27/05/11 -- Soybeans: Jul 11 soybeans closed at USD13.79 3/4, down 5 cents; Nov 11 Soybeans closed at USD13.68 1/2, down 4 cents; Jul 11 soybean meal closed at USD355.60, down USD4.70; Jul 11 soybean oil closed at 58.61, down 9 points. Beans closed a little lower in a light volume pre-holiday session. China's CNGOIC lowered it's 2010/11 soybean import estimate to 53 MMT, some 1.5 MMT lower than the USDA's latest estimate. The Chinese government also announced plans to sell 2 MMT of state-owned reserves to five favoured crushers at 13% below the market to enable them to meet soyoil price caps. That seems set to keep them out of the volume import market for a wee while yet. US markets are closed for Memorial Day on Monday, so the USDA will report on planting progress after the close on Tuesday May 31st.
Corn: Jul 11 corn closed at USD7.58 1/2, up 13 cents; Dec 11 corn closed at USD6.84, up 7 3/4 cents. July corn was down a cent on the week whilst new crop Dec was 17 1/2 cents higher. Private exporters announced the sale of 168,000 MT of new crop corn to Mexico. Funds bought an estimated 7,000 contracts on the day. They were long more than 350,000 contracts as of May 23rd, that's over 44.5 MMT. Things are finally set to improve weathewise in the Eastern Corn Belt which should aid corn planting. "The Midwest is forecast to warm up Sunday and Memorial Day. It's not perfect weather as showers also are in the forecast. On Monday highs over 90 F are predicted in Illinois, Indiana, Ohio and Michigan which are much needed to dry out fields. An upper-air blocking pattern is starting to evolve. Improved warm weather in the Eastern Midwest early next week is a reflection of this change," say Martell Crop Projections.
Wheat: Jul 11 CBOT wheat closed at USD8.19 3/4, up 5 1/4 cents; Jul 11 KCBT wheat closed at USD9.43, up 1/4 cent; Jul 11 MGEX wheat closed at USD10.56 1/4, up 10 1/2 cents. On the week as a whole CBOT wheat was up 13 1/4 cents, KCBT rose 9 3/4c and MGEX jumped 56 1/2c. Minneapolis raced to well over 20 cents higher in early trade but gave up half of those gains by the close of what could be a long weekend in a variety of different ways. Some newswires are suggesting that a decision on whether Russia will lift it's grain export embargo is due on Tuesday. If so that would come out before the daytime US grains futures next trade. Northern spring wheat farms are still too wet to plant, and more heavy rain fell again Friday. "More normal weather may finally develop over North America continent by the middle of next week. That's when the blocking pattern is expected to completely resolve," say Martell Crop Projections.
27/05/11 -- EU wheat futures closed mostly lower with Jul London wheat up a nominal GBP0.50/tonne to GBP196.50/tonne and with new crop Nov falling GBP1.50/tonne to GBP197.00/tonne. Nov Paris wheat was down EUR1.75/tonne to EUR249.25/tonne whilst May12 declined EUR2.25/tonne to EUR249.00/tonne.
On the week as a whole Nov London wheat rose GBP2.50/tonne and Nov Paris wheat was up EUR4.50/tonne.
The UK picked up some decent rains this week, particularly in the north and west. Even the parched south east managed to get something, although opinions on how much good it will have done and what eventual production numbers might be vary wildly.
Front month August Paris rapeseed closed EUR3.50/tonne higher, having closed to the upside every day since May 12th as concerns mount over EU production this year.
French analysts Offre et Demande Agricole forecast the Ukraine rapeseed harvest rising to 1.95 MMT this year, up by a third from 1.47 MMT last year as rising yields more than offset a drop in planted area, according to FCStone.
That would allow Ukraine to export 1.8 MMT of rapeseed in 2011/12, they add. The EU look like needing all of that and more with French and German output set to fall sharply.
The balance of exporting power certainly seems to be switching back to the Black Sea for 2011/12. Ukraine may also export 11.5-12.0 MMT of wheat next season, up around 225-250% on 2010/11, according to a report on Bloomberg.
27/05/11 -- Hope you all have a lovely soaking wet, BBQ-flooded out, cricket cancelled, kids crying, mopping out the kitchen, putting the sandbags out sort of a weekend. Personally I will be taking shelter in the pub. Enjoy!
27/05/11 -- The overnights are mostly green, although not by that much with wheat around 3c firmer, corn up 2c and beans 2-4c higher. Crude is a little higher and the dollar weaker, with the pound rising to around 1.6450 against the greenback.
China's CNGOIC has lowered it's 2010/11 soybean import estimate to 53 MMT, now 1.5 MMT lower than the USDA's latest estimate. The Chinese government have announced plans to sell 2 MMT of state-owned reserves at knock down prices to domestic crushers in exchange for them keeping soyoil prices low.
The upshot of that is that China's purchases from the US and South America may continue to run at unusually spartan levels, especially whilst there's still an estimated 6 MMT of soybean stocks in private hands sitting at port side in China.
The dollar is under pressure on ideas that another round of monetary easing may be on the cards if employment data due next Friday disappoints.
Locally to Nogger Towers we got 11.4 mm of rain yesterday, our biggest one day total since at least February, bringing our monthly total to 42.9 mm, more than ten times what we got in the whole of April.
LOCAL SHOPKEEPERS WHINE AS OUT OF TOWN MEGASTORE PREPARES TO OPEN
We may be set for a disappoint harvest in Europe and America, but look at it this way all we are doing is avoiding the frustration of not being able to sell a bumper crop because the Black Sea are nicking all the business.
Surely it's not too difficult to recall the days when Russia, Ukraine and Kazakhstan were there to undercut any offer in the market? Those days are about to be thrust upon us again I feel as the balance of power switches back to the Black Sea.
Speaking at the 4th International GAFTA Conference in Kiev the director of Noble Resources Ukraine said yesterday that the wheat harvest there could hit 20 MMT this year, giving them the potential to export 11.5-12.0 MMT, according to my chums at Bloomberg.
That places exports up around 225-250% on this season, and 3.0-3.5 MMT more than the USDA currently estimate.
Total grain exports could hit 24 MMT in 2011/12, he said, which is significantly higher even than the government's own estimate of 19-20 MMT.
A local British shopkeeper said "They come over here with their cheap wheat, and urinate all over the place. It's a blim bloomin disgrace, that's what it is. I'm going to write a stiff note to the council."
A local Egyptian man said "Well, of course I'm going to pop up there on the park and ride and have a bit of a look round like, I'd be stupid not to, innit. I hear that they're virtually givin it away and there's a McDonald's as well. Happy days. We can take the kids and make it a nice family day out. Come on Chantelle, Beyonce, Nectarine..."
26/05/11 -- Soybeans: Jul 11 Soybeans closed at USD13.84 3/4, up 7 3/4 cents; Nov 11 soybeans closed at USD13.72 1/2, up 11 1/2 cents; Jul 11 soybean meal closed at USD360.30, up USD2.00; Jul 11 soybean oil closed at 58.70, up 74 points. Even another week, or should that be weak, of disappointing export sales at 163,200 MT couldn't keep the bulls at bay. Funds bought an estimated 5,000 bean contracts in spillover support from corn and wheat. The April crush data from the US Census Bureau was also below estimates of 129.3 million bushels at 127.98 million, the lowest April total in seven years. So if demand isn't doing anything for the bulls, then they'll chose to concentrate on supply concerns. Even those are on fairly shaky ground with the weather forecast for warmer and drier next week, there's still plenty of time to get those beans in.
Corn: Jul 11 corn closed at USD7.45 1/2, up 3 1/4 cents; Dec 11 corn closed at USD6.76 1/4, up 5 1/2 cents. Fund money was back with a vengeance buying an estimated 10,000 contracts on the day fuelled by late planting concerns, particularly in Indiana and Ohio. Even so forecasts for next week are looking brighter for planting progress, even for those states. Weekly export sales for corn was bang in the middle of the anticipated trade estimates at 779,600 MT (est: 500-900,000 MT). In amongst that was a 116,800 MT corn sale to China, switched from unknown. Private exporters also announced the sale of 168,000 MT of new crop corn to Mexico.
Wheat: Jul 11 CBOT wheat closed at USD8.14 1/2, up 18 cents; Jul 11 KCBT wheat closed at USD9.42 3/4, up 14 cents; Jul 11 MGEX wheat closed at USD10.45 3/4, up 25 3/4 cents. Minneapolis wheat led the way on sluggish planting progress of spring wheat on the northern Plains and Canadian Prairies. July MGEX wheat hit the highest for a front month in three years. Weekly export sales came in at a combined 432,300 MT - towards the low end of expectations of 400-700,000 MT. EU weather concerns are ssen likely to cut production there, although opinions on by how much vary quite widely. The IGC trimmed 3 MMT off it's April projection to 141 MMT, but other estimates in a Bloomberg survey range from 128.6 - 135.8 MMT. Funds bought an estimated 5,000 CBOT contracts on the day.
26/05/11 -- EU grains closed sharply higher with July London wheat up GBP2.25 at GBP196.00/tonne and with new crop Nov closing GBP5.25 higher at GBP198.50/tonne. Nov Paris wheat rose EUR8.00/tonne to EUR2452.75/tonne whilst May12 was up EUR6.25/tonne lower to EUR251.25/tonne.
The bulls certainly had it today, with Paris wheat setting contract highs and Nov London wheat setting a contract lifetime high close, and getting within GBP0.25/tonne of last week's all-time high.
New crop London wheat traded at a premium to old crop for the first time this season.
Paris wheat was supported by the euro falling to 1.16 against the pound for the first time since Mar 11.
Minneapolis wheat meanwhile raced to it's highest in three years on continued spring wheat planting delays in the Dakotas and Canadian Prairies.
Brussels granted export licenses for another 230,000 MT of soft wheat this week, bringing the 2010/11 year to date total to 17.4 MMT.
The ICG came out with an inexplicably optimistic EU-27 wheat production estimate, cutting just 3 MMT off last month's prediction to 141.1 MMT. That still represents a 4.2% increase on last season. That included French production at 39.0 MMT and UK output at 15.7 MMT.
A Bloomberg survey out today however seemed much more realistic. The median estimate of seven analysts and traders surveyed by them pegged the EU wheat crop at around 131 MMT.
The most bearish assessment came from Offre et Demande Agricole who placed production this year at just 128.6 MMT, a 10 MMT reduction on the USDA's estimate earlier this month.
EU production of soft wheat is forecast at 122.3 MMT, based on the median estimate of five analysts and traders, the report said.
26/05/11 -- The IGC are out today with a raft of production numbers on the global grains front. Here's a little sampler of how they see things currently.
Their EU-27 wheat production estimate was lowered 3 MMT from last month to 141.1 MMT, which amazingly still represents a 4.2% increase on last season. France will still manage to produce a 39 MMT crop (up 2% on 2010), with Germany chipping in with 24.5 MMT (also up 2%) and the UK with 15.7 MMT (up 4%), they say.
Do you want to go on? Barley output is seen at 54.3 MMT, 2% up on last year. France will produce 10.0 MMT of that (down 2%), Germany 9.5 MMT (down 9%) and the UK 5.3 MMT (up 2%).
Do you still want to go on? Nah there's not much point is there? They're about as much use an a ejector seat in a helicopter that lot.
26/05/11 -- The overnights closed firmer with wheat leading the way up 16c nearby, corn was up 4-5c and beans up 7-10c. Crude is a little lower and the dollar is weaker.
Weekly export sales came in at a combined 432,300 MT for wheat (against expectations of 400-700,000 MT); 779,600 MT for corn (500-900,000 MT) and 163,200 MT for beans (150-325,000 MT).
Lurking in amongst that lot was a 116,800 MT corn sale to China, switched from unknown. Huge it isn't, but the bulls won't care about that.
The bulls have the upside momentum, there's little doubt about that. Yet somehow I just feel that for all this planting delays, we're gonna lose 2 million acres of corn Oh Lordy rhetoric that's kicking around most of it will get into the ground one way or another. Prices will see to that.
The IGC have just released their latest blind stab in the dark, pegging world wheat production at 667 MMT, 5 MMT lower than last month and 3 MMT below the USDA. Consumption will also fall 3 MMT from that predicted last month, with carryover stocks down 1 MMT to a still healthy 185 MMT, they say.
Corn production is seen up 1 MMT from last month, with consumption falling 1 MMT and ending stocks rising 5 MMT to 116 MMT from what they reckoned in April.
EU-27 wheat production was reduced 3 MMT to 141.1 MMT, with barley output cut by just 0.6 MMT to 54.3 MMT.
They haven't got a clue have they, bless. I have this mental image of them all sat round in huge wing-backed leather arm chairs in an oak panelled gentleman's club somewhere, large whiskey in one hand with the other drawing balls out of a black felt bag. A bit like the draw for the FA Cup, but without Gary Lineker.
They can't wait to get the draw out of the way 'cos there's a free bar and sandwiches on in the other room.
"What size do you fancy on the Russian wheat crop this year Roderick?"
"Buggered if I know old bean, pass the vol au vents will you there's a good stick, what, what, what. I think I need the loo, where's the gents in this place. Nah, bugger it, too late. Clean that up will you old chap and get me another G&T after you've washed your hands...I knew a Russian girl once you know, Eva she was called, enormous whatdoyoucallits....Where am I again? Ah yes drawing the FA Cup...Charlton, are they still in it?"
Early calls for this afternoon's CBOT session: wheat up 15-17c, corn up 4-6c, beans up 8-10c.
26/05/11 -- Nov London wheat is currently GBP4.00/tonne higher in early trade, testing last week's all-time high of GBP199.25/tonne and seemingly determined to break through the magical GBP200.00/tonne mark.
Yields are likely to be down "50% or more" I read somewhere the other day along with reports of wheat already being cut as whole crop silage.
Farmers don't want to sell anything at the moment, as they haven't got a clue what yields they are going to get and clearly don't want to find that they've over sold. That's perfectly understandable.
Stocks are tight, tighter even than Defra's numbers released yesterday suggest, they only pegged the entire 2010/11 marketing year exports at 100,000 MT more than they know we'd exported by the end of March.
Stocks are so tight in fact that one leading UK merchant decided to sit on their May London wheat longs convinced that the market couldn't come up with the physical grain. Except it did.
Wheat is now so expensive that Ensus have decided to shut down and wait for a better day rather than continue to buy it and turn it into bioethanol. The economics would appear to have got worse since they made that descision, not better.
Wheat is now so expensive that even "they like to see it on the ticket" feed compounders are turning their backs on it.
Wheat is now so expensive that merchants are complaining that the only "buyer" is the futures market, physical buyers of real live tangible here it is where do you want it tipping guv wheat are much harder to find.
Merchants are complaining that all these futures sales they have on are once again eating into their cash reserves with every (losing) margin call that comes along. They can't unwind without a physical buyer at the other end, and finding one of those isn't easy.
On the spot market flour millers are sellers of wheatfeed pellets now at huge discounts to the price of wheat simply because they need physical movement. They need an end user mouth to take delivery of it. And those buyers are operating in a completely different market to the paper shufflers.
26/05/11 -- World agri-weather highlights from the excellent Martell Crop Projections:
- Canadian prairies very cool; spring crops germinating slowly; night temps fell to 30s-40s F this week; cold air heading into Northern Great Plains in United States; spring wheat states North Dakota and Montana wet and cool; the worst of both worlds; spring planting delays very serious northern United States; US Midwest wetness growing worse every day; conditions are most wet in western corn belt from repeated rains this week; heavy rainfall spreading into eastern Midwest today - Thursday; planting struggles persist corn and soybeans
- Brazil weather very dry in May; Mato Grosso received no rainfall, gets 2-3 inches normally in May; safrinha (second-crop) corn deteriorating from heat, dryness; Parana state is bone dry in May; rain needed soon for wheat planting; forecast rains in South Brazil have not materialized; dry topsoil delaying winter wheat planting So Brazil
- Argentina drought eased by scattered showers yesterday Buenos Aires province; more needed; 90-day moisture deficit 5.3 inches (135 mm) eastern Buenos Aires; top winter wheat district Tres Arroyos extremely dry, 6.7 inch rainfall deficit and 29% of normal the past 90 days; La Nina drought influence still present
- Northern Europe much cooler this week; still suffering from drought; talk of severe yield reductions in UK wheat; crop conditions were too dry for too long; northern France drought has grown very severe; Paris rainfall less than 10% of normal the past 6 weeks; heat is another stressor; afternoon temperatures France frequently 8-10 F above normal; Germany and Poland showers last week eased drought stress a bit; more rain still needed; though topsoil moisture improved subsoil moisture still short in Poland, Czech Republic, Slovakia, Hungary
- Australia weather conditions cool and unstable, eastern growing areas; showers continued Tuesday northern New South Wales; soil moisture improving for winter wheat planting NSW, Victoria, South Australia with good rain past 2 weeks; unusually cold weather has developed; night lows 30s F southeast Australia; subsoil moisture badly depleted in Western Australia top wheat state; mid May showers were helpful, much more rain needed to jump-start wheat planting; shower chances increasing in 7-day forecast
- China Manchurian Plain conditions are warming; corn planting prospects brightening , projected temps rising to upper 70s- 80s F; Heilongjiang top soybean province still very wet; May rainfall way above normal keeping planting to a minimum; warmth very welcome, will heat up cold soils; farmer will plant between showers, forecast is stormy; biggest worry in China agriculture is drought in East; water supplies badly depleted, reservoirs running dry in rice, eastern rapeseed areas; China winter wheat harvest reportedly was slightly above 2010 production; wonder how this is possible with very low spring rainfall; drought grew severe in North China Plain top wheat provinces Henan and Shandong
- India high heat continues; over 100 F most areas; Pakistan also extremely hot, 105-108 F; a few India showers occurred this week, southwest, northeast growing areas; monsoon officially starts June, lasting through September; crop production last year was good with mostly above-normal monsoon rainfall; farmers hoping for another productive crop season in 2011; La Nina favours high rainfall in India
- Ukraine, Russia experiencing summer-like heat; highs over 80 F past several days; moisture stress is a growing worry; hit-or-miss showers helped a little, past couple of days; worst drought in central Ukraine with less than half of normal rainfall the past 9-10 weeks; winter crops rapeseed, wheat suffered with spring dryness; spring planting surging with springtime warmth and dryness; now rain is needed to germinate seeds; main crops are corn, soybeans, sunflower; drought worries increasing now in Russia Black Earth; same warmth, dryness as Ukraine; low rainfall the past 2-3 months; Russia spring grain planting surged ahead of normal pace with sunny warm weather; showers would be welcome to improve germination; welcome rain occurred yesterday in Russia Urals
26/05/11 -- The overnight Globex markets are firmer across the board, NYMEX crude is back up above USD100/barrel and even the euro is off it's lows.
There hasn't been a great deal of change weatherwise, potentially much warmer and drier is on the cards for the Midwest next week. You'd have thought that was a blessing but one bull comment I read was that there was concern that this rapid switch from spring to high summer may cause some harm.
The bulls are rampant, and EU wheat futures look set to open higher on the back of it. So here's a little interesting thought for you: Since news of the Ensus shutdown was announced new crop wheat has risen around GBP20/tonne whilst the price of crude has hardly changed.
The "Sold Out" signs came down in Ukraine yesterday, it seems that the shop next door may be about to re-open too.
The Russian deputy PM has said that a decision on whether to lift their export embargo could be made "within days". It's unclear whether that means to lift it when the existing June 30 deadline runs out, or if they may remove it even sooner.
Spring grain plantings are now progressing well with around 75% of the planned area in the ground, but cash for seed is tight and domestic prices have been battered well below international levels. The announcement that the export ban will be lifted at then end of next month may ensure that growers do that final push to get the governments targeted acreage in.
Japan has bought 157 TMT of food wheat spread fairly evenly between US, Canadian and Australian origin overnight. They're so courteous aren't they the Japanese.
Qatar are tendering for 100,000 MT of feed barley, Sepp Blatter is in line to win that tender as they owe him a couple of favours.
25/05/11 -- Soybeans: Jul 11 soybeans closed at USD13.77, up 4 3/4 cents; Nov 11 soybeans closed at USD13.61, up 6 3/4 cents; Jul 11 soybean meal closed at USD358.30, down USD0.90; Jul 11 soybean oil closed at 57.96, up 48 points. Crude oil was supportive, having been lower earlier in the day it closed almost USD2/barrel higher. The market can't weigh up the impact of potentially late plantings on corn for soybeans. A Reuters survey estimates US soybean plantings at 76.7 million acres, a fall of 0.6 million on the latest USDA estimate. Almost 2 million acres of intended corn acres wont get planted either, they reckon. Lanworth disagree, pegging disruption to corn and soybean plantings at substantially less, saying that "the net effect of flooding on US spring plantings is likely to be minor." For what it's worth I side with Lanworth.
Corn: Jul 11 corn closed at USD7.42 1/4, up 9 cents; Dec 11 corn closed at USD6.70 3/4, up 8 1/4 cents. A Reuters survey pegged the US corn acreage at 90.35 million versus the USDA's 92.2 million. Final output was seen at 13.2 billion bushels compared to 13.5 billion from the USDA. Nobody really has a clue at this very early stage, as is indicated by potential yield estimates ranging from 151.0 bu/acre to 162.1 bu/acre. Trade estimates for tomorrow's weekly export sales report range from 500 to 900,000 MT. South Korea reportedly bought South African corn today, saying that US corn was too expensive. Funds were said to have bought around 10,000 contracts on the day. Open interest in July corn remains very large.
Wheat: Jul 11 CBOT wheat closed at USD7.96 1/2, up 16 3/4 cents; Jul 11 KCBT wheat closed at USD9.28 3/4, up 16 3/4 cents; Jul 11 MGEX wheat closed at USD10.20, up 31 1/4 cents. Minneapolis led the way as spring wheat plantings remain a major concern. Across the border in Canada spring sowings are also wel behind schedule. EU weather woes are also to the forefront of trader's minds. Few are paying too much attention to the FSU countries. Ukraine canceled their export quota system today and Russia may soon follow suit. Estimates for tomorrow’s weekly export sales report range from 400 to 700,000 MT.
25/05/11 -- EU grains closed with July London wheat up GBP1.75 to GBP193.75/tonne and with new crop Nov up GBP1.90/tonne to GBP193.25/tonne. Nov Paris wheat closed EUR3.75/tonne higher at EUR244.75/tonne whilst May12 was up EUR3.50/tonne to EUR245.00/tonne.
The July/Nov London wheat spread has narrowed to just GBP0.50/tonne from GBP37.00/tonne in little more than a month as new crop prospects continue to decline.
The first winter barley was cut in the Charantes area of France yesterday, with resulting yields described at "catastrophic" by Agritel, although they did concede that this was possibly not the land with the best potential.
Defra came out with some revised 2010/11 grain ending stocks numbers today, pegging UK wheat inventories at 1.51 MMT, representing the lowest stocks:use ratio since 1997/98. The UK exportable surplus is now 2.44 MMT, they said, although that's clearly too low as we've already exported 2.34 MMT of that by the end of March.
Ukraine announced that they are to lift the existing grain export quota system. The country will export 8-9 MMT of wheat in 2011/12 (an increase of around 130-150% on this season), and 5-6 MMT of barley (an increase of 100-140%), they said.
Russia are expected to lift their own export embargo sometime across the summer as the balance of export power switches away from the US and Europe, and back in favour of the Black Sea nations.
Stories abound that Russian trading houses have large stocks of grain sitting at the ports just waiting for the green light.
25/05/11 -- The overnight grains finished mostly a little higher with beans leading the way up 6-7c, corn up 3-5c and wheat 3-4c higher. NYMEX crude is down 66c to USD98.93/barrel and the dollar is a touch firmer.
On the US weather front it's a game of two halves. Beneficial rains have crossed the HRW wheat areas of Nebraska, Kansas and Oklahoma, say WT Weather. Yet rain continues to hamper spring wheat (and corn and soybeans too) plantings further north.
It's also still far to wet for timely spring sowing across the border on the Canadian Prairies.
For the Midwest of the US it's a case of things look pretty good for what is already in the ground, it's a question of getting what's left sown.
Some forecasts are calling for below normal rainfall with much above normal temps in the May 29th to June 8th timeframe. That would be helpful to those looking to get their crops into the ground, and should also be conducive to good crop development for those that already have.
Nearby July contracts remain vulnerable to rolling of positions. Despite some recent liquidation open interest in July corn is well over half a million contracts, the equivalent of over 73 million tonnes! For July soybeans it's around 32.5 MMT.
South Korea has reportedly bought South African corn, saying US corn was too dear. The trade will be scrutinising tomorrow's export sales report for further evidence of demand switching away from the US, and in the case of soybeans evaporating entirely.
China has been rather conspicuous by it's absence lately. Domestic soybean stockpiles at the ports are still said to be at, or near, record levels.
Ukraine has lifted it's grain export quota system, and is issuing bullish statements about crop production and export prospects for 2011/12. Everyone is now eyeing Russia for a similar move.
Markets are expected to open higher, but I sense some nervousness, especially with a long weekend looming and the size of OI in July. Any faltering in early strength could signal another rush for the exits.
Early calls: corn up 3-5c, beans up 6-8c, wheat up 3-5c.
25/05/11 -- Ukraine's Agriculture Minister Nikolai Prisyazhnyuk has said today that "the government has approved a resolution canceling grain export quotas."
He went on to say that the country will export 8-9 MMT of wheat in 2011/12 (an increase of around 130-150% on this season), a figure in line with that from the USDA.
They also expect to export 5-6 MMT of barley, he added. That's an interesting figure as it's way above the USDA's current estimate of only 3.5 MMT, it would also represent an increase of 100-140% on the current marketing year.
25/05/11 -- Been running round like one of these this morning. Just for future reference, if anyone is interested, the little John Inman "I'm free" ad on the right there is a reference to availability not price FFS!
Now, what's going on? London wheat is a bit firmer I see, although sterling strength against the euro may limit those gains. Paris wheat, rape and corn are all up around EUR2.00/tonne with the weak euro underpinning those.
The overnight Globex market sees wheat up around 4-6c, corn up 2-3c and soybeans 6-9c firmer. Crude is a tad weaker.
There's a three day weekend coming up for the Septics as well as us Brits, it's Memorial Day on Monday over there, so we could have a bit of a book-squaring couple of days ahead.
The weather outlook hasn't changed a great deal. Over here there's chances of light rain for the SE tomorrow. Also prospects of similar in France and Germany. A drought buster it isn't with only a trace to 0.25 inches in France and 0.1-0.35 inches in Germany over the next five days, according to QT Weather.
My man in Moscow tells me that Russian traders say that there are still large volumes of grain in store over there, almost to the point of there being little free space for the coming harvest.
Crops in the south are looking "not bad" he says. SovEcon would seem to agree, they've upped their grain harvest estimate to 85 MMT, a 40% rebound from last year. Debate still abounds over when Moscow will allow exports to resume. It is a "when" rather than an "if" though.
It also seems to be true that there are surprisingly large volumes of the 2010 crop still left to market as the export ban depressed local prices to way below international levels.
With global prices where they are at the moment all that would point to Russian traders coming out as very aggressive marketeers the minute the export floodgates are opened.
That could have a swift and immediate impact on prices, especially is Ukraine and maybe even India too are already out there pitching.
24/05/11 -- Soybeans: Jul 11 soybeans closed at USD13.72 1/4, down 1 1/2 cents; Nov 11 soybeans closed at USD13.54 1/4, up 3 1/2 cents; Jul 11 soybean meal closed at USD359.20, up USD0.40; Jul 11 soybean oil closed at 57.48, up 26 points. Soybeans fared much better than corn or wheat on the day. Maybe the underlying reason was that planting progress for corn last night at 79% was much better than many had anticipated, therefore the chance of beans picking up more acres than expected has diminished. Funds were said to have sold 15,000-20,000 corn lots on the day as opposed to buying 2,000 bean contracts.
Corn: Jul 11 corn closed at USD7.33 1/4, down 20 3/4 cents; Dec 11 corn closed at USD6.62 1/2, down 8 cents. Fund rolling of nearby longs is expected to start in the next few days, maybe others anticipated this and decided to get out early? On the other hand maybe the funds started liquidating early, selling around 15-20,000 lots on the day. The weather forecast calls for warmer and drier weather for slow planted states like Indiana and Ohio starting this weekend. China say that they are in for a record corn crop in 2011, forecasting output at 181.5 MMT.
Wheat: Jul 11 CBOT wheat closed at USD7.79 3/4, down 23 1/4 cents; Jul 11 KCBT wheat closed at USD9.12, down 19 cents; Jul 11 MGEX wheat closed at USD9.88 3/4, down 12 1/4 cents. Wheat futures appeared to be consolidating after gains of around 60c to a dollar a bushel on the week as a whole last week. Weaker EU wheat futures were a concern despite widespread reports of "irreversible damage" to French, German, Polish and UK wheat. Weather conditions appear to have improved in Western Australia whilst India looks set for a record crop any maybe an opening of the export floodgates.
24/05/11 -- EU wheat futures closed lower with Jul London wheat down GBP3.50/tonne to GBP192.00/tonne and with new crop Nov falling GBP2.15/tonne to GBP191.35/tonne. Nov Paris wheat was down EUR3.50/tonne to EUR241.00/tonne whilst May12 declined EUR3.50/tonne higher at EUR241.50/tonne.
Paris corn was mostly around EUR0.50-1.50 lower, with rapeseed futures rising around EUR1.00-2.00/tonne and malting barley up a euro nearby to as much as EUR9.25/tonne further forward.
New front month July London wheat posted the lowest close for a front month since Mar 17th. Back then wheat was on it's way back up from the 2011 low of EUR167.35/tonne - set a couple of days earlier in the immediate aftermath of the Japanese earthquake and subsequent tsunami and nuclear crisis.
India - the world's second largest wheat producer - say that they will harvest a record amount of wheat this year, possibly in excess of 86 MMT, which may open the door for some sizable exports. The government there say that local wheat procurement is well ahead of last season.
The authorities there have come in for heavy criticism in the past few years for allowing bumper wheat stocks to rot in inadequate storage facilities rather than allow the grain to go for export. With international wheat prices where they are now the government may decide that it would be foolish to continue to look a gift horse in the mouth.
"Russian spring grain planting is moving rapidly ahead under dry conditions, warmth in May is perfect for spurring fast planting in Black Earth and Volga districts," say Martell Crop Projections.
UkrAgroConsult estimate 2011/12 wheat production in Ukraine now at 20.4 MMT, down slightly from the previous forecast of 20.5 MMT, but an increase 18.6 MMT on the previous year. Exports are estimated at 10.0 MMT, an increase of over 150% on the current season. They aren't likely to be too tardy in getting started with those either.
24/05/11 -- The overnights closed mixed with wheat mostly 5-6c lower, beans 6-8c higher and corn 3-5c lower. Crude oil is the best part of two dollars firmer which should support after Goldman Sachs raised their price outlook on crude.
Goldman did however lower their outlook on corn and soybean prices. A firm dollar may cap gains. Weather is mixed, some are saying conducive for planting advancement. HRW wheat may see some decent rains too.
Planting prospects appear to have improved in Western Australia.
China say that they are in for a record corn and wheat crop this year and India say that they will harvest a record amount of wheat.
Last night's soybean export inspections were a bit slack again for soybeans, hinting at another week of disappointing sales.
Fund money is set to begin rolling out of July longs as month end nears, which may see some erosion of old crop premiums over new crop.
Japan are shopping for 157,000 MT of food wheat and Algeria are looking for 50,000 MT of durum.
Early calls for this afternoon's CBOT session: beans up 6-8c, wheat down 4-6c, corn down 3-5c.
24/05/11 -- The overnights are green across the board with wheat up around 5-6c, corn up 4-6c and soybeans 10-12c firmer. Crude is a dollar higher, which may have more to do with it than anything else as I don't interpret the USDA's planting progress numbers as particularly bullish.
Things have caught up remarkably well in the past fortnight with corn planting advancing from 40% to 79% done and soybeans moving from 7% to 41% complete. Beans can be planted right up until Independence Day in some states.
Ohio stands out as a notable slow-coach at only 11% planted on corn versus 80% normally and 4% planted on beans versus 54% on average. For the record Ohio produces around 4% of the US corn crop and 6% of the US soybean crop, so it's not that drastic in the overall scheme of things.
Chinese think tank CNGOIC say that corn production will come in at a record 181.5 MMT this year and wheat output will also rise, although a bit more modestly to an also record 115.5 MMT. No surprises there then.
What is a surprise is that Barack Obama is Irish, bejeezus fancy that to be sure? That smacks of desperation to win votes, any votes, to me. And if true how come we've never seen him at Cheltenham? I'm sure that there's probably a touch of Mexican in there and a bit of Red Indian too if you look hard enough Barack.
My part of North Yorkshire got 2.8mm of rain yesterday and has had 0.3mm so far this morning. The BBC are giving "heavy rain showers" for the likes of Cambridge, Peterborough and Norwich on Thursday. Let's hope that they're right.
The grain market seems to have become once again re-aligned to following crude oil again of late, having seemingly de-coupled itself when it all kicked off in North Africa and the Middle East earlier in the year.
Goldman Sachs have today increased their forecasts on crude oil, pegging WTI (as traded on NYMEX) at USD114.50/barrel six months from now and at USD126.50/tonne in twelve months time. Their six month Brent forecast is USD120.00/barrel and their 12 month Brent is USD130.00/barrel.
WTI is USD98.85/barrel currently and Brent is trading at USD111.20/barrel.
23/05/11 -- Soybeans: Jul 11 soybeans closed at USD13.73 3/4, down 6 1/2 cents; Nov 11 Soybeans finished at USD13.50 3/4, up 1/4 cent; Jul 11 soybean meal was at USD358.80, down USD1.80; Jul 11 soybean oil closed at 57.22, down 24 points. A strong dollar and weak crude oil won the day. The USDA reported soybean planting progress at 41% done, 10 points down on normal (and last year) but not half bad under the circumstances. This seems to be a case of is the glass half full or half empty? The state that lags noticeably is Ohio at 4% planted versus 54% normally. Other major bean states like Illinois and Iowa are actually ahead of normal pace however.
Corn: Jul 11 corn closed at USD7.54, down 5 1/2 cents; Dec 11 corn finished at USD6.70 1/2, up 4 cents. The USDA export inspections report was a bit flat at 35.801 million bushels. Planting progress released after the close came in at 79% done versus 87% normally. As with beans Ohio is the stand out laggard at only 11% complete versus 80% normally. Again though the likes of Illinois (90% done) and Iowa (98% complete) are ahead of the five year average pace. The fact that old crop exports are flagging, whilst new crop plantings remain sluggish may explain the narrowing of the old crop/new crop spread.
Wheat: Jul 11 CBOT wheat closed at USD8.03, down 3 1/2 cents; Jul 11 KCBT wheat was down 2 1/4 cents at USD9.31; Jul 11 MGEX wheat closed at USD10.01, up 1 1/4 cents. As with corn old crop mostly fell whilst new crop was mostly higher, narrowing the spreads. Export inspections came in at 30.159 million bushels. The USDA reported winter wheat ratings at 45% poor/very poor, down a point on the week. Spring wheat was reported as 54% planted versus 89% normally. Some reports suggest that good progress could be made in the Dakotas this week as things turn a bit drier.
23/05/11 -- EU grains ended mixed. Expiring May London wheat went off the board unchanged at GBP205.00/tonne with new crop Nov closing down GBP0.50 to GBP193.50/tonne. Nov Paris wheat fell EUR0.25/tonne to EUR244.50/tonne whilst May12 was EUR2.75/tonne lower to EUR245.00/tonne.
Wheat traded both sides, opening higher but falling later in the day as crude oil declined, dragging US grains with it.
Paris corn and rapeseed futures managed to hang onto early gains, with corn up around EUR2-3.00/tonne at the close and rapeseed showing gains of around EUR3-4.00/tonne.
Concerns over European sovereign debt are never far away, with Italy and Greece taking centre stage today, that saw the euro fall to 2 month lows against both the pound and US dollar.
In the UK weekend rains were good in the north and west, but a bit more disappointing the further east and south you went. The British breadbasket that is East Anglia got only one or two millimeters at best.
Some further light rains may penetrate that far later in the week, with chances too for northern France and Germany by midweek and beyond.
Things are particularly bad for spring sown grains, many of which have hardly seen any rain at all since the day that they were planted. One farmer emailed me this morning to say that some of his fellows were talking about spring barley not even having enough moisture to come into ear this season.
The USDA will report tonight on US winter wheat crop conditions, currently standing at 44% poor/very poor as of May 15th compared to just 8% a year previously. In Kansas, the top HRW wheat producing state which grows almost a quarter of all US winter wheat, 55% of the crop was rated poor/very poor.
Meanwhile US spring wheat plantings further north have the opposite problem, being dogged by excessive field moisture. North Dakota, the leading producing state, was only 15% planted last Monday compared to 68% normally.
23/05/11 -- The overnight grains started higher but closed lower with wheat down 8-10c, corn 2-4c lower and beans down 4-6c.
Dollar strength on the back of the old faithful "flight to safety" was the theme following credit downgrades for Italy and Greece. The euro slumped below 1.40 against the dollar for the first time since mid-March on the back of that.
Crude oil is also sharply lower, down a little over USD3.00/barrel on NYMEX and with Brent falling by a similar amount.
Slow US planting progress is what everyone is still talking about, the USDA will reveal how slow is slow tonight. Corn is expected to be 75-80% done, with beans maybe around the 40% mark and spring wheat up near halfway.
North Dakota, the leading spring wheat producing state, was only 15% planted last week compared to 68% normally. May 25 is the normal cut-off date for sowing, according to Martell Crop Projections.
Across the border Canadian sowings also still lag, very similar to last season. The USDA have Canadian wheat production set to recover 2 MMT to 18.5 MMT this year. Given that this year’s crop conditions are almost identical to those of twelve months ago then that is probably a somewhat optimistic assessment.
France, Germany and the SE of the UK continue way too dry. Official production estimates there from the likes of the USDA and Coceral are probably all very much on the high side of reality.
Western Australia has had some rain, but could certainly do with a bucket full more as wheat plantings there get underway.
China imported 3.88 MMT of soybeans in April, according to customs data, a near 8% fall on April 2010.
There are plenty of bullish fundamentals amongst that lot as you can see. The question is can the grains get themselves disentangled from the outside markets? It could also be argued that whilst the fundamentals now point higher, possibly we shouldn't be at the current starting point at where we now find ourselves.
Early calls for this afternoon's CBOT session: wheat down 8-10c, corn down 2-4c, beans down 4-6c.
23/05/11 -- Got to pop out for an hour shortly, so this is just a quickie. Wet and windy was the form for North Yorks this weekend, although the rain gauges aren't showing anything like the volume that seemed to fall.
Some very sharp showers about, but also clearly very localised. My local rain gauge says 2mm Fri, nothing Sat and 3.3mm Sun for a 28.2mm total for the month so far. Certainly I'm surprised that the weekend totals are so low.
There doesn't seem to be much in the forecast for the SE again this week, unfortunately.
French farmers blockaded a stretch of the main A10 motorway that links Paris and Bordeaux at the weekend in a demonstration against government limitations on water usage, according to Bloomberg.
May London wheat goes off the board today, so anything could happen with that.
The euro is off to a bad start, with the pound rising above 1.15 against the single currency to it's highest levels since mid-March as ratings agencies cut their view on risk for Italy and Greece.
Another Icelandic volcanic eruption over the weekend could do more damage to the European economy it is feared.
Crude is down a couple of dollars as the USD rises.
The overnight grains are mixed, weighed down by dollar strength.
The USDA will report tonight on planting progress and crop conditions after the close of Chicago.