels has issued export licences for this past week.
16/02/11 -- World agri-weather highlights from Martell Crop Projections:
- Strong warming in the United States bringing wheat out of dormancy, highs 60s hard red winter wheat area; Midwest snow rapidly melting; fields still frozen Upper Midwest; big rain event predicted next week in US Corn Belt
- Mato Grosso heavy rain continues, good for pod filling soybeans; reinforces forecast for record Brazil soy harvest; 7 day outlook drier South Brazil, soil still wet from last week heavy rainfall; no Brazil crop worries
- Argentina rain would be welcome, has been dry for one week; cool Feb temperatures a big help, holding evaporation down; forecast hopeful for showers Cordoba, La Pampa but dry in eastern grain belt
- Beneficial showers yesterday in western Europe; still not enough to relieve dryness central France, northern Spain, Italy; forecast wet, but when does it rain? Warmth western Europe a contrast to bitter cold Poland, European Russia
- Australia weather favourable for summer crops, Feb coolness favours summer crops South Australia, Victoria, southern New South Wales; heat wave in Western Australia, highs upper 90s F; rainy season due to start Apr-May
- Snow and rain showers again in China winter wheat area, mostly under .20 inch, scattered; winter rapeseed faring better, heavier rain; winter crops semi-dormant; much cooler this week; NE China corn-soy area still frozen
- Northern India showers again yesterday, beneficial for winter wheat; February heat has reached winter wheat, cooler forecast is beneficial; India subcontinent still way too hot highs over 90 F
- South Russia doing better with rainfall, heavy amounts past 30 days; cold temps keeping witner wheat dormant; excellent rain affecting Turkey, Russia Caucasus wheat areas, all good
16/02/11 -- Soybeans: Beans rebounded somewhat from early losses closing 2-4c lower, with meal down USD2-3 and oil 7-10 points higher. Even so this was the fifth successive lower close for beans with funds selling an estimated 2,000 contracts on the day. Exports are seen slowing as the (potentially record) Brazilian harvest picks up. Weekly export sales will be out tomorrow with trade estimates predicting sales of 400-700,000 MT.
Corn: Corn managed to close unchanged after trading lower for much of the session. Crude oil moved modestly higher. Argentina's corn crop is likely to be 19.5 MMT compared with 22 MMT last season, according to one trade source. That's better than some earlier estimates of 14-15 MMT before recent rains arrived. Mexico's winter corn crop may not have been as badly damaged by frost as some previous talk indicated. Weekly export sales for tomorrow are likely to be in the range of 800 TMT - 1.1 MMT, according to trade estimates.
Wheat: CBOT wheat was 2-4c lower, with KCBT wheat down 12-14c and MGEX wheat declining by 15-20c. Egypt bought three cargoes of wheat in today's tender, two of which came from the US. La Nina is finally waning rapidly which generally seems t be improving global crop weather. China is turning wetter in drought-stricken areas to the north. Russia look like emerging from winter with decent moisture levels. Australian and Argentine wheat crop estimates are increasing.
16/02/11 -- EU wheat closed sharply lower for the second session in a row with Mar London wheat down GBP6.00 to GBP201.00/tonne and new crop Nov down GBP6.35 at GBP170.65/tonne. Mar Paris wheat fell EUR5.00 to EUR261.50/tonne, with Nov down EUR4.75 to EUR234.00/tonne.
Weak speculative longs seem to be getting forced out of what has suddenly turned into a very volatile market. Old crop London wheat closed at contract lows on the day, whilst Nov11 traded as much as GBP13.00/tonne lower at one stage, before rebounding to close with losses of around half that.
The probability that Brussels is about to suspend EU feed wheat and barley import duties next week could open the door for significant volumes of foreign wheat to enter the bloc.
ABARES say that despite all sorts of problems this year Australia's wheat crop is up 20% to 26.3 MMT this season. Much of that this time round is of course feed wheat looking for a home.
Argentina meanwhile are set to put the finishing touches to a 15 MMT wheat crop, double last season's output, on the back of "exceptional" yields. That puts them firmly back on the world export stage after an absence of a couple of years, with their largest crop since 2007/08.
It seems that the world isn't going to run out of wheat after all, much to the bulls' disappointment. It's March in a fortnight which means that India's anticipated 82-85 MMT harvest is almost upon us, they will soon be harvesting in North Africa too, which may slow demand from that quarter somewhat.
Egypt did however buy three cargoes of wheat today, one of which was French origin (the other two were from the US). So there is still some buying interest out there, it just isn't for feed wheat. The downside for that has to be quite considerable from here I'd say.
In the shell of a nut, end users simply don't want it at these levels, and they'll want it even less come May.
Meanwhile at current lofty heights wheat continues to magically appear out of the woodwork, both domestically and internationally. Ukraine have decided to release an extra 1 MMT of wheat (and 1.7 MMT of corn) onto the market. They will be looking to sell anything that isn't nailed to the floor again when their harvest starts in June too.
16/02/11 -- Mexico's Minister of Agriculture says that the volume of winter corn damaged by recent frosts there amounts to 1.8 MMT, according to a report on Reuters. That's around 7% of national annual production of what is mostly a summer crop of 24-25 MMT in total. Planting of the latter begins next month. That doesn't sound like a huge percentage for the market to get too excited about to me.
16/02/11 -- Nov London wheat has briefly traded GBP12/tonne lower this morning before stabilising at around "just" a fiver down.
Paris rapeseed is taking another pummeling on the ropes too, down around EUR9/tonne meaning front month May has now shed EUR24.25 in a week. The market seems to be waking up to the fact that nobody wants the physical stuff at these levels. Rapemeal is also taking a pasting with the continent down EUR7/tonne today, having fallen EUR5/tonne yesterday.
In the UK the crushers are extremely keen to get on with meal sales I gather, with spring in the air and sales for May/July extremely lightweight given that it's only 2 1/2 months away.
Who could possibly have seen this coming eh?
16/02/11 -- The overnight grains are a bit firmer this morning as one or two buyers emerge convinced that last night's shake out has merely presented a buying opportunity. Globex wheat is up 5-7c, corn 3-4c higher and beans are up 4-6c.
A weak US dollar is helping, and so too is crude oil being up around half a dollar, albeit from the lowest levels yesterday since November.
Egypt are back in the market tendering for wheat today, French material will probably miss out again though. Brussels will report tomorrow tonight on weekly export licences, only 128,000 MT of soft wheat was authorised for export last week and we need a much bigger number than that to hit USDA projections for the 2010/11 MY.
ABARES (they've changed their name slightly, adding an "S" to make them look more interesting) say that despite drought, floods, locusts, cricketing capitulation, cyclones and killer zombies this season's Australian wheat crop will total 26.3 MMT, a 20% increase on last season.
Ukraine, salivating at current global grain prices, have decided to release an extra 1 MMT of wheat and 1.7 MMT of corn onto the market.
Turkey's 300,000 MT wheat tender was split 50:50 between the US and Kazakhstan.
The Texas wheat crop isn't looking very bright as the ongoing drought there sees only 15% of the crop rated good/excellent, with 58% of it poor/very poor. Not much of that is probably going to see a combine this year.
China's Ministry of Commerce says that soybean imports in Feb will slump to only 3.13 MMT. Added to news of "unknown" cancellations yesterday and gathering confidence that Brazil is in for a record 70 MMT plus crop this year and US beans may find it difficult to press much higher for the time being.
On the global weather front La Nina finally seems to be waning, and rapidly too. China is getting some precipitation in the north, with more on the way next week, according to QT Weather.
Next week's annual USDA Outlook Forum will attempt to put some flesh on the bones of the so-called "battle for acres" - baseline projections released earlier in the week were based on data gathered in November so next week's estimates may prove more reliable.
15/02/11 -- The market regularly gets a well-documented "February break" - a buying opportunity at this time of year, rarely though does it come from such lofty heights. Are we seeing one such opportunity now, or a major reversal? Only time will tell. You can pay your money and take your choice, except you'd better have plenty of money behind you because this time round the stakes are higher than they've ever been.
CBOT soybeans closed with losses of around 33-35c, with meal USD9 lower and oil down around 115 points. "Unknown" cancelled a couple of cargoes of US beans, the trade concludes that this means China. Chinese buying is now starting to focus on South America. Brazil is expected to have a record harvest, and things have bucked up considerably in Argentina. The USDA yesterday released interim projections for 2011 plantings of 78 million acres, up from 77.4 million last season.
Corn fell 5-7c on old crop where stocks are still tight, but 16c or so on new crop. the The USDA's baseline projections yesterday pegged 2011 plantings at 92 million acres, a jump of almost 4 million from last year. Next week's Outlook Forum will maybe give a more accurate reflection on potential plantings this year. Near record length in fund positions in corn prompted the liquidation of an estimated 10,000 contracts today. The USDA announced 120,000 MT of US corn for 2010/11 delivery sold to Egypt today.
CBOT wheat fell 30-32c, KCBT wheat 31-34c and MGEX wheat 32-28c. Global wheat weather conditions seem to be improving with some heavy snow in North China winter wheat areas such as Hebei and Shandong, according to Martell Crop Projections. US wheat hasn't fared too well in recent international export tenders, picking up only modest amounts faced with stiff competition from the likes of Australia and Canada. Meanwhile US stocks are more than adequate and the new crop harvest is only 14-15 weeks away.
15/02/11 -- World agri-weather highlights from the excellent Martell Crop Projections:
- Wet conditions Pacific NW will travel south into California, symptomatic of weakening La Nina; strong warming inducing wheat growth, will reveal if winter kill occurred in HRW wheat; massive run-off in Midwest with rapid snowmelt
- Mato Grosso getting excellent rain to finish pod filling in soybeans; Monday was wet Parana Brazil, ideal growing season persisting in this key soybean and corn state; cooling trend expected in Paraguay never materialized
- Quiet in Argentina grain belt, no rain yesterday; temperatures creeping higher in La Pampa, Cordoba, Santa Fe; soil moisture still good: rain would be welcome with increasing heat; showers expected Friday-Saturday
- Spotty showers yesterday France, Low Countries, Spain; badly needed, virtually no rain past 30 days; wet forecast welcome Italy and Balkans, also super-dry; winter thaw, warmth causing growth in winter wheat, rapeseed
- Unusually wet conditions in Australia interior, New South Wales and Victoria; extreme heat absent; temperatures cooler than normal SE Australia summer crops; Western Australia got useful rain, still not enough
- Snow some heavy in North China winter wheat, Hebei and Shandong; winter wheat dormant sub-freezing temps; Heilongjiang soy province very cold, single digits F; key corn province Jilin 15-18 F Monday; warm-up predicted
- India winter wheat wet yesterday; beneficial rain Punjab, Haryana Uttar Pradesh; unsettled weather to continue; cooler temps also helpful for wheat; still too hot India interior, stressful for non-irrigated rapeseed
- Bitter cold in European Russia Monday, highs single digits F Belarus; winter wheat protected by snow Black Earth and Volga, also very cold; stormy weather, beneficial rain affecting Turkey wheat, may spread to Middle East
15/02/11 -- EU wheat closed lower across the board with Mar London wheat down GBP3.00 to GBP207.00/tonne and new crop Nov GBP5.00 down at GBP177.00/tonne. Mar Paris wheat fell EUR8.25 to EUR266.50/tonne, with Nov down EUR7.75 to EUR238.75/tonne.
There were some pretty steep declines today. A stronger pound after UK inflation rose again last month, prompting ideas of rising UK interest rates before too long, weighed on London wheat.
Not to be outdone, Paris grains declined even more steeply on ideas that exports are dwindling as EU wheat prices itself out of the export market.
Australia have plenty of feed wheat this year, and some of it could be coming our way if Brussels rescind the existing duty on imports.
Figures out today show that the UK exported 266,000 MT of wheat in December bringing the marketing year-to-date total to more than 1.9 MMT. Even so that's 44% down on what we exported in November, and seems to indicate that exports are slowing rapidly.
Indeed, most UK merchants are reporting a marked lack of interest with foreign buyers keener on selling-back existing purchases than seeking more wheat.
Suddenly things look very toppy. Front month Paris rapeseed has fallen an astounding EUR57.75/tonne in less than a month, with EUR9.00/tonne of those losses coming today.
15/02/11 -- UK inflation continues to rise, hitting 4% last month from 3.7% in December, according to data out this morning. That's the highest since November 2008, but unlikely to be the end of the story, with BOE governor Merv the Swerve saying 5% could be on the cards in the not too distant future.
He's probably right, hence the pound rising above 1.61 against the dollar and 1.19 versus the euro as this reinforces pundits ideas that an interest rate rise may be in the offing before spring is out.
The VAT increase and rising crude oil price were largely to blame, according to Merv. Interestingly whilst Brent crude has risen by USD8/barrel since the turn of the year, NYMEX crude is down by a similar amount.
15/02/11 -- Rapemeal prices have fallen away sharply in recent days, in line with declines on the seed market. Front month Paris rapeseed futures are down by more than EUR50/tonne in less than a month. The UK ex farm market has fallen GBP12/tonne in the past two days, according to my chums at Dalmark.
Here's the latest guide prices for EU rapemeal, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
14/02/11 -- Soybeans: beans fell around 13-14 cents, meal was down around USD2-3 and oil was 75-80 points lower. The NOPA Jan soybean crush came in at 144.6 million bushels, matching expectations and also still ahead of the pace needed to reach the USDA's target for the 2010/11 season. The USDA export inspections report this morning came in at 33.823 million bushels. South American weather conditions look generally non-threatening.
Corn: corn closed around 10-12 cents lower with funds estimated to have sold around 10,000 contracts on the day. Frost damage to Mexican corn may not be as bad as was first reported, and replanting could sort the problem out. They did however buy 145,000 MT of corn from the US today, along with 129,600 MT of sorghum. The USDA export inspections report this morning was a little bearish at 26.149 million bushels.
Wheat: CBOT wheat ended around 5c higher, with KCBT wheat up by a similar amount and MGEX down 4-7c. Tunisia tendered for 50,000 MT of soft milling wheat, but bought 100,000 MT of optional origin wheat over the weekend. Iraq also bought 200,000 MT of US and 150,000 MT of Australian wheat. USDA export inspections reported this morning were on the low side at 24.196 million bushels. Drought in China remains a concern even though some light snow has arrived.
14/02/11 -- EU wheat closed higher again with Mar London wheat climbing GBP2.25 to GBP210.00/tonne and new crop Nov GBP1.75 higher at GBP182.00/tonne. Mar Paris wheat rose EUR1.75 to EUR274.75/tonne, with Nov up EUR3.00 to EUR246.50/tonne.
It was a record high close for new crop London and Paris Nov wheat.
Tunisia bought 100,000 MT of optional origin wheat and Iraq bought 200,000 MT of US and 150,000 MT of Australian wheat, bringing their total purchases to 850,000 MT so far this year.
Unusually low temperatures in Mexico appear to have caused some damage to the corn crop there, although replanting is an option. There are also question marks over Chinese and US wheat potential this year.
EU wheat sales seem to be slowing at these levels, with US, Canadian and Australian wheat winning the lion's share of recent global tenders.
Brussels are set to vote on whether to temporarily waiver the EUR12/tonne import duty on feed wheat and EUR16/tonne tariff on barley later this month. With Australia having an abundance of feed wheat about it this year that could stem the way for large scale exports into the EU.
That could cap any further upside for EU feed wheat already struggling to feature in compounder's rations.
14/02/11 -- The overnight grains were mixed with wheat up 8-12c, beans down 1c to up 2c and corn unchanged to up a half.
Wheat led the pack on more concerns over China's winter crop in the Northern Plains, otherwise there wasn't too much fresh news. Crude oil is static around USD85.50/barrel.
Tunisia bought 100,000 MT of optional origin wheat and Iraq bought 200,000 MT of US and 150,000 MT of Australian wheat, bringing their total purchases to 850,000 MT so far this year.
The USDA hold their annual Outlook conference next week when we get our first hints at how spring planting in the US might go, before we get the more official data at the end of March. Generally they've proven to be more accurate than some of the other early high profile private estimates over the past couple of years.
At the moment of course all the talk is about the "battle for acres" - with corn at USD7/bushel and demand from the ethanol monster in full swing then a significant increase in corn plantings could be on the cards.
The NOPA Jan soybean crush came in at 144.6 million bushels, matching expectations and still ahead of the pace needed to reach the USDA's target for the 2010/11 season.
Frost damage to Mexican corn is also in the headlights today with 1.5 million acres possibly affected and in need of replanting. To ensure that they don't run out of tacos they've just bought 145,000 MT of corn from the US today, along with 129,600 MT of sorghum.
Chinese customs data shows Jan edible oil imports at 610,000 MT, 12% up on this time last year.
Early calls for this afternoon's CBOT session: corn steady, beans down 1-2c, wheat up 9-11c.
14/02/11 -- London wheat seems to be attempting to press on to new highs this week, judging on today's price action so far, but how much consumer interest in wheat will there be with May futures at GBP212/tonne?
Possibly not too much with summertime wheatfeed pellets offered at GBP150/tonne and falling. In fact 10% protein wheat is now GBP20-25/tonne dearer than 35% protein rapemeal and priced higher than just about every other ingredient in a compounder's ration barring 48% soya.
Export interest has slowed to a trickle, in fact there's more interest in buyers selling existing purchases back than booking fresh cargoes at these levels from what I am hearing.
The expected tightness in availability hasn't yet manifested itself in the physical market. It seems that there may be more people than you might think hanging onto wheat in anticipation of a making a last minute killing.
Meanwhile I fully expect feed demand from the livestock sector to fall off a cliff come May once current market levels are fully factored into finished feed prices.
When the only buyers are Tarquin and his paper-purchasing batty boy mates, it might be time to get out.
14/02/11 -- It's Valentine's Day, another chance for retailers to attempt to wring a few quid more out of us. As it happened I had to go into Adsa yesterday and was dismayed to see thousands of identical bunches of a dozen red roses carefully placed next to a pallet of giant toblerones. That's the way to show your woman how much she means to you, you old romantic. Still I suppose that it's one tiny step up from the Esso station on the way home option.
Talking of romance MrsN#3 keeps hinting about wanting a "large rock" and a long engagement. She does unfortunately read this blog, and so is fully aware of the MrsN#1 and the cubic zircona ruse, so that particular avenue of deception is closed to me. So it's best not to disappoint her and play safe by getting her nothing again this year methinks in a lone protest against rampant consumerism.
London wheat has opened higher, with May coming in up GBP3 to GBP213.50, just GBP0.50 shy of last week's all time contract high. A close above GBP212.75 would be a record high close for the contract.
Paris wheat is also higher, coming in around EUR3-4/tonne firmer on spillover support from Globex wheat which currently stands around 12-14c firmer.
Mexico's corn crop may have been damaged by unusually cold temperatures bringing frost to "up to" 1.5 million acres of the crop in the north of the country. That's one of the reasons behind this morning's excitement. The corn could be replanted, but we're ignoring that bit for now.
We've also got the old chestnuts of drought in China and concerns over US wheat on the Plains. Plus the market seems to feel that with Mubarak out of the way things will regain some degree of normality in Egypt. It probably won't mean them buying any more wheat, but we're ignoring that bit as well.
At least the Suez Canal isn't under threat of closure, that's a bonus, although to be fair that is bearish for oil not bullish. NYMEX Crude has slid to USD85.49/barrel currently, within a smidge of it's lowest since November, so we'd better ignore that bit too.
Egypt bought Canadian, Australian and US wheat on Friday, passing over on French wheat which was too dear. Ignore.
For now the European market seems almost relieved to be missing Egypt's business, availability is after all tighter than a shark's arse at fifty fathoms isn't it? Canadian wheat was USD20/tonne cheaper (before freight) than French wheat on Friday. Australian wheat meanwhile was more than USD33/tonne cheaper and US wheat was USD24/tonne less. Ignore.
By my calculations we need to average sales of 419,000 MT/week to hit the USDA's projected 21.5 MMT for the current marketing year. We've only beat that weekly total once since Christmas. Ignore.