Chicago Soybeans Gain For Tenth Straight Session

02/03/12 -- Soybeans: Mar 12 Soybeans closed at USD13.28 1/4, up 11 1/2 cents; Nov 12 Soybeans closed at USD12.98, up 3 3/4 cents; Mar 12 Soybean Meal closed at USD357.30, up USD3.60; Mar 12 Soybean Oil closed at 53.76, down 18 points. This was an impressive tenth straight day of gains for beans with added just under 50 cents on the week, with meal posting a weekly gain of USD23.70 as oil lost 53 points. Funds were said to have bought 6,000 soybean contracts on the day. The Commitment of Traders report shows large funds adding around 20,000 contracts on the week through to Tuesday. They've probably added another 12-14,000 since then, meaning that they're heavily overbought leaving the market vulnerable to a sudden and violent correction. But when?

Corn: Mar 12 Corn closed at USD6.59, up 5 1/4 cents; Dec 12 Corn closed at USD5.70, up 3 1/4 cents. On the week as a whole Mar 12 was up 18 1/4 cents and Dec up 12 cents. Funds were said to have bought 3-5,000 lots on the day, adding to the length that they've been steadily building since Christmas. The Commitment of Traders report shows large funds adding 35,000 of futures and options length in the week through to Tuesday. We now have the trade jockeying for position ahead of next Friday's USDA world supply and demand numbers. Informa Economics today pegged the Argentine corn crop at 22.5 MMT and the Brazilian crop at 61.5 MMT, that's unchanged from last month and 0.5 MMT above the USDA's February estimate in each case.

Wheat: Mar 12 CBOT Wheat closed at USD6.70 3/4, up 11 1/2 cents; Mar 12 KCBT Wheat closed at USD7.10 1/2, up 13 1/2 cents; Mar 12 MGEX Wheat closed at USD8.27 3/4, up 13 3/4 cents. On the week as a whole Chicago wheat added 29 3/4 cents, Kansas 19 1/2 cents and Minneapolis 41 1/4 cents. Funds were said to be net buyers of around 3,000 Chicago contracts on the day. The Commitment of Traders report has them covering in around 8,000 of their short position on the week through to Tuesday, although that still leaves them short more than 51,000 lots. Russia's Ag Ministry says that the country will have exported around 23 MMT of grains by the end of the month. That means that shipments should slow up in the last quarter of 2011/12 as they approach their suggested 27 MMT limit.

EU Wheat Closing Comments For Friday

02/03/12 -- EU grains finished mostly higher with front month Mar 12 London wheat up GBP0.55/tonne to GBP165.30/tonne and Mar 12 Paris wheat rising EUR2.50/tonne to EUR217.00/tonne, putting a EUR6.50/tonne premium between it and May 12.

It's interesting to note that the differential between May 12 and Nov 12 is a hefty GBP15.80/tonne in London, considerably more than the EUR13.00/tonne spread in Paris.

At the end of a choppy week overall Mar 12 London wheat gained just GBP1.05/tonne whilst Mar 12 Paris wheat added EUR9.50/tonne. Euro weakness has something to do with that disparity, with the pound gaining from a touch under 1.18 last Friday to close around 1.20 tonight.

London wheat seems to be developing a sideways pattern, having traded within a fairly narrow GBP163-170/tonne range for the past five weeks. Paris wheat has had a more choppy feel, trading between EUR205-222.25/tonne during the same period.

The market still has to accurately assess winter kill losses caused by the recent cold snap on unprotected crops. One report suggests that parts of eastern and northern France may have lost 5-10% of it's winter wheat.

Russian losses are thought to have been relatively minimal. Ukraine's are more severe, although that is probably more to do with the dry September/November period than the Siberian cold air that moved in last month.

The severe frosts that those weather conditions brought cut Ukraine's grain exports 10% year-on-year to 1.7 MMT last month, with more than three quarters of that being corn. That brings their year-to-date grain exports to around 13.5 MMT, meaning that total 2011/12 shipments are likely to be around 20-22 MMT, considerably less than the government's target of 25-26 MMT.

EU Rapemeal Prices

02/03/12 -- Rapemeal prices on the continent are firmer again today, especially on old crop months.

Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
















































Mar12
205.00
+6.00
Apr12
199.00
+3.00
May12
194.00
+4.00
May/Jul12
190.00
+4.00
Aug/Oct12
169.00
+1.00
Nov12/Jan13
173.00
+1.00
Feb/Apr13
175.00
+1.00
May/Jul13
173.00
+1.00
Aug/Oct13
163.00
+1.00

Mid-Morning Mumble

02/03/12 -- The overnight grains are a little easier with wheat, corn and soybeans all around 2-3 cents weaker in light profit-taking. Even so for the week so far we have CBOT wheat up 15 1/4 cents, corn up 11 1/4 cents and soybeans up 34 1/4 cents including the overnight dip.

The Buenos Aires Grains Exchange left it's weekly Argentine soybean and corn estimates unchanged last night at 46.2 MMT (versus the USDA's 48 MMT) and 21.3 MMT (USDA: 22 MMT) saying that recent heavy rains have improved prospects for soybeans.

Russia's Ag Ministry says that the country will have exported around 23 MMT of grains by the end of the month.

"Winter grains in Russia have apparently survived bitterly cold winter weather without any significant damage. A new report from the state weather agency Gidromet-Russia claims only 6-8% of winter grains were in poor condition," report Martell Crop Projections.

Things are shaping up with promise for 2012 Russian grain production. "Fall wheat growing conditions were very favourable in the Volga District in 2011, with above average rainfall. It was just the opposite of 2010 when severe drought existed, preventing all the intended wheat from getting planted," they say.

"The Volga is a swing district sharply increasing Russia grain production in wet growing seasons, but shrinking the national harvest in years of drought," they add.

Ukraine exported 1.7 MMT of grain in February, with corn accounting for the vast majority of that at 1.3 MMT. Wheat's share was only 340 TMT. Year-to-date grain exports are 13.5 MMT, almost 5 MMT up on year ago levels.

Nobody seems to be holding their hand up with regards to which trading house it was exactly that sold Iran two cargoes of US wheat yesterday, or indeed how they expect to be paid for it. That was the first sale of US wheat to them since 2009. It's easy to hide behind the "humanitarian" hoarding, especially when they're paying big bucks it would seem.

London wheat is having a very quiet end to the week, maybe last night's Manchester Corn Trade Dinner has something to do with that? There's only been 15 lots traded all morning so far, with May12 down GBP0.65/tonne to GBP166.00/tonne.

Computers (Again)

02/03/12 -- Pain in the backside when they aren't working properly. This morning's grief come from Easily.co.uk who are the people I buy all my domain names from. They are apparently doing a "major upgrade" this morning, but not to worry "Email and web forwarding will continue to function as normal" they say.

Except web forwarding isn't working on just about every domain name I own which are all currently throwing up an error message when you try to access them including nogger.co.uk and even the dog has had his plug pulled.

Apologies if you are one of the companies affected. Hopefully Easily will extract the digit and sort the problem out asap or I may have to get the dog to unfurl a special present for them, if you get my drift.

Chicago Soybean Rise For Ninth Straight Session

01/03/12 -- Soybeans: Mar 12 Soybeans closed at USD13.16 3/4, up 3 1/4 cents; Nov 12 Soybeans closed at USD12.94 1/4, up 5 1/4 cents; Mar 12 Soybean Meal closed at USD353.70, up USD2.50; Mar 12 Soybean Oil closed at 53.94, down 15 points. Beans managed a ninth straight higher close as funds came in to extend their length by an estimated 4,000 soybean contracts on the day. The USDA reported weekly export sales at the top end of expectations at a combined 976,400 MT. Argentina's president Cristina Fernandez's soybean crop estimate of 48 MMT, the same as the USDA's, was treated with scepticism.

Corn: Mar 12 Corn closed at USD6.53 3/4, down 2 3/4 cents; Dec 12 Corn closed at USD5.66 3/4, down 1 3/4 cents. The incentive of a dollar a bushel more for old crop corn than new crop is wringing a bit more of the former out of the remaining long-holders. Funds were said to have sold 7-9,000 contracts on the day, having bought around 46,000 over the previous six sessions. Export sales of a combined 713,000 MT were in the middle of expectations of 650-850,000 MT. Weekly ethanol production slipped to 896,000 barrels/day from 919,000 the week before as margins get squeezed and stocks run at record levels.

Wheat: Mar 12 CBOT Wheat closed at USD6.59 1/4, down 5 cents; Mar 12 KCBT Wheat closed at USD6.97, down 2 cents; Mar 12 MGEX Wheat closed at USD8.14, up 10 1/4 cents. Funds were reckoned to have sold around 2,000 CBOT contracts on the day. weekly export sales of a combined 509,100 MT for wheat, at the low end of expectations of 500-700,000 MT. Shipments of only 205,800 MT were the worst since the first week of the marketing year save for the holiday shortened New Year week. The USDA reports the sale of 120,000 MT of HRW wheat to Iran despite the international sanctions against them.

EU Wheat Mixed, Paris Higher As Euro Slumps

01/03/12 -- EU grains finished mixed with Mar 12 London wheat closing down GBP0.75/tonne to GBP164.075/tonne and Mar 12 Paris wheat rising EUR1.50/tonne to EUR214.50/tonne.

Paris wheat rose as London wheat fell due to a sharp decline in the euro after news broke that Eurozone unemployment rose to a record 10.7% in January. Spain is the worst off where unemployment is now a whopping 23.3%. The pound rose close to the 1.20 level on the news.

As the market closed we had reports that Brussels had issued almost 430 TMT of soft wheat export licences this past week, the best weekly total for seventeen weeks. Even so, cumulative 2011/12 year-to-date exports at just over 9 MMT still lag last season's levels by more than a third.

In complete contrast the USDA reported weekly wheat shipments of only 205,800 MT, the worst since the first week of the marketing year save for the holiday shortened New Year week.

The HGCA reported that winter crop conditions at home are pretty good.

"Overall the wheat crop is well established with good growth over winter. The majority of crops are well tillered with good plant populations," they said.

"Winter barley crops are well established and have a good level of tillering. Weed control is generally good and crops very competitive," they added.

For oilseed rape "crops tend to be well established with large canopies this season. Some older leaves died back in the cold spell in early February, but many crops remain large," they noted.

Early Call On Chicago

01/03/12 -- The overnight grains ended lower with beans down 4-5 cents, corn around 3 cents easier and wheat losing 4 to 4 1/2 cents in a bit of light consolidation from recent gains. Crude is up half a dollar or so and the US is unchanged.

The USDA reported weekly export sales of a combined 509,100 MT for wheat, at the low end of expectations of 500-700,000 MT. Shipments of only 205,800 MT were rather disappointing and the worst since the first week of the marketing year save for the holiday shortened New Year week.

For corn we got sales of a combined 713,000 MT in the middle of expectations of 650-850,000 MT. Soybean sales cam in at the top end of expectations at a combined 976,400 MT.

There are reports that early harvest yield results from northern Brazil have been better than expected, which may offset some of the losses anticipated in the south of the country still to come.

After several successive up days some downwards correction looks like being on the cards amidst overbought conditions in soybeans and corn. Wheat will simply follow.

The USDA reports the sale of 120,000 MT of HRW wheat to Iran despite sanctions against them.

Early calls have corn down 2-3 cents, wheat down 3-4 cents and soybeans down 3-5 cents.

Ukraine Latest

01/03/12 -- The Ukraine Ministry say that spring grain plantings will increase 22% to 9.5 million ha this year, by virtue of heavier than normal winter losses. The overall harvested area is expected to be around the same as last year at 15.5 million ha.

What does this mean for production? Around 4.5-5.0 million ha of winter wheat is said to have survived the winter, and spring plantings of wheat will rise by 100,000 ha to 400,000 ha, they say - giving us an overall wheat area of 4.9-5.4 million ha. Using a three year average yield of 3.0 MT/ha that potentially gives us a wheat crop of around 15-16 MMT in 2012 - a decrease in the region of 30 percent on last year, give or take.

Corn is expected to be sown on 4.5-5.0 million ha this year, they say. That's an increase of around 30-40 percent on 2011. A 3-year average yield of 5.3 MT/ha would give us a corn crop of around 24-26 MMT in 2012, beating last season's record crop by 1.5-3.5 MMT.

Some 800,000 to 1 million ha of winter barley has survived the winter and spring plantings are expected to increase from 2.7 million to 3 million ha. That means we could end up with a barley crop of around 9 MMT in 2012 - similar to last season.

So there we have it, very roughly, around 6-7 MMT less wheat, 2-3 MMT more corn and the same volume of barley. Always read the label, terms and conditions apply.

Chicago Rally Continues - Led By Soybeans

29/02/12 -- Soybeans: Mar 12 Soybeans closed at USD13.13 1/2, up 8 1/4 cents; Nov 12 Soybeans closed at USD12.89, up 1/2 cent; Mar 12 Soybean Meal closed at USd351.20, up USD4.70; Mar 12 Soybean Oil closed at 54.09, down 33 points. This was the eighth session in a row that beans have closed higher, they also ended February over a dollar higher than they began the month. Continued strong demand saw the USDA announce the sale of 175,000 MT of soybeans to China for 2011/12 delivery and 110,000 MT for 2012/13 delivery. Estimates for tomorrow's weekly export sales are a conservative looking 400,000 to 800,000 MT.

Corn: Mar 12 Corn closed at USD6.56 1/2, up 3 cents; Dec 12 Corn closed at USD5.68 1/2, up 5 cents. For corn this was the sixth higher close on the run, although it only managed a 17 1/2 cent gain on the month. The USDA announced the sale of 120,000 MT of optional origin corn to Mexico. Funds were estimated to have bought around 6,000 contracts on the day. The corn harvest in Brazil is reckoned to be around 14% done. Trade estimates for tomorrow's weekly export sales report are 650 to 850 thousand MT.

Wheat: Mar 12 CBOT Wheat closed at USD6.64 1/4, up 2 cents; Mar 12 KCBT Wheat closed at USD6.99, down 1/2 cent; Mar 12 MGEX Wheat closed at USD8.03 3/4, up 1 1/2 cents. Today was first notice day for March contracts, deliveries against the March CBOT contract were relatively light. Wheat got dragged higher by beans and corn for the third session in a row, but Chicago wheat ended February 1 3/4 cents lower than it began it. Trade estimates for tomorrow's weekly export sales report are expected to reflect the newly found competitiveness of US wheat at 500 to 700 thousand MT.

EU Wheat Edges Higher Despite Lack Of Bullish News

29/02/12 -- EU grains finished higher with front month Mar 12 London wheat up GBP0.50/tonne to GBP165.50/tonne and Mar 12 Paris wheat EUR3.00/tonne firmer to EUR213.00/tonne.

European grains moved up once again on spillover support from Chicago wheat futures which moved above their 200-day moving average for the first time since August in overnight trade.

Fundamentally though wheat lacks much in the way of bullish news, with the existing size of the spec short in Chicago wheat perhaps the main thing it has going for it. Conversely I wonder why the existing magnitude of fund length in corn and soybeans isn't therefore bearish, but these guys have deep pockets, especially when the one-armed bandit is paying out.

World wheat ending stocks are seen at their highest levels in history for 2011/12, a record which will probably only last for twelve months, until the end of 2012/13, when they may rise even further again.

Meanwhile European exports are down by more than a third in 2011/12 and production is expected higher for the 2012/13 season.

For there to be any longevity in wheat prices at these levels it looks like it needs the continued assistance of corn. The largest US corn plantings since 1944 probably isn't the best help it could get, neither is declining demand from the ethanol sector.

America has kind of got used to dominating the world corn export market, but that seems to be changing. From accounting for 67% of all global exports as recently as 2005/06 the US has seen it's market share subsequently fall by more than 20 percentage points by 2011/12 as Brazil, Argentina and particularly Ukraine have spotted an opportunity.

Ukraine is seen ramming up corn plantings this spring to a record 5 million hectares, almost 43% up on the area that gave us a record crop of 22.5 MMT in 2011. That sets them up to potentially be very aggressive sellers in the autumn.

Morning Snippets

29/02/12 -- The Argie government is urging importers there to stop buying British goods as the dispute over the Falklands hots up. Does that mean we can finally send Carlos Tevez back from whence the cheating, winging little reptile emerged?

India's wheat harvest this year will amount to a record 87.5 MMT, according to the USDA's agricultural attache there. Slightly less than the Indian government's official estimate of 88.3 MMT, but nevertheless still a record volume.

It's rumoured that the Indians may be about to sell 3 MMT of wheat with Iran, if only they can sort out how Iran will pay for the stuff. A similar deal is said to be under negotiation between Iran and Pakistan with the latter maybe taking fertiliser in exchange.

"We don't want a humanitarian crisis, not at the prices that these guys are willing to pay," said nobody in particular.

"The new rainfall outlook is very wet in the Central Argentina grain belt in Cordoba, Santa Fe and northern Buenos Aires, all important soybean provinces. The demise of La Nina has been very favourable for late-filling soybeans in Argentina with drenching rainfall over the past 4-5 weeks," say Martell Crop Projections.

EU Rapemeal Prices

29/02/12 -- Rapemeal prices on the continent are flat to mostly a little steadier today, in line with a firmer Chicago close on soya last night.

Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:











































Feb12
unq
n/a
Mar12
199.00
-1.00
Apr12
196.00
+1.00
May12
190.00
+1.00
May/Jul12
186.00
+1.00
Aug/Oct12
168.00
+1.00
Nov12/Jan13
172.00
unch
Feb/Apr13
174.00
unch

The Morning Rant

29/02/12 -- Been snowed under with work again this week, so just when you thought things couldn't get any worse, I return from walking the dog this morning (via the local greasy spoon) all tooled up and ready to hit the ground running.

Bacon butty in hand, along with the free cup of rather decent tea that they thoughtfully provide I am trying to juggle things like slipping the lead onto the dog, locking the car, keeping the bacon butty away from the dog and avoiding spilling my tea.

As I slip the lead onto the dog I feel something strangely moist. That's funny I think, his neck area feels like he's been in the river. But we haven't been down to the river, not on a Wednesday.

What can it be this moist sensation up my bacon butty holding arm? Oh no, he's only been and gone & rolled in "something" hasn't he, the little bugger. He's good as gold the dog apart from this affinity with "stuff" - stuff which is now on my hand and up my arm.

Hastily I check, is the bacon butty safe? It is. There's no brown sauce in sight. Next dilemma do I still eat it? My appetite for bacon is bordering on legendary, but even I am starting to think that I may just have to give it a miss this morning.

The dog is booted straight outside where I propose to leave him for the rest of the day. The bacon butty is on the table looking at me. I am looking at it. Obviously a visit to the sink is my first port of call. After that it's still there, all bacony and welcoming. The dog is whining at the back door, he knows that there's me and a bacon butty inside. Perhaps he thinks "if I've put him right off it then maybe I can have the lot?"

We'll never know. It didn't taste quite as good as normal, but it was still pretty good nevertheless. Now I have another dilemma. There's a little bit of bacon stuck right between my teeth. Which hand was it again....

Chicago Soybeans Rise For Seventh Session In A Row

28/02/12 -- Soybeans: Mar 12 Soybeans closed at USD13.05 1/4, up 11 1/2 cents; Nov 12 Soybeans closed at USD12.88 1/2, up 7 1/4 cents; Mar 12 Soybean Meal closed at USD346.50, up USD5.60; Mar 12 Soybean Oil closed at 54.42, down 4 points. Funds bought an estimated 8,000 soybean contracts on the day, pushing beans higher for the seventh session in a row and to a close above USD13/bu for the first time for a front month since September. Oil World see global soybean production down 19 MMT this year, primarily due to losses in Brazil, Argentina and Paraguay. Celeres say that the Brazilian soybean harvest is 29% complete as of Friday, up ten points from this time last season. Private estimates are for a crop there of 68-70 MMT compared to the USDA's 72 MMT.

Corn: Mar 12 Corn closed at USD6.53 1/2, up 9 cents; Dec 12 Corn closed at USD5.63 1/2, up 6 1/2 cents. Funds were said to have bought a weighty 18,000 contracts on the day, a volume that sellers found difficult to accommodate especially on old crop. The new crop picture looks quite a bit different though with potentially record US production and falling demand from the ethanol sector. Pacific Ethanol are forecasting a 5% drop in corn for ethanol usage in 2012, although they say that their own grind will fall by more. The differential between old crop and now crop therefore continues to widen. As we approach the last trading day of the month the Mar/Dec spread is 90 cents, on the last day of January it was less than 70 cents and on the last day of 2011 it stood at 60 cents.

Wheat: Mar 12 CBOT Wheat closed at USD6.62 1/4, up 16 1/2 cents; Mar 12 KCBT Wheat closed at USD6.99 1/2, up 14 1/2 cents; Mar 12 MGEX Wheat closed at USD8.02 1/4, up 11 1/2 cents. Funds were said to have bought 4,000 Chicago wheat contracts on the day, making them net buyers all round. The spread between Chicago and Minneapolis continues to narrow, albeit from an extraordinary wide level on perceived improved prospects for spring wheat production both in the US and Canada. Despite today's fund buying they still remain heavily short CBOT wheat, and that is their Achillies heel. Russia announced that they expect to ship 27-28 MMT of grains this season, so it will be interesting to see if their rate of exports picks up again once more clement weather conditions arrive.

EU Wheat Dragged Higher By Surging Soybeans

28/02/12 -- EU grains finished mostly higher with front month Mar 12 London wheat up GBP1.00/tonne to GBP165.00/tonne and Mar 12 Paris wheat rising EUR4.00/tonne to EUR210.00/tonne.

Surging US soybean prices supported the entire market today, with front month March breaching the USD13/bushel level for the first time since September in overnight trade, dragging corn and wheat with it.

That strength spilled over into lacklustre European trade, despite the lack of a real bullish story for wheat. Reduced South American corn production is about as bullish as it gets, and even though it's below early expectations Brazil's corn crop could still be a record.

The Russian Ministry upped their 2011/12 grain export estimate to 27-28 MMT. That revision seemingly reflects optimism over the condition of winter crops and hopes that spring plantings will get underway in a timely manner and that prospects are favourable.

Ukraine looks set to carryover 14.6 MMT of grain into 2012/13 "which will create considerable difficulties providing a reduction in grain prices," according to the APK Inform Agency there. That's around double the normal volume.

Canadian spring plantings are expected to be sharply higher this spring, with Louis Dreyfus forecasting a 12.6% leap in rapeseed sowings to an all time high of 21 million acres.

Agriculture and Agri-Food Canada recently said that growers there will plant 24 million acres of wheat for the 2012 harvest, up 14% from 21.1 million in 2011.

As well as forecasting higher wheat production in the EU for 2012/13 yesterday, the European Commission also said that ending stocks here would increase by more than 50% to 15.1 MMT at the end of next season.

World Crop Weather Highlights

28/02/12 -- World agri-weather highlights from the excellent Martell Crop Projections who say that La Nina has rapidly weakened since late January, evidenced by strong warming in the eastern equatorial Pacific Ocean.

This seems to have caused a sudden reversal in weather patterns for many countries.

"Argentina soybean growing areas have suddenly become very wet following prolonged and intense drought. In the United States, hard red winter wheat has received beneficial rain and snow easing a previous severe drought.

"In Western Europe growing conditions have reversed course turning much drier in recent weeks after a stormy period mid winter in France, Spain and United Kingdom. At the other end of the see-saw, Ukraine recently has received very generous winter precipitation, easing drought.

"Russia winter wheat in the Volga was very wet, but now has gone dry," they add.

In the US they say that "hard red winter wheat conditions have improved sharply since late January, reflecting generous precipitation in the Great Plains. Wheat potential is way better than last year, when winter growing conditions were very dry. It is not likely wheat would recover fully from dry planting conditions last fall. It is more hopeful outlook nonetheless, especially with higher plantings boosting production."

Meanwhile "Stormy weather has developed in the Northern Midwest over the past 24 hours with heavy rain and sleet in spring wheat- and northern corn states Minnesota and Iowa. One big storm would not cure severe drought in the northern United States but at least improves topsoil moisture for spring planting, due to begin in late April-early May," they conclude.

EU Rapemeal Prices

28/02/12 -- Rapemeal prices on the continent are flat to a bit firmer today, consolidating a touch after recent steep gains. Nearby availability remains very tight.

Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:











































Feb12
unq
n/a
Mar12
200.00
+3.00
Apr12
195.00
unch
May12
189.00
+1.00
May/Jul12
185.00
+1.00
Aug/Oct12
167.00
unch
Nov12/Jan13
172.00
unch
Feb/Apr13
174.00
unch

Chicago Soybeans Hit Highest Since September

27/02/12 -- Soybeans: Mar 12 Soybeans closed at USD12.93 3/4, up 14 3/4 cents; Nov 12 Soybeans closed at USD12.81 1/4, up 10 1/2 cents; Mar 12 Soybean Meal closed at USD340.90, up USD7.30; Mar 12 Soybean Oil closed at 54.46, up 17 points. Funds came in for 7,000 soybean contracts on the day as May closed above USD13/bu for the first time since September. The IGC pegged global soybean production at a three year low in 2012/13, principally due to drought in northern Argentina, southern Brazil and Paraguay. Local agency Ag Rural estimated this year's Brazilian crop at 68 MMT - 4 MMT below the USDA's number.

Corn: Mar 12 Corn closed at USD6.44 1/2, up 3 3/4 cents; Dec 12 Corn closed at USD5.57, down 1 cent. Corn gained nearby on spillover support from beans and strong demand with funds buying an estimated 9,000 contracts on the day. The gap between old and new crop continues to widen. China’s Ag Minister was apparently quoted on state run radio as saying that their total grain output this year could drop to 525 MMT compared to 571 MMT in 2011 due to the rising cost of fertiliser, labour and weather uncertainties.

Wheat: Mar 12 CBOT Wheat closed at USD6.45 3/4, up 4 3/4 cents; Mar 12 KCBT Wheat closed at USD6.85, up 4 cents; Mar 12 MGEX Wheat closed at USD7.90 3/4, up 4 1/4 cents. Fund buying in Chicago wheat was estimated at 4,000 contracts on the day. Wheat also derived spillover support from beans hitting their highest levels since September. Wheat doesn't really have a bullish storyline of it's own, weekly export inspections were well below the trade’s expectations at 9.375 million bushels - more than 10 million below the same week last year.

EU Wheat Declines But Ends Off Session Lows

27/02/12 -- EU grains finished mixed but mostly lower. Mar 12 London wheat closed down GBP0.25/tonne to GBP164.00/tonne and Mar 12 Paris wheat fell EUR1.50/tonne to EUR206.00/tonne.

It was a topsy turvy sort of a day with futures both sides of the Channel closing well off session lows.

Most active May 12 Paris wheat fell below EUR200/tonne for the first time in a month in early trade before ending the day EUR0.50/tonne higher at EUR202/tonne.

The euro was a bit weaker today, which helped Paris grains.

The EU-27 wheat harvest is set to rise this year, lifting inventories by 40%, despite damage from cold weather in many areas and a threat from a drought in Spain, report Agrimoney.com.

"The European Commission, in its first estimate for this year's harvests, pegged the soft wheat crop at just under 133m tonnes, a rise of 3.2m tonnes over the 2011 result," they say.

"The forecast reflected ideas of an above-average yield, of 5.7 tonnes per hectare, which would be the best result in four years, despite setbacks from cold earlier this month," they add.

Market Drifting Lower

27/02/12 -- The markets are down again this morning, drifting more than falling out of bed, but it's a while since I posted this picture of "Doris" so I thought I'd give it one more airing. May 12 Paris wheat has fallen below EUR200.00/tonne for the first time in more than a month this morning. Have we seen the top? If we have it was the 7th Feb close at GBP169.50/tonne for London wheat and the day before finish at EUR222.25/tonne for Paris wheat.

At least one merchant assured me that the top is indeed already in last week, pointing to the fairly wide spread between May 12 and Nov 12 - GBP16.50/tonne as at Friday night's close.

For once I haven't got a strong conviction either way, although I do strongly fancy Nov 12 to be significantly lower than it's current GBP149.00/tonne when we get there.

It seems unlikely that US corn yields will come in as high as the USDA's "trendline" number, but even so a record crop is a distinct possibility this year. Demand from the ethanol sector in the US is also waning. I also fancy a large increase in Ukraine corn production this year too, meaning that they will keen exporters come the autumn. As we should all know by now, price is a secondary concern with these lads which can only mean one thing for prices.

"The grass is growing," remarked MrsN#3 over the weekend. "Yes, and so is the wheat," I sagely replied as we drove past a field we pass regularly. That's about as exciting as it gets round here. There was no evidence of drought either as I walked the dog across a sodden field on Saturday morning. Round here at least things look better than they did twelve months ago, so there's reason to be optimistic over prospects for 2012 at this early stage.

My spies on the continent are also cautiously bullish about production prospects in Europe this year. So all things being equal a modestly higher European wheat output seems to be the most likely scenario come harvest time. The way exports have gone in 2011/12 it also appears to be a given that carryover into next season will be a significant amount too.

Potentially record US and Ukraine corn crops, the first decline in usage from the "golden child" darling of the ethanol sector for at least a decade and a decent European wheat crop with sizeable 2011/12 ending stocks carried into it. Why would prices not be lower come the autumn?