Exiting commodities - "I want to know what the new rules will be before I play in the game"

A very interesting article by one leading US investment expert:

The Commodity Futures Trading Commission announced this week that they are looking very hard at possibly closing a regulatory loophole that allowed some extremely large commodity index funds to get around position limits. For those not familiar with the concept of limits, it basically works like this. No trader or fund is allowed to own more than a specific amount of a commodity traded on the futures exchange. This limit varies from commodity to commodity and exchange to exchange. The point is to keep one group from manipulating the price of a commodity, as the Hunts did with silver in the early 80s.

The loophole is one where large investment banks can sell a "swap" for a specific commodity like corn and then hedge their position in the futures markets. There is no limit on the amount of the commodity that can be hedged. So, a fund can accumulate sizeable positions far in excess of what they could do directly by working with an investment bank. In essence, the swap is a derivative issued by a bank which acts just like a futures trade, but it is with the bank as guarantor and not an exchange. Swaps are not regulated as such. And up until now, the banks were seen as legitimate hedgers so there were no limits on what they could buy in the futures markets.

This works for very large commodity index funds which try to mirror a particular commodity index and need to be able to buy very large positions in excess of the normal limits (and there are scores of them), and for the banks that make the commissions and profits on the swaps. Remember, the fund gets a management fee, so growing the size of the fund grows their fees.

These indexes typically have about 26 commodities, with the largest allocation to oil, but almost anything that is traded has some small portion of the allocation. As I noted last week, there are some who believe this is working to drive up the price of commodities beyond the simply supply and demand principles. Whether or not you believe this to be the case, the CFTC is looking at the loophole.

The key word in the announcement yesterday was the word "classification." Right now the banks are classified as hedgers and as such have no limits. But they are not really hedging the actual physical commodity as a farmer or General Mills might do, but the hedge is their financial position.

If the CFTC decides to look through them to the funds, and they did use the word transparency in their announcement, they could decide to change the classification of the banks from hedgers to speculators. While I do no think that might make a difference in the long run, in the short run it could make commodities volatile in the extreme, and exert downward pressure up and down the price curve, depending on how they would decide to unwind the commodity index funds.

For what its worth, I advised my daughter to get out of the commodity fund she was in for the time being. When the regulators are in the room, anything could happen. And they are getting intense pressure from Congress to change the rules. My bet is that the train has left the station and it is but a matter of time until position limits are put in place for commodity funds, including commodity ETFs. Is that a good thing? I think not, but that matters not one whit. The hand writing is on he wall.

Does this mean I am not a long term commodity bull? No, I remain bullish on a host of commodities over the long term from a supply and demand perspective. It is just that you might want to consider whether to stand aside for a time while the congressional elephant is stampeding around the room. Maybe it is a non-event and someone figures out a way to unwind the positions slowly and over time. Who knows? As I said, when the regulators are under pressure to do something, I want to know what the new rules will be before I play in the game.

Crude oil ends mixed following Thursday's collapse

OILINTEL Houston, TX - The NYMEX July crude oil contract ended the day above yesterday's settle. However, June RBOB gasoline was steady while heating oil was under pressure as the hype about a lack of worldwide of distillate supplies has run its course. Both June product contracts expired today.

For the early part of today's trading session products dictated price direction although as we moved further into the session the June products lingered as July crude fell sharply in overnight trading before opening on a strong note.

Traders sparred with each other with some covering shorts early in the day and then selling into the market later before trading ended at nearly $1.00 off its intraday high.

There was little market moving news today with most traders focused on the expiring product contracts. In addition, it appeared that earlier this morning the perennial bulls may have been trying to spook the market into a massive recovery from Thursday's collapse of $4.41 for July crude oil. If that's true, they failed miserably.

Our first look into our crystal ball for Sunday's Globex's trading session suggests prices will attempt to rally to today's high of $128.30 with a failure to breach that level bringing a sell-off in crude that could send prices to the low $125.00 area.

French farmers struggling with old crop wheat stocks

In a report Friday, BNP Paribas said French farmers are struggling with old-crop wheat stocks after hoarding supplies in hopes of higher prices and demand from North Africa.

CFTC investigation into fund activities in "fixing" oil market spreads to cotton

It seems that those naughty fund boys have been getting up to all sorts of mischief. Following the CFTC's announcement this week that they are looking into ways of more closely regulating activity in the crude oil market, it seems that there is also a "stewards enquiry" going on in the cotton market as well. Surely its only a matter of time before they tighten up the rules to cover all these markets including grains? From the Wall Street Journal read on...

The U.S. Commodity Futures Trading Commission has launched an investigation into potential irregularities in the cotton futures market, according to people familiar with the matter.

Commissioners are considering publicly acknowledging the ongoing, confidential probe as soon as next week, along with a broader set of oversight initiatives involving other agriculture markets.

Prices of many grains and other crops hit all-time highs this spring at a time when trading in those markets had been surging to record levels.

The cotton investigation concerns a dramatic spike in cotton prices in early March, followed by a drop. People familiar with the matter say the agency sent out subpoenas over the past several weeks to a variety of cotton market participants.

Unlike the grain markets, where inventories stand at multi-decade lows, cotton stocks were overflowing this spring and few saw a reason for the sudden rally.

Many cotton merchants had already agreed to sell cotton futures later this summer at much lower prices. Over the two days that prices soared, their lenders asked for dramatically higher margin, or collateral, payments not to close out their trades.

The agency's stepped-up scrutiny of the agriculture markets comes in response to criticisms aired at a CFTC hearing in April that speculators and other financial investors could be influencing markets for basic foods and fibers, either driving up prices or making the markets more volatile.

Grain elevators, farm cooperatives, and other merchants have flooded the agency with letters and sent lobbyists to Capitol Hill to argue that the CFTC should do more to police aggressive hedge-fund trading and to study the impact of increased pension fund investment in farm commodities.

Earlier this week, the U.S. futures regulatory agency unveiled a similar package of new surveillance initiatives in the energy markets. Under pressure to show consumer-friendly action in an election year, it also took the extraordinary step of disclosing a wide-ranging investigation into the crude-oil markets.

The CFTC is studying a number of suggestions from agriculture market participants to improve the ability of futures markets to reflect market prices. Officials are likely to announce stepped-up scrutiny of financial trading in agricultural commodities. They also are reviewing potential technical changes, such as how physical commodities are delivered to satisfy futures contracts, people familiar with the review say.

Friday night wrap-up, US grains reverse Thurs losses

Chicago grains & oilseeds closed firmer across the board Friday, effectively reversing Thursday night's heavy losses. Crude oil had a bad case of the jitters Thursday which dragged everything else down with it. Having stabilised Friday, grains followed suit.

Nearby beans closed around 40c firmer with new crop months around 30c higher. Old crop/new crop spreading was a feature as a strong crush and nearby export demand served as the catalyst that allowed the front end of the market to gain at the expense of deferred-month futures. Nevertheless futures remain in a sideways pattern as a glance at the chart to the right shows.

Corn closed around 17c firmer, rallying strongly in the last half hour of the session (see chart below) on damage limitation ahead of the weekend. Heavy rainfall in the western U.S. corn belt, particularly Iowa, was raising concerns about continued emergence delays, and the likelihood that many farmers will have to replant, which at this late stage would likely result in lower yields. As well as it's normal planting progress report Monday will see the USDA's first crop condition ratings of the season for the emerging corn crop. The portion of the crop rated good-to-excellent is expected to be well below the average of 70% for the first report of the season.

Wheat closed around 18c firmer, dragged higher by beans & corn late in the session (see chart below). Whilst the hotter, drier forecast for the US across the weekend & into the next week is seen as being largely beneficial for corn & beans hotter temperatures in the Plains during the next five days could increase stress to wheat.

Carr's Milling Industries plc: Positive Trading Update

Carr's, the fully-listed agriculture, food and engineering group, announced its Interim Results for the six months to 1 March 2008 on 7th April 2008. The Interim Results were substantially ahead of the comparable period of the 26 weeks to 3 March 2007 and appreciably ahead of budget, it says.

Since 7th April, the Company has continued to enjoy strong trading in the UK and USA, particularly in its agricultural division, including its oil distribution business, and now expects profits before tax for the year ending 30 August 2008 will be in excess of £8.6 million (2007: £5.5 million), the statement reads. The Company says it will provide a further update in its Interim Management Statement, which it expects to make in late June.

USDA Export Sales report Highlights

Friday's delayed USDA export sales report pegged 07-08 corn sales at 477,400MT and 08-09 at 226,000MT against trade expectations for total sales of 450,000 to 900,000MT.

Soybeans sales were 245,600MT (07-08) and 262,700MT (08-09) vs 550,000MT to 750,000MT expected.

Wheat sales were negative for 07-08 at -340,700MT and 904,600MT for 08-09 against expectations of 150,000MT to 600,000MT. This included 200,000MT for Iraq switched from 07-08 to 08-09.

Latest UK trades/market comment

Never seen a falling market before Sonny?

Long and wrong

LIFFE wheat futures continue decline

London feed wheat futures continue to slide on a bumper European crop outlook. Export business remains slack and traders are scrambling to liquidate old crop stocks which are larger than anticipated. July wheat is down £1.50/tonne at £145.50/tonne, and new crop Nov down £0.70 at £135.00/tonne.

July LIFFE Wheat Future:

CFTC releases details of surveillance plan into crude oil market manipulation

Is it a coincidence that crude oil is selling off sharply just as the CFTC announces stepped up supervision of that market?

The Commodity Futures Trading Commission released a three-point plan for expanded surveillance of energy commodity trading Thursday morning. Briefly, here are the points:

I. Expanded information-sharing with the United Kingdom Financial Services Authority (FSA) and ICE Futures Europe for surveillance of energy commodity contracts with U.S. delivery points, including crude oil large trader position data on all WTI contract months, and a commitment to enhance trader information to permit more detailed identification of market end users.

II. Increased transparency of trading in U.S. energy markets, in particular for index trading activity, including monthly reporting of index trading. CFTC said it will develop a proposal to require more detailed information from index traders and swaps dealers, and will review whether classification of these types of traders can be improved for regulatory and reporting purposes, and will review trading practices of index traders to "ensure that this type of trading activity is not adversely impacting the price discovery process"

III. CFTC said it began conducting an investigation in crude oil last December, surrounding the purchase, transportation, storage and trading of crude oil and related derivative contracts. Specifics remain confidential.

Early call on Chicago

Pressures from outside markets continued to push prices lower in overnight trade. There could be some support entering the market before the close of business today however. Watch energy prices. Soybeans seen down 10-12c, corn down 2-4c and wheat flat.

Severe storms to hit NSW, QLD

Well, they wanted rain in NSW thay are going to get it big time, as wheat planting hasn't yet started there this can only be beneficial IMHO...

RESIDENTS on both sides of the NSW and Queensland border are preparing for a weekend of wild weather, with torrential rainfalls already recorded on the Sunshine Coast.

Severe weather is threatening the regions after falls of more than 100mm were recorded on the Queensland Sunshine Coast and Capricornia district overnight, weather forecaster Weatherzone say.

Lady Elliot Island received 127mm in the 24 hours to 9am (AEST), the heaviest rainfall in five years and the highest May rainfall in 10 years.

Kingfisher Bay also recorded its highest rainfall in five years after receiving 113mm in the same period.

A low pressure system has developed off the Central Queensland Coast, bringing rain across the Capriconia and Wide Bay Districts over the past 24 hours, Weatherzone meteorologist Matt Pearce said.

"We are expecting the low to track southwards across the weekend, so the heavy rain is likely to extend across the southeast coast (Qld) district and eventually into north-east NSW,'' Mr Pearce said.

Double Island Point recorded easterly gusts of 98kmh at 7.20am (AEDT) today.

A severe weather warning is in place for the Capricornia, Wide Bay and Burnett and Southeast Coast districts, including Brisbane.

Mr Pearce said the weather brought the potential for damaging winds, heavy rain, flash flooding and damaging surf over the weekend.

US wheat crop looking good

Scripps West Texas Newspapers -- Many farmers across the nation, including some in West Texas, are upbeat about this year's predicted record-setting wheat harvest.

Joe Compton and his family operate farms from Elmdale to Lawn, near Abilene, and he said this year will be one of the best they have seen in 30 years.

"This has been a great year for our crops," Compton said. "We've had a nice balance of moisture and mild weather that produced a large, good quality of wheat this year."

Dub Vinson, who operates Abilene Ag Service and Supply, said the 2008 harvest, which has just gotten under way, could be the biggest the Big Country has seen since he opened his business 30 years ago.

"We are seeing a large, good quality crop coming in across the area," Vinson said. "We think it could be a record year for everyone."

Vinson said Abilene-area farmers may see a record 1.5 million bushels turned in this season, which will top the 1.3 million bushels in 2006.

In the San Angelo area, agricultural officials are seeing early yields of about 25 bushels per acre. Local farmers have suffered through adverse weather conditions that are affecting yield.

Still, a Department of Agriculture report published in early May predicts a winter wheat harvest of about 1.7 billion bushels from 30 states. Should their predictions prove accurate, the 2008 harvest would be a 17 percent increase from last year.

Australia wheat plantings seen up 13 percent, canola up 40 percent

According to the Profarmer/Callum Downs Planting Intentions Survey, Australian grain growers will plant record wheat, barley and canola crops this year.


Wheat plantings will rise in every State, for a 13 per cent increase in the national plant, which would equate to record plantings of around 13.9 million hectares - well above the record 13.1 million hectares in 2004-05.

Queensland is planning the biggest increase (35 per cent) and solid increases are also being pencilled in across New South Wales (15 per cent) and WA (15 per cent).

Growers across the southern cropping States of South Australia (8 per cent) and Victoria (2 per cent) are planning more moderate planting increases.


The rise in barley planting intentions surprised almost rivals the increase in wheat plantings, at 11 per cent.

This would lead to record plantings of 4.8 million hectares.

The biggest increases will be in WA (14 per cent) and SA (16 per cent).

The increase in cereal plantings of 2 per cent and 5 per cent for wheat and barley, respectively, foreshadowed by Victorian growers appears a little disappointing.

However, this should be read in the context of a 10 per cent lift in canola sowings.


Nationally, our survey foreshadows a large lift of around 40 per cent in canola plantings, leading to record plantings of nearly 1.5 million hectares.

This is double the increase forecast by the Australian Oilseeds Federation (AOF).

The big rise in canola plantings across NSW (66 per cent) counters AOF forecasts, as does the lift in Victorian plantings. AOF is suggesting a rise in SA, but our survey reckons area will fall slightly (2 per cent).

Russian grain harvest to top 85MMT, no need for export duty - Ag Minister

Russia's 2008 grain harvest will amount to at least 85 million tonnes, Russian Agriculture Minister Gordeyev told a news conference at Interfax on May 28.

The food grain harvest will amount to 40 million tonnes, he said

"The Agriculture Ministry is fairly confident the harvest will amount to no less than 85 million tonnes, which is 3 million tonnes more than in 2007. The harvest of food grain will also rise substantially. It will total roughly 40 million tonnes," Gordeyev said.

The wheat harvest will total 48 million-50 million tonnes, of which food wheat will amount to about 40 million tonnes, he noted.

Currently 15.3 million hectares are sown with the winter grain crop, which is 2 million hectares more than last year. "Of course that in itself holds the promise of a good harvest in the current year," he said.

The Agriculture Ministry does not think there is a need to continue the grain export duty after July 1, Gordeyev.

"Given that we expect a good harvest, and this is already apparent, we see no need to introduce restrictions on grain export starting on July 1," Gordeyev said.

"The situation on the market will show what further actions are needed," the minister said.

Gordeyev added that Russia's grain reserve level was high and prices were decreasing, which would mean there is no need to continue with the export duty. "I would pay attention firstly to [the fact] we still have a decent supply of grain in the country. As of July 1, we forecast that grain reserves will come to 11.5 million tonnes, which is an increase from the previous year of 1 million tonnes," he said.

"Secondly: the peak price mark for foodstuffs grain has already passed - 9,500 rubles per tonne in mid-April of this year. Now prices are shrinking, having fallen by 1,000 rubles to a current 8,500 rubles.

Our prognosis: in July the price should finally stabilize and come to around 6,000 rubles per tonne," Gordeyev said.

UK Gvt would Support Lifting MBM Ban in Some Animal Feed if BSE Concerns are Met

The UK Government has said it would back lifting the meat and bone meal (MBM) ban between poultry and pigs if it could be assured the move would not harm its bid to eradicate BSE in Great Britain.

But the Department for the Environment Food and Rural Affairs (Defra) said there are no plans to relax its current animal feed controls measures at present.

The announcement comes as pressure to relax the present blanket ban on MBM gathers momentum. The EU banned use of MBM in farm animal feed in 2001 largely as part of a bid to stamp out mad cow disease BSE and associated illnesses.

The EU also confirmed recently it has set up a review into whether to allow the protein from pigs to be used in poultry feed and vice versa. The task force examining the issue, including testing methods related to BSE, is due to deliver its findings and recommendations in 2009.

Earlier this month the German Agriculture Minister Horst Seehofer said he would press for the EU wide ban to be relaxed as a bid to cut animal feed costs and counter rising global food prices. He urged EU members to debate the matter again and said his government was hoping to deliver proposals of its own within three months.

A Defra spokeswoman said: “There is currently no specific proposal to relax the current farmed animal feed controls to permit the feeding of proteins from poultry to pigs and vice versa, under consideration.

“We would support the feeding of proteins from poultry to pigs and vice versa, if we were completely satisfied that the necessary control tools were available to ensure that it would not compromise our objective of eradicating BSE in GB.”

Overnight market developments - its all about oil

Overnight markets have followed through from last night's steep losses and are down again this morning.

News that the CFTC is looking at ways "to ensure U.S. energy markets function properly and are free of manipulation and abuse" has given speculators in the oil market the jitters which has spilled over into grains. Firstly if crude is going down then grains will follow it, secondly if the CFTC are looking at regulation spec activity in crude then why not investigate/cap it in grains as well?

A firmer dollar has also dampened sentiment.

Beans are currently down 9-10c, adding to last night's 50c loss. Corn is around 5c lower and wheat down 1c. Crude is around $125, the thick end of $2 down, following yesterday's drop of nearly $4.50/barrel.

Spec money has nothing to do with commodity price rises, honest

News that the U.S. Commodity Futures Trading Commission said Thursday it was expanding its surveillance of the energy markets, and had begun an investigation into potential oil market manipulation in the U.S. sparked fears that the CFTC could take action to limit the role of speculative funds in the commodities markets.

That had NOTHING to do with soybeans closing 50c down, meal down 12 bucks, oil down 235 points, wheat down 15c, corn down 10c and crude down $4/barrel.

That was a coincidence or something. Prices are high due to market forces, world demand, China, India, earthquakes, Iran and stuff. NOTHING to do with price manipultion. This is a MASSIVE buying opportunity.

House prices are still on track for a 20pc drop - Telegraph

It's not just us, estate agents are looking for buyers as well according to the Daily Bellylaugh who say we are on track for a 20% drop by the end of 2009.

Nice semi you have there sir

Latest trades/markets

No, they aren't last night's winning numbers they are in fact all reported traded prices for spot/June wheatfeed yesterday (ex mill levels). Prices depending on location, pellet size & movement restrictions (eg weekend collections) etc.

Lots of activity yesterday with buyers one minute turning sellers the next, sellers selling at £2/tonne less than they bought at earlier in the day and then turning back into buyers again. At least the broker makes a commission, I'm not sure if anyone else is making much out of it. Hey who cares, I need the commissions anyway to fund the blog & pay for all the ink I'm using writing all the contracts out!

Oct/Apr winter runs also reported traded yesterday at £115 basis SE range.

Other business done yesterday includes spot Liverpool citrus at £140.

The market really is changing by the minute, so call or email for the latest.

Early call on Chicago

Continued pressures from outside markets pushed prices lower in overnight trade. Warming temperatures across the Corn Belt will improve crop development.

Corn seen opening 4c lower, wheat down 2-4c and soybeans down 6-8c.

Feed contamination investigation completed - Defra

Defra says it has completed its investigation into an incident in which routine official sampling of a consignment of wheat feed revealed low-level contamination with material of animal origin, and that temporary movement restrictions imposed on cattle and sheep that may have eaten the relevant feed have now been lifted.

Full news release on Defra's website: here

Midwest weather warms up

They'll be talking "heat stressing developing crops" before long you watch.

Tom Skilling of WGN reports that it's unlikely daytime temperatures are going to flirt again with 50 degrees -- as they did Tuesday -- anytime soon. Chicago readings rebounded to 62 degrees Wednesday and are predicted to surge to 73 degrees Thursday and 80 degrees Friday. The big atmospheric changes behind the warm-up show no sign of abating in the coming two weeks -- a period in which nearly all daily average temperatures are likely to finish near or warmer than normal. It's a welcome change which more nearly parallels the warmth
observed here a year ago when the high reach 88 degrees.

The three month "meteorological summer" season begins as June arrives Sunday -- and not a moment too soon. Three out of four days this month have been cooler than normal.

Here's the outlook for Chicago for the first half of June:

Oil - Where are all the tankers?

For a few weeks now, observers have noticed that Iran is leasing tankers and storing oil in them. At about $140,000 a week or so, that is expensive storage. At first, conspiracy theorists were wondering if they were preparing for some kind of war or attack. But more conventionally, it may be they are having problems selling their oil. Their oil is not very high-quality, and there are only a few places that can take it and refine it. India, China, and the US are among the countries with refineries that can take Iranian oil (although the US won't officially buy it, it can sometimes end up there via the back door).

India's refiners are telling Iran they no longer want their oil, preferring the higher-quality oil that is readily available in the area. So Iran has to decide whether to send it to China or "repackage" it so that it can end up in the US, while they try to get refiners in India to change their minds. Thus, they are leasing tankers to store the oil they are pumping.

A check on tanker availability & rates indicates that currently there is a serious tanker shortage. Lease prices have soared in the past few weeks. It is clear there are a lot of speculators betting that oil is going to rise to $150 or so and are willing to pay very high prices for keeping the oil on the seas waiting for higher prices. It is a speculative boom. Almost everyone (except the stock market) is convinced oil is going higher in the near term.

An old oil pundit recalls flying into New York in the early '80s. Outside the harbour were 30 or so tankers just sitting, waiting for prices to continue to increase as they had been doing for some time. When they did not, they all tried to get into the harbor at the same time, and of course they couldn't. It was the top of the market. Prices dropped, and the owners of the oil had to go to the futures market to hedge what they could.

Is it 1980 All Over Again?

Many developing countries subsidize the price of oil to their citizens, so they do not feel the pain of higher oil prices. But the headline of today's Financial Times is that Asia is finally getting ready to cut their subsidies as oil rises to $135. The awareness that they need to allow market conditions to prevail is finally being acknowledged, as they cannot afford the subsidies. This is going to help drive down demand for oil over time.

As demand starts to fall, let's remember that the storage facilities for oil waiting to be refined are a finite item. If all those tankers end up needing to find a home at the same time, even as demand for oil is going down, you could see the price of oil go down rather quickly in the short term.

If you are leasing tankers to deliver oil that is already hedged in price, you want to get it to port as soon as possible so that your lease payments stop as soon as possible. You only hold it on the high seas if you think the price is going up by more than your carrying costs (the cost of money and leasing the tanker). If you start to lose money, you sell your oil on the futures market and get it to port as fast as you can.

Now, here is where it could get interesting. Oil is the biggest component of the commodity index funds. If oil drops and looks likely to go lower, then the massive buying of these funds we have seen in the past few months could dry up. As Dennis Gartman says, it takes a lot of buying to make the price of something to go up, but it only takes a lack of buying to make it go down. And if there is net selling?

If we see money start to flow out of the index funds (and ETFs) because of momentum selling, that means the funds are not only selling their oil components, but also the grain and metal and meat. If the index funds are the key component in the rise of prices, we should see the price of all commodities go down in tandem and in sympathy.

Oil speculators have us over a barrel

Oilintel, Houston, TX - The NYMEX July crude and June RBOB gasoline and heating oil contracts all ended the day sharply above Tuesday's close. Suddenly, supplies are tight again today.

Tuesdday's downtrend continued in overnight trading and during the early part of Wednesday's open outcry session, as crude oil fell nearly an additional $3.00, adding to yesterday's $3.34 drop. However, news that Nigerian output for July may be only 1.75 million bpd versus "normal" levels near the 2.0 million bpd level sparked a massive amount of short-covering.

We believe Wednesday's move higher is just one more example of the financial power the large hedge funds and financial trading houses exert over commodities generally and especially in the energy markets. It's also an example of why the government needs to find some answers that can slow down the amount of speculation in the markets.

Frankly, the futures markets were not designed as investment opportunities or hedges against other investments. In fact, the Nigerian news was circulating yesterday and yet prices were down sharply. The real facts seem to indicate that until the perennial bulls either achieve a target of $150.00 for crude oil, or the government finds a way to halt the daily volatility in prices, that the International Energy Agency's head of the oil industry and markets division, Lawrence Eagles, warned recently is a "speculative overshoot" in crude oil markets. "The IEA has consistently called for more data transparency, but the message is now being rammed home by a $135 sledgehammer," he said.

Of course any legislation that might come out of Congress would face a veto from this White House due to this administration's refusal to interfere with normal business functions, except when its serves their purpose, which in our opinion, distorts the idea of free trade it says it wants to defend.

Our early analysis for overnight trading suggests that prices are likely to at least test today's highs with at least a 50% chance they will breach that level. We believe renewed hype will likely occur in overnight trading as some market participants will want traders to focus on demand that they claim is outpacing supplies, especially in front of Thursday's EIA inventory estimates for the week ending May 23. We believe that most analysts are predicting data that is, at best neutral. Of course the perennial bulls have a knack of turning neutral or even bearish data to better suit their positions.

At 9.00am crude was $130.42/barrel.

Gordon Brown - about as popular as piles

In a hilarious move, supposedly designed to ease the pressure on just about every sector of the market by containing oil prices, the Government yesterday announced the go-ahead for two new oilfields, West Don and Don South West, which together would bring an extra 50,000 barrels per day ashore when the oil begins flowing next year.

To further attempt to boost output Gordon Frown announced a tinkering with petroleum tax revenue that would help carve out new oil and gasfields from existing fields, ensuring that the new developments would not be affected by the old tax. The changes to the PRT regime would enable the investment that could add 20,000 barrels per day, the Department of Business said.

Wooohoooo! 70,000 barrels a day more that's going to make a massive difference isn't it?

Erm, how much do we produce per day I hear you say. Don't bother Googling for it I've done it already, 2.8 MILLION barrels per day. Don't bother getting the calculator out either, thats a WHOPPING 2.5% increase we are looking at.

That's one in the eye for OPEC. Go Gordon, Go Gordon. Yes, GO GORDON.

Overnight Developments, Grains Fall As U.S. Grazing Plan Signals Higher Feed Supplies

The entire grains & oilseeds complex is lower overnight pressured by news that the USDA is to allow 24m acres of CRP land in the US to be used for grazing, reducing feed demand.

The move may add as much as 18 million metric tons to feed supplies, the Department of Agriculture said.

Livestock groups have lobbied for government intervention this year to reduce soaring costs of corn and hay, said Dale Schultz, a commodity specialist at livestock-feeding company Gottsch Enterprises in Hasting, Nebraska. The grazing plan will free up as much as $1.2 billion in forage feed supplies, the government said.

The Conservation Reserve Program pays farmers to leave land idle for as long as 10 years to improve soil and water quality.

At 8.00am BST corn was around 3c lower in overnights trade, with wheat down 2-4c and soybeans down 4-5c.

German milk strike spreading across Europe

With food costs soaring around the world, German dairy farmers began a strike over falling milk prices on Wednesday in a protest that a European milk body said is spreading to other EU countries.

Nearly 30,000 German dairy farmers halted milk deliveries to retailers on Wednesday on the second day of their strike, according to the European Milk Board, based in the western German city of Hamm.

It said deliveries dropped by some 60 percent in Switzerland's Zurich region and in the Netherlands, where the Dutch Dairymen Board urged its 4,000 producers to "keep milk on the farm."

Austria's IG Milch dairy association weighed in with a call on the country's 43,000 dairy producers to halt deliveries in protest at the milk price. "We urge all producers to cease delivery to dairy factories completely from Thursday," said the federation's president, Ewald Gruenzweil.

Germany's BDM dairy federation, which represents almost half of the country's producers, said it had also received "declarations of support" from Belgium, Luxembourg and "parts of France."

"I expect more countries to join the strike," deputy president Stefan Mann told the Frankfurter Rundschau daily newspaper.

The strike in Germany, Europe's biggest milk producer, began on Tuesday as farmers heeded a call by the BDM to stop supplying milk in order to force up prices that are currently hovering between €0.28 and €0.34 ($0.43 - $0.53) per litre (2.2 pints to the litre).

"We plan to decrease the flow to the food industry further still in coming days and then supermarkets will start feeling the pinch," said Hans Foldenauer, a spokesman for the BDM.

Germany opposed a decision by European Union agriculture ministers in March to allow a bloc-wide increase in production of two percent as part of a larger plan to phase out dairy subsidies by 2015.

The BDM said that milk prices agreed between suppliers and supermarkets have fallen by as much as €0.15 per litre compared to last year, while dairies' operating costs have risen. It is demanding that the milk price be pushed up to €0.43 per litre.

The Swiss farmers' trade union Uniterre said some 100 dairy producers in the west of the country voted Wednesday in favour of joining a delivery strike in the German-speaking part of Switzerland in support of German producers.

"We have been negotiating about the milk price for years without any success. So we can only conclude that a strike is the only way forward," a union representative told the ATS news agency.

Switzerland's Big-M union said the 200 producers in the Zurich region had delivered virtually no milk on Wednesday.

The milk price protest seemed set to spread to Romania next week. Romanian agricultural trade union Agrostar said dairy farmers would stage a three-day picket outside the French embassy in Bucharest and the headquarters of dairy company Danone to demand better prices for their milk.

Chicago latest

At 16.05BST wheat down 14 1/2c, beans down 3 1/2c, corn down 12c.

Two Injured As French Riot Police Charge Protesting Farmers

SETE, France (AFP)--A policeman and a protester were injured Wednesday when riot police using tear gas battled farmers blocking an oil depot in southern France to protest over soaring fuel prices, an AFP reporter said.

The clashes at the depot near Sete on the Mediterranean coast lasted several minutes, with around a hundred farmers throwing objects at the police, who numbered around 50.

The farmers pulled back from the entrance to the depot but remained nearby after the altercation.

The incident came as fishermen called off strikes in key French ports, lifting a week-long blockade of France's largest oil refinery, but truckers and farmers stepped up their own protests over fuel prices.

Fishermen and truck drivers have been in the vanguard of a wave of protests across western Europe over rising fuel costs, as oil prices recently hit a global record of over $135 a barrel.

UK trades/markets

As grain prices continue to slide the wheatfeed market keeps on going with it with plenty of nearby material swilling around in the market. Prices are all over the place, with all sorts of money reported as trading depending on whether the person actually doing the reporting is a buyer or a seller! Pick a number anywhere between £100 and £130, add on your birthdate, subtract the number of your house and divide by how many kids you've got.

Spot corn gluten feed pellets reported traded yesterday at £164 ex Liverpool and spot PK's done at £129. Also offered spot citrus pulp pellets ex Liverpool, looking for interest.

Resale offers kicking around on hipro soya Humber & South Coast £POA.

The rapemeal market is drifting easier again, aided no doubt by the fact that seed futures are down EUR8-10 today following crude oil's decline.

£100 here we come

"Is that a buyer over there?"

US truckers choking on high diesel costs

Herald tribune -- With diesel prices over $4.50 a gallon, independent truckers are parking their rigs, or even getting out of the business.

Trucking is an industry that's suffered from over-capacity (there are 350,000 independent operators), so truckers find it hard to impose fuel surcharges, reported Louis Uchitelle in the New York Times. About 70 percent of the nation's freight tonnage moves by trucks, and profit margins are "minuscule," Uchitelle reported.

The independent fleet has already begun to shrink, with more than 45,000 vehicles withdrawn from service since early last year, and larger operators are also cutting back the size of their operations or shutting down as well, Uchitelle reported.

That surpasses the last great shakeout, in the early 1980s, when deregulation, along with a recession, high interest rates and the second Arab oil embargo, took out 33,000 rigs.

"There are so many used trucks in dealer lots now that some of the larger dealers have stopped buying them," said James McCormack, whose Web site, TruckerToTrucker.com, markets used trucks. "From what dealers tell me, exports have become their best outlet, particularly to Russia."

Trucks are also going abroad. Nearly 24,000 used, over-the-highway rigs have been exported since early last year, the Commerce Department reports, or nearly three times the number in 2006. The weakness of the dollar makes the prices more attractive to foreigners and less so to potential domestic buyers.

Early call on Chicago

More pressure from outside markets pushed grain and soybean prices lower in overnight trade. The opening call is sharply lower on the grains and moderately lower on soybeans.

Wheat seen down 10c, corn down 10-12c and beans down 4-5c.

Midwest finally set for some warmer weather

Freese Notis--While too much rainfall this spring has draw most of the headlines in regards to a fairly poor start to 2008 corn and soybean crops in the Midwest, cooler-than-normal temperatures have been equally as much of a problem.

March temperatures of two to six degrees below normal, April readings of normal to five degrees below normal for areas west of the Mississippi River, and May temperatures on the order of two to six degrees below normal over the entire Midwest means that we could see the meteorological spring (which ends on May 31) rank among the twenty coolest ever recorded for parts of the Midwest.

What is notable about upcoming weather then, is the fact that we are going to see a shift towards extended periods of warmer-than-normal conditions for the first time in a long while. Cool weather of the middle of this week is really the only cool weather in the forecast through the first ten days of June. High temperatures in the 80s will return to much of the Corn Belt by Friday, with 80s probably even more common for Saturday. High temperatures of 75 to 85 degrees should then dominate into next week, though southwestern and southern parts of the region may even do a little better than that once in a while.

Weds forecast highs

Thurs forecast highs

Fri forecast highs

Sat forecast highs

Sun forecast highs

Mon forecast highs

Crude dives as spec money leaves, grains follow suit

A spate of bad news on the US economy and bearish crude stocks & usage data has set speculators scrambling to book profits after last week's record highs.

Crude is $126.65/barrel at 11.00am, down $2.23 on yesterday's close.

The sharp drop in crude over the last few days is spilling over into grains & oilseeds this morning.

At 11.00am eCBOT wheat was down around 9c, with corn also down a similar amount and soybeans down 3-4c.

London wheat is down £1.50 on old-crop July, but MATIF rapeseed is hardest hit shedding EUR10.00/tonne.

Germany dairy farmers strike, UK implications?

WHILE dairy farmers in the UK are struggling to cover costs even as milk prices are rising, on the continent the situation is even worse, with many of the major buyers cutting the price farmers receive for their milk.

On Monday an estimated 9,000 German farmers demonstrated outside a major dairy in Weihenstephan, while a large number of producers were planning to withhold milk from their regular outlets yesterday.

Many supermarket chains have slashed the retail price of dairy products and these reductions have been passed right down the chain to farmers.

Ernst Halbmayr, an executive committee member of the European Milk Board, said: "Farmers are not delivering milk to the dairies. A similar situation is developing in Italy, France, Luxembourg and Spain."

Romuald Schaber, leader of the BDM German association of 30,000 dairy-cattle farmers, said the group expected the boycott to last between a week and 10 days.

He asserted that participation was "overwhelming" with 80 per cent of farmers taking part "in some regions." The unsold milk is being fed to calves or dumped in farm-waste tanks.

Ex-farm values have declined by more than 5 per cent in the past year on the continent, whilst production costs, as in the UK, have risen steeply.

Germany's dairy output prices are controlled by a few powerful companies which currently pay 27 euro cents (21.6p) a litre for milk in northern Germany according to BDM data.

In the UK falling production has forced the major UK supermarkets and the dairy companies to increase their prices to farmers, but if international dairy commodity prices fall then there is a possibility of downward pressure on ex-farm prices over here. The UK market remains in a state of uncertainty, with many farmers contemplating their future strategies.

Overnight developments

Corn is around 7c lower in overnight trade after the USDA reported plantings at 88% done which was up from 75% the previous week and towards the top of the range of traders expectations.

Forecasts for warmer, drier weather in the Midwest later in the week should also help get this last 12% planted which is further pressuring prices this morning, as is lower crude oil.

Soybeans are around 7c firmer, primarily on news that the Argy strike is back on. US plantings at 52% done were in line with expectations.

Wheat is 5-7c lower after the USDA upped it's winter wheat good/excellent rating 2 points to 49%. Recent rain in Kansas is seen as beneficial where the good/excellent rating improved 6 points ferom last week.

The U.S. spring wheat crop was 76% emerged, up from 54% the previous week and only slightly down from the five year average of 78%.

Wheat may average $7 a bushel in the third quarter, down from $8 a bushel in the second quarter as global output jumps 7 percent to a record 650 million metric tons, Rabobank analysts including Sydney-based Luke Chandler said in a report yesterday.

Soybeans will average $12.60 a bushel in the third quarter from $12.80 in the second quarter, according to the report. Corn will average $5.80 a bushel in the third quarter compared with $6 in the second quarter, the report said.

Crude Oil: Is the end of the party in sight?

Crude oil & gasoline futures fell sharply yesterday after a report showed U.S. consumer confidence dropped to the lowest level since October 1992.

The average U.S. gasoline pump price reached an all-time high May 26, crimping demand from motorists.

"The litmus test over the next couple of weeks will be how the U.S. driving season pans out and it looks like the risk is to the downside," said Mark Pervan, the senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne. "The market is saying the driving season is going to disappoint."

Yesterday, oil dropped more than $3 a barrel in the biggest one-day drop since April 29 to close at $128.85. Futures reached $135.09 on May 22, the highest since trading began in 1983, and have doubled in the past year.

"People realize that there is a point where high prices are going to start affecting demand and consumers will start revolting," said Anthony Nunan, assistant general manager for risk management at Mitsubishi Corp. in Tokyo. "The market is easy to push up until we have a collapse in demand and that's what it's going to take to get this thing into a downtrend."

Early yesterday prices had rallied on reports that Valero shut the 55,000 barrel per day gasoline-making fluid catalytic cracker at its 160,000 barrel per day refinery Paulsboro, New Jersey (near Philadelphia), due to a leak in an expansion joint. While we were unable to conclude when the gasoline unit will be back running, one our sources, a refinery engineer, said this type of problem is easily remedied, which means it should be back running this week.

Valero did report problems at its Caribbean refinery in Aruba, but it was reportedly minor.

As the news was digested in the marketplace, it became clear that the refinery snags are all minor and won't have any real impact on summer grade gasoline, and even gasoline succumbed to the liquidation impacting heating oil and crude oil.

However, it is still too early to declare prices have peaked as we remain confident the perennial bulls still intend to reach new record levels, said Oilintel."As we wrote recently our technical analysis suggests that until crude oil falls below $110.30 and stays there, prices have a better chance of trying to set new highs."

It should be noted that Tuesday's refinery rumour would normally have pushed prices much higher as the bulls normally seize any news of a bullish nature as justification to buy heavily. This was not the case.

More of a signal is watching the shrinking contango, or higher forward prices. As these margins shrink, it will be more of a sign that perhaps major long positions are under pressure as the publicity surrounding the impact of speculation in the market grows.

More and more critics of commodities trading are criticizing the huge long positions held by hedge funds, implying they have artificially inflated prices. Also, there has been long overdue criticism of the type of forecasts that Goldman Sachs and others announce, which serve to feed the frenzy and further artificially inflate prices.

At some point, there will be widespread acknowledgement that what we have here is a classic bubble.

USDA Crop Progress Report Highlights

Corn planting was seen at 88% done as of Sun 25th May versus trade expectations of 80-90% complete. This is pretty good under the circumstances, within 2-3 days of "normal" although emergence is about a week behind average.

Soybean planting at 52% done was also pretty good compared to expectations of somewhere in the 45-60% region.

Chicago opening

Not as strong as expected on beans & corn. Latest corn down 3c, beans up 6c, wheat up 8c.

Americans Driving At Historic Lows

Houston, TX - Americans drove less in March 2008, continuing a trend that began last November, according to estimates released from the Federal Highway Administration.

"That Americans are driving less underscores the challenges facing the Highway Trust Fund and its reliance on the federal gasoline excise tax," said Acting Federal Highway Administrator Jim Ray.

The FHWA's "Traffic Volume Trends" report, produced monthly since 1942, shows that estimated vehicle miles traveled (VMT) on all U.S. public roads for March 2008 fell 4.3% percent as compared with March 2007 travel. This is the first time estimated March travel on public roads fell since 1979. At 11 billion miles less in March 2008 than in the previous March, this is the sharpest yearly drop for any month in FHWA history.

The FHWA said that while February 2008 showed a modest 1 billion mile increase over February 2007, cumulative VMT has fallen by 17.3 billion miles since November 2006. Total VMT in the United States for 2006, the most recent year for which such data are available, topped 3 trillion miles.

So when we hear that gasoline and diesel demand is really not dropping very much, we find it quite ludicrous. After the Memorial Day weekend, which we suspect will be the slowest in years, based on the amount of driving Americans don't do, it will become clearer just how far gasoline demand is dropping.

It is clear American consumers are changing driving habits due to high retail prices. FHWA report confirms our suspicions, and will only get worse as prices head to $4.00 per gallon, and diesel approaches $5.00 per gallon.

Additionally, the U.S. Department of Transportation estimated that greenhouse gas emissions fell by an estimated 9 million metric tons for the first quarter of 2008.

Early call on Chicago

Too much rain in the Corn Belt on the weekend and forecast for this week pushed prices up in overnight trade. Outside markets are strong too. Corn seen up 2-4c, beans up 20c and wheat 7-8c firmer, although weekend rains could be seen as beneficial for spring wheat.

History lesson

Does it REALLY repeat itself? Is it actually relevant any more? Are we in a whole new ball game and everything that's gone before is out the window? Here's the thoughts of one market analyst:

While there is no sure-fire way to predict the future, history does have its merit, especially when it comes to the seasonality of commodity markets. Often prices reach high levels when supply is expected to be limited and uncertainty for the upcoming growing season is in front of the new crop. If crops mature without issue, this usually implies increased supply. The natural tendency for end-users is to buy only as needed until it appears the market is finding a bottom. Then long-term buying comes into play as end users take advantage of cheaper prices and increased inventory. Basically, it is the simple laws of supply and demand that move prices.

So what does history tell us for the corn, soybean and wheat markets? Our study indicates that, over time, these markets have a tendency to peak in the winter or early spring months. At that point, all variables for the upcoming crop are unknown. If normal growing conditions exist, and unless there is a significant change in perceived demand, prices typically slide into harvest. Our research indicates that, as of this writing if one looks over the past 10 years, prices have been down 7 out of 10 years 60 days out from today and down 8 out of 10 years 90 days out from today. In essence, as the corn crop grows and matures, the market will take uncertainty out of prices through lower value.

For soybeans, the next 60 days indicates up in 6 out of 10 years, but 90 days out the market has been down 6 out of 10 years. As for Chicago wheat futures, the market has been weaker 7 out of 10 years over the next 60 days (reflecting harvest pressure) and down 6 out of 10 years over the next 90 days.

We would caution anyone using history alone as a method to outguess the market. However, with historically high prices for corn and soybeans, the likelihood is good that, if crop conditions appear adequate and weather outlook mostly normal, prices will be on the defensive into the mid-to-late June time period. After that, all bets are off, as weather may have a significant impact directing prices. Wheat should edge lower reflecting harvest pressure.

OSR growth seen coming from Eastern Europe

Farmer's Guardian--WHILE experts at Syngenta do not expect the acreage of oilseed rape grown in western Europe to increase in the next five years, they predict some growth in eastern European countries.

In Europe, 6.5 million hectares of rapeseed is grown, accounting for 35 per cent of the world’s production.

Grzegorz Szreder, Syngenta’s rapeseed product manager for Europe, said: “The market will remain stable in western Europe in terms of acreage, and the main growth will come from come from newer EU members in the east such as Russia, Ukraine and Belarus.”

He expected the area of OSR grown in these east European countries to grow by one million hectares between 2008 and 2013 with much of this growth coming from Poland, Czechoslovakia and Russia.

The main drivers for growth will be the commodity price, growing demand for rapeseed, increased focus on biofuels and increases in yields.

Mr Szreder said that, in some of these countries, oilseed rape had replaced the more traditional crop of sugar beet.

Its not just us- Australian's baulk at A$2/litre fuel

Fuel prices in a Queensland outback town have soared to more than $2 a litre, hurting heavy transport operators.

Diesel fuel was priced at $2.02 a litre at the petrol station in the north-west Queensland town of Bedourie.

Unleaded fuel was selling for $1.96 a litre - 59c more than the cheapest fuel in Brisbane today.

Diamantina Shire mayor Robbie Dare and petrol station operator said fuel prices were at record levels.

"It's the highest (petrol prices) I have seen," Mr Dare said, who has been running the town's only roadhouse for the past 20 years.

"Road contractors and cattle carters are the hardest hit.

Nogger-A$2 in the outback is 97p/litre. The Brisbane price quoted of A$1.37 is 67p/litre. And they think they've got it tough then eh?

Fertiliser cartels under microscope

Wall St Journal--At a time when food prices are soaring world-wide, so is the price of fertilizer, producing huge profits for leading fertilizer makers and stirring anger among farmers in the U.S.

Fertilizer prices are rising faster than those of almost any other raw material used by farmers.

Farmers say too much market power is concentrated in the hands of a small group of companies in the U.S., Canada and Russia that dominate global production of potash and phosphate. Along with nitrogen, potassium, usually in the form of potash, and phosphorus, in the form of phosphate, are the main ingredients of fertilizer.

The price of fertilizer "defies rational explanation," says Robert Carlson, president of the North Dakota Farmers Union, one of the state's most influential farmers' groups. In a May 8 letter to North Dakota's three-member congressional delegation, he accused fertilizer companies of "price gouging," and asked for an investigation.

On Friday, Sen. Byron L. Dorgan, a North Dakota Democrat, said he is asking the Federal Trade Commission to scrutinize the industry's business practices. Sen. Dorgan heads the Senate Commerce subcommittee that oversees the FTC.

Major fertilizer producers deny any allegations of gouging. They say they are simply raising prices to reflect tight supplies and growing demand after years of relatively low prices.

But there's an unusual piece in the pricing puzzle: In several countries, obscure laws shield makers of potash and phosphate from certain antitrust rules. In the U.S., for example, phosphate makers are among a handful of industries empowered by the 1918 Webb-Pomerene Act to talk with competitors about pricing and other issues.

Some legal experts think that law has outlived its usefulness. "It's an obscure act that's moribund," says Jim Mongoven, an attorney in the FTC's Bureau of Competition.

China, after initial protests, recently agreed to pay $576 per ton of potash, up $400 from its previous deal in 2007, to Canpotex, a potash export cartel protected by an exemption in Canada's Competition Law.

In March, Russian antimonopoly regulators required the country's largest potash maker, Uralkali, to cut domestic prices of the plant nutrient after wrangling with the company over its pricing behavior in court. Brazil's government is considering nationalizing the country's fertilizer deposits to help reduce farmers' production costs.

Helped by soaring potash prices, Potash Corp. of Saskatchewan Inc., one of the companies that make up Canpotex along with Minnesota-based Mosaic Co. and a smaller Canadian producer called Agrium Inc., posted first-quarter net income of $566 million, or $1.74 a diluted share, nearly triple the year-earlier figure. The company's stock has risen nearly eightfold to around $200 from about $25 three years ago. Mosaic's latest quarterly earnings came in at $520.8 million, up more than 10-fold from a year earlier.

In the U.S., Potash Corp. and Mosaic are the sole surviving members of a phosphate export cartel called the Phosphate Chemicals Association. Under a 90-year-old law designed to promote American exports, the companies are allowed to legally market and sell their product overseas as a single entity at a price set in consultation with one another. Similarly, Canada has Canpotex, and Russia has Belarus Potash Co., another export cartel.

While the individual cartels can't legally collaborate among themselves on pricing, they regularly -- and legally -- follow each others' price increases. After the Russian cartel recently said potash prices would rise to $1,000 a ton, Potash Corp.'s Mr. Doyle said Canpotex would soon match that price.

'We face the most serious recession of our lifetime' - Soros

Daily Telegraph--George Soros, 'the man who broke the Bank of England', tells Edmund Conway of his fears for the economy. The conditions today are almost uniquely dismal, however.

Not pleasant reading

Soros also says that speculators are a key cause of the sharp rise in the price of crude oil. The price increase has a "parabolic shape," Soros says, noting that such a shape is "characteristic of bubbles," but that the oil bubble will not burst until the U.S. and Britain are both in recession, at which time oil prices may drop dramatically.

Spot corn gluten

Just picked up an enquiry for a couple of loads in the north. Pls give me a call/email if you have any to sell.

Overnight/weekend developments

The Argy problems are ongoing, a bit like Everything I Do I Do It For You, I'm getting more than a bit fed up of this being the No 1 story now. If they're going to have a strike why can't they just do it & have a proper strike? Instead we have this poncey half-hearted shall we shan't we affair. Hand of God workshy cheating Argies. How do you know when an Argie is lying? His lips move. Look you've gone & got me started on the Argies now. Nurse where's my pills.

Right, for those of you who don't know the US was also closed yesterday for their Memorial Day hols so all you need to know is Friday's close & this morning's overnight market. Nearby beans were up around 43c Friday with the deferreds up around 25-30c. Beans are up a further 20c this am. Crude, Argies, weather/planting uncertainties. The USDA are out after tonight's close with their delayed planting progress report.

The other factor that is helping beans (& oil) this morning is speculation that China will reduce soybean-oil import tariffs from the current 9 percent to boost domestic supply. They have already reduced import tariffs on the soybeans to 1 percent from 3 percent until the end of September.

Corn was up 4c Friday and is up a further 4c this am, basically tracking beans & supported by crude plus planting progress uncertainties over the weekend.

Wheat was up 7c Friday and up a similar amount this am on concerns that NSW needs some rain to aid plantings there, although conditions in other parts of Australia are generally pretty good.

LIFFE feed wheat was also obviously closed yesterday. Friday nearby July closed down £2, with new crop Nov down £1.

Paris was open yesterday seeing milling wheat close with little change after November earlier fell to a fresh 10-month low for the recent move of EUR183/ton.

Showers fell over the weekend in some northern European Union wheat areas,which were seen as favourable for plant development. In response to last week's losses on the futures market, French standard grade wheat on the cash market for May-June delivery to the main port of Rouen yesterday was priced at EUR185/ton, down EUR3 from Friday. And wheat for August-December delivery was down EUR2 from Friday at EUR182/ton.

Crude is back up above $133/barrel on more Nigerian unrest. You'd think with all those "you my most loyal and trusted friend help me get $250 million out of my war-torn country because my husband's brother's cat has died" emails they send out, they'd have no time for any kind of militant action wouldn't you?