Latest UK trades/markets
Falling markets, remember them? You must do. The days when you can't find a buyer for love nor money. The grass is growing, the sun is shining, livestock numbers are falling and you can't give stuff away. Also known as this summer, coming soon to a compound mill near you!
The rapemeal market continues to ease. Erith quotes today: Straight May 167, May/Jul £165, Aug/Oct £149 and Nov08/Apr09 at £156.
Wheatfeed pellets are also drifting lower on lack of buying interest as the wheat market is suddenly not as tight as many had expected. South East mills offered at £129 for straight May on it's own and Jun/Sep quoted at £126, and Oct08/Apr09 quoted at £130. May/Sep delivered into Cheshire/Staffs area quoted at £139, could probably do Oct08/Apr09 at the same money.
Spot Liverpool soya hulls traded earlier in the week at £140, with a possibility of finding straight May at the price. Oct08/Apr09 last traded at £144.
Spot Avon maize distillers grains available on resale £POA.
Spot/May Liverpool PKs have been trading at £136, and spot Liverpool citrus pellets reported done £147 this week.
Early call on Chicago
Corn futures are expected to open 3 to 5 lower; soybeans mostly 12 to 15 lower; wheat mostly 5 to 7 lower. The U.S. dollar was stronger in overnight trade, so that kept pressure on corn, soybean and wheat prices. A lower opening is expected. Technical support could develop later in the trading session.
Wheat - Its Only Just Begun
I've posted this article before but make no excuses for posting it again. Its worth noting that this article was first published in Money Week on 27th Feb 2008. Spookily, check it out if you don't believe me, Chicago May wheat topped out at an all-time high of $13/bushel on 27th Feb 2008:
You may not have realised it, but one commodity is currently seeing the greatest bull market in its entire history. Not gold, not oil – but wheat.
From its low of $2.40 in late 1999 to yesterday’s high above $12 is an eight-year, near-400% move. Wheat has never moved up so much.
I don’t mean to sound like a harbinger of doom, or perhaps I should say Grim Reaper, but the whole grains sector – whether it’s wheat, corn, soybeans, barley, whichever – has become worryingly reminiscent of uranium this time last year.
The shorting opportunity of a lifetime may be just around the corner…
First let me recap on what happened to uranium. By the end of 2006, come New Year prediction time, uranium was the hot tip for 2007 (just as grains were this year). For five years or more the price of uranium had crept up beautifully, without anyone appearing to notice.
Then suddenly in October 2006 the well-documented flood at Cameco’s Cigar Lake mine made the headlines and everyone began talking uranium. “Supply can’t match demand,” declared the bulls. “China’s building so-many thousand nuclear power plants a year,” they went on. “Where’s the uranium going to come from?” “It takes ten years to get a uranium mine into production”; “Nuclear power is the only answer to the coming energy crisis”, and so on.
The thing is there was a great deal of truth to all these arguments and the uranium price went from a steady incline to a near-vertical ascent. Having stealthily risen from below $10 a pound to $70, it suddenly bounded another $70 to $140. Everyone was talking uranium. Every exploration company had suddenly added the word uranium to its name. Stocks were soaring. Even the Labour Government began talking nuclear. Then suddenly the stocks capitulated and over the next few months we saw brutal corrections in the uranium companies - in some cases, of 80% or more.
Uranium had traced out the typical pattern of a bubble from boom to bust. I have posted this excellent chart from Jean-Paul Rodrigue of Hofstra University before. But it merits re-posting. The typical small uranium stock traced a very similar pattern and in my view, grains may be doing the same.
Grains: the risk is to the downside. Take a look at the chart for wheat. Does it look strangely familiar? This, my friends, is an accident waiting to happen.
Yes, I know all the arguments. Asian diets are improving, their middle class is growing, they’re eating more meat, more grain has to be grown to feed the livestock, the drought in Australia has hit wheat supply, the Americans are using their corn to make ethanol, more fields are being turned over to corn, inventories are low, supply can’t meet demand, monetary inflation means higher prices in everything, what if we get bad weather and it kills the harvest?
I know all of this. They are all utterly convincing arguments that hold a great deal of truth – it’s because of this credibility that more and more people are climbing on board and pushing the price up further.
Nevertheless the price has got way ahead of itself in my view and is due a correction, potentially a nasty one. All the risk is to the downside.
This bull market began in 2000, but until very recently nobody was talking about it. Now the world, his wife and their shoeshine boy seem to be long grains. Not a good sign.
Great bull runs often end with a series of limit-up days (this is when the maximum daily move on the exchange is reached – unlike the FTSE 100, some smaller exchanges try to control volatility by limiting how far a price can rise or fall in a single day). We saw three limit-up days in a week a fortnight ago. The 30c limit has now been upped to 60 cents. We saw another limit-up on Monday and again yesterday. Is this your classic blow-off top? Many chartists would say so.
Looking at previous bull markets in wheat, the biggest was in the six years to February 1974 in which we saw a 312% move. Before that the biggest move was 173% in the four years to May 1898! In other words, as I pointed out at the beginning of this email, this eight-year, near-400% move, is the biggest in wheat’s history.
The subsequent corrections in virtually every major bull market in wheat saw it give back almost all of its gains. “Give back all of its gains?” I hear you say. “But that would take us back to $2.50 a bushel. Wheat’s up by over $2.50 this month alone.”
What goes up …
Buy meat, not wheat
One of the consequences of the high cost of grain is that it has become expensive for farmers to feed their cattle and pig. In fact, it’s so uneconomic many have been sending their livestock to an early slaughter. This has led to there being rather a surfeit of meat on the commodities exchanges with the resultant steep decline in the price of hog and cattle (this despite the rise of the new meat-eating middle-classes in Asia we hear so much about).
Further down the road, as more stocks are slaughtered, what surely lies in store is a shortage of pig and cattle to eat all this wheat. Meat, not wheat, is where you should be looking for an entry point in the coming months. As for wheat, your eyes should be looking towards the exit.
The thing is there was a great deal of truth to all these arguments and the uranium price went from a steady incline to a near-vertical ascent. Having stealthily risen from below $10 a pound to $70, it suddenly bounded another $70 to $140. Everyone was talking uranium. Every exploration company had suddenly added the word uranium to its name. Stocks were soaring. Even the Labour Government began talking nuclear. Then suddenly the stocks capitulated and over the next few months we saw brutal corrections in the uranium companies - in some cases, of 80% or more.
As a footnote to this article, here is a chart of the LIFFE May wheat future:
May LIFFE Wheat
Spot anything? What was that song by the Karen Carpenter again?
Rice goes off the boil
Rice prices in Chicago tumbled after touching a record above $25 per 100 pounds yesterday, as Thailand and Brazil said they will not curb exports and Pakistan plans to ship overseas, easing concern over tight global supplies.
Rice closed down its 50c limit in CBOT last night and is currently a further 71c lower in the overnight market, having earlier touched its expanded 75c limit down.
Wheat has gone down the pan - is corn next?
Wheat has been the 'golden child' of the grain markets the past 12 months, with the pinnacle in February when HRS wheat futures hit $25 for a high. This was quite an achievement, and has pretty much put the frosting on the wheat cake for this year, and perhaps even for decades. Cash HRS wheat prices are now worth less than half of what they garnered just 2 months ago - a remarkable change in a short period of time.
Wheat prices have dropped steadily since then, taking new crop Chicago wheat down below the $8.50 level after tipping the $13 level earlier. This is a huge price move for wheat growers, and one that at this point looks like an opportunity wasted. Not only have 2008 wheat prices dropped solidly, but 2009 and 2010 have dropped hard as well from previously dramatically high levels.
While wheat has become the ugly sister after its two month metamorphosis, one has to start looking at the corn market with its current $6+ price level as being vulnerable. Of course, we all know corn planting is lethargically behind normal, with progress at a terribly slow pace for now. In fact, weather forecasts haven't changed while corn prices have hovered for the past few weeks. The volatility is there, but so far corn doesn't appear to have any technical appearance of topping.
With wheat prices clearly retreating from previous highs, wheat is starting to become priced as a feed grain - a dangerous development for corn. Corn growers can start to get nervous when they see the $5 break in wheat prices to the point where it might start entering feed rations again. Corn fundamentals look impossibly bullish for now, but as all grain traders are aware - things are always the most bullish at the top.
Chicago late call
Wheat is called to open 6 to 8 cents per bushel lower. Bears have solid downside technical momentum on their side in the wheat markets after recent setbacks, traders said. CBOT July wheat, which represents the new crop, is down more than $4.50 from its high last month and overnight fell to its lowest price since Jan. 14.
"Prices are still in a six-week-old downtrend on the daily bar chart," a technical analyst said.
Total weekly wheat export sales of 272,000 tons were nothing to get excited about either, traders said.
Soybean futures are called to start the session 4 to 6 cents higher.
Demand prospects linked to a possible resumption of an Argentina farmers' strike next week continues to support futures, and with prices holding above key technical levels, bullish psychology remains in the market, analysts said.
However, a firmer U.S. dollar index is seen limiting upside momentum, a CBOT floor trader said. Also rumours circulating that the Argentine government may possibly suspend the tax on exports that farm groups oppose will keep traders cautious.
Corn futures are expected to open 2-3 cents a bushel higher Thursday after prices bounced slightly in overnight trade following a lower pit close on Wednesday and as showers and storms move through the heart of the corn belt, analysts said.
IGC sees global wheat production, stocks rising
The International Grain Council (IGC) projects global wheat production and stocks climbing in the 2008/09 season.
Forecast production is 645 MMT, 41 MMT more than in 2007. Crops in Europe, the CIS and China are developing well although parts of the US and Canada need more rain. Hot weather is stressing crops in Near East Asia and North Africa. Rain in Argentina and Australia is boosting their prospects.
As prices ease food consumption growth in developing countries should recover and feed use will rise: the total is forecast at 630 MMT, 19 MMT more than last year. Stocks are expected to go up 14 MMT to 128 MMT, with a significant increase in the US.
USDA Weekly Export Sales
For the week ended April 17, traders expected: wheat sales from 250,000 to 350,000 MT; corn sales from 750,000 to 1.25 million MT; soybean sales from 250,000 to 450,000 MT;
The actual figures were: wheat 158,000 MT old crop, 114,800 MT new crop; corn 775,300 MT old crop, 212,300 MT new crop; soybeans 376,700 MT old crop, and no sales for new crop.
Latest UK trades/markets - rape/wheatfeed slide
The rapemeal market continues to ease. Erith quotes today: May/Jul £167 (unch), Aug/Oct Erith £153 (down £2) and Nov08/Apr09 at £158 (down £3).
Wheatfeed pellets are also drifting lower, with today's resale offers around a pound lower than yesterday. South East mills offered at £131 for straight May on it's own and Jun/Sep quoted at £127, and Oct08/Apr09 quoted at £132. May/Sep delivered into Cheshire/Staffs area quoted at £139. Buying interest wanted.
Spot Liverpool soya hulls traded yesterday at £140, with a possibility of straight May at the price. Oct08/Apr09 traded yesterday at £144. Spot Avon also trading yesterday at £141.
Spot Avon maize distillers grains available on resale £190, looking for interest.
Spot/May Liverpool PKs have been trading at £136, and spot Liverpool citrus pellets reported done £147 yesterday.
Got interest in nearby oatfeed pellets, looking for offers.
Early call on Chicago
Corn futures are expected to open lightly mixed; soybeans 2 to 4 higher; wheat mostly 6 to 9 lower. Soybean prices inched up in overnight trade on technical buying. Corn was slightly mixed as traders await progress of storms headed into the Corn Belt. Wheat mostly lower on technical pressures.
LIFFE/Euronext wheat futures down again
Liffe's European wheat futures fell again Thursday, setting fresh lows for the recent move in most contracts. Pressure spilled over from a drop in Chicago Board of Trade wheat futures and outlooks for a large 2008 harvest.
CBOT wheat futures closed Wednesday with losses of 34c in nearby May, and the overnight eCBOT session has also ended lower with May down 10c to $8.07 3/4. That's $5 42 1/4 below the all-time high set 27 Feb.
Nearby Paris May milling wheat is currently down EUR3.50 at EUR197.25 a metric ton, making a fall of EUR97.75 from the contract's high set on 11 Feb. New crop November is down EUR3.75 to EUR190.50/ton.
London May feed wheat is down GBP4 to GBP155.50/ton, that's GBP46 down on the contract high set as recently as 26 Feb. July has also fallen GBP4 so far today to GBP158.50/ton. New crop November is down GBP1.75 to GBP139.50/ton.
With first tender day against the London May contract scheduled for today, brokers have expressed concern about the continued high value of old-crop contract, GBP16/ton, over new crop. Recently, the Paris old-crop contracts significantly narrowed the premium over new crop, with May now holding just a EUR6.75/ton premium over November.
EU bioethanol production slump
BIOETHANOL production slumped in the EU last year as high feedstock prices forced buyers to look outside of Europe for their fuel.
Production increased by 11 per cent in 2007 compared to growth rates of over 70 per cent in both previous years.
France is the biggest EU producer, outstripping UK production 30 times over but high commodity prices have forced fuel companies to source more renewables from third countries.
The slowdown rubs against new European regulation that obligates member states to add 5 per cent renewable fuel to all transport fuel by 2010.
A spike of imports from third countries has prompted a call from the European Environment Agency to scrap EU plans to increase the renewable target to 10 per cent by 2020.
The Agency, who act as an advisory to the European Commission, recommend a comprehensive review of the risks and benefits of biofuels, before higher targets are set in place.
“The 10 per cent target will require large amounts of additional imports of biofuels. The accelerated destruction of rain forests due to increasing biofuel production can already be witnessed in some developing countries. Sustainable production outside Europe is difficult to achieve and to monitor,” said the Agency.
The Commission’s own Joint Research Centre has joined the EEA in its criticism of the 10 per cent target: “The costs will almost certainly outweigh the benefits,” said the JRC.
European Parliament members in charge of fuel and renewable energy proposals have further ramped up the pressure in a letter that asks Commission president Jose Manuel Barroso to reconsider the 10 per cent proposals.
US crop comments
It's a big place America. Here's a sample of what some US farmers are saying about their current situation taken from a popular message board I frequent. There are some striking differences:
4/23 - Northern Illinois: Wet wet wet. Glad I applied my nitrogen last fall. The large operators are panic stricken. Appling nitrogen with mud on the tank tires! Weather is looking worse in the 7 day instead of better. Grounds too cold, too wet, time to mow the YARD! BE SAFE.
4/23 - Fayette County, South Central Texas: Corn is all planted, oldest is waist high. Almost finished spraying Roundup. Had frost damage April 14, latest ever! Poor soils were looking bad but an inch of rain last Thursday got everything perked up. More rain needed this week.
4/23 - Allen County, Northeast Indiana: Just now getting fit to do any work here. Calling for some pretty cool temps first of next week, we will wait for warmer forecast to start planting. Planting rotation about the same 45% corn 45% beans and 10% wheat. Input cost up about 60%.
4/23 - West Central Ohio: Lots of planters rolling today in west central Ohio.
4/23 - Southwest Ohio: Went from soggy to dry in a short period. Finally got the cereal grains, mostly wheat, top dressed. Wheat looks very good unlike a year when most of it was killed and planted to corn. Planting has started in nice conditions. Fertilizer and spraying is hot and heavy in preparation for or following up planting.
4/22 - Rock County, Minnesota: Soil conditions are just about perfect now. I saw some corn planters going yesterday and we plan on starting today by mid-morning. Things have really turned around here in the last several days. We can put a lot of acres in a short amount of time. We are going 100% corn this year if the weather allows.
4/22 - Central New York: Weather is very warm. Ground Temp is 50+ in the Valley. Some people are planting corn now. Most all oats are in and all new seedings are in also. We need some rain real soon. Dairy pastures are not growing. Fire dangers are high, and there have been several bad grass fires already.
4/22 - North Central Iowa: Raining again—ground already to wet to do anything in the field. This will just add a few more days to the start of planting.
4/22 - Nobles County, Minnesota: Corn planters galore. Seems liked everyone is planting corn today. Things have really dried out. Coffee shop talk is that a lot more corn is going in again this year than soybeans. I guess I should plant more beans but already applied my Anhydrous.
4/22 - Central Minnesota: Started getting in the field this past weekend but no need getting excited ground temp, very cold yet. Frost still in some spots.
Overnight market developments
Wheat is lower again in overnight trade on CBOT, with May currently 7 3/4c easier.
Wheat fell 4 percent yesterday on speculation India, the world's second-biggest consumer, will produce enough this year to replenish stockpiles and remove the need to import.
Wheat also fell yesterday after Ukraine Prime Minister Yulia Timoshenko said the country will lift wheat-export restrictions after two years. Ukraine farmers will harvest at least 40 million tons of wheat this year, the government estimates.
The country will have enough to ship 7 million tons of the grain, Leonid Kozachenko, president of the Ukranian Agrarian Confederation, said. Last year Ukraine's exports totaled 3.4 million tons, according to the USDA.
Wheat has fallen 39 percent from a record $13.49 1/2 reached Feb. 27, but is still up 71 percent from a year earlier.
Soybeans and corn are showing little change overnight with beans around 4c higher and corn 1-2c firmer.
Chicago closing comments: wheat weakness wins the day
It was always going to be about wheat weakness vs soybean strength tonight. One would have to win the battle, it was wheat weakness.
Wheat was on the defensive from the start, yet beans began the session fairly strong (reaching around 10c up early on) and it was always a struggle which one would win the day. It does happen, but not very often, that one closes weak and one strong, but normally strength in one drags the other higher or vice versa.
Tonight wheat dragged everything else lower. This, I believe, is a fundamental sign that wheat is in a serious long-term down-trend. Any recent bullish news has largely been ignored or brushed off. This is a classic sign of a market that has peaked big-style and is only going to work lower.
Having worked it's way to such a major never-seen-before high it isn't that difficult to envisage wheat still coming down a lot more from where it is now.
The thing that surprises me most is that none of the news that is driving the market lower is news that is particularly fresh.
The info being quoted at the moment is that the Ukraine have got lots of wheat about them, that was reported here back in February. India have got a great crop & won't need to import any wheat (Mar), EU crops are looking good (Feb), Australia could double it's output (Mar). It's all very old news, yet news that the market finally seems to be absorbing/accepting only now.
Chicago late call
Wheat 6-8c lower. The US is starting to realise that it is far from the only shop in town on the wheat front and the solid downtrend looks set to continue.
"It seems farmers around the world responded to high prices in wheat by expanding wheat plantings, said Vic Lespinasse (specialist subject the bleeding obvious). Recent talk of strong production potential in the E.U. and China is bearish, he said. "
Cheers Vic for that incredible insight. It's the first we've heard of it, so we'll keep an eye out for increased production numbers now that you've given us the nod.
Beans up 3-5c. Tight supplies, Argy Bargy. Sadly, Vic had no little secrets to let us into on the soya market.
Corn down 2-3c. Something to do with overnight action, not that Vic has probably seen much of that himself mind. Vic has heard however that it's a bit wet in the midwest & suggests that we monitor the situation, so remember where you heard that one first, from good old Uncle Vic. Nudge, nudge, wink, wink.
GAFTA reporting feed contamination in Tilbury
GAFTA are reporting that they have been advised by the Food Standards Agency that material of animal origin was found in wheatfeed intended for ruminant rations in stores at Tilbury Docks. The potential contamination was discovered following routine sampling undertaken as part of DEFRA’s National Feed Audit, they say.
The analysis gave positive results for the presence of muscle fibre, terrestrial animal bone and fish bone. The FSA stated that it appears the wheatfeed was distributed to a number of merchants and feed mills throughout England after the samples were taken but before the analysis results were available.
So that will be all right then, if DEFRA are on the case. Oh hang on, weren't they responsible for the last foot & mouth outbreak?
I just looked up DEFRA in the dictionary, here's what it said:
Limp-wristed "it wasn't me" leftist clipboard-wielding nancy-boys that are all too ready to roll over and offer their bottoms to the establishment.
Well it did in my dictionary anyway
Latest UK trades/markets
The rapemeal market continues to be all over the place, with spot material tight, particularly in the north. May onwards however is a different kettle of fish with crushers & shippers keen to get sales on.
Spot material ex Liverpool reported traded £202 yesterday, yet Erith fixings have just traded £184 this morning. Aug/Oct Erith today quoted £155 and Nov08/Apr09 at £161.
Wheatfeed pellets are not dissimilar to rapemeal, with spot still relatively tight, but May onwards quite different. South East mills offered at £132 for straight May on it's own and Jun/Sep quoted at £128, and Oct08/Apr09 quoted at £133. May/Sep delivered into Cheshire/Staffs area quoted at £139 against buyers ideas of £137.
Got a possible reseller of D/o 1st May hi-pro soyameal ex Humber £POA. Spot Liverpool hi-pro traded £305.
Spot Liverpool soya hulls traded at £140, with a possibility of straight May at the price. Oct08/Apr09 traded today at £144.
Spot Avon maize distillers grains available on resale £192, looking for interest.
Spot/May Liverpool PKs have been trading at £136, and spot Liverpool citrus pellets reported done £147 today.
Newcastle disease outbreak in Germany
News is just breaking of an outbreak of Newcastle disease in Germany at a farm in Bayern according to the World Organisation for Animal Health.
For all you footie fans it would have been a much better headline if it would have been in Sunderland of course, but it isn't.
Early call on Chicago
Wheat prices are called a bit lower again, soybeans mixed and corn mostly flat as weather developments play out this week.
There's nothing really new. The threat of the Argy strike kicking off again next week will put a floor in nearby beans. Planting delays due to rain should underpin corn.
There's nothing much however to underpin wheat. Even yesterday's impressive performance by the soy complex and corn struggled to support wheat.
Beans called 4-6c higher, corn flat to 2c lower and wheat 8-10c lower.
OFT in £100k Morrisons payout
From the Beeb:
The Office of Fair Trading (OFT) is giving supermarket chain Morrisons £100,000 to settle a defamation case. In 2007, the OFT named the firm among those subject to an OFT provisional finding suggesting it broke rules over milk, cheese and butter for two years.
The body also suggested it had already warned the grocer in connection with anti-competitive behaviour. But the claims were not true. The OFT said it wished to "sincerely apologise" for these "serious errors".
The only allegation regarding Morrisons was related to liquid milk products - not butter or cheese - and dated back to 2002 alone, rather than 2002 to 2003, said the OFT.
In addition, the body said it "accepts that Morrisons had not received a warning from the OFT".
"Would anyone like to give me £100k on the strength of getting your years mixed up & a letter going astray in the post?" said Mr Hugh Jarse, 7 The Cuttings, East Cheam.
Chicago rice closes limit up - Just by way of a change
Planting in the U.S. is "way behind" due to poor weather, a trader said. The USDA pegged planting progress at 26% complete as of Sunday, down from 40% last year and the five-year average of 43%. "They are in trouble," he said of rice growers instates like Arkansas.
CFTC meeting summary - I'm all right Jack
Bugger all change, but when the fund speculators account for 40% of all CME trade what did you really expect?
Full story if you can be bothered: fend for yerselves lads
Chicago closing comments - why do we bother?
Nothing much fresh really. Turn the clock back to Friday night and we are pretty much back where we started. With the exception of wheat, Chicago futures contracts effectively erased Monday's losses Tuesday.
Wheat was "dragged kicking & screaming" into positive territory by the soy complex & corn, however only ended with modest gains compared to Monday's sharp declines.
There wasn't really that much different fundamental fresh news across the entire sector. There was some new export business announced, but nothing spectacular or out of the ordinary really.
The USDA planting progress report released after the close Monday provided a few disappointments, but again nothing major.
Perhaps the main factor behind all this was that on Monday the large spec trader was a little wary of what might come out of Tuesday's CFTC forum & liquidated some longs, sending the market crashing lower. When the forum turned out to be a mutal patting on the back exercise they piled back in, sending the market storming higher. Not that they are responsible for dictating the market direction or anything, that's all external uncontrollable forces that are required to maintain liquidity remember.
The huge fat cats that control the rules governing these markets probably don't even know the huge fat cat hedge fund managers that are involved. Honest.
Late call on Chicago
CBOT soybean futures are called to start the session 10 to 12 cents higher. July wheat, which represents the new crop, is called to open 1 to 2 cents per bushel lower. Corn is called 3 to 5 cents higher.
"It looks like the market overreacted to the downside Monday, and with the U.S. dollar lower and solid underlying demand, corn & soybean futures are poised to extended the higher overnight theme," a CBOT floor analyst said.
Meanwhile, rumors that the lack of progress in negotiations with the Argentine government and farmers could lead to a resumption of a farmers strike in Argentina next week are seen supporting futures as well, traders said.
Wheat has a lack of technical support after recent losses, traders said. CBOT July wheat needs to return above $8.95 to $8.96 in the next two trading days, or the market is likely to continue its technical sell-off, said Mike Zuzolo, analyst for Risk Management Commodities. "If we don't regain the $8.95 support level in the next two sessions, the downside is another 40-60 cents in July Chicago wheat," Zuzolo said in a note to clients.
Corn is seen steadier as a new round of showers currently over eastern Iowa, eastern Missouri and parts of Wisconsin are expected to keep producers out of the fields.
Early call on Chicago
Soybeans seen opening up 10-12c, corn up 2-4c and wheat mixed. More aggressive thunderstorms than expected overnight in the Western Corn Belt helped to push eCBOT futures up slightly. Expect a great deal of price volatility this week, however.
Wheat can't seem to buy a rally at the moment with bullish news ignored or quickly brushed off. The main focus of traders' attention here is that a much bigger crop world-wide is not very far away.
German bank rumours spark USD/EUR volatility
The purported troubles of a German bank sparked large swings in EUR/USD price action during the overnight sessions. The rumour that German bank Duesseldorfer Hypothekenbank (that's worth 274 at Scrabble) was facing liquidity issues saw the pair fall over 75 points to 1.5833. The subsequent denials from the property lender sparked a Euro rally that erased the earlier losses and sent the pair above 1.5950 making a run at 1.60.
When reports surfaced that the German BdB banking association had taken control of lender Duesseldorfer Hypothekenbank, traders feared the worse on the heels of ECB President’s Trichet’s recent comments warning that the financial –market crisis was far from over as long as banks were reluctant to lend. The banking association has temporarily transferred the lender to one of its guaranteed funds; until Germany’s second largest housing lender can be sold. The move will allow the financial institution to get through the problems it faces brought on by the current credit crisis.
Traders have started to focus on the recent comments from Trichet and other ECB members reaffirming their hawkish stance. Council Member Nicholas Garganas stated today that the central bank won’t reduce rates if inflation remains high, and the course of future interest rates will depend on inflation risks. Expectations are growing that the interest rate differential between Europe and the U.S. will continue to grow, with the Fed expected to cut rates by at least 25 points at its upcoming meeting on April 30th.
Chicago overnight wheat & corn lower
Wheat & corn are lower in the overnight market on follow through selling from last night's sharply lower close.
Despite the USDA crop condition report released after last night's close showing a 2 percentage point decline for wheat rated good/excellent (compared to expectations of a slight increase), traders are focussing on bearish export inspections & the prospect of a much larger world wheat crop.
Weekly wheat inspections of 22.4 mb are viewed as bearish. The U.S. needed 24.8 mb to be inspected this past week to be on pace with USDA's projection of 1.275 bb of export inspections for the 2007-2008 marketing year, with seven weeks left in wheat's marketing year the US need to ship out about 170 mb of wheat in order to match USDA's projection.
A sixteen percent increase in Canadian wheat plantings announced by Stats Canada yesterday is also weighing on the market this morning.
Weekly corn inspections are also viewed as bearish for corn. The USDA reported 36.2 million bushels inspected as of April 17, which was below the 46.9 mb needed that week to be on pace with USDA's projection of 2.5 billion bushels for the 2007-2008 marketing year. This was also below the range of estimates for corn export inspection, which was between 40 mb and 45 mb.
Wheat is around 7-9c lower at 10.00am Tuesday morning, whith corn down 1/4 to 3 1/4c.
Chicago late call
Corn Dn 6-8c, Soy Dn 15-20c, Wheat Dn 8-12c.
The U.S. corn belt didn't receive the excessive rainfall expected over the weekend, and with warmer temperatures for the region forecast for the next week, farmers are expected to increase planting progress, grain analysts said.
In the big picture, planting concerns remain supportive, but in the short term, opportunistic planting outlooks for the next week or two and the absence of fresh fundamental news to feed market bulls should shake a few longs out of the market, a CBOT floor analyst said.
Speculators continue to hold large net long positions in the market, but without fresh supportive fundamental influences, traders are trimming some length amid the uncertainties of acreage and weather, analysts added.
The inability of futures breach overhead resistance in recent sessions is attracting light selling pressure as well, but the daily dose of bullish outside market influences continues to provide underlying strength, traders added.
Stats Canada Up All-Wheat Plantings 4.5Mln Acres
StatsCanada have pegged Canadian all-wheat plantings for the coming season at 25.109m acres, up from 21.617m acreas last year.
The USDA will release it's crop progress report for US winter wheat after tonight's Chicago close and is expected to show a modest increase in the good/excellent category due to warmer, drier conditions in soft red winter wheat regions.
UK latest trades/markets
The rapemeal market is a bit of a conundrum, with spot material tight, particularly in the north. May onwards however is a different kettle of fish with crushers & shippers keen to get sales on.
Erith rapemeal fixings were all over the place last week trading in a range of £180/190. Aug/Oct today quoted £156 (well below the last traded level of £158). Nov08/Apr09 offered at £162.50 having traded at £165.50 early last week.
Wheatfeed pellets continue to ease back with mills & dealers alike looking for buyers as wheat prices both sides of the pond continue to fall. Although spot is still relatively tight, as with rapemeal, May onwards is quite different with South East mills offered at £132 for straight May on it's own with Jun/Sep quoted at £129, and Oct08/Apr09 quoted at £133.
Spot Liverpool soya hulls offered £140, May08/Apr09 traded last week basis £144.
Spot Avon maize distillers grains available on resale £192.
Spot/May Liverpool PKs traded last week £136, seller over.
Paris wheat futures set eight-month low
Chicago Early Call
Corn futures are expected to open 4 to 8 lower; soybeans 13 to 18 lower; wheat 4 to 13 lower. General liquidation ideas put pressure on markets in the overnight trade. Planting progress should improve some this week as midwest temperatures warm up, although there is also still quite a bit of rain in the forecast. Whilst this rain will benefit wheat in dry areas of the plains it may hinder corn planting in parts of the midwest.
Farmers planning UK’s most modern crop storage and processing facility
A group of enterprising East Midlands farmers has unveiled ambitious plans to build the most modern crop storage and processing facility in the UK.
Some 40 farm businesses within a catchment area stretching from Milton Keynes in the south to Grantham in the north have already made a financial commitment to the project, which aims to have a 50,000-tonne capacity facility ready for harvest 2009.
The final APF is planned to reach twice this size within four to five years. It will be located, subject to planning approval, on a brownfield ex-quarry site at Geddington, near Kettering and will feature state-of-the-art grain handling, drying and conditioning equipment.
Full story here: Farmers Guardian
