EU Wheat Close
05/07/11 -- EU grains closed firmer with July London wheat up GBP2.00/tonne to GBP175.00/tonne, and new crop Nov GBP3.00/tonne higher at GBP165.50/tonne. Nov Paris wheat closed EUR4.50/tonne higher at EUR197.50/tonne whilst May12 rose EUR4.50/tonne to EUR203.25/tonne.
Extreme volatility continues with July London wheat up GBP20.00/tonne since last Monday, when it was down GBP17.25/tonne from the previous Monday!
Recent price declines have taken the wind out of the bull's sails following a rally that lasted eight months to the February highs for wheat. Despite an improved performance in the past week front month Paris wheat is still EUR81.00/tonne lower than then, with London wheat down GBP42.50/tonne.
The UK barley harvest is moving forward slowly. Reports are also coming in of some early rapeseed being cut in Kent and Essex.
Recent rains have slowed early harvesting in Ukraine and also in the southern Krasnodar/Stavrapol areas of Russia.
Some reports suggest that China has seized upon the recent lull in prices to book some US corn late last week and over the weekend. Whilst the tonnages aren't enormous, the fact that China's name is attached to them rather than say Mexico or Japan always gets the market that bit more excited.
Old crop corn was sharply higher as the European session closed on the conviction that stocks are tight, regardless of what the USDA has to say.
Early Call On Chicago
05/07/11 -- The overnight grains finished stronger after their three day weekend with wheat ending around 20-22c firmer, with corn up 10-16c and beans 12-14c firmer.
It would seem that the market is hopeful rather than confident that downside potential has run it's course. There are a few bargain hunters around it appears after last week's shake out. Firmer crude and gold offer outside support.
Will fund money come flooding back in now that we are into a new month? Have Greek jitters gone away? The ECB is widely expected to raise eurozone interest rates this week, yet S&P's are saying that getting private banks to roll over some Greek bonds would constitute a “selective default” anyway.
China reputedly bought US corn on last week's price break and South Korea are in for more this week. Brazil's corn crop got hit by frost last week and may be in for more of the same in the next few days.
The USDA will report on crop conditions and winter wheat harvest progress after the close tonight.
Russia's Kommersant newspaper says that Gaddafi is starting to contemplate an exit plan as shortages of cash and fuel bite, according to report on Reuters.
Early calls for this afternoon's CBOT session: wheat up 20-22 cents, corn up 14-16 cents, beans up 12-15 cents.
EU Rapemeal Prices
05/07/11 -- Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Jul11 | 187.00 | -6.00 |
| Aug/Oct11 | 184.00 | -2.00 |
| Nov11/Jan12 | 187.00 | -2.00 |
| Feb/Apr12 | 189.00 | -2.00 |
| May/Jul12 | 185.00 | -2.00 |
| Aug/Oct12 | 166.00 | -2.00 |
Tesco To Sell Double Glazing
05/07/11 -- No it's not April Fool's Day, our old mates Tesco are moving into double glazing, according to this report in the Daily Mail. Is there anything left that they haven't got their sticky fat finger into? Apart from in-store sex shops I'm struggling to come up with one.
As they apparently already sell viagra it's only a matter of time before the "ladies things" aisle is adorned with all sorts of other products conveniently located next to the batteries.
It won't be long presumably before the girls on the checkouts are offering "extras" as well? I've already been confused more than once when they've asked me "do you want a hand with your packing" or "a bag for life". I've already shaken off two bags for life I certainly don't want another one thank you.
Talking of which, MrsN#1 once said that she felt that we were growing apart, and should learn to "talk the same language more" to which I said "OK then, moooooooooo!"
Morning Markets
05/07/11 -- The overnight Globex market is trading higher after a three day weekend with wheat up 14-17c, beans up 7-8c and corn around 8-11c firmer. Crude is down a touch.
Open interest in Malaysian palm oil hit an all time high overnight on "heightened investor interest" - or speculation as you and I call it.
The UK barley harvest is moving forward slowly. Reports are also coming in of some rapeseed being cut in Kent and Essex, with Dalmark Grain reporting "lots of rape being swathed around Sleaford over the weekend."
India says that it has all-time high grain stocks of 65.47 MMT, but has yet to decide whether to open up the export doors or continue to let their national food security rot in open storage.
The Russian Ministry have reiterated their 85 MMT grain production target for 2011 and say that carryover stocks from 2010/11 were 18-18.5 MMT, and that the country will export 15-17 MMT in 2011/12. The latter figure sounds a bit on the low side to me, especially if they did indeed export 1 MMT on day one of the embargo being lifted last Friday.
Nov London wheat has opened GBP2.50/tonne higher in early trade with Nov Paris wheat up EUR3.25/tonne.
The USDA are out after the close this evening with their latest crop conditions and harvest progress report. I expect to see corn and soybean good/excellent rating improve a little. Winter wheat harvesting should also be well advanced.
Standard and Poors are reiterating a stance mooted a couple of weeks ago, that getting private banks to roll over some Greek bonds would constitute a “selective default” as far as they are concerned. That would mean a further downgrade in Greece's credit rating from "pants" to "poohed in pants".
EU Wheat Close
04/07/11 -- EU grains finished higher with Nov London wheat up GBP2.00 to GBP162.50/tonne and with May also climbing GBP2.00/tonne to GBP170.00/tonne. Nov Paris wheat rose EUR5.25/tonne to EUR193.00/tonne whilst May12 climbed EUR4.25/tonne to EUR198.75/tonne.
It was a relatively low volume day with US markets closed for the Independence Day holiday.
Recent rains in Ukraine are said to have improved spring grain potential there significantly, although the winter grain harvest has stalled on the back of it.
Russia said that it had exported more than a million tonnes of grain on the first day of the newly reopened export window on Friday. Exporters are also said to have significant volumes lined up for shipment in the coming weeks.
The UK barley harvest advanced over the weekend as the weather remained fine over much of the country. Harvesting in France is ongoing, with results continuing to come in highly variable.
Budget cuts have led to Egypt's new temporary military regime saying that the country will import 2 MMT less wheat than previously expected in 2011/12. Algeria bought 150,000 MT of optional origin feed barley over the weekend.
Copa Cogeca peg the EU-27 soft wheat crop at 122.18 MMT, 2.9% down on last year, with the all wheat crop coming in a fraction under 130 MMT. Maize production is seen up 9% to 60.37 MMT and barley output down 4.4% to 50.41 MMT. Total grain production in the EU-27 is seen falling less than one percentage point to 272 MMT.
News Snippets, And That Branson Muppet
04/07/11 -- America is closed and Andy Murray has confirmed his position as a useless Jock git.
Russia wasted no time in flexing it's export muscles by shipping 1.1 MMT of grain on day one of the new free for all season, according to its Deputy Prime Minister.
Algeria say that they bought 150,000 MT of new crop feed barley at around USD290 CIF over the weekend. Bit expensive that Algeria, they must have seen you coming you muppets.
Talking of which, Richard Branson's long awaited engineer came round this morning. You will be unsurprised to hear that half of the Virgin Media broadband in town went down last Monday. It's a shame then that the Mumbai call centre didn't know about that when they were insisting that there was nothing wrong then wasn't it. Sigh.
Ukraine say that they finished the 2010/11 marketing year exporting around 12 MMT of grains, including 5 MMT of corn, 4 MMT of wheat and 2.7 MMT of barley.
Recent rains there are said to have improved spring crop conditions no end, although they are delaying winter grain harvesting. Only a small quantity of wheat has been cut so far, but yields are said to be up by more than a third on last year.
My chum Mike Lee over there says "crops look much better after the rain of late, sunny weather with occasional showers, may be the Minister of Ag might be right with his bumper crop predictions!"
Large managed funds cut their net CBOT corn longs by 18% last week, and piled out of soybeans to an even greater extent, down 22%, according to CFTC data.
A report on Reuters suggests that getting the G20 to agree on some form of regulation on speculative activity in the commodities markets is like "herding cats".
"Most governments see little benefit in new rules that could harm their financial interests," they say. Our own Minister for Agriculture is quoted as saying: "We are not persuaded that speculation is the fundamental problem". He might change his mind when I get hold of him later in the year.
Did You Know?
04/07/11 -- According to the latest information from the CME Group just over 19 million soybean futures contracts were traded on the Chicago Board of Trade during the first six months of 2011, along with a further near 5.4 million of options trades. All together, in English money, that's the equivalent of 2.6 billion tonnes - ten times the word crop trading in just half the year! It's got nothing to do with speculation though, it's all bona fide hedging that is as any index fund manager will tell you.
