03/06/11 -- Soybeans: Jul 11 soybeans closed at USD14.14 1/2, up 7 1/2 cents; Nov 11 soybeans closed at USD13.97, up 4 1/4 cents; Jul 11 soybean meal closed at USD368.40, up USD2.40; Jul 11 soybean oil closed at 58.73, down 18 points. On the week as a whole Jul beans gained 34 3/4 cents, with new crop Nov climbing 28 1/2c. Planting remains sluggish in some of the more northern soggy states like Ohio. There's still time to get a bean crop in though, but these delays and tight old crop stocks have encouraged new money back into the market. Weekly export sales were a bit disappointing at 155,500 MT, compared with expectations of 150-350 TMT. That's six weeks in a row of sales below 200,000 MT.
Corn: Jul 11 corn closed at USD7.54, down 12 1/2 cents; Dec 11 corn closed at USD6.86 1/4, down 8 3/4 cents. Corn fell despite the late planting story on ideas that it is simply too expensive relative to wheat. Stories coming out of Asia suggest that as a feed grain US corn is currently around USD60/tonne more expensive than Australian feed wheat. An improved weather forecast for the Corn Blet this weekend may finally see many of those unplanted acres get sown. The USDA will report on planting progress on Monday night, 14% of the crop was unseeded as of last Sunday night. Corn export sales were a combined 700,900 MT, in the middle of trade ideas of 500TMT - 1 MMT
Wheat: Jul 11 CBOT wheat closed at USD7.73 3/4, up 4 cents; Jul 11 KCBT wheat closed at USD9.14 1/4, up 5 1/4 cents; Jul 11 MGEX wheat closed at USD10.60 1/2, up 41 cents. Minneapolis wheat raced away, extending the gap between it and Chicago wheat now to close to three dollars. Spring wheat plantings remain well behind schedule, and final yield potential is being reduced with each day that passes. Winter wheat production estimates are also falling with Linn Group and Informa Economics cutting their forecasts this week. Export sales of 308,800 MT were in line with expectations for sales of 200-500,000 MT.
03/06/11 -- EU grains closed with July London wheat down GBP0.45 to GBP195.00/tonne and with new crop Nov up GBP1.55/tonne to GBP193.00/tonne. Nov Paris wheat closed EUR1.50/tonne lower at EUR234.25/tonne whilst May12 was down EUR1.25/tonne to EUR238.50/tonne.
Based on today's exchange rates Nov London feed wheat is only 20 euros cheaper than French milling wheat, which sounds like a relatively a small differential to me.
Maybe that's a function of weekend weather forecasts being on the wet side across the Channel yet remaining dry over here? In addition, reports are coming through of farmers in the SE of the UK already talking of using wheat for whole crop silage rather than see what can be gleaned from it come August.
On the week as a whole July London wheat was GBP1.50/tonne lower, whilst Nov fell GBP4.00/tonne. Nov Paris wheat EUR15.00/tonne and May EUR10.50/tonne.
That means that Nov London wheat has only fallen 2% since last Friday, whereas Nov Paris wheat is down 6%.
The pound fell to a four week low against the euro after weaker than expected PMI data. Even so the euro is hardly a strong currency at the moment, and neither is the dollar. Going into the second half of 2011 the pound may prove to be marginally the best of a bad bunch.
London feed wheat therefore may be a little over-valued, although farmers are understandably reluctant sellers until they have a better handle on yields here.
03/06/11 -- The overnights closed mixed with beans and wheat around 3-5c firmer and corn 1-2c lower.
Jobs data just out from the US is being described as "horrible" and "shockingly bearish" by some. US non farm payrolls rose by only 54,000 last month, well below expectations of an increase of around the 165,000 expected in a Bloomberg survey.
US unemployment rose from 9% to 9.1%, analysts had expected a fall to 8.9%.
On the back of those numbers crude oil is down USD1.65/barrel to USD98.75/barrel on concerns that the US may be heading for a double dip recession, backed up by news of US house prices falling to 2002 levels. Wall Street is expected to open lower on the news too.
The question this afternoon is can the grains sector ignore these outside influences?
Yesterday was all about fund money as they weighed in for an estimated 12,000 corn, 6,000 beans and 3,500 wheat contracts. Will they have the stomach to be back for more today ahead of the weekend?
Paris wheat is a little lower on the back of forecasts for fairly widespread rain for France and Germany over the weekend. If the funds don't show up this afternoon then we could be heading lower I'd suggest.
Weekly export sales numbers from the USDA were all within trade expectations, although it is notably that soybean sales have fallen away sharply of late.
Early calls: wheat and beans up 3-5c and corn unchanged to 2c lower
03/06/11 -- The USDA's weekly export sales for the week ended May 26th are out this afternoon. They reported combined wheat sales of 308,800 MT, in line with expectations for sales of 200-500,000 MT. Corn sales were a combined 700,900 MT against trade ideas of 500TMT - 1 MMT. Soybean sales were a bit disappointing at 155,500 MT, very much towards the low end of expectations of 150-350 TMT.
02/06/11 -- Soybeans: Jul 11 soybeans closed at USD14.07, up 20 3/4 cents; Nov 11 soybeans closed at USD13.92 3/4, up 18 cents; Jul 11 soybean meal closed at USD366.00, up USD5.30; Jul 11 soybean oil closed at 58.91, up 48 points. A fresh inflow of fund money spurred July beans to close above USD14.00/bu for the first time for a front month since the last day of March. Funds bought an estimated 6,000 contracts on the day and were also featured buyers of corn and wheat. Trade estimates for tomorrows export sales data are in the range of 150TMT-350TMT.
Corn: Jul 11 corn closed at USD7.66 1/2, up 8 cents; Sep 11 corn closed at USD7.41 1/2, up 13 1/4 cents; Dec 11 corn closed at USD6.95, up 15 1/2 cents. As with soybeans fund money was pouring in for corn, buying an estimated 12,000 contracts and brushing aside anything negative. There were a few such factors about, like a rising dollar and Informa increasing it's world corn production forecast by 11 MMT, including pegging China's output some 8 MMT higher than last month's USDA number. Instead the funds are more interested in what's going on in their own backyard and concentrating on planting delays. Trade estimates for tomorrows export sales data are in the range of 500TMT-1MMMT.
Jul 11 CBOT wheat closed at USD7.69 3/4, up 10 1/2 cents; Jul 11 KCBT wheat closed at USD9.09, up 17 1/2 cents; Jul 11 MGEX wheat closed at USD10.19 1/2, up 14 cents. Ukraine dropping their wheat export target for 2011/12 was seen as supportive along with speculation that Russia will introduce an export duty on grains. Lebanon found that Ukraine wheat was even cheaper than Russian in their tender and bought accordingly. Informa dropped their US winter wheat production estimate to 1.421 billion bushels. Trade estimates for tomorrows export sales data are in the range of 200TMT-500TMT.
02/06/11 -- EU wheat futures closed mostly higher with Jul London wheat up GBP3.45/tonne to GBP195.45/tonne and with new crop Nov rising GBP3.80/tonne to GBP191.45/tonne. Nov Paris wheat was up EUR1.25/tonne to EUR237.50/tonne whilst May12 rose EUR1.50/tonne to EUR239.75/tonne.
It was a bit of a mini recovery after a few days of losses since Russia announced the lifting of it's export embargo. Interestingly since then we've seen Nov Paris wheat fall 4.7% yet Nov London wheat has only declined by a more modest 2.6%.
Ukraine intriguingly lowered their 2011/12 grain export estimate from 19-20 MMT to 15-18 MMT, despite having plenty of carryover old crop stocks and a potentially bumper 2011 harvest only a few weeks away.
The trade is debating whether new crop prospects are as rosy as the Ministry there insist, or indeed whether they are actively trying to understate their potential for next season in the hope of shoring up prices a little.
Politics also seem to be at work across the border in Russia. Trade talk suggests that the rapid domestic price increases that they've seen since the ban was lifted may herald the imposition of some sort or quota system, or even the introduction of export tariffs.
The trade awaits the results of assorted international tenders kicking around from the Middle East and North Africa to gauge just how cheap the Black Sea is going to be relative to EU/US wheat.
It was a hot day across much of the UK today with the mercury hitting 26C in Poole. That may have caused further yield loss potential in the SE areas that didn't get much in the way of rain over the past fortnight.
02/06/11 -- The overnight grains finished mixed with wheat around 6-10c firmer, beans up 3-5c and corn trading fractions either side.
Crude is slightly firmer and the dollar a tad weaker. The USDA weekly export sales report is delayed until tomorrow after Monday's Memorial Day holiday. Also out tomorrow are some pretty important US jobs numbers, the vibe is that they could send the dollar into a tailspin.
Fresh news is pretty limited. Algeria are tendering for 50,000 MT of any origin wheat with the results expected any day now. It will be interesting to see if the Black Sea gets the nod, and if so exactly how much cheaper than EU/US origin they are. Lebanon are also said to be in the market.
Wheat's overnight action can probably be attributed to nothing more than a rebound from 60c losses since last Friday after the Russian export ban was lifted over the long weekend.
Linn Group put out some pretty bearish planting numbers for corn, beans and wheat yesterday. They can't be right on all three can they?
Things certainly look pretty washed out in Canada too at the moment it has to be said.
It seems like we are about to see the global grains supply pipeline switch from West to East. The West was only too happy to accept the baton from the East last summer, and wheat prices have moved up more than three dollars a bushel since then.
The question now is how will prices fare with the "lookie, lookie, for you I make special price" men of the East back in charge of the game?
Whilst we are considering that one, there's also the point that the futures markets that are driving the bus are still located in the West. That may mean that they are more likely to concentrate on what is happening here (ie production problems), than what is happening there (ie the shops are open 24/7 and the sales are on).
Early calls for this afternoon's CBOT session: wheat up 7-10c, beans up 3-5c, corn 2c higher to 2c lower.
02/06/11 -- With early barley cutting expected to be only a fortnight away, Ukraine still has a large carryover grain surplus to shift from the 2010 harvest. With only one month of the 2010/11 marketing year remaining the FSU country has exported little more than half of what it shipped in 2009/10 due to export bans and a complicated quota system.
Now that the floodgates are open they expect to increase grain exports this month to around 1.5 MMT (from 1.1 MMT in May). That however would only bring total 2010/11 exports to around 12 MMT leaving the country with carryover old crop grain stocks of a hefty 8 MMT at the end of the July/June marketing year.
With the deputy Ag Minister recently saying that grain production this season could be "significantly higher" than 45 MMT, exports in 2011/12 have the potential to break through 20 MMT. Strange then that they should chose today reduce their export target from 19020 MMT to 15-18 MMT. Trying to keep prices from falling out of bed wouldn't be the reason surely?
02/06/11 -- The loss of the Vivergo contract seems to have proven to be a bit of a spanner in the works for the engineering company Redhall Group Plc. Pre-tax profits fell 70% to GBP1m for the six months ended March 31 compared with GBP3.3 million a year ago figures released today show.
"The board believes this is a low point and trading will be much improved in the second half and beyond," they said.
01/06/11 -- Soybeans: Jul 11 soybeans closed at USD13.86 1/4, up 10 1/4 cents; Nov 11 Soybeans closed at USD13.74 3/4, up 11 1/4 cents; Jul 11 soybean meal closed at USD360.70, up USD5.40; Jul 11 soybean oil closed at 58.43, down 6 points. Beans wrestled with bearish outside influences like crude oil being sharply lower and the late planting scenario outlined by the USDA last night which put sowings 20 points behind normal at 51% done. Personally I don't think that this is such a HUGE issue at this stage as there is still plenty of time to get beans into the ground. But it's more important what the market thinks than what I think. Above normal temperatures and below normal rainfall forecast for much of the Midwest over the next fortnight should allow bean planting to catch up. Linn Group disagree, pegging this season's soybean acreage at 74.9 million.
Corn: Jul 11 corn closed at USD7.58 1/2, up 11 cents; Dec 11 corn closed at USD6.79 1/2, up 6 1/2 cents. As with beans corn was torn between bearish outside influences and the late planting storyline. Linn Group estimated this season's corn area at 87.2 million acres, miles below the USDA's 92.2 million. Funds bought an estimated 11,000 contracts on the day. Wheat was a negative influence as too was lower crude oil and soft employment and manufacturing data. An improved weather outlook for the US east of the Rockies for the next two weeks should enable much of the outstanding 14% of unplanted corn acreage to make it into the ground.
Wheat: Jul 11 CBOT wheat closed at USD7.59 1/4, down 23 cents; Jul 11 KCBT wheat closed at USD8.91 1/2, down 16 1/2 cents; Jul 11 MGEX wheat closed at USD10.05 1/2, down 19 1/2 cents. The Russian story dominated the wheat market dragging all three exchanges lower despite US winter and spring wheat having different bullish stories of their own. Funds sold an estimated 6,000 lots on CBOT. Forecast wetter weather for northern Europe starting this weekend and lasting into the middle on June was also a negative influence. Linn Group's spring wheat planting estimate was 13.8 million acres, some 600,000 lower than the USDA's May estimate.
01/06/11 -- EU grains closed lower with July London wheat down GBP1.00 at GBP192.00/tonne and with new crop Nov closing GBP1.85 easier at GBP1987.65/tonne. Nov Paris wheat fell EUR1.50/tonne to EUR236.25/tonne whilst May12 was down EUR0.50/tonne to EUR2538.25/tonne.
As well as the impending arrival of Russia onto the global grain export stage the market was today also considering the potential of an improved European weather outlook.
Flagged up on here last night we had Martell Crop Projections reporting the GFS weather model predicting 0.75-1.5 inches of rainfall for France, Germany and the SE of the United Kingdom in the 4-day June 3rd-6th time frame.
Today other weather forecasters appeared to concur, with the possible exception of the SE of the UK.
QT Weather are now forecasting "a much wetter period seen starting late this week and lasting into mid-June," giving 0.5-1.0 inches in Western France and up to 2-4 inches for the rest of France and into Germany & Poland.
Two weeks from now these rains are seen spreading east into Eastern Europe and the FSU, whilst continuing in France and Germany, they add.
Exactly how much good these rains will do if they materialise remains to be seen, but they certainly can't do any harm can they?
One of my spies in upper Bavaria today reports that "the corn here is low in the fields, between maybe 3 and 7 inches high. Otherwise at this time of the year, it should be a foot or two tall.
"The winter wheat looks good, all green and blueish and with healthy grains developing. Not much sign of the spring drought.
"Today it's raining all over Bavaria, and in Munich it was raining since late yesterday, and quite a bit so far. Almost incessantly, so the crops should catch up. Farmers told me on my biking trip that the corn looks bad, but assured me it will be back in time."
01/06/11 -- The overnights closed mostly lower, led by wheat which finished with losses of around 10-12c, corn was 2-5c lower and beans down 1-3c.
Crude is a tad lower and the dollar barely changed.
Wheat is lower on the back of the Russian news and also some ideas that France and Germany may be in for a wet weekend. QT Weather are forecasting "a much wetter period seen starting late this week and lasting into mid-June."
They're giving 0.5-1.0 inches in Western France and up to 2-4 inches for the rest of France and into Germany & Poland.
Two weeks from now these rains are seen spreading east into Eastern Europe and the FSU, whilst continuing in France and Germany, they add.
In the US, a the warmer and drier outlook should be favourable for early crop development and planting of what is left to go into the ground.
Early calls for this afternoon's CBOT session: wheat down 10-12c, corn down 3-5c, beans down 2-4c.
01/06/11 -- Morocco, the third-largest wheat buyer in North Africa, is set for a bumper harvest this year reducing the country's need for imports, say the United Nations’ Food and Agricultural Organization.
The wheat harvest is seen rising 20% to 5.9 MMT from 4.9 MMT in 2010, whilst barley production is expected to amount to 3.1 MMT, also an increase of 20%, the FAO said.
"Timely and good rains during land preparation and plantings led to an increase in planted area. About 4.9 million hectares have been planted to wheat (2.2 million hectares of soft wheat and 1.5 million hectares of durum wheat) and 1.6 million hectares with barley," they say.
"Moreover, soil moisture levels have generally been adequate to meet the crops’ water requirement since the beginning of the growing season, allowing satisfactory crop development in main producing zones," they added.
Harvesting begins this month.
The country’s overall grain imports are forecast to fall by more than a quarter to 4.44 MMT in 2011-12 from 6.04 MMT in the current marketing year, the FAO say.
01/06/11 -- With an estimated crush of around 23 MMT in 2011/12 Europe could do with a bumper rapeseed crop this year, unfortunately it doesn't look like it's going to get it.
Oil World peg the 2011 EU-27 rapeseed crop at 19.2 MMT (down 6.8% on last year), with sharp falls coming from Germany, Poland and France. The German crop will be down 19% from last year at at 4.65 MMT, they say.
Toepfer agree, pegging German output at 4.4-4.8 MMT vs 5.7 MMT a year ago, a decline of between 16-23%.
In Poland GUS, the Central Statistical Office, say that winter rapeseed plantings fell 12.5% as a result of the exceptionally wet conditions in August and September. In addition the hard winter then killed off 15.7% of those fields that did get planted, they add.
My man in Romania, Europe's fifth largest producer, says that OSR potential in the south is looking particularly poor and that a "severe shortage of rape" is likely there in the coming season.
Meanwhile wet weather and flooding in Canada also is delaying planting of spring rapeseed for the second year in a row. Take a look at this short video here from my mate Brad in Saskatchewan.
31/05/11 -- Soybeans: Jul 11 soybeans closed at USD13.76, down 3 3/4 cents; Nov 11 soybeans closed at USD13.63 1/2, down 5 cents; Jul 11 soybean meal closed at USD355.30, down USD0.30; Jul 11 soybean oil closed at 58.49, down 12 points. Beans finished with only modest losses despite weakness from wheat and corn. Month-end selling led funds to shed an estimated 3,000 contracts of beans on the day. Crude oil strength was supportive. After the close the USDA pegged US soybean plantings at 51% complete, compared to 71% normally and below trade expectations for 55-65% done. There's still plenty of time for things to catch up. "Hot temperatures have suddenly developed in US grain belt, the heat wave will continue along with scattered strong thunderstorms in the Midwest corn-soybean area," say Martell Crop Projections.
Corn: Jul 11 corn closed at USD7.47 1/2, down 11 cents; Dec 11 corn closed at USD6.73, down 11 cents. Corn fell on a combination of spillover weakness from wheat following the removal of the Russian export embargo and month-end liquidation. The USDA said that planting progress was 86% done after the close, compared to trade estimates of 85-90% planted vs last weeks 79%. Ohio continues to stand out at only 19% finished vs 93% normally. In its first crop condition report of the season the USDA rated the crop as 63% good/excellent as opposed to 76% last year. Weekly export inspections came in at 35.6 million bushels, around 6 million under what is required to meet the USDA's current target for the 2010/11 marketing year.
Wheat: Jul 11 CBOT wheat closed at USD7.82 1/4, down 37 1/2 cents; Jul 11 KCBT wheat closed at USD9.08, down 35 cents; Jul 11 MGEX wheat closed at USD10.25, down 31 1/4 cents. Wheat was down on the back of the news emanating out of Russia over the weekend that the existing export ban will expire at the end of the month. That's pretty bad news for a country that is expected to export 59% of it's annual production in 20101/11. Spring wheat planting progress increased from 54% last week to 68%, towards the top end of trade estimates. North Dakota is only 55% done vs 93% normally. Spring wheat emerged is also lagging at 40% compared to 81% on average. Winter wheat conditions improved one point good/excellent to 33% and fell on pip poor/very poor to 44%. Still a pretty poor performance it has to be said.
31/05/11 -- EU grains closed with July London wheat GBP3.50 lower at GBP193.00/tonne and with new crop Nov down GBP7.50/tonne to GBP189.50/tonne. Nov Paris wheat closed EUR1.00/tonne lower at EUR237.75/tonne whilst May12 fell EUR0.50/tonne to EUR238.75/tonne.
This was the first close below GBP190.00/tonne for Nov London wheat in a fortnight as it played catch-up following steep losses across the Channel yesterday after Russia announced that it was calling off it's grain export embargo.
For the month of May as a whole however Nov London wheat still posted impressive gains of almost GBP20.00/tonne, with Nov Paris wheat gaining EUR27.00/tonne.
Paris wheat did most of it's falling yesterday, closing with losses of 4.6% on the Nov contract over the two sessions since last Friday. London fared better by comparison, down 3.8% today. That would seem to suggest that Paris has fallen too much, or London not enough.
The over-riding concern with farmers in the UK, France and Germany for now seems to be over-selling their crops with huge clouds of uncertainty hanging over potential yields. New crop business has therefore ground to a trickle.
Nobody knows what to do, one merchant said to me the other day that he'd wouldn't be surprised to see London wheat at GBP150/tonne or GBP250/tonne come harvest. I know what he means.
Martell Crop Projections today report the GFS weather model predicting 0.75-1.5 inches of rainfall for France, Germany and the SE of the United Kingdom in the 4-day June 3rd-6th time frame (click image to enlarge).
Official crop estimates keep coming in generally much higher than some of the trade chatter of losses of up to 20%, or more in some cases. Toepfer for example peg the German wheat crop at 22.8-23.3 MMT vs. 24 MMT a year ago, a fall of "only" around 3-5%.
31/05/11 -- The overnight grains finished mixed but mostly lower led by wheat which fell around 15-17c following the news coming out of Russia. Corn was a cent up on old crop and 4-5c weaker on new crop, beans were mixed.
Crude oil is around USD1.75/barrel firmer, which should lend support as should a weaker dollar.
Reports suggest that Ukraine has already been a busy little bee making new crop wheat sales to Africa and the Middle East in the few days since it lifted it's export restrictions. Russia will surely be busy on the phone right now too.
Parts of Western Australia saw up to 50mm of rain over the weekend, which should aid winter wheat plantings.
The SE of England, France, Germany and Poland are all in the grip of varying degrees of drought. Yields will undoubtedly be affected but nobody seems to have a clear handle on by how much.
Some speculate that France's exportable wheat surplus could more than halve.
The USDA will report on planting progress for corn, beans and spring wheat tonight together with winter wheat crop conditions. Although wheat is the weakest leg today, tomorrow things could look different armed with those numbers.
Dockers in Rosario are threatening a port blockade in a dispute with fertilizer company Mosaic.
The IGC say that China may produce a record 170 MMT of corn this year. Rabobank say that Chinese corn imports could "at least" double. Sounds exciting doesn't it, although twice of not that much really is still not much really in the overall scheme of things.
Early calls for this afternoon's CBOT session: wheat 15-20c lower, corn steady to 3c lower, beans 2-4c easier.
31/05/11 -- Opinion is divided over Argentine wheat prospects for 2011/12 with planting now underway. The Ag Ministry there peg the wheat area for the coming season at 5 million hectares, a 6% increase on the 4.7 million sown in 2010.
The Buenos Aires Grain Exchange concur, pegging the planted area at 4.95 million. The Rosario Grain Exchange however say that wheat plantings will fall 10% on continued farmer dissatisfaction with government tinkerings with export quotas and taxes.
31/05/11 -- It might be a Godsend for some and another nail in the coffin for others. Metcheck say that things are "slowly starting to settle down and this trend will continue over the coming days as high pressure eventually takes control bringing plenty of fine and warm weather across much of the country by the end of the coming week."
"By the time we get through to Thursday high pressure will be really starting to take control and the end of the week will be fine and sunny for most areas with temperatures rising into the mid-twenties," they add.
Further ahead "warm, sunny weather looks likely to take hold across the UK for the middle of June," according to the BBC.
Flaming June here we come then? Note: Wimbledon runs from June 20 - July 3rd so we can expect torrential rains at the back end of the month if normal form prevails.
31/05/11 -- The overnights are mixed with wheat sharply lower, although well off session lows so far, corn is down in sympathy and beans are a little higher.
Front month July Globex wheat is down 20c, but has been as much as 36c lower following the weekend news that Russia is to lift it's grain export ban from July 1st.
Paris wheat closed sharply lower last night in the wake of the announcement. Some unconfirmed reports this morning say that "Russia has already begun selling". Other more reliable sources state that Ukraine meanwhile have sold new crop wheat to Tunisia, Ethiopia, Egypt and Lebanon in the past few days since it lifted it's own export restrictions.
Western Australia picked up some much needed moisture (up to 50mm in places) over the weekend to aid winter wheat plantings there from a second wave of rainfall across the state. A decent crop here this season could herald record production Down Under.
Northern and western areas of the UK had a soggy Bank Holiday weekend, although rainfall totals were more modest in the SE. France and Germany got some rain, with chances for more looking ahead. Snowstorm are giving chances of rain in Paris every day for a week starting on Saturday.
Russian spring grain plantings were approaching 80% complete as of May 26th, with Kazakhstan saying it will be done by the weekend and with Ukraine spring sowings already finished.
Nov London wheat opened GBP5.00/tonne lower and currently trades GBP7.25/tonne (down 3.7%) easier in early trade playing catch-up with Paris from yesterday which closed 4.9% lower.
30/05/11 -- London wheat was closed due to the Spring Bank Holiday, but the continent was open with Nov Paris wheat closing EUR12.25/tonne lower at EUR238.75/tonne whilst May12 was down EUR9.75/tonne to EUR239.25/tonne.
For the record other Paris grains were also generally lower, with malting barley finishing with losses of EUR17.50/tonne, rapeseed down around EUR5-7.00/tonne and corn mostly EUR3-4.00/tonne easier.
The weekend announcement that Russia will lift it's existing export embargo on grains at the end of next month was the catalyst to set grains tumbling.
Russian trading houses have apparently been buying up surplus grain stocks, with domestic prices heavily discounted to those on the international stage, and moving them to the ports in anticipation of this move.
That would seem to indicate that, regardless of the potential of EU and/or US wheat production this year, Russia is likely to be ultra competitive in any upcoming tenders with an estimated 10 MMT of old crop wheat to shift before new crop becomes available.
Ukraine will of course be fighting them all the way. Russian traders will be conscious of the country's tarnished reputation as a reliable supplier, and will be looking to eradicate those thoughts as quickly as possible. And what better way to smooth things over than with price?
Where the volume interest will come from is another matter, with the world's largest wheat buyer in Egypt saying that a good domestic crop and high international prices mean that it doesn't need to buy anything for some time. Internal politics and lack of cash may also have something to do with it.
US markets are closed for Memorial Day, so it looks highly likely that wheat there too will be lower in the morning.
The north and west of the UK had a pretty wet and miserable Bank Holiday weekend, with many parts of France and Germany also seeing some precipitation of sorts. That may add to the bearish sentiment tomorrow.
29/05/11 -- Russian PM Vladimir Putin has announced on national TV (and on his own personal website - note the lack of "Buy Vlad A Vodka" button) that the country's grain export ban WILL end when the existing deadline runs out at the end of June.
A statement on Putin's personal website quotes First Deputy Prime Minister Viktor Zubkov as saying: "The aim of the August 2010 export ban was to keep the Russian domestic market well supplied with grain in order to prevent sharp price rises for both agricultural producers and consumers. This applies both to feed grain and bread grain. I must say the government measures were effective. We have stabilised the market. Moreover, large amounts of grain from the south of Russia could begin to be exported from July 1. The current price of Russian grain is 5,200* to 5,400 roubles per tonne, which is 50% lower than world prices. I suggest lifting the embargo from July 1, as there is enough grain on the market, winter crops are in a good state and the spring sowing campaign is progressing at a good pace."
You can read the full transcript here: I'm not Putin it off any longer
A coincidence it isn't that the announcement comes just a couple of days after Ukraine also lifted it's own export ban.
It will be interesting to see how the markets react after their long weekend break with the news that a fully restocked Matalan and Primark are about to re-open. London and America are closed Monday, but I think that Paris is open to give us an initial taster...
*5,200 roubles is around GBP112 incidentally.