10/09/11 -- A funny gut feeling is telling me that things could look very different in the grain (and probably stocks/crude too) market before very long. Something big is in the wings, within the next month, maybe sooner. The problem is I don't know what it is, and/or whether the market will react bullishly or bearishly to it when it comes along.
On the other hand my uneasy gut could have something to do with my incomprehensibly poor "1955 burger" at McDonald's yesterday. MrsN#3 dragged me in there for a quick "anything fast will do" sort of a moment yesterday. Well, a more disappointing quickie I can't recall.
Being a cheese-hater (I know, it's not really REAL cheese that goes on these things you cheese aficionado's will tell me), but my dislike of the stinking stuff is so great that I really can't even stand the bland rubbery cheesy concoction that these places use. So I thought the new cheese-free 1955 burger, so named to celebrate the year that the company was founded in the US, was right up my street.
Well, I've never been so disappointed since I found out that Lady GaGa was a bloke. It didn't even deliver on the fastness front, as the girl behind the counter looked at me aghast as if nobody else had ever ordered one, and I now know why. I literally wouldn't, and therefore didn't, give it to the dog. Even with his legendary constitution.
So there you have it, two for the price of none. Something big is maybe going to happen, but I don't know what it is, and forewarned is forearmed next time the missus drags you into the Golden Arches.
Next week: Has it happened yet? And advice on choosing the correct pie to accompany a chips, gravy and mushy pea dinner.
09/09/11 -- Soybeans: Sep 11 Soybeans closed at USD14.16 1/, up 9 1/4 cents; Nov 11 Soybeans closed at USD14.26 1/2, up 8 1/2 cents; Sep 11 Soybean Meal closed at USD368.70, up USD3.20; Sep 11 Soybean Oil closed at 58.20, up 38 points. The European debt alarm bells are getting louder, causing a flight to safety which sees the dollar post significant gains across the week, hindering US export competitiveness. China has reputedly switched much of it's attention to South America. The chances of a frost risk for September 14, 15 and 16 are increasing, say WxRisk.com. Weekly US export sales were as expected. Nov beans were down 19 1/4 cents on the week. Monday's USDA reports will hopefully provide some direction from here.
Corn: Sep 11 Corn closed at USD7.26, up 2 3/4 cents; Dec 11 Corn at USD7.36 1/2, up 2 1/2 cents. Dec was down 23 1/2 cents on the week. Weekly export sales were in line with expectations at 870,600 MT, in addition to which the USDA announced a sale of 127,506 MT to unknown under the daily reporting system. Monday's USDA report is expected to cut US corn production to around 12.5 billion bushels this year. That's the equivalent of around 317.5 MMT, which is 10.5 MMT less than last month's projection. A strong US dollar rose to it's best levels since February against the euro and since January versus the pound, which may keep a bit of a lid on exports.
Wheat: CBOT December wheat fell 8 1/4 cents to USD7.29 3/4; KCBT December lost 13 1/2 cents to USD8.32 1/2; MGEX December slipped 1c to USD9.07 1/4. CBOT wheat has fallen every day this week with the September contract losing 29 cents. The strong dollar should hinder US exports, although weekly sales were good at 512,200 MT compared to estimates of 350-450 TMT. Funds were estimated to have sold 3,000 Chicago contracts on the day, bringing their total for the week to around 11,000 lots. No majors surprises are expected from the USDA on Monday with regards to wheat S&D, support - or otherwise - may come from corn. Some reports suggest that the US has already started importing feed wheat from Canada and the UK.
09/09/11 -- EU grains finished mixed with Nov London wheat down GBP0.50/tonne to GBP168.50/tonne and Nov Paris wheat ending EUR1.25/tonne higher at EUR206.75/tonne.
On the week as a whole London wheat lost GBP4.55/tonne whilst Paris shed a more modest EUR1.50/tonne.
The euro remains under acute pressure, with the pound closing above 1.16 for the first time since 10th March late Friday.
A high profile member of the ECB's governing council resigned on Friday, officially "for personal reasons" although the market is sceptical. Talk of Greece being allowed, or even expelled, from the eurozone is mounting.
Bloomberg are reporting that Germany is drawing up contingency plans to help its banking sector in the even of a Greek default.
On a brighter note Brussels issued 415 TMT of soft wheat export licences this week, the best total of the marketing year so far. Trade gossip suggests that the UK has recently sold a couple of cargoes of feed wheat to the US.
All eyes will be on the USDA on Monday when they release their latest supply & demand and stocks numbers. Whilst few surprises are expected for wheat the US corn production number is perhaps the one that is most eagerly anticipated.
09/09/11 -- The overnight grains finished mostly higher with corn up 2-3 cents, beans 4-6 cents firmer and wheat 1-2 cents weaker.
Weekly export sales from the USDA were better than expected for wheat, and in line with expectations for corn and beans.
Wheat sales came in at 512,200 MT compared to estimates of 350-450 TMT, with unknown destinations (251,400 MT) the biggest buyer.
Corn sales of 870,600 MT were in line with the 800 TMT - 1 MMT expected with Mexico (313,800 MT) the largest buyer. There were 2,795,700 MT in sales outstanding at the end of the 2010/2011 marketing year (Aug 31st) which were carried over to the 2011/12 marketing year.
Soybean sales of 444,900 MT were in the middle of the 350-650 TMT expected with China featuring as the largest buyer booking 192,200 MT. A total of 2,281,900 MT in sales were outstanding on August 31 and were carried over to the 2011/12 marketing year.
On the week so far we have Dec wheat down 37 1/2 cents, Dec corn down 26 cents and Nov beans down 27 1/2 cents.
Crude oil is down more than USD2/barrel on the back of the firm dollar, which won't help US exports too much.
There are reports from the USDA however of the sale of 127,506 MT of corn overnight to unknown.
It's shaping up like a quiet pre-weekend and pre-USDA report session. On Monday the USDA are expected to peg US corn production this season at around 12.5 billion bushels, with soybean output coming in a shade over 3 billion.
Early calls: beans up 3-5 cents, corn up 1-3 cents, wheat mixed down 2 cents to up 2 cents.
09/09/11 -- Talk of Greece being allowed to leave the euro zone is gathering momentum with the Dutch PM quoted as saying: "Countries which are not prepared to be placed under administratorship can choose to use the possibility to leave the euro zone."
Meanwhile the possibility of an Italian default is also now being discussed. The ramifications of the latter would dwarf those of the former. The euro vultures are circling overhead with the single currency falling to it's lowest level since March against the dollar this morning.
London wheat has opened GBP1.00/tonne lower on front month Nov with Paris wheat EUR1.00/tonne higher as the pound rises above 1.15 against the single currency.
Federal Reserve chairman Ben Bernanke disappointed the market in a speech in Minneapolis yesterday by not hinting at further QE. Barack Obama meanwhile used a televised address to unveil a USD447bn package aimed at reducing unemployment. The opposition Republicans however may be less enthusiastic to help vote it through.
The Farmers Guardian are reporting that UK OSR gross margins will "clearly outstrip wheat as the highest broad-acre combinable crop" for the first time in 20 years for the 2012 harvest.
Encouraged by this year's exceptional yields and lofty ex-farm prices that surely means that plantings will be up again for 2012 I'd guess.
India has agreed to allow private firms to export 2 MMT of wheat for the first time in four years.
By September 7th Kazakhstan had harvested 8.7 MMT of grains off 36% of the planted area with yields up a whopping 80% on last year, according to the Ministry of Agriculture.
08/09/11 -- Soybeans: Sep 11 Soybeans closed at USD14.07 1/4, down 3 3/4 cents; Nov 11 Soybeans closed at USD14.18 1/4, down 2 1/2 cents; Sep 11 Soybean Meal closed at USD365.50, down USD1.70; Sep 11 Soybean Oil closed at 57.82, down 36 points. It was another "no news" day in which funds sold an estimated 4,000 soybean contracts on the day. Once again there were fairly large deliveries against the September contract, indicative that cash values aren't keeping pace with paper trade. Weekly export sales, one day later than normal due to Monday's holiday, are expected to be in the range of 350-650 TMT.
Corn: Sep 11 Corn closed at USD7.23 1/4, down 13 1/4 cents; Dec 11 Corn closed at USD7.34, down 14 cents. Funds were said to have sold 13,000 contracts on the day, bringing their total sales for the week so far to 28,000 lots. Weekly export sales due tomorrow are forecast in the region of 800 TMT - 1 MMT. If they prove to be a disappointment then we may see further liquidation ahead of the weekend and Monday's USDA reports. If so that would be four lower closes in a row.
Wheat: Sep 11 CBOT Wheat closed at USD7.09 1/4, down 5 1/2 cents; Sep 11 KCBT Wheat closed at USD8.24, down 18 cents; Sep 11 MGEX Wheat closed at USD9.49 1/2, down 14 3/4 cents. Funds sold 3,000 Chicago contracts on the day, bringing their weekly sales to around 8,000 so far. The strong dollar continues to hamper US exports. India is said to have authorised the sale of 2 MMT of it's surplus wheat stocks. Export sales for tomorrow are estimated at 350-450 TMT.
08/09/11 -- Nov London wheat closed GBP1.50/tonne lower at GBP169.00/tonne with Jan down GBP2.25/tonne at GBP170.50/tonne. Nov Paris wheat fell EUR1.00/tonne to EUR205.50/tonne with Jan declining EUR1.25/tonne to EUR206.25/tonne.
The market seems to be in consolidation mode ahead of Monday's USDA reports. They (the USDA) had better have something bullish up their sleeves or things look set to fall out of bed (again).
Demand is sluggish, and what buying interest is out there is getting mopped up by Russia, and now Kazakhstan. Ukraine also has oodles of wheat, barley and corn to sell but is keeping it's fingers crossed that the government there may rescind export duties. That looks unlikely this side of 2012, but even so all that does is provide a widening of the window of opportunity for the aforementioned two brothers in arms.
Tomorrow's USDA weekly export sales data may provide some further clues as to world demand. I suspect that the numbers may be disappointing, showing at the very least that paper buyers' pricing ideas are well above those that physical users are willing to pay.
US grain bulls in particular have developed an air of invincibility of late and are maybe losing sight of what the real market can afford, if that is they ever had a handle on that side of things anyway.
The pound had a volatile day ahead of the BOE announcing that it was keeping interest rates on hold. That was no surprise to anybody, although the fact that they also left QE on hold appeared to catch a few shorts unaware, hence the pound appreciating later in the day.
08/09/11 -- The overnight trade ended mostly lower with wheat down 3-5 cents, corn 2-3 cents easier and beans falling 5-8 cents in the most active months. Crude is a little higher as too is the dollar.
Fresh news is once again hard to come by as the trade awaits Monday's USDA reports.
Given yesterday's bullish sub-12 billion bushels production estimate from Cropcast, corn put in a pretty poor show to close in negative territory last night. It has also slipped away into the red this morning along with wheat and beans.
Some reports of early harvested corn suggest better than expected yields, which is maybe going to keep the heavily long bulls a bit nervous going into Monday's reports.
Other reports suggest sharply higher corn plantings in Brazil and Argentina due to the high levels of profitability current levels present.
South Korea has bought 161,900 MT of US corn overnight.
US wheat wasn't even offered in yesterday's Egyptian tender in which Kazakhstan emerged as a new competitor for Russia.
USDA weekly export sales are only out tomorrow due to the Labour Day holiday on Monday.
I'd expect to see some modest profit-taking today which may continue tomorrow, especially if the export sales disappoint, as I think they might. There are some rain possibilities in the forecast for the southern Plains ahead of winter wheat planting.
There are also various differences of opinion as to what track the next wave of tropical storms brewing up in the Gulf of Mexico will take.
Obama will address a joint session of Congress tonight and before that Fed Chairman Ben Bernanke will speak to the Minnesota Economic Club in Minneapolis.
There are maybe enough uncertainties there to encourage some money being taken off the table. Early calls: corn down 2-3 cents, wheat down 3-5 cents and beans down 5-7 cents.
08/09/11 -- There hasn't been much movement from within the bowels of The Old Lady of Threadneedle Street lately, with the Bank of England leaving UK interest rates on hold at 0.50% again today for the 30th month in succession.
Despite pleas from the Institute of Directors warning of "dire consequences" in the form of lost taxes without a further GBP50 billion of QE, the BOE have left that on hold too. I think they should try slipping Merv the Swerve some senna pods in his tea next month.
The pound is up from early lows on the news, poking it's little tortoise-like head up above 1.14 against the euro and 1.60 versus the dollar.
It's a thrill a minute isn't it?
08/09/11 -- We're in for a wet weekend here in the UK, particularly on Sunday, by the looks of it.
And that's before the remnants of Hurricane Katia make it off the coast of Ireland/Scotland on Monday.
Check out the UK Weather School window on Dalmark's thoroughly excellent GrainPortal.com to see the latest video forecast.
08/09/11 -- There's not a lot to get excited about once again as the market treads water waiting for some words of wisdom from the USDA on Monday. Whether we will get them or the whole thing is consigned to Tuesday's fish & chip paper remains to be seen.
The trade is expecting a corn production number of around 12.5 billion, with soybeans coming in a shade over 3.0 billion. Yields are estimated at 148.8 bu/acre for corn and 41 bu/acre for beans. Remember that this is what the trade is expecting the USDA to say, not necessarily what the trade themselves estimate.
The French Ministry yesterday upped their all wheat production estimate there to 35.5 MMT, 2.75 MMT down on last year but much better than was predicted a few months ago and 1 MMT more than the USDA forecast.
Rapeseed production there was also raised to 5.3 MMT, both half a million more than last year and the USDA's current estimate, making France the EU's largest producer this year.
The pound had flirted with the idea of breaching support at 1.59 against the dollar this past couple of days. It's only traded below that level once since January. There are some calls for the BoE to increase QE at today's MPC meeting. I don't expect that they will, which may see sterling improve a little this afternoon.
The German high court yesterday ruled that giving money away to alcoholics in the park is fine as long as you ask you Mum first. That appears to have cleared that little one up and the market seems somehow becalmed by the news.
Scruffy McGuffy, the alcoholic's spokestramp says that they will tidy up the mess that they've made in the park straight after they get their next cash injection at lunchtime. And they've given their word on that, so that's OK.
07/09/11 -- Soybeans: Sep 11 Soybeans closed at USD14.11, down 2 1/2 cents; Nov 11 Soybeans closed at USD14.20 3/4, down 1 3/4 cents; Sep 11 Soybean Meal closed at USD367.20, down USD1.10; Sep 11 Soybean Oil closed at 58.18, up 62 points. It was a mixed session ahead of next Monday's USDA report. Stats Canada pegged rapeseed stocks there at 1.828 MMT - well above trade estimates of 0.70 to 1.3 MMT. Large deliveries against the September bean contract denotes that physical demand is thin at these levels.
Corn: Sep 11 Corn closed at USD7.36 1/2, down 10 1/4 cents; Dec 11 Corn closed at USD7.48, down 7 3/4 cents. Private production forecasts have been all over the place in the past week or so, highlighted by weather firm Cropcast coming out with a production estimate of just 11.913 billion bushels today - the lowest yet. Surprising therefore, and disappointing for the bulls, that the market couldn't manage to hold onto early gains. Talk is that a production number of around 12.5 billion bushels is what the market has factored in for Monday.
Wheat: Sep 11 CBOT Wheat closed at USD7.14 3/4, down 1 1/2 cents; Sep 11 KCBT Wheat closed at USD8.42, down 4 cents; Sep 11 MGEX Wheat closed at USD9.64 1/4, down 6 3/4 cents. Stats Canada pegged wheat stocks there at 7.2 MMT, above trade estimates of 5.5 to 6.8 MMT. US wheat wasn't even offered in this week's Egyptian tender. It's interesting to see Kazakh wheat competing with it's neighbour as the harvest there progresses, which may cap upside potential for Russian grain going forward. French wheat was also priced out of the market.
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.
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.
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.
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.
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.
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.
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.
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.
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?
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.
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.
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.