EU Grains Close
31/05/11 -- EU grains closed with July London wheat GBP3.50 lower at GBP193.00/tonne and with new crop Nov down GBP7.50/tonne to GBP189.50/tonne. Nov Paris wheat closed EUR1.00/tonne lower at EUR237.75/tonne whilst May12 fell EUR0.50/tonne to EUR238.75/tonne.
This was the first close below GBP190.00/tonne for Nov London wheat in a fortnight as it played catch-up following steep losses across the Channel yesterday after Russia announced that it was calling off it's grain export embargo.
For the month of May as a whole however Nov London wheat still posted impressive gains of almost GBP20.00/tonne, with Nov Paris wheat gaining EUR27.00/tonne.
Paris wheat did most of it's falling yesterday, closing with losses of 4.6% on the Nov contract over the two sessions since last Friday. London fared better by comparison, down 3.8% today. That would seem to suggest that Paris has fallen too much, or London not enough.
The over-riding concern with farmers in the UK, France and Germany for now seems to be over-selling their crops with huge clouds of uncertainty hanging over potential yields. New crop business has therefore ground to a trickle.
Nobody knows what to do, one merchant said to me the other day that he'd wouldn't be surprised to see London wheat at GBP150/tonne or GBP250/tonne come harvest. I know what he means.
Martell Crop Projections today report the GFS weather model predicting 0.75-1.5 inches of rainfall for France, Germany and the SE of the United Kingdom in the 4-day June 3rd-6th time frame (click image to enlarge).
Official crop estimates keep coming in generally much higher than some of the trade chatter of losses of up to 20%, or more in some cases. Toepfer for example peg the German wheat crop at 22.8-23.3 MMT vs. 24 MMT a year ago, a fall of "only" around 3-5%.
Early Call On Chicago
31/05/11 -- The overnight grains finished mixed but mostly lower led by wheat which fell around 15-17c following the news coming out of Russia. Corn was a cent up on old crop and 4-5c weaker on new crop, beans were mixed.
Crude oil is around USD1.75/barrel firmer, which should lend support as should a weaker dollar.
Reports suggest that Ukraine has already been a busy little bee making new crop wheat sales to Africa and the Middle East in the few days since it lifted it's export restrictions. Russia will surely be busy on the phone right now too.
Parts of Western Australia saw up to 50mm of rain over the weekend, which should aid winter wheat plantings.
The SE of England, France, Germany and Poland are all in the grip of varying degrees of drought. Yields will undoubtedly be affected but nobody seems to have a clear handle on by how much.
Some speculate that France's exportable wheat surplus could more than halve.
The USDA will report on planting progress for corn, beans and spring wheat tonight together with winter wheat crop conditions. Although wheat is the weakest leg today, tomorrow things could look different armed with those numbers.
Dockers in Rosario are threatening a port blockade in a dispute with fertilizer company Mosaic.
The IGC say that China may produce a record 170 MMT of corn this year. Rabobank say that Chinese corn imports could "at least" double. Sounds exciting doesn't it, although twice of not that much really is still not much really in the overall scheme of things.
Early calls for this afternoon's CBOT session: wheat 15-20c lower, corn steady to 3c lower, beans 2-4c easier.
The Jury Is Out On Argy Wheat Plantings
31/05/11 -- Opinion is divided over Argentine wheat prospects for 2011/12 with planting now underway. The Ag Ministry there peg the wheat area for the coming season at 5 million hectares, a 6% increase on the 4.7 million sown in 2010.
The Buenos Aires Grain Exchange concur, pegging the planted area at 4.95 million. The Rosario Grain Exchange however say that wheat plantings will fall 10% on continued farmer dissatisfaction with government tinkerings with export quotas and taxes.
Here Comes The Sun
31/05/11 -- It might be a Godsend for some and another nail in the coffin for others. Metcheck say that things are "slowly starting to settle down and this trend will continue over the coming days as high pressure eventually takes control bringing plenty of fine and warm weather across much of the country by the end of the coming week."
"By the time we get through to Thursday high pressure will be really starting to take control and the end of the week will be fine and sunny for most areas with temperatures rising into the mid-twenties," they add.
Further ahead "warm, sunny weather looks likely to take hold across the UK for the middle of June," according to the BBC.
Flaming June here we come then? Note: Wimbledon runs from June 20 - July 3rd so we can expect torrential rains at the back end of the month if normal form prevails.
EU Rapemeal Prices
31/05/11 -- Guide prices for EU rapemeal, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Jun11 | 195.00 | -1.00 |
| Jul11 | 198.00 | -2.00 |
| Aug/Oct11 | 202.00 | -1.00 |
| Nov11/Jan12 | 205.00 | -2.00 |
| Feb/Apr12 | 207.00 | -2.00 |
| May/Jul12 | 206.00 | -1.00 |
| Aug/Oct12 | 186.00 | -2.00 |
The Early Vibe: London Wheat Down GBP7.25 In Early Trade
31/05/11 -- The overnights are mixed with wheat sharply lower, although well off session lows so far, corn is down in sympathy and beans are a little higher.
Front month July Globex wheat is down 20c, but has been as much as 36c lower following the weekend news that Russia is to lift it's grain export ban from July 1st.
Paris wheat closed sharply lower last night in the wake of the announcement. Some unconfirmed reports this morning say that "Russia has already begun selling". Other more reliable sources state that Ukraine meanwhile have sold new crop wheat to Tunisia, Ethiopia, Egypt and Lebanon in the past few days since it lifted it's own export restrictions.
Western Australia picked up some much needed moisture (up to 50mm in places) over the weekend to aid winter wheat plantings there from a second wave of rainfall across the state. A decent crop here this season could herald record production Down Under.
Northern and western areas of the UK had a soggy Bank Holiday weekend, although rainfall totals were more modest in the SE. France and Germany got some rain, with chances for more looking ahead. Snowstorm are giving chances of rain in Paris every day for a week starting on Saturday.
Russian spring grain plantings were approaching 80% complete as of May 26th, with Kazakhstan saying it will be done by the weekend and with Ukraine spring sowings already finished.
Nov London wheat opened GBP5.00/tonne lower and currently trades GBP7.25/tonne (down 3.7%) easier in early trade playing catch-up with Paris from yesterday which closed 4.9% lower.
Paris Grains Close
30/05/11 -- London wheat was closed due to the Spring Bank Holiday, but the continent was open with Nov Paris wheat closing EUR12.25/tonne lower at EUR238.75/tonne whilst May12 was down EUR9.75/tonne to EUR239.25/tonne.
For the record other Paris grains were also generally lower, with malting barley finishing with losses of EUR17.50/tonne, rapeseed down around EUR5-7.00/tonne and corn mostly EUR3-4.00/tonne easier.
The weekend announcement that Russia will lift it's existing export embargo on grains at the end of next month was the catalyst to set grains tumbling.
Russian trading houses have apparently been buying up surplus grain stocks, with domestic prices heavily discounted to those on the international stage, and moving them to the ports in anticipation of this move.
That would seem to indicate that, regardless of the potential of EU and/or US wheat production this year, Russia is likely to be ultra competitive in any upcoming tenders with an estimated 10 MMT of old crop wheat to shift before new crop becomes available.
Ukraine will of course be fighting them all the way. Russian traders will be conscious of the country's tarnished reputation as a reliable supplier, and will be looking to eradicate those thoughts as quickly as possible. And what better way to smooth things over than with price?
Where the volume interest will come from is another matter, with the world's largest wheat buyer in Egypt saying that a good domestic crop and high international prices mean that it doesn't need to buy anything for some time. Internal politics and lack of cash may also have something to do with it.
US markets are closed for Memorial Day, so it looks highly likely that wheat there too will be lower in the morning.
The north and west of the UK had a pretty wet and miserable Bank Holiday weekend, with many parts of France and Germany also seeing some precipitation of sorts. That may add to the bearish sentiment tomorrow.
Vlad All Over
29/05/11 -- Russian PM Vladimir Putin has announced on national TV (and on his own personal website - note the lack of "Buy Vlad A Vodka" button) that the country's grain export ban WILL end when the existing deadline runs out at the end of June.
A statement on Putin's personal website quotes First Deputy Prime Minister Viktor Zubkov as saying: "The aim of the August 2010 export ban was to keep the Russian domestic market well supplied with grain in order to prevent sharp price rises for both agricultural producers and consumers. This applies both to feed grain and bread grain. I must say the government measures were effective. We have stabilised the market. Moreover, large amounts of grain from the south of Russia could begin to be exported from July 1. The current price of Russian grain is 5,200* to 5,400 roubles per tonne, which is 50% lower than world prices. I suggest lifting the embargo from July 1, as there is enough grain on the market, winter crops are in a good state and the spring sowing campaign is progressing at a good pace."
You can read the full transcript here: I'm not Putin it off any longer
A coincidence it isn't that the announcement comes just a couple of days after Ukraine also lifted it's own export ban.
It will be interesting to see how the markets react after their long weekend break with the news that a fully restocked Matalan and Primark are about to re-open. London and America are closed Monday, but I think that Paris is open to give us an initial taster...
*5,200 roubles is around GBP112 incidentally.
