EU Wheat Close
07/09/11 -- EU grains finished firmer with Nov London wheat up GBP1.50/tonne to GBP170.50/tonne and Nov Paris wheat ending EUR0.75/tonne higher at EUR206.50/tonne.
After losing GBP5.75/tonne in four sessions (and EUR 5.50/tonne in the case of Paris wheat) London decided that it was time for an up day today, although this was hardly a convincing performance.
US futures were higher for most of the day in their usual "Turnaround Tuesday" mode. OK we know it's Wednesday, but as America was shut on Monday it is only Tuesday in a funny sort of way.
The French Farm Ministry raised their soft wheat production estimate from 32.5 MMT to 33.5 MMT and corn production from 13.3 MMT to 14.1 MMT.
Egypt bought 300,000 MT of Russian/Kazakh wheat, once again shunning French origin, with US wheat not even being offered. French wheat was priced around USD10/tonne more expensive than Russian wheat on an FOB ex origin basis, and there is also usually a freight disadvantage too. Not as bad as things have been, but no coconut either.
Western Australia, usually the largest producing state Down Under, looks set for a bumper wheat crop this year. In addition significant rains forecast for Thursday and Friday over the southern half of Queensland and New South Wales will aid dryness concerns there.
The wheat harvest on the Canadian Prairies is said to be progressing well.
Crude oil jumped more than USD3/barrel as EU debt worries took a bit of a back seat for the first time this week. A series of major storms heading for the Gulf of Mexico was also a factor.
Merchants, co-ops, traders and consumers alike all seem to be saying the same thing. The markets are so volatile, unpredictable, and governed by outside influences that they've given up second guessing which way they will go next.
EU Rapemeal Prices
07/09/11 -- Guide prices for EU rapemeal, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Sep11 | 180.00 | -2.00 |
| Oct11 | 180.00 | -2.00 |
| Nov11/Jan12 | 182.00 | -1.00 |
| Feb/Apr12 | 184.00 | -1.00 |
| May/Jul12 | 182.00 | unch |
| Aug/Oct12 | 162.00 | -1.00 |
Western Australia Having 'Wonderful' Season
07/09/11 -- Just as I am reading about the potential for Western Australia to have "well above average" yields this year, what lands in my inbox but these pictures from my mate Bill Crabtree Down Under.
Bill farms in the Geraldton area of WA and says that they are "having a wonderful season" and he certainly seems to have the pictures to prove it.
Elsewhere today the state's Department of Agriculture is forecasting above average rainfall through to the end of October, and it is they who are predicting yields of well above average.
Wheat production in the state slumped to just 4.7 MMT last season, but looks could rebound to as high as 8.4 MMT this year, according to some recent reports - that would be an increase of more than three quarters.
Quick Morning Vibe
07/09/11 -- The overnight market is higher in a one day delayed Turnaround Tuesday on a Wednesday sort of a way.
Egypt are back in the market again, issuing a tender for wheat after last night's close of Chicago.
Informa finally came out with their delayed crop production forecasts yesterday pegging soybean yields at 41.5 bu/acre, which is actually a tad more than the USDA's August number. Corn yields were estimated at 151.0 bu/acre, that's 2.0bpa lower than the USDA but miles above some other recent forecasts.
The harvest on the Canadian Prairies is said to be progressing well, despite crops their being late-sown after Mother Nature has decided to look a bit more kindly on the region in the past few months. In Manitoba the rapeseed crop is as much as 80% complete in some areas, with quality "average to above average". The wheat harvest is also said to be ahead of schedule particularly in the east and central parts of the province. Winter wheat planting is also underway with more acres likely to go into the ground than normal.
China are said to be overlooking US soybeans in favour of South America.
The German courts are today expected to give parliament there more of a say on any further German contributions to the eurozone bailout fund.
Chicago Close
06/09/11 -- Soybeans: Sep 11 Soybeans closed at USD14.13 1/2, down 22 1/2 cents; Nov 11 Soybeans closed at USD14.22 1/2, down 23 1/4 cents; Sep 11 Soybean Meal closed at USD368.30, down USD9.50; Sep 11 Soybean Oil closed at 57.56, down 18 points. Beans were down but off session lows as funds sold an estimate 7,000 contracts on the day. Better than expected weekend rains were likely to have been more use for beans than corn. US and Eu debt/economic woes weigh. After the close the USDA cut the percentage of the crop rated good/excellent by one point to 56%, not as bad as it might have been. Informa estimate the US crop at 3.016 billion bushels with yields at 41.5bpa.
Corn: Sep 11 Corn closed at USD7.46 3/4, down 3 1/2 cents; Dec 11 Corn closed at USD7.55 3/4, down 4 1/4 cents. Corn ended well off session lows on ideas that weekend rains won't have been of any great benefit. Early harvested yields vary dramatically from "much better than expected" to "terrible". Funds sold an estimated 7,000 contracts on the day, at least partially encouraged by global economic worries. After the close the USDA dropped their good/excellent ratings two points to 52%. Informa pegged this season's US crop at 12.771 billion bushels with yields at 151bpa, much better than most other private estimates. Weekly export inspections were a disappointing 40 million bushels.
Wheat: Sep 11 CBOT Wheat closed at USD7.16 1/4, down 13 3/4 cents; Sep 11 KCBT Wheat closed at USD8.46, down 12 cents; Sep 11 MGEX Wheat closed at 9.71, down 13 1/4 cents. Wheat fell on spillover weakness from the rest of the sector, also influenced by the same global debt concerns. Funds sold an estimated 3,000 Chicago contracts on the day. The spring wheat harvest is 68% complete compared to 81% for the five year average. Harvesting on the Canadian Prairies is benefiting from favourable weather at 33% complete. Weekly export inspections came in at 21 million bushels. The firm US dollar will do little to aid US export hopes.
EU Wheat Close
06/09/11 -- EU grains finished lower with Nov London wheat falling GBP1.20/tonne to GBP169.00/tonne and Nov Paris wheat losing EUR1.00/tonne to EUR205.75/tonne.
London wheat has fallen GBP5.75/tonne in the last four trading sessions. The pound rose to 1.14 against the euro but fell to a seven-week low below 1.60 against a resurgent US dollar.
Fresh news remains thin on the ground. Concerns over European debt haven't so much as re-emerged, but surged to the surface gasping for air which is pressuring the euro. The US certainly isn't out of the danger zone yet either, although the flight to safety that saw gold hit another all-time high today is also helping the dollar.
Many that I am talking to are very confused. Plenty now seem to be predicting that the US will slump into a double dip recession. Many are also forecasting that the current EU malaise is only the tip of the iceberg.
What most of them don't seem to know either though is whether this is bullish or bearish for grains.
The huge economic slump of the second half of 2008 into 2009 saw grain (and crude oil) prices fall out of bed in spectacular style. Is there any difference between then and now? Well yes, we've been printing money that we haven't got in the run-up to this particular recession (if we get one).
As sure as eggs are eggs that usually leads to rampant inflation. That should be bullish for grains, yet a wholesale flight to safety out of risk suggests a bearish scenario for grains.
Confused? So am I.
Early Call On Chicago
06/09/11 -- The overnight grains finished lower on economic jitters with beans down around 17 cents, corn 5-7 cents weaker and wheat falling 7-9 cents. Crude oil is the best part of USD3/barrel weaker.
We have a tug of war developing between US recession fears combined with European debt versus the apparently bullish fundamentals of falling US corn and soybean yields.
Allendale have today placed this season's corn crop at 12.466 billion bushels with a yield of 147.7 bu/acre and soybean production at 3.007 billion on a yield of 40.7 bu/acre. The corn yield is at least better than Lanworth's suggestion last week although still well below the USDA's August number.
Informa are expected out with their numbers mid-session.
Gold has hit another record high as money continues to look for safe havens. They are few and far between.
Early calls for this afternoon's CBOT session: corn down 4-6 cents, wheat down 7-9 cents, beans down 16-18 cents.
EU Rapemeal Prices
06/09/11 -- Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Sep | 182.00 | unch |
| Oct11 | 182.00 | -1.00 |
| Nov11/Jan12 | 183.00 | -2.00 |
| Feb/Apr12 | 185.00 | -2.00 |
| May/Jul12 | 182.00 | -3.00 |
| Aug/Oct12 | 163.00 | -2.00 |
Ask Nogger
06/09/11 -- Today's problem comes from Stuart of Walthamstow, he writes:
Q: Dear Nogger, I work for British Unfairways in the complaints department and as you can imagine I'm always very busy. The abuse I have to take drives me close to tears sometimes as I trot out the company line "I think if you read the small print sir...etc." I don't know how much more I can take. My wife left me six months ago because of the shame my job brought upon us and now my beloved German Shepherd has just died and gets buried tomorrow. I'm at a really low ebb. What can I say at his funeral?
A: How about Auf wiedersehen, pet.
News Snippets
06/09/11 -- Kazakhstan has harvested 6 MMT of grain off 26% of the planted area with yields so far averaging 74% more than last year. That puts them on target to beat the Ministry's forecast for a 18.9 MMT crop this year.
Ukraine have harvested 34.9 MMT of grain so far off 74% of the planted area with yields coming in 22% higher. Corn harvesting is now underway where a crop of 16-17 MMT is expected.
The corn harvest has also begun in France with early yields described as "excellent." Some reports suggest that yields could reach a record 10 MT/ha this year due to timely sowings in the spring and regular rainfall across the summer.
Chinese inflation fell from 6.5% in July to 6.1% in August, although pork prices are said to be at record highs.
The USDA will report on crop conditions after the close tonight. I'd expect that we could see corn good/excellent fall maybe 3-4 points, with beans down 2-3 in the top two categories.
Nov London wheat has opened GBP0.20/tonne lower in early trade, with Nov Paris wheat down one euro.
The Swiss National Bank has announced that it is to set a minimum exchange rate against the euro of 1.20 for the soaring Swiss Franc by buying foreign currency in "unlimited quantities." That could cost more than a trip to the Harvey Nicks with Mrs N#1.
Gold has hit it's twelfth record high since the beginning of August this morning, trading above USD1920/oz for the first time since Adam was a lad as the market braces itself for a raft of data and news out of the US and Europe this week. First up is US manufacturing data later this afternoon.
The Morning Vibe
06/09/11 -- The overnight grains are lower, clearly taking their lead from outside market influences. Crude oil is a couple of dollars lower (ie. in line with yesterday's "synthetic" trade).
The slow motion car crash that is the European debt crisis continues to rumble on, limping down the road to oblivion a little bit further before the engine finally blows.
The German courts are set to rule tomorrow on whether continuing to give away money to the EU bailout fund actually contravenes German law. The most widely anticipated response is that the German parliament will now have to vote "Ja" every time another tranche of cash is required, further slowing the decision process.
Greece are saying that they are all austeritied up to the eyeballs and need to roll over EUR135 billion of bonds by the weekend. The IMF and the European Financial Stability Facility are wagging their finger and saying "you won't get any more money unless you tidy your room".
Greece's big brother, Italy, has point blank refused to tidy his room and is playing his opera CD's very loudly. The twins, Portugal & Ireland, are demanding more pocket money to go to the cinema to watch "The Inbetweeners" even though it's a 15 and they are only six and Spain wants an iPhone "cos everybody else has got one."
Mum and Dad are contemplating divorce. Mum, Angela, has let herself go just lately as the stress is starting to get to her and appears to now have to get approval in triplicate before she can get her purse out.
Uncle Sam is refusing to help - saying that he's got enough troubles of his own.
Meanwhile a quick glance out of the back window shows that the garden has gone to pot.
Maybe we should ask the gay bankers across the road for some help. Morgan and Stanley, they're loaded. Bugger me, is that a "for sale" sign?
EU Wheat Close
05/09/11 -- Nov London wheat closed GBP2.85/tonne lower at GBP170.20/tonne and Nov Paris wheat fell EUR1.50/tonne to EUR206.75/tonne.
Paris wheat was trading modestly higher for much of the day on carry through impetus from a firm US close on Friday night and a weaker euro. It failed to hold onto those gains as the day wore on however as once again European debt concerns came to the forefront.
German Chancellor Angela Merkel's Christian Democrat party took a pasting in state elections over the weekend as the electorate there displayed their anger over her handling of the European debt crisis. Two thirds of the population are now said to be against further donations into the bailout fund.
Greece is in trouble for not meeting its austerity obligations within the pre-agreed timeframe and Italy appears to be having difficulty getting its own measures through parliament. Hence both it's and Spain's lending costs are on the up again.
The BBC report large amounts of foreign, much of it probably EU held, cash swapping sides of the Atlantic for America across the summer.
All of that suggests that the debt crisis here is very far from over, and that one default could trigger many more. Meanwhile where is the money going to come from to fund an EU economic recovery if it's already been syphoned off to America?
The US meanwhile have plenty of problems of their own as indicated by Friday's appalling jobs numbers.
Crude oil slumped the best part of three dollars/barrel, adding to losses of a similar magnitude on Friday. The FTSE100 ended with losses of almost 189 points (3.6%), with the Paris CAC40 down almost 150 points (4.7%) and the German DAX falling 292 points (5.3%). Shares in the banks took the biggest hit with the RBS plunging 12.3%.
There was no US market today due to the Labour Day holiday, trading will resume with the normal Globex session overnight. It remains to be seen if that can shrug off the strong negative bias of these outside influences and trade the more bullish US fundamentals.
Early Call On Chicago
05/09/11 -- Unchanged across the board is the confident shout from Nogger Towers today! European stocks are sharply lower on a combination of US recession fears and debt woes that simply won't go away. (As the market appeared to be hoping they would).
Crude oil is USD2.28/barrel lower, whilst the FTSE100 is down 3.5% at 3pm London time. Things are even worse on the continent where the French Cac40 and German Dax are down around 5.5% on the day so far.
Nov London wheat is down GBP2.05/tonne and Paris wheat EUR0.75/tonne easier on negative sentiment.
All that could change tomorrow however when US markets re-open, depending on whether or not Chicago grains can divorce themselves from outside influences.
Inform Economics are due out tomorrow afternoon with their latest US crop estimates ahead of the official USDA version next Monday.
Before that we will have the USDA out tomorrow night with their latest crop progress report, we can expect further declines in good/excellent for beans and corn.
Ukraine only exported 1.8 MMT of grain in July/August weighed down by export duties, according to the local Agrarian Confederation. That's 22% down on last year and only a third of Russia's exports during the same period.
They shipped 1 MMT of barley during the period, with more than half of that going to Saudi Arabia.
Beneficial rains throughout the growing season mean that Western Australia state is expecting a grain crop of 11-12 MMT this year, of which wheat should comprise around 8 MMT, 70% up on last year.
Jordan is tendering for 100,000 MT of barley this week.
The Morning Vibe
05/09/11 -- America is shut for Labour Day today, so fresh impetus is likely to be thin on the ground. NYMEX crude oil is however trading, and having lost USD2.58/barrel on Friday it's a further USD1.58/barrel weaker this morning. That's a 4.6% fall in two sessions to currently trade at below USD85/barrel.
The reason for that is perhaps the clearest evidence yet that America is heading for recession, if in fact it isn't already in one. Friday's US jobs numbers showed zero jobs created in August, and revised downwards the previous figures for both June and July. That makes the number of jobs created in the last three months just 105,000.
One report I read over the weekend suggests that the US need 125,000 new jobs each and every month just to keep up with the pace of rising population. In other words for the real unemployment rate not to rise America needed to have created 375,000 jobs across the June/August period.
The rules and regulations relating to exactly how the unemployment rate is calculated are complicated to say the least. However it is suggested that the true US unemployment rate is maybe closer to 20% when including only those that really do want work, around double the official rate of 9.1%.
Across the pond we have Italy's coalition government struggling to get the austerity measures it plans to introduced passed in parliament. The ECB meanwhile is buying Italian bonds in the face of fierce criticism in an attempt to atop Italy's borrowing costs spiralling out of control.
Meanwhile the German public are rapidly tiring of being asked to put their hands in their pockets to bailout their weaker irresponsible neighbours. A survey published last week suggests that two thirds of German nationals think that there should be no more handouts.
German Chancellor Angela Merkel's Christian Democrats took a pasting in a vote in the north-eastern state of Mecklenburg-Western Pomerania over the weekend as voters expressed their dissatisfaction with her handling of the eurozone debt crisis.
The German Federal Constitutional Court is expected to rule on Wednesday on lawsuits claiming that contributing to bailout funds for eurozone members in distress is actually unlawful.
Greece meanwhile is attempting to roll-over EUR135 billion of outstanding bonds by Friday. It effectively seems to be saying "you'd better buy these bonds, even though you don't want them and they're almost worthless or you know what the consequences will be don't you?"
Talks between Greece and its eurozone/IMF creditors over the country's failure to adhere to its austerity schedule broke down on Friday. This interesting report in the Wall Street Journal sets the scene: Greece Has Its Fill of Austerity
Elsewhere the Beeb are reporting on foreign banks shifting large amounts of cash to the US across the summer and that separate data from the ECB suggests that European banks have been heavily involved.
It's not looking overly pretty is it? The six trillion dollar question that I can't quite get my head round is this: what does all this mean for grain prices?
On the one hand you could argue that a worldwide slump into a second double dip recession would see money pour out of commodities in general, including crude oil and grains. That is after all what happened in 2008/09.
On the other, you could say that QE1/2 & 3 if/when we get it at home and in the US will surely cause further inflation in everything. Most likely with fuel and food being up there with the leaders just behind gold.
So which is it to be? If you forced me to put money on it my answer would be both! A sudden and extreme knee-jerk downwards move potentially followed by an equally severe correction. Having already had two such similar moves already this year we should be getting used to it by now.
Chicago Close
02/09/11 -- Soybeans: Sep 11 Soybeans closed at USD14.36, up 11 1/4 cents; Nov 11 Soybeans closed at USD14.45 3/4, up 11 1/4 cents; Sep 11 Soybean Meal closed at USD377.80, up USD1.20; Sep 11 Soybean Oil closed at 57.74, up 3 points. Beans gained 21 1/4 cents on the week, with meal up USD1.80 and oil rising 114 points. Spillover support came from corn although gains were capped by poor US jobs data which led crude oil to post losses in excess of USD2/barrel. Weekend rain potential varies from one forecaster to another. That gives the market the scope to do something dramatic when trading resumes on Tuesday after the long weekend.
Corn: Sep 11 Corn closed at USD7.50 1/4, up 21 1/2 cents; Dec 11 Corn closed at USD7.60, up 21 1/2 cents. What was expected to be a quiet pre-weekend book squaring session exploded into life when respected private analysts Lanworth released a corn yield estimate of 143.3 bu/acre, almost 10bpa lower than the current USDA estimate. An anticipated production estimate by Informa has now been put back to Tuesday. Despite today's sharp rise Sep corn was actually 2 1/4 cents lower on the week. Whatever weekend rain does materialise is likely to be of more benefit to beans than corn.
Wheat: Sep 11 CBOT Wheat closed at USD7.30, up 14 1/2 cents; Sep 11 KCBT Wheat closed at USD8.58, up 10 cents; Sep 11 MGEX Wheat closed at USD9.84 1/4, up 13 1/2 cents. Chicago wheat fell 32 1/4 cents on the week, with Kansas down 8 cents and Minneapolis rising 28 cents. There wasn't much fresh news about for wheat, with Chicago opening lower but turning round after corn moved sharply higher. There are some chances of rain coming up for the dry southern Plains before winter planting begins, although what's in the forecast is hardly a drought-buster.
EU Wheat Close
02/09/11 -- EU grains finished mixed with Nov London wheat up GBP0.30/tonne at GBP173.05/tonne and Nov Paris wheat ending EUR0.50/tonne lower at EUR208.25/tonne.
On the week overall London wheat gained GBP1.30/tonne whilst Paris wheat fell EUR2.00/tonne.
The market regained some lost ground late in the day after America moved sharply higher on corn after respected private analyst Lanworth pegged US corn yields this season at 143.3 bu/acre, almost 10 bu/acre below last month's USDA estimate.
Closer to home the German Ag Ministry pegged the wheat crop there at a fraction under 23 MMT, 3.4% down on last season. Their rapeseed crop will plunge more than 30% to just 3.9 MMT, they added. That will likely mean substantial imports will be required by the domestic crushing industry.
UkrAgroConsult forecast that only 40-45% of the Ukraine wheat crop will make milling standard this year, down from 55% a year ago. Based on reports from my contacts over there that may be optimistic.
Russia exported 2.6 MMT of grain in July, followed by a mammoth 3.2 MMT in August, according to the Grain Union there.
So it looks like Russia, soon to be joined by Kazakhstan, will have the cheapest milling wheat in the world in 2011/12. Ukraine look set to monopolise feed wheat exports as soon as the sort out their internal red tape.
Bollocks To The Hungry - I Want A Speedboat
02/09/11 -- The CME gleefully report that August was an all-time record month for volume on the exchange with 393 million contracts trading, of which 84 percent was traded electronically.
That's 17.1 million contracts a day, up 46 percent from August 2010 they gush, whilst extolling the virtues of the vital liquidity that they provide "during times of high market volatility."
They don't mention any of this in their press release though: Secret Exemptions Allowed Speculators to Distort Futures Markets
Early Call On Chicago
02/09/11 -- The overnight grains finished higher, although only partially regaining some of Thursday night's steep losses. Wheat ended up 6-8 cents and corn & beans mostly 4-5 cents firmer.
Based on the overnight closes Sep CBOT wheat is down 38 cents on the week so far, with corn down 18 1/4 cents and beans 15 cents higher.
Crude oil is more than a dollar lower after the US non-farm payrolls data showed zero jobs were added during August, contrary to expectations for 70-90,000 additions. This was apparently the first time that there were zero jobs added since Feb 1945. Hardly an economy booster that one is it?
In addition the June number was revised down from +46k to +20k and the July figure revised down from +117k to +85k.
Additional downside pressure for crude may come from ideas that Libya will be attempting to pump as much as it can before long.
Yesterday's US crop production numbers from FCStone could be viewed as either bullish or bearish, in a kind of half full or half empty sort of a way. Informa may enlighten us further later this afternoon.
Weather watchers are monitoring a major depression in the Gulf of Mexico south of Louisiana with a projected track due north into central Louisiana, then curving east across southern Mississippi. Landfall is expected midnight Sunday as a tropical storm with winds of 60 miles per hour.
"Given the current forecast, heavy, soaking tropical rains would avoid the Midwest, soaking Louisiana, Mississippi and Alabama," say Martell Crop Projections.
Meanwhile a cool front tracking west-to-east across the Midwest this weekend should "bring some useful rainfall to soybeans but just how much is the question. If the front moves quickly through the grain belt rainfall would be slight, but a slow moving front could bring 1.2 inches of rainfall. The atmosphere has grown humid and unstable in the Midwest giving rise to hopes for scattered heavy rains," they add.
The poor jobs data appears to have got the stock market rattled heading into the long weekend. There may be enough weather uncertainty around too to maybe generate a bit more long liquidation meaning that we close lower than the opening calls which are: corn up 4-5 cents, beans up 5-7 cents and wheat up 6-8 cents.
The Morning Vibe
02/09/11 -- A heavy sell-off in the Chicago grains last night appears to have flushed out a few bottom pickers this morning with Globex wheat, corn and beans all up around 5-8 cents.
Where are we for the week so far? Including latest overnight action Sep CBOT wheat is down 38 cents, corn down 14 1/4 cents and beans up 14 3/4 cents.
Informa become the latest private analyst to release their yield and production estimates mid-session this afternoon. Latest weather forecasts for the long weekend may also help fashion market direction after lunch.
This afternoon also sees the release of the important US August jobs numbesr. A big jobs report if you like. The market is hoping for non-farm payrolls to have increased by 90,000 - but I have a funny feeling that it will be significantly less than that. That could see Wall Street under pressure this afternoon which may spill over into the grains.
Libya bought 50,000 MT of Russian wheat overnight. Thanks for releasing the money France, but your can stick your expensive wheat where the soleil don't shine.
Poor old Ukraine, all that grain to sell but nobody wants it after you've been stitched up by the government once again. The only thing to do is plant some more, and that's exactly what they're doing with winter rapeseed sowings already past the halfway point. How long before we see reports in the press that growers there say that winter plantings will be down due to lack of funds?
Nov London wheat has opened GBP0.30/tonne easier at GBP172.45/tonne, still that's GBP0.70/tonne higher on the week hardly matching Chicago's 38 cent drop.
Chicago Close
01/09/11 -- Soybeans: Sep 11 Soybeans closed at USD14.24 3/4, down 24 1/4 cents; Nov 11 Soybeans finished at $14.34 1/2, down 23 cents; Sep 11 Soybean Meal closed at USD376.60, down USD4.20; Sep 11 Soybean Oil closed at 57.71, down 84 points. Funds sold an estimated 8,000 beans on the day ahead of the long weekend. Weakness in corn also led to spillover selling in beans. FCStone lowered their soybean yield estimate to 41.05bpa from 42.4bpa, with production coming in at 3.03 billion bushels. Both are in line with last week's ProFarmer numbers. Weekly soybean export sales came in at 593,800 MT, towards the top end of the 350 to 600 thousand MT estimated.
Corn: Sep 11 Corn closed at USD7.28 3/4, down 28 3/4 cents; Dec 11 Corn fell to USD7.38 1/2, down 29 cents. Funds sold an estimated 18,000 contracts on the day, making them net sellers of around 10,000 on the week. The catalyst for the sell-off may have been FCStone estimating this season's corn yields at 146.3bpa, producing a crop of 12.35 billion bushels. Whilst below the recent ProFarmer number their yield estimate is much better than some of the "low 140's" numbers that have been flying around this week. Weekly export sales were a net 637,000 MT versus forecasts of 400 to 650 thousand MT.
Wheat: Sep 11 CBOT Wheat closed at USD7.15 1/2, down 29 3/4 cents; Sep 11 KCBT Wheat was at USD8.48, down 23 cents; Sep 11 MGEX Wheat finished at USD9.70 3/4, up 3 3/4 cents. Minneapolis continues to lead. Chicago fell on spillover weakness from corn with funds selling an estimated 3,000 contracts on the day. Export sales of 369,200 MT were towards the low end of expectations of 350 to 550 thousand MT. This maybe reminded the market that US wheat is going to have a tough job matching USDA targets for 2011/12 at these prices.
EU Wheat Close
01/09/11 -- EU grains finished lower with Nov London wheat falling GBP2.00/tonne to GBP172.75/tonne and Nov Paris wheat losing EUR2.50/tonne to EUR208.75/tonne.
Fresh news was thin on the ground, and those bulls need to be fed every day. US futures were lower, pressuring EU grains, on profit-taking ahead of a long weekend in America.
The HGCA said that the UK wheat harvest is 75% done, whilst that of spring barley is 55% complete. The winter barley and rapeseed harvests are finished. In Scotland the harvest is later and slower than average, they added.
UK wheat yields have averaged 7.5-7.7 MT/ha, slightly under the five year average of 7.8 MT/ha, they say. A remarkable recovery compared to all those "25% of the crop is lost" reports that were circulating not that long ago?
Noises coming out of Ukraine suggest that the removal of export duties there is unlikely this side of Christmas. That will affect their ability to compete with Russia and Kazakhstan on the export market. It will however only delay the inevitable. When they do eventually emerge as eager sellers they will be ultra-competitive.
EU exports continue to chug away at an unspectacular rate. Brussels granted 276,000 MT of soft wheat export licences this week, which is 50,000 MT down on a week ago.
That brings the total MY to date total to 2.1 MMT, fully 1.2 MMT lower than where we were a year ago. Imports meanwhile now stand at 2.3 MMT, meaning that effectively we currently have more wheat in Europe nine weeks into the current campaign than we started with!
Early Call On Chicago
01/09/11 -- The overnight grains finished with wheat and beans around 10-12 cents lower and corn down 7-8 cents. Crude is a little weaker and the dollar slightly firmer, both negative for grains.
The USDA reported weekly wheat export sales of 369,200 MT, towards the low end of expectations for sales of 350 to 550 thousand MT. Corn sales were minus 320,900 MT for old crop and 957,900 MT for new crop giving a combined 637,000 MT versus forecasts of 400 to 650 thousand MT. Soybean sales came in at 593,800 MT of all new crop compared with the 350 to 600 thousand MT estimated.
In amongst a lot of corn switching was the sale of 116,000 MT to China switched from unknown.
It's the first of the month, but with a long weekend looming in the US it may be next week before we see any "new money" coming into the market. With the possibility of a wetter look to the weekend funds may decide that it would be prudent to regroup next week once the extent of weekend moisture is known.
That may give us some more long liquidation and profit-taking this afternoon.
FCStone are out later today with their slant on US corn and soybean production, followed by Informa tomorrow ahead of the USDA a week on Monday. Lower corn yields look like they are a given, but how much is already factored in?
Brazilian growers like the look of corn at these levels and are seen upping plantings accordingly.
Early calls for this afternoon's CBOT session: corn down 6-8 cents, wheat and beans down 8-10 cents.
Ukraine Export Duties
01/09/11 -- Ukraine is unlikely to lift it's existing grain export duties in the near-term it is being suggested on the HGCA website amongst others this morning. To do so would contravene agreements that the country has with the IMF, according to the Ministry of Finance. (As if Ukraine normally has a problem contravening anything).
The duties will "remain in place until the end of 2011" the Minister of Agrarian Policy suggests.
If so, that will probably depress domestic prices, much as last year's export embargo did in Russia. It may also mean that Ukraine will try and squeeze a years worth of exports into the first half of 2012, making them ultra-aggressive when the time comes.
It could also give Russia and Kazakhstan grain an additional route out into the Med and beyond via Ukraine ports, and provide Ukraine customs officials with some useful "backhanders" in the run-up to Christmas!
Saving The Planet Is So Bloody Boring Isn't It?
01/09/11 -- BOCM Pauls have secured a GBP90 million lending package from Lloyds TSB, according to this report.
Some of the money will be used to reduce CO2 emissions at its mills.
If it was down to me however, I'd draw out GBP89,999,999 immediately and spend it on essentials like having a "bit of a dabble" on the old gee gees and then use the rest of it to host a massive alcohol-fueled party in which naked dancing girls would be flown in from all around the globe to fill a jacuzzi the size of Bury St Edmunds.
Then, once the girls had been flown back home again and we'd tidied the place up a bit, we could sit down and see what we'd got left. Get some sandwiches in and a few crates of beer, obviously, and have a little chat about this CO2 thingy. I mean we've managed alright up until now haven't we? Let's put it on the back burner until next year, we'll get another "package" then won't we? Blimey, is that the time, they'll be open in half an hour. If the bank ring tell them that I've gone for an early business lunch...
Sorted, and no harm done eh?
Morning Vibe
01/09/11 -- White rabbits, white rabbits, white rabbits. It's a beautiful morning in North Yorkshire. The birds are singing. The squirrels are gathering nuts, and the wretched kids have only got one day of the school holidays left to go. Woooohoooo.
The overnight grains are lower. London and Paris wheat have opened easier, although they are really only back to where they were yesterday morning after somehow managing to officially close higher.
Fresh news is extremely thin on the ground. FC Stone are out later today I understand with their thoughts on US corn and soybean yields, and Informa are out tomorrow.
Before that the market will also be looking at the latest USDA weekly export sales this afternoon to see if there's any sign of demand slipping with prices where they are.
The HGCA sees the UK wheat harvest 75% done, whilst spring barley is 55% complete. The winter barley and rapeseed harvests are finished. In Scotland the harvest is later and slower than average. Just like the Scottish midfield.
The Kazakh harvest is around 15% done, according to the Ag Ministry there. Grain production there should be up 60% after near ideal spring and summer growing conditions.
Having issued us with harvest data on an almost daily basis throughout July and August the Russian Ministry seem to have gone very quiet this week. Maybe they are on holiday, or maybe they don't want to publicise too highly how things are going in Siberia (which in Russian terms is "just over the road" from Kazakhstan). I suspect that the answer to that is "pretty bloody well actually, comrade".
The Russian harvest may be larger than the market thinks. The only problem that they will have is shipping it out fast enough. The fact that world wheat prices have moved up since the beginning of August will delight them.
Chicago Close
31/08/11 -- Soybeans: Sep 11 Soybeans closed at USD14.49, up 1/4 cent; Nov 11 Soybeans closed at USD14.57 1/2, up 1/2 cent; Sep11 Soybean Meal closed at USD380.80, down USD0.30; Sep 11 Soybean Oil closed at 58.55, up 35 points. Whilst there wasn't a lot of change to the nearbys Nov12 beans were 12 1/4 cents higher at USD13.92 as the market appears to want to buy into the longevity of USD14/bu beans. Funds bought an estimated 2,000 bean contracts on the day. Trade estimates for tomorrows weekly export sales report range from 350 to 600 thousand MT.
Corn: Sep 11 Corn closed at USD7.57 1/2, down 6 cents; Dec 11 Corn closed at USD7.67 1/2, down 7 3/4 cents. Funds were given credit for selling 8,000 contracts on the day. Private estimates on potential corn yields are starting to filter through ahead of the USDA's September numbers. Linn Group today pegged this season's crop crop at 12.391 with yields coming in at 149.1bpa. That's a better yield than last weeks Pro Farmer estimate but lower overall production. Trade estimates for tomorrows weekly export sales report range from 400 to 650 thousand MT.
Wheat: Sep 11 CBOT Wheat closed at USD7.45 1/4, down 5 cents; Sep 11 KCBT Wheat closed at USD8.71, up 3 1/2 cents; Sep 11 MGEX Wheat closed at USD9.67, up 26 cents. As you can see Minneapolis wheat led the way again today. There is some rain in the long weekend forecast for Texas and Oklahoma which will be welcomed ahead of winter wheat planting. Rain on the northern Plains however will hamper spring wheat harvest activity. Trade estimates for tomorrows weekly export sales report range from 350 to 550 thousand MT.
