EU Grains Close
28/06/11 -- EU grains finished sharply higher for once with July London wheat up GBP12.50 to GBP167.50/tonne and with new crop Nov climbing GBP5.75/tonne to GBP164.25/tonne. Nov Paris wheat closed EUR7.50/tonne higher at EUR195.00/tonne whilst May12 rose EUR7.00/tonne to EUR201.00/tonne.
Futures effectively reversed yesterdays losses, although little more than that with the exception of front month July London wheat. Seeing as that has fallen GBP33.00/tonne in the past fortnight then maybe that was understandable.
There was no particular reason for the reversal in fortune, apart from maybe profit-taking from those that had been quick to jump onto the short selling bandwagon during the recent demise.
There also seems to be a bit more optimism about that Greece will get their austerity measures through or else be thrown a Plan B lifeline.
Early barley harvesting is underway Russia and Ukraine, and initial yield results are promising. There has even been some very early barley cut in the UK, with more lined up for later in the week. Also there are reports of rapeseed being sprayed off ready for harvest.
There are suggestions of more than ample domestic old crop stocks still hanging around in storage in the hands of one notable major player. The same dealer got their fingers badly burnt last month assuming that May short sellers couldn't come up with the wheat to tender against the expiry of that contract. Today's price action suggests that maybe they are hoping to have a better result with July.
With the UK wheat harvest only a few weeks away too, and with consumer interest having more or less dried up they will be hoping for non-stop rain throughout July to recoup recent losses.
News Snippets
28/06/11 -- Fresh news is thin on the ground, there seems to be some optimism that the Greeks will get their austerity measures voted through and that the EU/IMF will therefore come up with the next tranche of loan money.
Deputy Prime Minister Viktor Zubkov says that with grain prices where they are now that "there is no need to impose export duties on grains."
Japan says it won't be issuing it's regular wheat tender this week, no reason was given.
Tunisia is in for a wheat crop of more than double last season reducing their import needs, according to the FAO.
The UK barley harvest is underway I hear, with some grain being cut over the weekend at Brampton in Cambs.
Hungary's Agriculture Ministry peg this year's wheat crop up 4.5% on last year to 3.93 MMT.
Agritel report that French grain yields are highly variable, and although generally better than feared a month ago, production will still be down significantly.
Early FSU Harvest Results
28/06/11 -- Early barley harvesting is underway in the FSU, with results so far coming in significantly better than last year.
In the Krasnodar Region of Russia the local Ag Ministry report yields of 5.0 MT/ha, hugely better than the national average last year of just 1.2 MT/ha although those results are off a very small harvested area so far (1,500 ha).
In Ukraine things are a little more advanced with around 15,000 hectares cut as of June 24th and with yields so far coming in at just under 3.0 MT/ha, 50% up on the national yield of 2.0 MT/ha last year.
The last time Ukraine had yields like that was in the bumper pile it high and sell it cheap crop year of 2008.
Chicago Close
27/06/11 -- Soybeans: November soybeans rose 5 3/4c to USD13.15/bushel; Dec soymeal was up USD2.60 at USD339.50; Dec soyoil fell 16 points to 56.20. The USDA confirmed the sale of 132,000 MT of soybeans to China. Beans managed to distance themselves from falling corn and wheat. After the close the USDA pegged the crop at 97% planted, one point ahead of normal. Condition ratings however fell three points from last week to 65% good/excellent. On Thursday the USDA is expected to show planted soybean acreage down slightly from last month to 76.53 million from 76.609 previously and 77.404 last year.
Corn: July CBOT corn ended down 9 1/4c at USD6.60 3/4 per bushel; Dec corn closed down 5 1/4 cents to USD6.26 3/4. Funds just don't fancy corn anymore, selling an estimated 8,000 lots on the day. The weekly export inspections report came in well below trade estimates of 33-39 million bushels at just under 29 million. After the close the USDA pegged good/excellent crop ratings down 2 points from last week to a still healthy 68%. The USDA reported 230,000 MT of corn sold to unknown - 130,000 MT of old crop and 100,000 MT of new crop. Corn acreage for Thursday's report is estimated roughly unchanged from last month at 90.767 million acres.
Wheat: CBOT July wheat fell 13c to USD6.22 3/4 per bushel; KCBT July wheat dropped 20c to USD7.28 1/2; MGEX ended down 20 1/4c to USD8.05 3/4. Harvest pressure continues with better than expected yields and quality coming out of Kansas. After the close the USDA pegged winter wheat harvesting at 44% complete, up from 31% last week and 37% normally. Good/excellent conditions fell one point to 35% however. Spring wheat plantings are only 95% done as opposed to 100% normally. For Thursday's USDA report all wheat acres are estimated at 56.671 million against 57.70 million previously, although well up on 53.603 million last year.
EU Wheat Close
27/06/11 -- EU grains closed sharply lower with July London wheat down GBP7.65 to GBP155.00/tonne and with new crop Nov falling GBP5.00/tonne to GBP158.50/tonne. Nov Paris wheat closed EUR8.25/tonne lower at EUR187.50/tonne whilst May12 fell EUR7.50/tonne to EUR194.00/tonne.
We haven't seen a front month close this low on London wheat since early October, and we are now GBP62.50/tonne, or 29%, lower from the highs set little more than two months ago.
For Paris wheat this was the lowest front month close since last July.
Chicago grains offered little in the way of encouragement, with shell-shocked bulls there pinning their hopes on reports of corn sales of 230,000 MT to unknown, of which 130,000 MT was for the 2010/2011 crop year and 100,000 MT for the 2011/2012 marketing year.
The suggestion is that these sales may have been to China but the market reaction was uninspiring. That news/rumour would have got the market surging a couple of months ago. Today it caused hardly a ripple. That is probably indicative of the current market situation in which we now find ourselves, bullish news is largely ignored and bearish news seized upon. The complete polar opposite of where we were a few months ago.
Reports of a major rain event for all of the Ukraine/Black Sea area should seal the crop there. SovEcon now peg Russia's 2011 grain crop at 82-86 MMT.
At home old crop wheat's fall from grace may be at least partially attributable to reports of substantially higher wheat stocks than most market participants realised/expected a few months back. Demand from the feed sector has also fallen off a cliff and of course there's no hungry Ensus to rely on at the moment either.
That explains why July has now slumped to a GBP3.50/tonne discount to Nov, when just a month ago it was a GBP25.00/tonne premium. Old crop wheat is now trying to price itself at a level which attracts consumer demand with the harvest now only four weeks away.
End-user buyers however are very few and far between. It's not that the consumers don't want wheat at these levels and are buying something else, they simply don't want anything at the moment. Other products such as wheatfeed, soya hulls and citrus pulp are equally friendless.
That Branson Muppet
27/06/11 -- Yes folks, he's at it again, letting me down and getting my back up with aplomb. Richard Bloody Branson and his poxy wanky tosspot piss poor broadband my arse. Bollocksband that's what you are delivering my son, pure bollocksband. Thanks for making me spend my entire afternoon on the blower to Mumbai. Thanks for not coming even close to sorting my problem out. "I can tell you sir that your modem is working perfectly." Well why can't I connect to the internet then?
"Let me just try something for you, sir. Let's just delete all your browsing history, cookies etc, just to make it nice and difficult for you when we do finally get our arses into gear and send a slug out with your new modem, that I'm sure you don't need. Click this this and this, and then hit delete. That'll be fine sir you worry too much, there's nothing wrong with your Virgin Media modem I can assure you of that. It's probably your crappy Belkin router that's to blame."
"Well I'm sorry sir things seem to be malfunctioning a bit. Have you tried switching the modem off and one again. Really, fifteen times, well lets just try that one more time shall we just in case....there has that fixed it. No, well sorry for this sir, I'm fair flummoxed I am, anyway how are you today, Andy Murray is nice man, yes, no?"
"Well bugger me rigid sir, it would seem that it isn't your Belkin router after all it's us that's to blame and no mistake. We're going to have to send a technician out to have a look at what is causing the problem."
Surprise, surprise, they are inundated with technical call outs and malfunctions it would seem (either that or they only have one technician to cover the whole of Europe), as they can't get anyone out to see me for a week. Yes a chuffin, ball-breaking, bollock sapping, buggering week.
"Is there anything else I can help you with...?" Erm, well no actually, as that kind of implies that you've "helped" me with this problem doesn't it?
You could start by giving me Branson's address, I think that the dog may have an urgent parcel for him...and it's probably going to get there quicker than my bloody modem gets here. Tell the girl that opens the post to take some rubber gloves in with her for the rest of the week....Chummy, here boy, here's some of that nice Chicken Vindaloo that you like and a couple of onion bhaji's from your Uncle Richard.
It could be another quiet week on the blog if this persists.
Lunchtime News/Early Call
27/06/11 -- It's pretty much a sea of red everywhere, with London wheat down around GBP3.50-5.00/tonne and Paris wheat EUR5.00-6.00/tonne lower.
Globex wheat was around 8-10c lower, with corn down 5-8c and beans 3-5c weaker.
At home, anecdotal reports I am hearing suggest that there is more old crop wheat out there than the market realised. And as things stand we will be harvesting in four weeks.
Looks like we aren't going to run out after all then. In fact carryover into new crop could me more sizable than many thought possible. Whether that is down to an accumulation of higher carryins from previous years or a production underestimate from 2010 is unclear.
Wxrisk.com are forecasting a "dry warm week coming up for all of western and central Europe and a major rain event for all of the Ukraine/Black Sea area," according to our mates at Agrimoney.
The normally very reliable SovEcon now peg Russia's grain crop at 82-86 MMT, in line with government estimates of around 85 MMT.
Palm oil has set a new seven month low in Kuala Lumpur this morning.
As well as Greek jitters we also now have the market talking about inflation in China potentially damaging demand for commodities.
The BBC are reporting that the International Criminal Court has issued arrest warrants for Col Gaddafi, his son Saif al-Islam and his intelligence chief.
A firm dollar and weak crude oil are bearish for grains.
The USDA today reports 230,000 MT of corn sold to unknown: 130,000 MT sold in the 2010/2011 crop year and 100,000 MT for 2011/2012 marketing year. The bulls will immediately conclude that these are sales to China, and indeed they may be. It will be interesting to see if fund money continues to pour out of corn anyway.
The USDA have also confirmed the sale of 100,000 MT of soybeans to China, along with a switch of HRW wheat from unknown to Iraq.
Early calls for this afternoon's CBOT session: wheat 6-8c lower, beans 4-6c lower and corn 2-4c lower.
The Early Vibe
27/06/11 -- The overnight markets are all lower, continuing with the recent theme. The firmer dollar is clearly aiding the negative sentiment that's around at the moment.
The euro remains weak ahead of this week's Greek vote on austerity, and the pound is caught in the middle, falling to 1.5930 against the USD, but steady at around 1.1270 against the euro.
NYMEX crude is more than a dollar lower, and at 8.30am London time only 3 cents away from falling under USD90/barrel for the first time this year. Brent is down the best part of two dollars to it's lowest since mid-February.
At home, it rained heavily across much of the UK Friday and into the early part of Saturday followed by a pretty decent weekend. Temperatures are set to soar today followed by the chance of heavy showers later in the week.
It also rained heavily over the weekend in Ukraine, with Kiev picking up 35mm, whilst Russian Central and Southern regions also got some beneficial moisture.
On Thursday we have the USDA stocks and June plantings numbers. Prior to that we have crop conditions, spring plantings and winter wheat harvest progress tonight.
Fund money looks like it's shed around a third of it's length in Chicago corn in the past two weeks, and may continue to lighten the load ahead of Thursday and on the back of continued Greek debt concerns.
Russia are officially back in the export market Friday.
Lower looks to be the path of least resistance.
Can I also just say, come on Andy, you useless Scottish git, just to cover myself.
