18/03/11 -- Soybeans: May 11 soybeans closed at USD13.62 1/2, up 27 1/4 cents; May 11 soybean meal closed at USD367.90, up USD9.30; May 11 soybean oil closed at 55.77, up 125 points. Beans were up around 28 cents at the end of a topsy turvy week. Today's CFTC report shows an overall Index Fund and Managed Money decrease of around 36,000 bean contracts - although they still hold a combined long of around 214,000 contracts. That report is as of Tuesday night, so it will be interesting to see how that changes in next week's report. Rain is still affecting the Brazilian harvest which is seen at 30% complete by Celeres, compared to 46% done this time last year.
Corn: May 11 corn closed at USD6.83 1/2, up 37 cents; Dec 11 corn closed at USD5.98 1/2, up 19 1/4 cents. Corn was around 19 cents higher on the week, with old crop gaining heavily on new crop today as strong US export sales keep 2010/11 ending stocks tight. The CFTC report shows an overall Index Fund and Managed Money decrease of around 81,000 corn contracts. They were alleged to have bought up to 30,000 of those contracts back today on rumours of Chinese buying of US corn. Informa released their 2011 corn planting estimate coming up with an acreage figure of 91.758 million, slightly lower than the USDA's Feb Outlook Forum guesstimate of 92 million.
Wheat: May 11 CBOT wheat closed at USD7.23, up 12 3/4 cents; May 11 KCBT wheat closed at USD8.45, up 14 cents; May 11 MGEX wheat closed at USD8.67 1/2, up 12 3/4 cents. Chicago wheat posted gains of around 4 cents on the week, with Kansas up 20 cents or so and MGEX around 9-10 cents higher. Index Funds and Managed Money decreased their CBOT length by around 11,400 contracts as of Tuesday. Informa reduced their harvested acreage by more than half a million acres and cut yields by 1.3 bu/acre. "Growing conditions are very dry on the High Plains suggesting a sharp loss of production for the 2011 harvest," say Martell crop Projections.
18/03/11 -- EU grains finished possibly one of their craziest weeks in history higher, with Mar London wheat closing up GBP5.30/tonne at GBP194.35/tonne and new crop Nov up GBP5.10 to GBP163.30/tonne. May Paris wheat rose EUR8.00/tonne to EUR231.75/tonne whilst Nov was up EUR4.75/tonne to EUR207.50/tonne.
Mar London wheat was up GBP12.50 on the week as a whole, and finished GBP27 up on the intra-week low set Tuesday. Nov was up GBP9.80 on the week and GBP15.30 higher than Tuesday's intra-week low.
Russia's Deputy Prime Minister Viktor Zubkov reduced his estimate for the 2011 grain crop to 84-85 MMT from 85-87 MMT previously. SovEcon estimate the crop at 75-85 MMT versus 60.9 MMT last season.
The German wheat crop is seen at 24.6 MMT compared with 24.0 MMT in 2010.
"Europe got moderate rainfall yesterday in Germany, western Poland, the Czech Republic and Slovakia, which will be welcome after 30-40 days of dryness," say Martell Crop Projections.
US winter wheat crop conditions remain pretty dire. "The USDA crop progress report of March 12 revealed severe, worsening drought on the High Plains. Western Kansas topsoil moisture was 90-95% short-very short. Kansas wheat ratings fell to 40% poor-very poor, 34% fair, and 26% good-excellent. Texas wheat was even worse at 56% poor-very poor, 26% fair and 18% good-excellent," they add.
18/03/11 -- Nobody seems to know what to do at the end of an astonishingly volatile week. So many are opting for the "if in doubt do nowt" strategy. After a very strong opening European grains are slipping back slightly. Which may be a function of who'd want to sit on a large open position over this particular weekend?
The overnight Globex market is also a little off it's highs attained on the back of rumours that the early week slump in corn prices flushed China's COFCO out as a buyer. We did however see a spate of similar reports a couple of months back, and it all turned out to be baloney on that occasion.
Any orders over 100,000 MT have to be reported the next day to the USDA. The notion that they bought a significant volume in multiple lots of one cargo each from a dozen different sellers seems more than a tad far-fetched.
There's been no official news from the USDA on corn sales to China, or anybody else, so far today, although there was 110,000 MT of corn sold to "unknown" yesterday.
The early call on Chicago is going to be higher, where will it finish? Limit up, limit down or somewhere in between is my confident prediction.
18/03/11 -- The overnight grains are still bouncing higher, with the carryover of unfulfilled buy orders on corn sending the Globex market 25c higher again on nearby contracts. Wheat is up a similar amount, with beans showing a more modest 4c firmer.
I think that most traders will be glad to see the back of this week. One guy I spoke to yesterday said he hadn't slept for three days, fretting over his open position.
Brent crude is more than a dollar firmer at USD116/barrel as the UN approve the creation of a no-fly zone over Libya. I'm sure that Gaddafi will absolutely love that as he appeals to his people to stand united against the foreign infidel aggression.
The pound is down to 1.1440 against the euro, a level last seen on Bonfire Night as the market seems less confident that UK interest rates will rise in the next few months.
Japan's nuclear crisis still seems to be out of control, as if they're trying to put out a forest fire with a teacup. News this morning suggests that they are now considering covering the entire festering mess with sand and concrete. A bit like Blackpool but with lights that power themselves.
Reports are filtering through that incessant rains in some parts of Brazil have adversely affected yields and the quality of this season's soybean harvest. Second crop corn planting may also be under threat.
The major Brazilian port of Parangua was partially closed earlier in the week as mudslides caused by heavy rains blocked roads leading into the port, casuing tailbacks of up to 30km.
EU grains look set to open firmer at the end of an astonishing week.
17/03/11 -- As they used to say on Stingray. Watching the news tonight I wouldn't want to put too much of my own money on where we go from here.
Am I the only one who's thought IF those nuclear reactor housings ARE safe, and nice and intact and all that, then why are they dropping water on them? If the rods ARE OK inside a lovely intact housing then what difference is that going to make?
But IF they are open to the elements, what does that mean?
Meanwhile we could have a no fly zone in force over Libya by the morning. Is that bullish or bearish for grains? Nobody seems to know. Suppose that the entire Med becomes a no go zone as far as shipping is concerned, what does that mean?
War usually means grains go up. But if you can't actually deliver them to where they are wanted isn't that really bearish not bullish?
Confused? So am I.
17/03/11 -- Soybeans: May 11 soybeans closed at USD13.35 1/4, up 48 1/4 cents; May 11 soybean seal closed at USD358.60, up USD14.10; May 11 soybean oil closed at 54.52, up 156 points. What can we say? We've had possibly one of the most volatile weeks in the history of the grain markets. Heavy losses early in the week matched by heavy gains later in the week. Where will we be tomorrow, who knows? Weekly export sales from the USDA were poor at a combined 214,500 MT.
Corn: May 11 corn closed at USD6.46 1/2, up 30 cents; Dec 11 corn closed at USD5.79 1/4, up 30 cents. Unlike for soybeans weekly export sales were robust at over 1.3 MMT. South Korea purchased 110,000 MT of corn today and the USDA announced 110,000 MT of corn sold to unknown. Having supposedly sold a huge volume of corn this past few days, fund money was alleged to have bought more than 15,000 lots back in today. There were apparently over 120,000 of unfulfilled buy orders left over bidding limit up at the close of play.
Wheat: May 11 CBOT wheat closed at USD7.10 1/4, up 48 1/4 cents; May 11 KCBT wheat closed at USD8.31, up 52 3/4 cents; May 11 MGEX wheat closed at USD8.54 3/4, up 48 3/4 cents. The USDA's weekly wheat export sales were above trade estimates. Spillover support from limit up corn also helped wheat today. Where we go after here is anybody's guess though. This market has already turned on a sixpence twice in the space of a week. We can be sure that the market is more well aware of downside risk than it was a couple of weeks ago.
17/03/11 -- EU grains continued with their stunning rebound from recent steep losses with Mar London wheat closing GBP13.70/tonne higher at GBP189.05/tonne and new crop Nov up GBP9.60 to GBP188.20/tonne. May Paris wheat rose EUR17.50/tonne to EUR223.75/tonne and Nov was EUR12725/tonne higher at EUR202.75/tonne.
Having fallen GBP14.50/tonne in the first two days of the week, London wheat has now regained all of those losses back and then some in the last two sessions - putting on an amazing GBP21.70/tonne. Even so, we are still GBP21.20/tonne below the Feb all time highs. I think that this safely qualifies us as being a volatile market!
NYMEX crude oil jumped more than USD3.50/barrel and Brent by more than USD4.50/barrel on continued unrest in Bahrain and Libya.
Strategie Grains reduced their EU-27 2011 soft wheat production estimate by 300,000 MT from last month to 135.5 MMT, although that is still up 7% on last year.
They also upped their 2010/11 EU soft wheat export estimate from 18.4 MMT to 19 MMT.
Brussels issued soft wheat export licences for 540,000 MT this past week, a sharp increase from what we have witnessed of late and the second highest weekly total of the year.
That brings the total for the marketing year to date to 14.6 MMT, almost 2 MMT higher than this time last year.
On the weather front "in Europe there showers again today in the south of France, Italy and the former Yugoslavia. Dryness is still prevailing elsewhere however with hardly any rain in a over a month in Central Europe and unseasonable warmth in the past 7 days in continental Europe at 5-7 F above normal," say Martell Crop Projections.
17/03/11 -- May London wheat is up GBP11.00/tonne at 15.30 GMT. I suspect that we've never seen an eleven quid move both down and up within 48 hours of each other before.
One guy I was following on Twitter I've had to remove, his posts were becoming so vomit-inducing. I'm surprised he could actually see his monitor to be able to tell what Chicago was doing, if you get my drift.
How do you call a market like this? We can't even make our minds up if Middle East conflict is bullish or bearish! Last month oil and grains were going in completely opposite directions and this month they're following each other again.
Meanwhile there's a potential radiation time bomb ticking on the other side of the world, and we don't know whether that's bullish or bearish either.
Japan has said that it doesn't need any outside help or assistance in a move strangely reminiscent of an old episode of Scooby Doo. "And we would have got away with pretending that there was no radiation, if it wasn't for you pesky kids."
17/03/11 -- Everybody's favourite broadband non-provider is at it again this afternoon folks. So yet again I've had to cough up to put some dosh on my emergency Three PAYG dongle due to Scruffy McGuffy here's shortcomings. I really hate you Branson. I mean REALLY. It's a good job that I've got paying advertisers on here or I might be really tempted to let rip. You might even learn a few new words that you've never even heard before. Mind you though....there's no paying advertisers on the dog's blog to upset is there...now there's a thought.
17/03/11 -- The overnight grains closed higher in a rebound from recent steep losses with beans and wheat up around 20c and corn around 14-17c firmer.
NYMEX crude is back up above USD100/barrel, showing a USD2.40/barrel advance on the day.
Weekly export sales from the USDA were poor for beans at a combined 214,500 MT as demand switches to South America. China bought just the one cargo of new crop this week. Corn sales were strong again though at over 1.3 MMT and wheat sales also topped 1 MMT.
Allendale peg US corn acres at 91.3 million this year, 0.7 million lower that the USDA said last month. Bean plantings are also seen lower than the USDA said at 77.2 million, whilst the wheat area is higher at 57.4 million.
Massive fund liquidation, particularly in old crop corn, seems to be over for now although events in Japan and the Middle East could change that at any moment.
Confusion still reigns over the Japanese situation with conflicting media reports saying that disruption to grain shipments are anything from minimal to acute! A report on Dow Jones Newswires today says that "the affected area and extent of damage at ports are turning out to be much larger than provisional estimates" and that 7.8 MMT of compound feed, which is almost a third of national output, "is produced in the areas around four ports that have been badly affected by the catastrophe."
China sold 1.3 MMT of wheat at this week's government auction, demand certainly seems to be picking up there in this past few weeks.
Some news reports are talking of Asian buyers "snapping up" corn and wheat, encouraged by the recent dip in prices, although none of these orders look to be anything particularly out of the ordinary.
The USDA has confirmed 110,000 MT of corn sold to "unknown" today for the 2010/11 crop year.
Early calls for this afternoon's CBOT session: beans up 20-25c, wheat up 18-20c, corn up 13-15c.
17/03/11 -- We have a wee problermo in the Nogger household: a holiday. We want one, the kids want one. But after that the similarity ends.
We all do want "a place in the sun" so Centre Parcs isn't an option. We did the Lakes outward bound thing last year, and the delightful MrsN#3 and I would like a bit more of a relaxing time this year. But we'd also like the kids to be catered for. They're too old for facepainting and kids clubs, but too young to go clubbing in Faliraki at 12 and 14. Any ideas anybody? Somewhere that isn't more than say 4/5 hours away by plane.
Oh, and somewhere with t'internet and where beer is cheap would be good. And we don't want to go to the sort of place where they offer to buy your daughter for camels and stuff. Email me: Nogger needs help
17/03/11 -- The recovery appears to be continuing with overnight beans up around 18c, wheat up 15-16c and corn 8-10c firmer. Nothing cataclysmic has happened in Japan overnight, although the sight of helicopters dousing Fukushima haphazardly in sea water on our TV's last night hardly inspired confidence. And when was the last time you saw so many politicians wearing jumpsuits so pristine that you could eat your sushi off them?
Anyway, the panic that we saw at the beginning of the week seems to have subsided for now and whatever volume of longs the funds needed to dump to feel a bit more comfortable seems to have been jettisoned.
A quick resumé of where we are for the week overall may be in order, so here we go:
May London wheat (up a fiver this morning) down GBP1.50; Nov London wheat (currently up GBP2.40) down GBP2.50; May Paris wheat (currently up EUR6.50) down EUR10.25; Nov Paris wheat (currently up EUR3.50) down EUR10.25; May CBOT wheat (currently up 21c on the overnights) down 35 3/4c; May CBOT corn (up 10 3/4c overnight) down 37c; May CBOT beans (up 22c overnight) down 31 3/4c.
Those changes include what's happened so far this morning. What sticks out like a sore thumb there is that London wheat isn't down as much as everything else.
When it's quality wheat that the world wants that doesn't make too much sense, even if we are exporting our carryover surplus.
Strategie Grains are out with their latest thoughts on EU grain production for 2011 today. They've reduced their soft wheat production estimate by 300,000 MT from last month to 135.5 MMT, but still up 7% on last year.
They've increased their 2011 corn production estimate by 400,000 MT from last month to 58.7 MMT, also a 7% increase from last year, and dropped their barley projection by 200,000 MT to 55.0 MMT, up 4% on 2010.
They also altered their 2010/11 EU soft wheat export estimate from 18.4 MMT to 19 MMT.
Brent crude is up USD1.75/barrel this morning and NYMEX is up 1.50/barrel as tensions mount in the Middle East. European shares are also a little firmer.
16/03/11 -- Soybeans: May 11 soybeans closed at USD12.87, up 17 cents; May 11; May 11 soybean meal closed at $USD4.50, up USD3.70; May 11 soybean oil closed at 52.96, up 8 points. Estimates for tomorrow's weekly export sales report range from 350 to 450 thousand MT. Allendale peg the 2011 US soybean acreage at 77.193 million. Japan holds the key, and with reactor 4 looking like failing we could be in for a bumpy ride.
Corn: May 11 corn closed at USD6.16 1/2, down 19 1/2 cents; Dec 11 corn closed at USD5.49 1/4, up 1 1/4 cents. Estimates for tomorrow's weekly export sales report range from 550 to 750 thousand MT. Funds sold an estimated 28,000 old crop contracts today, a large amount bringing sales this month to a supposed 180,000 lots. Allendale peg this year's US corn acreage at 91.29m acres, a bit below the USDA's 92m estimated last month.
Wheat: May 11 CBOT wheat closed at USD6.62, down 5 3/4 cents; May 11 KCBT wheat closed at USD7.78 1/4, up 1 1/4 cents; May 11 MGEX wheat closed at USD8.06, down 1 1/2 cents. Estimates for tomorrow's weekly export sales report range from 400 to 600 thousand MT. Allendale peg the 2010/11 US wheat acreage at 57.435 million acres.
16/03/11 -- EU grains rebounded from recent steep losses today with Mar London wheat closing GBP8.00/tonne higher at GBP175.35/tonne and new crop Nov up GBP3.60 to GBP148.60/tonne. May Paris wheat rose EUR3.25/tonne to EUR206.25/tonne and Nov up EUR2.25/tonne to EUR190.00/tonne.
Having lost GBP14.50/tonne over the last two sessions then I guess that some form of correction was due for old crop London wheat. However, GBP8.00/tonne looks rather excessive to me compared with a rebound of only EUR3.25/tonne across the Channel. I'd already stick my neck out and forecast, as things stand, a lower London opening in the morning.
Egypt is forecasting at 25% increase in it's wheat output this year to 10 MMT. Moody's also downgraded the world's largest wheat buyer's credit rating today, saying that their ability to maintain government stability was under question in it's current transitionary state.
They also downgraded Portugal’s debt rating by two notches, putting the euro under a bit of pressure.
Market attention remains focused on Japan, where buyers seem to be delaying grain purchases until they have a clearer idea on the logistics behind port workings and internal transportation.
European Energy Minister Gunther Oettinger said today that Japan's nuclear facility at Fukushima was "out of control" and that "in the coming hours, there could be further catastrophic events."
Tunisia are tendering for 25,000 MT of milling wheat, with Jordan also in the market and Turkey rumoured to have bought German wheat on Monday.
16/03/11 -- The overnight grains were higher, rebounding from the steep losses of the past couple of days. Beans finished around 26-27c higher, with wheat up 21-23c and corn up 7-10c.
Crude oil is offering support, up USD1.50-2.00 and metals and other outside influences are also firmer.
All eyes remain on Japan and developments at the Fukushima nuclear facility, you wouldn't want to rule out this market rapidly changing direction one way or the other depending on events there.
This area is responsible for around 17-20% of Japan's feed manufacture, according to media reports. These stories also suggest that capacity can be increased elsewhere to make up for any shortfall in feed availability. Exactly how production can be ramped up in the south faced with power shortages is however unclear.
There are lots of other uncertainties too, lsuch as damage to the local infrastructure like ports and transport networks not to mention the possible implications on livestock numbers not just from the tsunami itself but also the evacuation of farmers leaving their animals behind, and possible radiation contamination.
Has fund liquidation ceased for now? Right now it seems like the answer is yes, but that doesn't exclude the possibility of another wave of selling at the drop of a hat depending on international events.
Japan has deflected much of the markets' interest away from the Middle East and North Africa it seems, as the violence spreads to Bahrain.
Other market fundamentals are for now very much playing second fiddle. Brazil's soybean crop may not break 70 MMT after all as rains continue to hamper the harvest, and the US winter wheat crop is in a pretty sorry state too.
Early calls for this afternoon's CBOT session: Beans up 20-25c, wheat up 20-25c, corn up 8-10c.
16/03/11 -- Arkady have just launched a swanky new website I see. I wonder which clever dick did that for them then? He must be one talented bloke, that's all I can say, and so affordable too.
Interesting bit of trivia: Did you know that the company was founded by Dr Robert Kennedy Duncan, hence the name RKD - Arkady, geddit? His brother Will invented alcopops I think. They had a cousin called Chip Argill, but he never amounted to much.
16/03/11 -- Greggs are reporting record profits of GBP52.5 million for 2010, and say that like for like growth in the early part of this year is double what it was at it's 1,480 shops in 2010. What about the other ones outside Middlesbrough, aren't they counting them as well??
16/03/11 -- Pondering the implications of a widespread radiation leakage in Japan, if one were to occur, I've done a bit of research into livestock numbers over there in comparison with those at home.
I'm not really that Jock/Taff-phobic, but the most recent fully updated across all sectors of the livestock industry I could find were in relation to Defra's June 2010 census which only gave detailed results for England.
If lamb is your bag then I wouldn't bother going there, that's all I can say. Anyway here's the numbers for comparison:
16/03/11 -- World agri-weather highlights from the excellent Martell Crop Projections:
- Still more rain Monday Mid South, Gulf states; Indiana-Ohio wet today; March excessively wet Ohio-Indiana, 2-4 times the normal precip; warm temps coming to Midwest, begins Wed Iowa-Nebraska-Minnesota; 60 F possible Chicago Thursday; warmth needed to melt snow, still several inches deep Upper Midwest
- Mato Grosso Brazil rainfall lightening up; soy harvesting picking up momentum; dry conditions persist Rio Grande do Sul, slight improvement with scattered rain recently; soybeans filling pods in March still need more rain; forecast dry but cooler South Brazil
- Argentina grain belt still too dry; cool front brought scattered shwrs, helpful, still not enough; worst dryness Northeast Argentina, upper Cordoba, Santa Fe, Entre Rios; temperatures sharply cooler this week, 70s F; mid 90s F common last week; forecast dry
- Europe wheat and rapeseed actively growing, afternoon temps 50s - low 60s F; drought very troubling France, southern Germany, Czech Rep, Slovakia, Hungary, Balkans; hardly any precipitation for 2 months; forecast is wet in southern Europe, active storm track in Mediterranean Sea
- Wet summer in most of Australia; tropical storm precip way above normal north Australia; excellent subsoil moisture ahead of wheat planting, Victoria, southern New South Wales especially wet; Western Australia needs rain, dry for a month, also very hot
- North China Plain wheat dry again; strong warming in March spurring wheat development; more rain needed; forecast not hopeful for significant rain; Northeast China trying to warm up; highs 30s F, night lows teens-low 20s F Jilin and Heilongjiang; below-avg temps expected next 7 days
- Northwest India, Pakistan in midst of a heat wave; temperatures upper 80s-low 90s, very unfavorable for wheat now filling grain; winter rapeseed Madhya Pradesh hotter, highs mid 90s F; forecast calling for more of the same
- Russia Volga wheat area expecting snow, upper 20s F for max temps; past 2 weeks very cold, 10-15 F below normal; feels like winter; Black Sea wheat area too dry, low rainfall past 30 days; showers keep going south affecting Turkey, Middle East; new 7 day outlook wetter; Ukraine warming up nicely; highs 40s to upper 50s F yesterday; spring has finally sprung; winter crops emerging from dormancy
16/03/11 -- After a couple of days of steep declines the market looks set for a bit of a rebound this morning, with the overnight Globex market up 25-30c on beans, 17-18c firmer on wheat and 5-10c higher on corn.
Nymex and Brent crude are a dollar to a dollar and a half firmer, and metals are mostly higher too.
The Nikkei rebounded from its biggest two day loss in 40 years to close 5.7% higher overnight, although the Japanese situation is very much ongoing. The BBC are reporting white smoke seen billowing from reactor 3 at Fukushima this morning.
It looks like European grains will open higher on bargain hunting and profit-taking from those who have been selling the market short in the past few days.
Japan has issued it's customary weekly wheat tender, although it's only shopping for 32,000 MT, not the 100-150 TMT it is usually looking for. Tunisia is also in the market for 25,000 MT of wheat.
Russian spring grain plantings are seen running a fortnight behind schedule whilst they wait for warmer weather to arrive.
15/03/11 -- Soybeans: May 11 soybeans closed at USD12.70, down 70 cents; May 11 soybean meal closed at USD340.80, down USD14.70; May 11 soybean oil closed at 52.88, down 250 points. Soybean futures closed limit down for all old crop contracts. That means that tomorrow's limits are now 105 cents. Fund long liquidation is the name of the game.
Corn: May 11 corn closed at USD6.36, down 30 cents; Dec 11 corn closed at USD5.48, down 30 cents. Crude oil ended down the best part of USD4.00/barrel. Japan, the number one US corn buyer, remains in turmoil. New limits for corn tomorrow will be 45c. Commodity funds sold an estimated 22,000 lots on the day.
Wheat: May 11 CBOT wheat closed at USD6.67 3/4, down 53 cents; May 11 KCBT wheat closed at USD7.77, down 48 1/2 cents; May 11 MGEX wheat closed at USD8.07 1/2, down 51 3/4 cents. As with other markets the fundamentals have gone out of the window, we are now trading on fear. Kansas wheat rated good/excellent only improved by one point last night.
15/03/11 -- Lordy, Lordy, and my oh my. Mar London wheat closed GBP11.00/tonne lower at GBP167.35/tonne, with new crop Nov down GBP6.00/tonne to GBP145.00/tonne. May Paris wheat fell EUR13.75/tonne to EUR203.00/tonne, with Nov declining EUR12.00/tonne to EUR187.75/tonne.
Any bullish news is now being totally ignored as the widely-feared, but much discounted, stampede for the exit door becomes a mass exodus. The market had apparently become so convinced of it's total invincibility that it knew for sure that "this time it was going to be different" - except it wasn't.
The Japanese situation has everyone scratching their heads and searching for comparisons. Unfortunately there aren't any, Chernobyl in 1986 was very different in my opinion.
There are still plenty of opinions around that the current situation is actually profoundly bullish, not bearish. Unfortunately those opinions are based on market fundamentals, and sadly we haven't been trading on those for some considerable time.
The levels that we are, or were at, didn't have a great deal to do with reality. They were "reality" from the perspective of so-called "smart" fund investment money.
That clever money now wants out. Indeed some of that cash may have been in the form of Japanese fund money which suddenly has much more pressing matters to attend to. Those outflows take precedent over market fundamentals.
Defra today said that the UK had exported 2.1 MMT of wheat up until the end of January in the current marketing year, even though they only have us down to export 1.3 MMT in the entire 2010/11 marketing year.
Based on that information you wouldn't really have expected wheat to close GBP11 lower would you? Especially not with the pound dipping below 1.15 against the euro for the first time since early November.
15/03/11 -- Underwater might be the safest place to be as the grain markets spectacular decline continues this afternoon with CBOT wheat down 40-50c, beans around 50c lower and corn at or around the daily 30c limit down.
In Europe, May London wheat stands GBP10.50 lower, with front month Paris wheat down EUR14.25, corn down EUR16.50 and rapeseed falling a stunning EUR23.25 as of around 15.30 this afternoon.
How many articles did you read on the way up that said "speculators aren't to blame for soaring grain prices?"
Funny then that spec money exiting what has suddenly changed from being a "nice little cushy investment" to a "risky asset" is responsible for such a stunning capitulation.
If wheat really was worth GBP200/tonne then we'd now have a queue of buyers all the way round the block wanting to book it wouldn't we? Instead we have none whatsoever.
15/03/11 -- Construction of the new Vivergo bioethanol refinery in Saltend looks like it's taken another blow. The engineering firm behind the project appear to have had their contract terminated.
Saltend Chemical plant workers face 'uncertain future'
Redhall to seek damages after Vivergo repudiates contract
15/03/11 -- Is anybody else getting déjà vu with May London wheat down eleven quid, May Paris wheat down EUR13.25 and May Paris rapeseed falling EUR19.50?
Chicago wheat trades down 33c shortly after the opening with beans down 34c and corn down the 30c limit. I think that we can justifiably call this panic selling.
Where will it end? When the money runs out.
15/03/11 -- A third explosion at Fukushima has potentially had a greater impact on the reactor inside the building than the previous two blasts, according to the BBC's website.
The exclusion zone around the plant has been increased from 20km to 30km, they say.
There are now concerns that the water inside reactor no4 may be boiling, they add.
As well as being the world's largest corn importer, Japan is also the biggest global buyer of rapeseed.
15/03/11 -- It already seems like it's been a very long week. Or maybe that has something to do with me working all weekend on yet another "last minute emergency" job?
The overnight grains were showing some sign of follow through stability early doors, but not so now. Once again the computer screens are a sea of red.
Globex wheat is currently around 10-12c lower, with soybeans down 7-10c and corn 2-3c easier.
Nov London wheat stands GBP4/tonne down, with Paris wheat showing losses of EUR4-5/tonne and rapeseed down around EUR5-6/tonne.
A third explosion has rocked the Fukushima power plant and the authorities there now say that radiation levels around it "have risen substantially above the legal limit".
The Nikkei 225 fell more than 10%, having been 14% lower at one point, adding to Monday's steep declines for its biggest two day fall in 40 years.
European stock markets are also feeling a few tremors of their own with the FTSE 100 167 points lower and the German DAX down 361 and the French CAC 40 down 148 points.
Brent and NYMEX crude are both down the best part of USD3/barrel.
Nervous grain longs are sweating like a dyslexic on Countdown. GBP200/tonne wheat wasn't the new normal after all it would seem.
14/03/11 -- Soybeans: Mar 11 soybeans closed at USD13.29, up 2 1/2 cents; Mar 11 soybean meal closed at USD349.60, up USD3.50; Mar 11 soybean oil closed at 55.27, down 22 points. The market managed to arrest recent steep declines, although only marginally. The Feb NOPA crush data was poor at 124.884 million bushels. Talk out of Brazil suggests that final production may be below 70 MMT as rains keep hindering harvest progress.
Corn: Mar 11 corn closed at USD6.64, up 4 3/4 cents; Dec 11 corn closed at USD5.78, up 1/4 cent. This was corn's first higher close in seven sessions. The The USDA export inspections report came in at 35.213 million bushels, a bit above trade expectations. The trade is still trying to weigh up the implications for Japan - America's largest corn buyer - with regards to their latest problems.
Wheat: Mar 11 CBOT wheat closed at USD7.00 1/2, up 5 1/2 cents; Mar 11 KCBT wheat closed at USD8.15 1/2, down 5 cents; Mar 11 MGEX wheat closed at USD8.53 3/4, up 1/2 cent. MGEX lost ground on Japanese import fears. The USDA reported export inspections this morning of 25.715 million bushels, in line with trade estimates, but below what is needed to meet current USDA estimates for the 2010/11 MY.
14/03/11 -- EU wheat fell heavily again today with Mar London wheat ending down GBP3.50 to GBP178.35/tonne and new crop Nov down GBP2.50 to GBP151.00/tonne. May Paris wheat closed EUR6.25 lower at EUR216.75/tonne, with Nov down EUR4.00 closing just below the psychologically important EUR200.00/tonne level at EUR199.75/tonne.
This was the lowest close for a front month on London wheat and the first time that Nov Paris wheat has finished below EUR200.00/tonne since late November.
Paris rapeseed, corn and malting barley also took their by now regular daily beating, with the former down EUR18.00/tonne on the nearby May future at one stage during the day.
May London wheat traded GBP9.00/tonne lower at one stage and had the remaining incredulous bulls almost dancing in the streets at the close of play with a finish of "only" GBP3.50/tonne lower on the day.
The Libyan situation has been consigned to second fiddle in the fallout from the Japanese disaster. They are amongst the largest importers in the world of corn, wheat and soybeans - and are particularly heavy buyers of US grains.
The market remains divided on the implications of the latest developments, although most seem to agree that at least in the short-term Japanese demand for grains will be cut by around 10-20%.
Regardless of what the medium to longer-term affects might be it seems that right at this moment the spec money wants out of the monster that they have created.
14/03/11 -- The overnight grains closed lower on continued fallout from the devastation in Japan where there's been a second reactor explosion this morning. Beans ended around 10-15c lower, with corn down 5-7c and wheat in the region of 6-8c easier.
Crude is offering no support at around USD2 lower.
Japan is America's largest corn customer, it's second biggest wheat buyer and is third in it's soybean rankings. Some media reports are suggesting that recent events are bullish in the long run. That they may be, but the market is more concerned with the shorter-term right now.
Whilst many newswires are carrying stories that grain shipments to Japan will hardly be affected, and in some cases that they may actually increase to maintain food security, they seem to be ignoring the damage to the local infrastructure and the problems created by power rationing.
The financial implications for the world's third largest economy will be long-term, it could also be argued.
On the global weather front a big warm-up is on the way for the Canadian Prairies, which will be welcomed with spring plantings now only six weeks away. The Midwest Corn Belt is trending warmer too, which is good, although the 6-10 day forecast also includes wetter than normal conditions which will be less welcomed, say Martell Crop Projections.
Signs that La Nina is dying out will also bring welcomed warmer weather for northern and eastern Europe, Russia and the Chinese Manchurian Plain, they say. "The faster that La Nina dies out the better the chances for timely spring planting in northern grain growing areas," they add.
US HRW wheat is still suffering from drought and rainfall this week in the Southern Great Plains "would be generally under 0.30 inch and scattered," they warn.
Elsewhere, Argentina received widespread beneficial rains over the weekend and Brazil's harvest weather outlook finally seems to be improving.
Jordan are tendering for 100,000 MT of wheat and a similar volume of feed barley.
EU grains are all sharply lower.
A lower close tonight for corn would be its seventh in a row, and for wheat it would be a sixth. That's what's being forecast as money continues to flow out of "riskier" assets like the grains.
There will certainly be some thinking that there is a buying opportunity here, but whilst funds continue to take cash off the table the path of least resistance remains lower not higher.
Early calls for this afternoon's CBOT session: Beans down 10-15c, corn 5-7c lower and wheat down 6-8c.
14/03/11 -- May London wheat is GBP8.00/tonne lower in late morning trade at GBP176.50/tonne. Exactly a month ago today it was GBP213.00/tonne, so we've fallen a whopping GBP36.50, or 17%, in just twenty eight days.
That's a pretty spectacular fall from grace by any standards, with the contract now at it's lowest levels since late November. The funny thing is that even more than thirty six quid off the highs it's STILL way too expensive a raw material for the feed sector.
That leaves us with just one buyer in the whole of the country, and they're about to have a shutdown as I recall. So hurry up Vivergo, can't you lads work any faster than that?
14/03/11 -- Rapeseed prices are down sharply today following Friday's soybean losses in Chicago which have been carried over into the overnight Globex session.
Here's the latest guide prices for EU rapemeal, basis FOB Lower Rhine in euros/metric tonne:
14/03/11 -- Today's explosion at Fukushima reactor 3 following on from Friday's kerfuffle at reactor 1, leaves just reactors 2 & 4 unscathed so far. Apparently now reactor 2 has a problem with its cooling system too, according to this report from the Beeb: Bang.
The report goes on to say that the Japanese government is to throw over GBP100 billion at the economy to help prop it up, without going into detail about exactly where the money is going to come from.
Already heavily laden with debt are they simply going to just print it?
And what does this all mean for the grain markets? A few reports I've read this morning are making out a case for it being bullish longer-term, with regards to demand for biofuel as opposed to nuclear energy.
That may indeed be the case, but I think that longholders are far more interested in the here and now rather than whether to get a bit of 2015 wheat on their books.
Short-term this has to be bearish to my way of thinking. I can't see how Japanese imports aren't going to be affected. With major power outages starting today, and likely to continue for months, manufacturing of everything whether it's compound feed or computers has to be affected.
The knock-on effect of the world's third largest economy taking a hit of this magnitude, and the detrimental medium to longer term damage done by increasing the national debt whilst simultaneously decreasing the national output also looks pretty severe to me.
They are the world's largest importer of corn, the fourth biggest buyer of soybeans and sixth largest of wheat. And the vast majority of all that business is done with America. That has to be sufficient uncertainty to encourage a bit more scrambling for the exit door this week I'd have thought.
14/03/11 -- Japan is the world's single largest corn importer by some considerable distance, buying around 16 MMT annually. An amount roughly equivalent the corn imports of Mexico AND the entire EU-27 put together.
Despite it's relatively diminutive size Japan is the sixth largest corn consumer in the world. They are also America's single biggest buyer, accounting for around 30% of all US corn exports in 2009/10. They also feature as the third largest buyer of US soybeans.
14/03/11 -- The BBC are reporting a second blast at the Fukushima power plant overnight. Japan's Nikkei average index has closed 6.2% lower today in it's biggest one-day drop since December 2008.
Large manufacturers all took a big hit with shares in household names like Toshiba and Hitachi both falling 16%. Tokyo Electric Power fell 24%.
NYMEX crude is down more than two dollars, currently standing a less than USD100/barrel. Brent is down a dollar and a half.
Gold is up on a flight to safety, but copper, platinum and silver are all down.
The overnight markets opened with beans, corn and wheat all trading around 5c lower. Wheat is currently 5c higher, with corn mixed and soybeans all over the shop but mostly lower and with some months posting double digit losses.
All CBOT March contracts expire today. America put it's clocks forward last night so the Globex market shuts at 12.15 GMT and the CBOT daytime session runs from 14.30 GMT to 18.15 GMT for the next two weeks until we catch up.
The pound isn't looking too healthy at 1.1540 against the euro and 1.6050 against the dollar. At one stage sterling hit 1.15 against the single currency, a level not visited since early November. The euro is up after ECB Jean-Claude Trichet late last week hinted at a euro zone rate rise in April.
In theory a weak pound would support UK wheat prices as it would help our export competitiveness. The only problem is that there is no export business to compete for. At home, demand from compounders is slack with many now dragging their heels on taking delivery of existing contracts.
There's plenty of resale raw materials being offered back onto the market therefore, with takers very few and far between.
When asking various people last week "where's the market on rapemeal/soya hulls etc?" the stock reply was pretty much "I've got no idea because there isn't a single bid in the market. Take the shippers price and knock ten or fifteen quid off it for starters."