06/08/11 -- News out late Friday, after the markets closed, that S&P's have downgraded America's credit rating to AA+ with a negative outlook sets us up for an interesting week ahead.
The fallout from last week hasn't really hit the grains too hard just yet with corn closing higher on the week as a whole, wheat little changed and soybeans a bit lower, but nothing too dramatic.
The FTSE100 though has just had it's worst week since the height of the previous financial crisis, falling almost 10% as GBP149 billion was wiped off it's value in a week. Stock markets around the world have fallen a combined GBP1.5 trillion since the month began, according to today's Daily Telegraph.
NYMEX crude fell 9.2% last week with Brent tumbling 8%, yet CBOT corn bucked the trend with a 4% increase.
A brief bit of respite for crude and equities was gained on Friday from news that US unemployment fell slightly from 9.2% to 9.1%, although that was largely because 193,000 people gave up looking for work, not because a significant number found new jobs. Those guys are hardly going to be big consumers of anything that will help drive the US economy forward are they?
Italy meanwhile are running around with their hand out only to discover that the rest of Europe has the "on vacation" signs out whilst Rome burns. Borrowing costs there rose above those of Spain for the first time since this all kicked off on Friday.
The big question this week is can the grains continue to divorce themselves from what is happening in outside markets around the world? Personally I suspect not.
05/08/11 -- Soybeans: Aug 11 Soybeans closed at USD13.31 1/2, down 7 3/4 cents; Nov 11 Soybeans closed at USD13.35 1/4, down 3/4 cent; Aug 11 Soybean Meal closed at USD345.20, down USD2.40; Aug 11 Soybean Oil closed at 54.90, down 28 points. On the week overall beans were 22 /34 cents lower, with meal falling USD6.40 and oil down 75 points. Yesterday's global commodity sell-off continued into today, although the market recovered some composure to end off session lows. A better than expected nonfarms payroll increase of 117,000 versus the 85,000 expected saw unemployment fall from 9.2% in June to 9.1% in July. Funds sold an estimated 5,000 bean contracts, 2,000 meal and 3,000 oil lots on the day.
Corn: Sep 11 Corn closed at USD6.93, down 3/4 cent; Dec 11 Corn closed at USD7.03, up 1 1/2 cents. Corn did all of it's gaining at the beginning of the week, closing 27 1/2 cents higher on front month Sept versus last Friday. Funds sold an estimated 5,000 contracts today. A better than expected US jobs number stopped the rot that had set in this afternoon. After the close though news of a US credit rating downgrade by S&P's may get trade off to a shaky start again on Monday. The USDA are out next Thursday with their August US crop production/stocks estimates and world supply and demand reports. For US corn they are expected to drop yields but not into the 150-153bpa region that others in the trade are talking.
Wheat: Sep 11 CBOT Wheat closed at USD6.79, down 2 3/4 cents; Sep 11 KCBT Wheat closed at USD7.80 1/4, up 9 1/4 cents; Sep 11 MGEX Wheat closed at USD8.27 1/2, up 4 1/4 cents. On the week as a whole CBOT wheat was up 6 1/2 cents, with Kansas rising 13 1/4 cents and Minneapolis falling 3 1/4 cents. Funds were said to have sold 3,000 Chicago wheat contracts on the day. Strength in corn has spilled over into wheat this week, adding support. News that Iraq bought 100,000 MT of US wheat in a tender was friendly, although that may have had more to do with politics than price. Normal to below normal temperatures for Nebraska and the states north and east through to August 12th capped gains.
05/08/11 -- EU grains finished with Nov London wheat down GBP1.60/tonne to GBP159.65/tonne and Nov Paris wheat EUR1.25/tonne lower at EUR195.50/tonne.
At the end of another volatile week Nov London wheat shed GBP4.00/tonne and Nov Paris wheat EUR2.25/tonne. For London wheat a front month has only closed lower than this once since early October 2010.
After trading higher early in the week, global economic jitters took over in the latter half of the week to send grains tumbling. We now have a full weekend to wait to see what the world thinks of America losing it's AAA credit rating with Standard & Poor's on Friday night. It's now rated AA+ with a negative outlook.
There hasn't been a great deal of progress made with the French wheat harvest this past few days as rains return to the north of the country with harvesting stuck at around 75% complete.
The French Ministry have increased their wheat production estimate from 32 MMT to 32.5 MMT, a figure in line with other trade forecasts. They've also upped their OSR production estimate from 4.5 MMT to 5 MMT on the back of much better than expected yields.
We know what they mean, with the HGCA increasing their UK rapeseed yield to 3.6-3.8 MT/ha, 15% higher than the 5-year average, suggesting a record 2.6-2.75 MMT crop using Coceral's 720,000 ha planting estimate.
05/08/11 -- Having fallen USD5.30/barrel yesterday, NYMEX crude has already added a further USD2.50/barrel to those losses by 8am this morning.
The overnight grains currently see corn down 10 cents, wheat down 12 cents and beans down 18-20 cents.
With the DJIA falling more than 500 points last night Asian markets have also collapsed this morning with the Japanese stock market falling 3.7% and Hong Kong's by 4.6%. Even gold is lower as everybody scrambles to get out of everything all at the same time.
The FTSE100 has just opened 138 points lower, for a fall of 2.5%.
Japan, the world's largest buyer of corn, has stepped in to devalue the yen which will make imports more expensive.
EU Commission President Jose Manuel Barroso has warned that the bloc's debt crisis is spreading. Thanks for the heads up on that one Jose, we hadn't noticed until you brought it up.
The pound is up to 1.1550 against the euro, and now seems to be eyeing a push through the 1.16 level, we haven't spent any length of time that high since March. Which is convenient for me as I'm going to Portugal next week, and it looks like I may be able to afford a beer or two after all.
Today I'm taking the day off to go shopping for a mankini....but I'll give you one of my famous predictions before I go, London wheat to open three quid down.
By the way, watch out for the US jobs data this afternoon, a further rise in unemployment (which is NOT what is expected) could be catastrophic.
04/08/11 -- Soybeans: Aug 11 Soybeans closed at USD13.39 1/4, down 24 3/4 cents; Nov 11 Soybeans closed at USD13.45 1/4, down 27 3/4 cents; Aug 11 Soybean Meal closed at USD347.60, down USD5.40; Aug 11 Soybean Oil closed at 55.18, down 110 points. Risk aversion saw crude fall more than USD5.00/barrel and the Dow plunge more than 500 points. In a market like that there was only ever going to be one winner despite weekly export sales being better than expected at 680,200 MT and the USDA announcing a further sale of 174,000 MT of new crop soybeans to China. WxRisk say that there is little heat threat now until Aug 20th, or maybe even the entire month, east of the Mississippi. Informa Economics put the US soybean yield at 42.5bpa, in line with FCStone's estimate of 42.4bpa earlier in the week.
Corn: Sep 11 Corn closed at USD6.93 3/4, down 12 1/4 cents; Dec 11 Corn closed at USD7.01 1/2, down 11 1/2 cents. Crude oil slumped more than USD5.00/barrel in a risk off session that corn did relatively well in to only close with losses of around 12 cents. Funds dumped an estimated 13,000 contracts on the day, but that still leaves them net buyers on the week as a whole. US weather prospects are improving, with the 6-10 day outlook calling for above normal precipitation and below normal temperatures. Informa came out with a yield figure of 158bpa, much higher than the 150-153 levels that have been flying about all week, which would produce a record corn crop of 13.353 billion bushels. Weekly export sales were disappointing at 758,600 MT (850 thousand to 1.1 million MT expected).
Wheat: Sep 11 CBOT Wheat closed at USD6.81 3/4, down 28 3/4 cents; Sep 11 KCBT Wheat closed at USD7.71, down 27 cents; Sep 11 MGEX Wheat closed at USD8.23 1/4, down 21 1/2 cents. The strong dollar, weak outside markets, world economy woes and spillover weakness from corn and beans all dragged wheat lower. Whist weekly export sales were good at just over 500 TMT news that Egypt continues to shop elsewhere for it's wheat requirements, whilst no surprise, further re-enforced the view that America needs to keep the pencil sharp on price to match the current USDA export target. There's every chance that that particular bar will be lowered next week. Informa increased all wheat production slightly to 2.117 billion bushels.
04/08/11 -- EU grains finished lower with Nov London wheat down GBP2.75/tonne to GBP161.25/tonne and with May falling GBP2.60/tonnne to GBP168.85/tonne. Nov Paris wheat was down EU2.50/tonne to EUR196.75/tonne whist May12 fell EUR2.75/tonne to EUR201.00/tonne.
Economic jitters haven't quite turned to panic yet, but they aren't that far off. As I write NYMEX crude oil is more than USD5.00/barrel lower on the day and now looks like closing well under the USD90/barrel mark for the first time since February.
When European markets closed crude was only around USD2.00/barrel lower, so it is already looking like there could be some follow through to this in the morning. US grains are also sharply lower heading into the close.
EU economic worries saw the pound rise above 1.15 against the euro for the first time since late May. The dollar was also stronger on a flight to safety.
The HGCA have the UK wheat harvest at around 5% done, with winter barley 75% cut and OSR 65% complete. Yield estimates on wheat are too early to quantify, winter barley however is pegged at around 6 MT/ha and OSR at 3.6-3.8 MT/ha.
Weather worries in the US have eased considerably. WxRisk say: "Right now there is absolutely no indication of any kind that the serious heat (95+ degrees) that we saw in July over the Plains and at times in the Midwest will comeback into the Midwest before Aug 20. Unless the pattern begins to change soon over Eastern Canada and Greenland we may make it to the entire month of August without serious heat east the Mississippi River.
Egypt bought three cargoes of Russian wheat and one from Romania today at levels around USD262.00-262.50/tonne. It's interesting to see Romania featuring there, just to keep Russia on it's toes.
EU soft wheat export licences only rose by 157 TMT this week, almost 60% down on a week ago, taking total year to date exports to 1.13 MMT. Imports meanwhile are running at almost double that total - 2.18 MMT - a year ago that figure was just 146 TMT.
04/08/11 -- The overnight grains finished lower in a further correction from Tuesday's steep gains. Wheat ended with losses of 10-15 cents, with beans falling a similar amount and corn 10-12 cents easier. Both front month September wheat and corn ended below the USD7.00/bushel mark.
On the week so far, including the overnights, front month corn is up 29 1/4 cents, wheat up 25 1/2 cents and beans down 4 3/4 cents.
Crude oil is lower again today, hovering around USD91/barrel, the dollar is higher and gold is up as economic jitters reverberate around the globe.
The USDA have reported a fairly decent set of weekly export sales with wheat and beans at the top end of trade estimates, although corn sales fell slightly short. Namely, wheat sales of 504,000 MT (against expectations of 350 to 500 thousand MT), corn sales of 758,600 MT (850 thousand to 1.1 million MT expected) and 680,200 MT of soybeans (450 to 650 TMT expected).
They've also reported the sale of 174,000 MT of new crop soybeans to China under the daily reporting system.
US weather forecasts say "welcome cooling is on the way with variable rains the next 7 days," according to Martell Crop Projections. That appears to be cooling fund appetite to press the market much higher ahead of next week's USDA reports, and serving as a reminder that yield potential can go up as well as down in August.
The stop-start European harvest looks set for another impromptu break as wetter weather moves in from the west. Not much damage has been done yet.
Egypt have just bought three cargoes of Russian wheat and one of Romanian wheat at levels around USD262.00-262.50/tonne.
Informa Economics are due out with their thoughts on yields and crop production later in the day.
Early calls for this afternoon's CBOT session: beans 12-15 cents lower, wheat and corn down 10-12 cents.
04/08/11 -- Which crazy loon saw that one coming. Oh, yes it was me. I also predict that it will get dark later this evening, Rangers won't do very well in this season's Champion's League and a brown horse will win the Grand National.
The ECB also left rates on hold at 1.5% in the eurozone, whist Spain successfully auctioned off EUR3.3 billion of bonds. The April 2014 maturing bonds had an average yield of 4.8% up from 4.3% at a similar auction a month ago.
The one to watch is the yield on Spanish 10-year bonds, currently trading at around 6.1% after hitting a record high during the lifetime of the euro of 6.46% earlier this week. It is widely regarded that anything above 7% is unsustainable and will mean a bailout.
04/08/11 -- Ukraine is eyeing a record corn crop of around 17 MMT this year, according to the Ag Ministry there. That would be an increase of 43% on last season's 11.9 MMT crop, using USDA data.
With domestic consumption pegged at 7.4 MMT that leaves the Black Sea nation well-placed to leapfrog Brazil into third place in the 2011/12 world corn export rankings, bettered only by the US and Argentina.
They'll be looking to pick up nearby business into Europe and North Africa I'd have thought. Egypt is the world's second largest buyer of corn after Japan with Europe in third spot.
04/08/11 -- Here's a very interesting article for you: Could There Really Be A Recession Risk In Germany?
Which makes out a strong case for potential trouble ahead for Germany's export dependent economy.
This also prompts the question how deep are you going to dig to fund the next bailout request Frau Merkel if this comes to pass?
04/08/11 -- The overnight grains are drifting lower, with Tuesday's excitement nothing but a distant memory. As I type front month September corn is 6 3/4 cents lower taking it back under the USD7.00/bushel mark.
A less threatening US weather forecast appears to have got the market thinking that enough weather premium may have been built in for now. Linn Group came out with a corn yield estimate of 152.1 bu/acre yesterday, slightly lower than FCStone's 153.2 bu/acre released on Monday. Informa are expected to release their estimate mid-morning Chicago time today.
Egypt released another wheat tender last night, some reports appear to suggest that Russian origin isn't included in this one, we shall have to wait and see.
The global economic jitters saw Brent oil fall below the 100-day moving average this morning. NYMEX crude is also lower, and looking like testing the USD90/barrel level, it hasn't closed below there since 18th Feb.
This afternoon we have the weekly US jobless claims report and tomorrow the important nonfarm payrolls numbers, where the market is looking for an increase of 85,000 jobs last month. US unemployment levels were 9.2% at the end of June, any increase from that could cause a few fireworks.
The poor old Spanish PM has had to cancel his holidays in a bid to sort out their financial crisis. They are going to auction off EUR3.5 billion worth of bonds today to try and raise enough cash so that he can upgrade to a villa with an infinity pool and a Phillipino houseboy.
Talking of sex, the Italians sent their Economy Minister to Luxembourg yesterday with a note from PM Berlusconi to the chairman of the euro zone finance ministers, Jean-Claude Juncker, saying "stump up the cash four eyes or we'll tell the world about your wig" I understand from my inside sources.
The Bank of England announce their decision on interest rates at lunchtime today. If you don't already believe that I can see into the future, I'll prove it to you now. They'll leave them on hold.
03/08/11 -- Soybeans: Aug 11 Soybeans closed at USD13.64, down 9 cents; Nov 11 Soybeans closed at USD13.73, down 6 3/4 cents; Aug 11 Soybean Meal closed at USD353.00, down USD4.20; Aug 11 Soybean Oil closed at 56.28, down 81 points. A cooler and wetter August outlook saw beans give up some of Tuesday's gains with outside markets doing little to offer support. Crude oil finished around USD92/barrel on global economic concerns. Funds sold an estimated 4,000 bean contracts on the day. Estimates for tomorrows weekly export sales report range from 450 to 650 TMT.
Corn: Sep 11 Corn closed at USD7.06, down 5 1/4 cents; Dec 11 Corn closed at USD7.13, down 2 3/4 cents. Funds sold an estimated 8,000 contracts on the day as bullish enthusiasm waned weighed down by lacklustre outside markets. The lack of follow through buying following Tuesday's limit up move was a disappointment to the bulls. Further yield forecasts are filtering through, and they all now seem to be around the 150-152bpa range, well below the USDA's 158.7bpa number from last month. Estimates for tomorrows weekly export sales range from 850 thousand to 1.1 million MT.
Wheat: Sep 11 CBOT Wheat closed at USD7.10 1/2, down 7 1/2 cents; Sep 11 KCBT Wheat closed at USD7.98, down 10 cents; Sep 11 MGEX Wheat closed at USD8.44 3/4, down 4 3/4 cents. Wheat was also in corrective mode after sharp gains Tuesday with funds selling an estimated 3,000 CBOT contracts on the day. Corn failed to offer any support for wheat today and neither did the outside markets. Egypt is tendering again for wheat with few expecting anything other than another resounding Russian victory. Trade estimates for tomorrow's weekly export sales range from 350 to 500 thousand MT.
03/08/11 -- EU grains finished with Nov London wheat up GBP3.00/tonne to GBP164.00/tonne and Nov Paris wheat EUR3.75/tonne higher at EUR199.25/tonne.
European markets were playing catch-up today from a sharply higher close in US wheat futures last night and a limit up finish on corn.
Things weren't as steady as they might have been however with concerns over European (and US) debt still hanging over the market.
All in all, EU prospects look far better than what was expected a few months back.
Recent weather conditions have stalled the mainland EU wheat harvest, with cutting in Germany at around halfway. Final output there is seen falling modestly from around 24 MMT to 23 MMT in 2011.
The weather has also improved this past few days in France, allowing harvest progress to resume, with a soft wheat crop in the region of 33 MMT expected versus 35.6 MMT last year.
UK wheat harvesting is only 5-10% done and early quality reports are very promising, final output may come in at around 14.5 MMT, a 2% drop on production last season.
Russian and Ukraine cereal output this season looks like being well ahead of current USDA projections, as too do exports. Russia exported a record volume of grains for the month in July and is expected to ship out it's highest ever monthly total in August.
03/08/11 -- The overnight grains were maybe a little bit of a let down for the bulls. Follow though activity on corn was limited after last night's limit up close and wheat and soybeans also slipped away into the red by the close of play.
Outside markets aren't helping, with crude down more than a dollar yesterday and losing a further 60c or so today to currently stand at just over USD93/barrel. MasterCard say that US drivers have bought less gas now for nineteen weeks on the trot.
The US Commerce Department said yesterday that consumer spending fell for the first time in nearly two years in June.
Employment data will be under the microscope this week after the percentage of US citizens without a job rose to 9.2% in June.
America isn't the only one with problems as the European debt crisis now threatens to engulf Italy and Spain.
Fast forward to the fundamentals...
Corn yields in the US are now looking like 5-7bpa lower than the USDA's current July estimate. Soybean yields may be a bushel or so lower.
Russia meanwhile carries on in it's own sweet way, having exported a record volume of grain for the month of July last month it now has it's sights set on an all-time record for August. Not only that but the Russian Grain Union says that they might export up to 25 MMT in 2011/12, almost double the amount that the USDA have them factored in for.
Prices of Russian wheat are so low that it could almost be shipped to France and then re-exported to Egypt at less money than current EU offers!
Ukraine has already harvested more wheat and barley than the USDA have them down to produce this year at 20.5 MMT of wheat and 8.5 MMT respectively.
Early calls for this afternoon's CBOT session: corn flat to 2c lower, wheat down 8-10c, beans down 3-5c.
03/08/11 -- Russia has harvested more than 27 MMT of wheat and 3.8 MMT of barley so far off 32% and 18% of the forecast area, according to the Ministry there. Yields are up 32% on wheat and 39% on barley compared with last year.
The bare maths of that are interesting as they would suggest a wheat crop of 84 MMT a barley output of 21 MMT if the entire planted area got harvested with yields like that! Current USDA estimates are 53 MMT and 15.5 MMT respectively.
Domestic grain prices continue to fall, regardless of what is happening on the other side of the world. Having just shipped a record volume of grain for the month of July, the Russian Grain Union are now predicting August shipments to reach an all-time high for any month of 3.5 MMT.
03/08/11 -- Sent to me by my old chum Bob at Gowlett Grain, who they say are East Anglia’s only independent malting barley and milling oat specialist. A nice visualisation of the magnitude of the US debt problem: Gee Mr President, that's enormous!
Meanwhile today we have the news that the Italian finance minister has begun "crisis talks" with Jean-Claude Juncker, the chair of the Euro Group of finance ministers for the 17 eurozone countries.
The latter also has Spain on hold on line five.
03/08/11 -- Blimey, what happened there then some of you may be thinking as you switch your computer screens on this morning. Chicago did a major turnaround late in the session last night to end with corn limit up and wheat 40 cents higher.
That catapulted both through the USD7.00/bushel level to leave front month September corn at USD7.11 1/4 and September CBOT wheat at USD7.18/bushel.
The reason seems to be a now almost universal belief that the USDA are talking out of their backsides (again) as far as US corn potential is concerned this year (again). Perhaps the fact that they attempted the same trick last year only to eventually capitulate is still fresh in trader's minds.
Bear in mind though that they didn't eventually come clean until the October report.
Having just got used to the idea that this year's corn crop was going to yield around the mid-150's we are now looking at the low 150's even though the USDA are still stuck in the high 150's.
There hasn't been a huge amount of follow through this morning it should be noted, with corn currently just 1-2c firmer. Wheat is down around 6-8c and beans 3-4c lower.
Meanwhile NYMEX crude oil closed at it's lowest in more than a month last night and is currently 75c lower again this morning at a fraction over USD93/barrel.
Asian stocks have fallen sharply overnight whilst safe haven gold has reached a record high. Growth in the US, Europe and even China is now at a near standstill. Spending cuts in the US and financial chaos in Europe hardly provide a nice firm springboard for renewed vigour.
All the same global economic concerns that we had yesterday are still here today. We may soon have a few more to add to those with a variety of US employment numbers due out between now and the end of the week.
The global financial markets are standing at the edge of a cliff I feel. If they fall into the abyss it's pretty unlikely that they won't drag the grains down with them regardless of what the corn crop in Illinois is looking like. IMHO.
02/08/11 -- Corn: Chicago grains stormed higher, led by corn, which closed up the daily 30 cent limit on the nearby Sep and Dec which finished at USD7.11 1/4 and USD7.15 3/4 respectively. The market opened quietly, questioning the validity of the USDA's latest crop condition report which saw good/excellent deteriorate in most of the major producing states yet stay unchanged overall at 62%. The trade has been factoring in a yield figure of around 155 bu/acre but FCStone came out with 153.2bpa mid-session and another analyst just 150bpa to send the market soaring through USD7.00/bu resistance. Funds were said to have bought heavily at 23,000 contracts. Add that to yesterday's purchases and they've increased their net long by the equivalent of 4.5 MMT this past two days.
Soybeans: Aug 11 Soybeans closed at USD13.73, up 14 1/4 cents; Nov 11 Soybeans closed at USD13.79 3/4, up 17 3/4 cents; Aug 11 Soybean Meal closed at USD357.20, up USD4.50; Aug 11 Soybean Oil closed at 57.09, up 94 points. The soybean market got dragged higher by corn and the two point drop in last night's good/excellent ratings. Outside markets like crude oil and global economic concerns prevented things from getting too much out of hand. FCStone estimated the 2011 US soybean crop at 3.145 billion bushels with a yield of 42.4bpa. Last month the USDA said 3.225 billion and 43.4bpa. The USDA announced 550,000 MT of old crop soybeans sold to China switching into new crop. Funds bought an estimated 5,000 bean contracts on the day along with 2,000 each in meal and oil.
Wheat: Sep 11 CBOT Wheat closed at USD7.18, up 41 1/2 cents; Sep 11 KCBT Wheat closed at USD8.08, up 36 3/4 cents; Sep 11 MGEX Wheat closed at USD8.49 1/2, up 15 1/4 cents. Wheat did a complete u-turn as corn stormed to limit up, Minneapolis wheat was over 20c lower early doors, with funds buying an estimated 6,000 contracts on the day. Short-covering in Chicago wheat may have been responsible for that being the strongest leg. Vomitoxin is reported to be a problem in late planted spring wheat following an exceptionally wet start to the growing season. Next week's USDA WASDE report should see production and export estimates raised in the Black Sea countries and probably Europe too - at least in the case of output. That may see a corresponding decline in US export potential in 2011/12.
02/08/11 -- EU grains finished with Nov London wheat down GBP2.50/tonne to GBP161.00/tonne and Nov Paris wheat EUR2.00/tonne lower at EUR195.50/tonne.
A weak euro prevented Paris wheat from falling too much as the Italian authorities called an emergency meeting as bond yields there hit their highest ever in the lifetime of the single currency.
The spotlight is also focusing on Spain, the size of whom's national economy is greater than that of Ireland, Greece and Portugal combined. Considering the uproar in bailing out these three relative minnows imagine the furore if one of the big fish start to flounder.
The US are expected to vote through their last gasp raising of the debt ceiling this afternoon, but as with Europe it seems like a temporary quick-fix rather than a long-term solution.
These outside factors are keeping market participants very nervous and appear to be having as large an influence on price direction as the grain fundamentals.
Whilst we have potential corn, and to a lesser degree wheat and soybean production challenges in the US, not all the market fundamentals are bullish.
European crops appear to have fared better with the dry spring and early summer than many expected, and the Black Sea is of course re-flexing it's muscles on the international export arena.
02/08/11 -- The overnight grains finished mixed with wheat and corn down a couple of cents and beans mostly a couple higher. Crude oil is around 50c weaker and the dollar up a tad ahead of this afternoon's Senate vote expected to pass the raising of the US debt ceiling.
The USDA has announced the switching of 550,000 MT of old crop soybean sales to China into new crop. Some news services currently seem to be reporting this as simply a new crop sale, but this is not the case as I understand it.
The bulls are still talking corn losses and tight stocks. The bears are talking the wider implications of global economic uncertainty and a double dip recession.
Italy is now getting drawn into the European debt crisis along with Spain, both of whom could be too big to bailout.
Jordan is tendering for 100,000 MT of feed barley, which will likely go the way of Russia or Ukraine. Japan is tendering for 103 TMT of US wheat.
Russia exported a record volume of grain in July, and doesn't look like letting up that pace anytime just yet.
Ukraine has already harvested more wheat and barley than the USDA have them down to produce this year.
The European harvest has restarted in northern France after a week or so of rain, without too many reports of significant quality issues. Soft wheat production there is now seen around the 33 MMT mark, in the region of 2.5 MMT down on last year.
Yesterday's export inspections for wheat were pretty poor, so this week's export sales will make interesting reading to see if there is any evidence that the US is losing business as it prices itself out of the market.
Early calls for this afternoon's CBOT session: corn down 2-3c, wheat down 1-2c, soybeans up 1-2c.
02/08/11 -- The euro has a shaky look about it again today with the latest injection of optimism following the latest Greek bailout already starting to wear off.
Moody's last week downgraded Cyprus, citing concerns about the size of it's banking industry (600% of GDP) and it's potential exposure to Greek debt.
Meanwhile Spain and Italy are waiting nervously in the wings. The ruling Spanish socialist party has thrown in the towel and called for an early election, now pencilled in for November. It isn't likely to be wanting to push any austerity measures through this side of that particular vote.
Indeed, as it is widely expected to lose, it probably isn't going to have to push any austerity measures through at all, the next lot in can sort that out.
It is worth considering at this point whether Spain and Italy are too large to let them fail, or too large to be bailed out. Spain's economy, which is the smaller of the two, is bigger than that of Ireland, Portugal and Greece put together - and you know how much trouble they had just trying to bailout each one of those on an individual basis.
Italy meanwhile has the highest debt to GDP ratio in the eurozone with the exception of Greece. Bond yields there have hit their highest in the euro's 11-year lifetime today, now running at the same level as those in Spain.
The day must come when Merkel and Sarkozy, or the Bank of Mum & Dad as I call them, says enough is enough we're not picking up the tab for your irresponsible excesses any more. But until then we'll just let the merry-go-round ride last a little while longer yet.
Now then, there's the mortgage to pay, the car to insure and the kids to be fed, but I really do NEED a holiday and an iPad...
02/08/11 -- New kid back on the block Russia exported 2 MMT of grains in July, according to the APK-Inform Agency. That would be a record monthly volume for July say Bloomberg, quoting the the Moscow-based Institute for Agricultural Market Studies (IKAR).
Of that total 273.6 TMT went to Egypt and 214 TMT to Turkey, say APK-Inform.
Freight rates falling 44 percent in the past 12 months is helping Russian wheat to travel to long-haul destinations such as Southeast Asia and southern Africa, say Bloomberg.
02/08/11 -- Adam Ant then, who remembers him? Like any good investigative blogger I spot this morning that his name is trending on Twitter, which means that suddenly lots of people are posting stuff about him, so I decide to find out why.
It seems that the 1970's heart-throb has been on telly this morning and his appearance caused something of a stir as he (unsurprisingly) doesn't look like much in the way of a dandy highwayman any longer.
As one Twitter wag puts it "more like a cross between Capt Jack Sparrow and Bet Lynch."
Here's a taster for you: So that's where me Nan's tea cosy went
02/08/11 -- Soybeans are higher on the overnights after the USDA dropped good/excellent ratings two points to 60%, six points below last year. Corn is a tad lower after they surprisingly left good/excellent unchanged at 62%. Wheat is higher after spring wheat conditions fell four points in the top two categories to 70%.
Second guessing the USDA is never easy, but I'm starting to get a feeling in the old water that they are gearing up for another corn surprise next week. If it's a bearish one then the weight of fund length could lead to a major correction to the downside.
For wheat they should raise production estimates in Russia, and Ukraine too. They should certainly also raise their EU-27 output number as well. Export potential from the FSU is significantly greater than they predicted last month, so that should increase along with a probable reduction in US wheat exports.
The Ukraine Ministry say that the country has harvested 30 MMT of grains so far, including 20.5 MMT of wheat and 8.5 MMT of barley. Last month's USDA estimates only had total wheat production there coming on at 18 MMT and barley at 7.5 MMT.
Argentine farmers are seen planting less soybeans and more corn and wheat this year, according to local analysts there. Growers there are expected to sow 4.6-4.7 million hectares of wheat for 2011/12, up from 4.4 million last year, and a similar area of corn, up from 4.3 million in 2010. Soybean plantings are seen falling from 18.7 million hectares to around 18.3-18.5 million.
The UK looks like being awash with rapeseed this year, with Gleadell quoted in this article on Agrimony.com as saying that "the crop now looked like hitting 2.6m tonnes, some 20% above last year's harvest."
That's half a million tonnes more than the USDA said last month (are you spotting the trend yet?), a 24% difference. I personally wouldn't be surprised to see the crop finally come in around the bin-busting 2.75 MMT region, a figure inconceivable three months or so ago.
01/08/11 -- Soybeans: Aug 11 Soybeans closed at USD13.58 3/4, up 4 1/2 cents; Nov 11 Soybeans closed at USD13.62, up 4 3/4 cents; Aug 11 Soybean Meal closed at USD352.70, up USD1.10; Aug 11 Soybean Oil closed at 56.15, up 50 points. The initial euphoria of a resolution of sorts to the US debt ceiling problem didn't last too long. Beans still managed to close in positive territory though as funds bought an estimated 4,000 soybean contracts as first of the month money came into the market. US weather forecasts look less troublesome, calling for normal temps and precipitation going forward through August. After the close the USDA dropped good/excellent crop ratings two points.
Corn: Sep 11 Corn closed at USD6.81 1/4, up 15 3/4 cents; Dec 11 Corn closed at USD6.85 3/4, up 17 cents. Corn was the main beneficiary of new month fund money as they piled in for an estimated 14,000 contracts on the day - the equivalent of 1.8 MMT. There is widespread talk that final yields may only be around 155 bu/acre after a hot and dry July took it's toll. That's around 4/bpa lower than the USDA's July estimate. They're due out with a revised number next week and it would be of no surprise to see them leave that yield estimate unchanged, or only reduce it slightly, regardless of what damage might have been done last month. If they did, that could trigger some wholesale liquidation. The latest commitment of traders report shows large funds adding 3,000 contract to the net long position to the week ended 26th Jul, with Index traders adding almost 4,000 contracts. That leaves the former net long 190,000 contracts (24 MMT) and the latter net long 372,000 contracts (47 MMT). The USDA surprisingly left good/excellent crop conditions unchanged after the close.
Wheat: Sep 11 CBOT Wheat closed at USD6.76 1/2, up 4 cents; Sep 11 KCBT Wheat closed at USD7.71 1/4, up 4 1/4 cents; Sep 11 MGEX Wheat closed at USD8.34 1/4, up 3 1/2 cents. Wheat closed higher but well off session highs as outside markets declined after the initial shine wore off the US debt ceiling announcement. Funds bought an estimated 3,000 CBOT contracts on the day. The USDA peg the winter wheat crop at 81% harvested, up six points from last week, but five behind normal. Spring wheat is 90% headed versus 98% normally and good/excellent fell four points to 70% with all of that drop coming in the good category incidentally. Wheat inspected for export this week was a disappointing 16.158 million bushels. Traders will be conscious of Russian wheat being offered into North Africa and the Middle East at prices way below US levels.
01/08/11 -- EU grains finished with Nov London wheat down GBP0.15/tonne to GBP163.50/tonne and Nov Paris wheat EUR0.25/tonne lower at EUR197.50/tonne.
It was a yo-yo sort of a day with EU grains modestly higher early doors on the back of news that a deal of sorts had been reached in the US over the weekend to avoid a debt default.
As ever with these things the devil is in the detail and the bottom line, much like the state of play in Greece, doesn't really seem to be a resolution to the problem but more of a deferral.
It seems to me that these international credit crisis problems will continue to haunt us for some considerable time yet. It also looks possible that one day the entire pack of cards will collapse, maybe with as great a set of unthinkable repercussions as the sub-prime disaster, or even worse.
France Export Cereales say that the country will have a soft wheat crop of 32-33 MMT this year, little changed from last year's 32.7 MMT harvest.
Very early UK wheat harvesting results continue to look unbelievably promising with hagbergs, proteins and bushel weights much higher than expectations of a few months ago.
Ukraine will harvest 20 MMT of wheat this year, according to the APK Inform Agency - 2 MMT more than the USDA's latest estimate. They will also produce a corn crop of 16-18 MMT, they add, again an improvement on the USDA's prediction of 15.5 MMT.
01/08/11 -- The late vibe just before the opening isn't quite so bullish after some disappointing data from the US. The Dow is now 50 points down having been almost 140 higher earlier in the day after the Institute of Supply Management (ISM) said that it's manufacturing index fell to 50.9 last month, much lower than the 55 mark expected, and the lowest in two years. The dollar is trending firmer, which may also weigh a little on the upside for grains this afternoon.
01/08/11 -- The overnight grains were higher on relief that a deal appears to have been struck over the weekend to avert a US debt default. It still has to get past the Senate and House yet before it is written in a tablet of stone though.
Wheat finished around 12-14c higher on the news, with corn up 7-9c and beans up 13-15c. Crude oil is currently two and a half dollars higher and the USD is weaker on the back of the news.
Yield losses in corn are being factored in, although I suspect that the USDA maybe won't concur, or at least not by as much as the market thinks, next week.
Before that we have the crop condition rating this evening. I'm expecting a drop of 1-2 points good/excellent for both corn and beans.
Black Sea grain continues to mop up many of the larger export orders kicking about. Russia has wasted no time getting it's 2011/12 season off to a flyer, although activity out of Ukraine has been more subdued due to customs problems. Be assured though that they have got plenty of grain to sell and will be eager exporters before too long.
Iran has said that it will be have 2 MMT of wheat to export in 2011/12, an unusual position for them to be in.
China says that it will import "only" 3.15 MMT of soybeans this month, a reduction of a third on this time twelve months ago, due to slack demand and increased government sales.
Early calls for this afternoon's CBOT session: wheat up 12-14c, beans up 13-15c, corn up 7-9c.
01/08/11 -- Avoid them like the plague, unless you like hanging on for their complaints department listening to classical Spanish guitar that is, in which case they are probably the airline for you.
"Our aim is to make sure that you fly with us again."
I'd rather chew off my own hand thanks very much.
Particularly avoid Tracey, she sounds like a right nasty piece of work. Like MrsN#1 just after root canal surgery. "Forget what's morally right and wrong Sir, if I can just refer you to our terms and conditions."
She went to the doctors once with a bad leg, MrsN#1 that is not Miserable Tracey, and she came home and said "the doctor says I can't drive." I said "no shit Sherlock, I could have told you that."
The fight goes on, when the refunds department get back from lunch. They're shut right now even though it's only half past eleven in the morning. Well, come to think of it it's half past eleven in the morning in England, we await to see where the refunds department are based. Although they could just be a room full of enormous bloaters that can't make it through to noon without triple pie and chips of course.
01/08/11 -- US Republicans and Democrats have thrashed out an eleventh hour deal overnight to prevent the US defaulting on it's debts. The compromise now needs to get voted through the Senate and House of Representatives later today. The former should be relatively straightforward, the latter less so but it is still expected to muster enough votes to scrape through.
The deal requires USD2.4 trillion in spending cuts and savings being found over the next ten years. Conveniently for him, President Obama said that these cuts "wouldn't happen so abruptly that they'd be a drag on a fragile economy."
What happens if the economy is still fragile in a couple of years time Mr President? Erm, we don't have to concern ourselves with that right now. Next..
The deal also appears to include the key provision of allow Obama to "go it alone" and raise the debt ceiling himself unless Congress can manage a two-thirds opposition to the move.
So effectively we appear to have a "let's raise the debt ceiling today and make a pledge to introduce some unspecified spending cuts to justify it in a couple of years time or so when I may not be in office" sort of a deal.
Exactly how the ratings agencies view all of this also still remains to be seen. The markets however seem relieved more than brimming with confidence.
Chicago wheat is 8-10c higher on the overnights, although that is only recovering half of Friday night's losses. Corn is 6-8c firmer and beans 12-14c higher. In the case of corn that is also only half of what it lost on Friday and for beans it effectively gets us back to Thursday night's close.
The UK had a fine and warm weekend, which doubtless saw plenty of harvest activity. Rain is seen moving in from the west by the middle of the week though.
The weather has also improved on the near continent over the weekend, allowing widespread harvesting to resume in France this week.
We've got the USDA out after the close tonight with the latest crop conditions report, will they show corn and soybean good/excellent declining further? Probably, by 1-2 points on each I'd guess.
31/07/11 -- Today's Sunday Telegraph appears to be suggesting that there may have been something unusual going on with London wheat lately "in what has been described as an attempt to corner the market."
The very idea! Surely nobody would want to create "a volatile market that often has no connection to real supply and demand, wreaking havoc on consumers in the UK and in poor nations." They clearly don't know what they're on about.
This is Britain after all. Misery and suffering isn't our game. We invented cricket, marmite, the guillotine (bet you didn't know that one - link), vertical take-off fighter jets and the bouncing bomb for Christ's sake.
Link here: Miss, Miss, the big boys did it