300 jobs lost as Leeds transport firm goes bust

(Yorkshire Post) -- A Leeds transport firm has gone bust with the loss of around 300 jobs. Macfarlane Transport is a victim of spiralling fuel costs which have left the £20m business unsustainable.

Joint administrators from accountants KPMG were appointed on Wednesday at the request of the firm's directors but were unable to sell the business as a going concern. It has now ceased trading.

Administrator Richard Fleming said: "It's very unfortunate that this long established business has been unable to survive and that large-scale redundancies will, inevitably, be a result."

He said the business had been hit by rising fuel prices and a competitive marketplace which had put its margins "under unsustainable pressure".

Every 1p increase in the price of fuel adds £600 a year to the cost of driving a lorry, according to the Road Haulage Association (RHA). The cost of diesel is around £1.30 a litre.

Leeds Chamber of Commerce executive director, Ian Williams, said: "This is one of the first high-profile businesses in the haulage sector that's gone under but underlines how tough things are at the moment in the transport industry."

Speculators driving US corn market, full impact of corn prices yet to hit consumers

Tim Jergenson, Barron County's agricultural agent, says most area farmers' corn was contracted six to 12 months ago at a price he estimates to be between $4 and $5 a bushel. Corn is selling for around $7 a bushel right now.

Corn prices have tripled in the past two years, according to a June 22 London Times Online article. Author Dominic Rushe attributed the spike to ethanol, floods, and maybe God's apocalyptic hand, in that order.

It's more complicated than that, say local agriculture experts. Randy Bina, general manager of the Barron County grain merchandiser United Ag Services, believes several other factors are contributing to record prices.

United Ag Services has the largest grain storage facilities in the county. They help farmers contract grain by buying grains for less than market price and storing them, then "shopping" the grains for farmers.

Trade on the Chicago Board of Trade determines the world market price for grains, and corn prices in Barron County move with that figure by the second, Bina explains.

Ethanol production is often blamed for driving up grain prices, but developing countries' increased demand for meat, and therefore the grains that feed livestock and poultry, adds to the overall demand for corn, says Bina, and the weak value of the dollar means American consumers competing in a global market must spend more to get less.

Although he says there's no way to quantify it, Bina personally believes market speculators-the same people allegedly driving up oil prices-are investing in commodities and causing prices to rise.

Minnesota market analyst Chris Steinhoff, of Country Hedging Inc., the commodities brokerage division of the national farmer-owned cooperative CHS, confirms that more investors are choosing commodities because "recent returns make it attractive."

Jennie-O Turkey Store, headquartered in Barron, is the county's largest buyer of corn. Grain buyer Gary Byl, of Rice Lake, agrees with Bina's assessment of the current market situation. He won't divulge how much area farmers will be paid for their contracted corn, but he says corn is "highly overvalued" at current prices, and market volatility, which has also increased fertilizer prices, isn't good for agriculture-or consumers.

"Index funds are pushing this market. The consumer hasn't even seen seven-dollar corn hit supermarkets. Just about every species of meat animal is being curtailed somewhere, some way," he says.

Byl won't say exactly how much corn Jennie-O has contracted this year. It's a "large amount" of what the company will require for feed, he says, but since the company enters into contracts with farmers on an ongoing basis, he anticipates rising turkey prices will hit grocery stores in the future.

Ukraine grain crop just keeps getting bigger

With the Ukrainian grain harvest well underway the size of the crop there is getting larger and larger. Latest figures from UkrArgoConsult peg this year's grain crop at 43.452mmt, around 3.5mmt higher than previously estimated and over 14mmt more than 2007.

The wheat crop is estimated at 21.83mmt, around 2mmt more than previously thought.

Grain exports are now forecast to reach 8.2mmt of wheat (up from earlier estimates of 7mmt) and 5 mmt of barley.

London flat bought for £175,000 last year is now worth less than £100,000

(Evening Standard) -- A property investor who bought a flat for £175,000 at the height of the housing boom has ended up in a negative equity nightmare after its value nosedived by almost 50 per cent.

Maurice Conroy, who owns a string of buy-to-let flats, bought the studio in Pimlico last summer. But he has just had it valued by three agents who told him it would now only sell for £80,000 to £100,000.

He is one of a growing number of buytolet investors who are discovering the property market is not necessarily a safe alternative to a pension.

Mr Conroy, 43, from Chelsea, admits he paid over the odds for the flat a year ago, but said the news left him reeling.

"It's like being hit in the stomach," he said. "It's the biggest drop I've heard of and I scan all the property news. A £95,000 drop - that's 50 per cent. Even if it sold for £100,000 that's 40 per cent. I questioned the agents and they said they cannot value it at more than £1,000 a foot."

Two agents valued it at £100,000, while Hamptons International said it was worth no more than £80,000.

Russia Could Increase Grain Output 50% - Cargill

Russia has the potential to raise grain output by 30-40 million tonnes per year, a 50 percent increase from current levels, a top official in commodity trading group Cargill was quoted as saying on Thursday.

Greg Page, president and chief executive of leading U.S. trader Cargill, said in an interview with Russian business daily Vedomosti that his company may double investment in Russia to $1 billion in the next 5-6 years.

"I know that Prime Minister (Vladimir) Putin is convinced of the necessity of increasing grain production in Russia by 30-40 million tonnes," Vedomosti quoted Page as saying.

He said the increase could take seven to eight years to achieve, given Russia's size and climate conditions.

"If you look at the number of hectares and the quality of soil, if the soil is ready for production and if sufficient infrastructure and processing capacities are created, I do not see this goal as unrealisable for Russian farmers," he added.

Russia officially expects to harvest at least 85 million tonnes of grains this year, up from 81.8 million tonnes in 2007.

Page said that, according to United Nations' forecasts, global food consumption was expected to rise by 50 percent by 2030 and double by 2050, and Russia would account for a significant part of the increase.

"I am sure that the world needs Russian grain to improve the balance between supply and demand on the grain market," he said.

Russia, one of the world's top grain suppliers, exported around 13 million tonnes of grain in the 2007/08 crop year finished in June. The Russian Grain Union industry lobby has said the country is likely to increase exports to 17 million next season.

Page said Cargill had spent $500 million on Russian projects since it started working in the country in 1991, and could double the investment in the medium-term.

"I will not be surprised if we invest at least the same amount in the next 5-6 years," he said.

Record prices for crops such as wheat and maize this year have sparked a surge of investment interest for farmland in Russia and other countries of the former Soviet Union, which have massive untapped potential.

Troika Dialog, in a report issued last month, estimated the Commonwealth of Independent States had 13 percent of the world's arable land, yet grows only 6 percent of its crops and farms just 3 percent of the world's meat.

Nebraska corn grower Roy Smith reflects on things he thought he'd never see...

I got the check for my last increment of 2007 corn today. It was sold for $7.12 per bushel last Friday. The bins are clean. There is no more corn to sell just in case the price goes higher. I can add $7 cash corn to the list of things I thought I would never see in my farming career.

This year marks 40 years of farming for me. When I began, corn was $1, soybeans were $2.50 or less. Nitrogen was about a dime per pound. We did not use any phosphate or potash. Herbicide use was limited, but the total cost of weed control was less than $10 per acre. It usually included one cultivation.

About four years later the price of everything escalated. By 1973, the normal price for corn was over $2 and soybeans $5. Of course, input prices went up accordingly. By the end of the 1970s we were no better off than we had been with lower prices. This assumes that land prices rose accordingly. For those who owned their land the situation was somewhat better then for those of us who rented.

I always figured that the move to higher plateau was a once in a lifetime event. Now it appears that was not the case. The situation today has a lot of similarities to the economic shift of 35 years ago. At least today I have my small land base paid for so I am not affected by land inflation.

Besides the price of corn today, I did not think I would ever see 200 bushel per acre dryland corn in eastern Nebraska. In 2004 I had a field that went over 225 bushels across the scale. I did not think I would see gasoline at $4.00, but it is there. I wonder what the next shock will be?

When I began farming I set a goal for what my net worth would be when I reached age 65. When I reached that birthday, I had achieved more than double what I had set for a target in 1968. However, I have some neighbors who are paying $5000 a month for nursing home care. What I thought was a secure retirement may not be so secure after all. I think I will just farm until I drop and save all of that money for long term care.

It is hard to see what might happen in the near future, let alone in the long term. I sold the last of my corn this week for three reasons. First, for the past several years it has been my policy to have everything priced by July 1. This strategy has saved me from a lot of grief over the years because at some point every summer the trade stops focusing on old crop and looking for new crop. When that happens, the price usually drops. Secondly, the talk of the government changing regulations on commodity speculation is seldom positive for grain prices. Any such action will eventually have a depressing effect on prices.

Third, the Fourth of July weekend has frequently been a turning point for grain prices. Sometimes prices turn higher. More often they turn lower. That is especially true when there has been a sustained rally in June. With prices where they are, the risk of holding through the long weekend is greater than if prices have been working lower through the past month. At any rate, I can brag about selling $7 cash corn for a while! If prices continue higher, I have all of this year's production to sell. Right now the crop prospects on my farm look very good.

Oil steady above $145 in Asia on Saudi declaration

(AP:BANGKOK, Thailand) Oil prices remained near record highs above $145 a barrel in Asia after Saudi Arabia's oil minister suggested his country doesn't plan to boost production.

Light, sweet crude for August delivery was up 23 cents at $145.52 a barrel in Asian electronic trading on the New York Mercantile Exchange, midafternoon in Singapore. Crude futures rose to $145.85, a record high, in New York on Thursday before settling at a record finish of $145.29 a barrel.

Oil prices have risen more than 50 percent so far this year.

Saudi Arabian Oil Minister Ali Naimi said Thursday in Madrid that the world's biggest oil exporter had no immediate plans to boost crude output because there was no need to do so. Naimi said Saudi Arabia is ready to raise production if the kingdom determines supply-and-demand fundamentals have changed. But for now, "all our buyers are satisfied and happy," he said.

Gains by the dollar Thursday against the euro helped keep oil prices from rising further. The greenback strengthened after the European Central Bank raised its benchmark interest rate an expected quarter point but signaled it didn't expect additional rate hikes that might further boost euro.

US car makers- the Big Three to become the "Not-So-Big-Two?"

(The Economist) -- THIS week shares in General Motors (GM), America’s biggest carmaker, fell below $10, valuing the giant firm at little more than $5.6 billion. The last time GM’s share price was this low, the Cadillac Eldorado had yet to grow fins and Volkswagen’s Beetle was a funny-looking novelty on American roads. That was in 1954.

Things are just as gloomy elsewhere in Detroit. Ford has abandoned all hope of returning to profit, as promised, in 2009 and appears to be bracing itself for a loss in 2008 even bigger than last year’s $2.7 billion. And on June 26th Chrysler was led to deny rumours that it was preparing to file for bankruptcy, after drawing down a $2 billion credit line from its owners, Cerberus Capital Management, a private-equity firm (see article), and Daimler.

It was not meant to be like this. At the beginning of the year both Ford and GM were expecting the credit crisis to knock sales in the first half, but they were still cautiously optimistic that they would soon reap the rewards of their expensive and painful turnarounds. Along with Chrysler, they had just secured a big package of concessions from the carworkers’ union that went a long way to closing the cost gap with the “transplants”—the lean, non-union factories operated in North America by their Asian and European rivals.

Independent reports by J.D. Power and Harbour showed that Detroit was also fast catching up with the Japanese on quality and productivity. GM’s new Chevrolet Malibu, declared North American Car of the Year in January, was seen as the first domestic product in years to give Toyota and Honda a run for their money in the fierce market for mid-size saloons.

But the carmakers have been ambushed by the disastrous housing market and, above all, by the soaring cost of fuel. Falling house prices have persuaded many people to put off buying a new car, and petrol at over $4 a gallon is radically changing demand. Detroit is still stuck with model ranges heavily biased towards the big, thirsty sport-utility vehicles (SUVs) and pickup trucks that raked in the profits when petrol cost half of today’s price.

The Big Three were certain that America’s love affair with go-anywhere, do-anything, gas-guzzling trucks would never end—so much so that both Ford and Chrysler pinned their hopes of recovery on new versions of their bestselling pickups, the F-150 and Dodge Ram respectively.

But that conviction has lately been shattered. Figures released this week show that sales of cars and light trucks in America in June fell by 18% compared with the same period a year earlier. Chrysler’s sales were down by a stunning 36%, pushing its market share below 10% for the first time in decades. Ford dropped by 28%. Despite flinging costly rebates at the market, GM’s sales were still down by 18%. Even Toyota, which was widely expected to overtake GM for the first time last month, took a 21% hit, as it struggled both to sell its big Tundra pickup and to keep up with demand for its popular fuel-sipping hybrids. Honda, by contrast, which unlike Toyota and Nissan has never offered Americans chunky pickup trucks, actually increased its sales by 1.1% thanks to a 26% rise in sales of its economical passenger cars.

Unless there is sudden reversal in the price of oil, Japanese and South Korean brands will make big gains in market share both this year and next. Their North American factories are more flexible than Detroit’s are and there is capacity to be tapped back home. Although GM and Ford make some fuel-efficient cars, such as the Chevrolet Cobalt and the Ford Focus, dealers complain that supply is limited and that customers tend to opt for Japanese or South Korean brands when trading down.

GM, Ford and Chrysler are each reacting to the crisis in different ways, but with the same aims—to reduce the speed at which they are burning cash, and to accelerate the arrival of more fuel-efficient models. Ford is slashing its salaried workforce, delaying the launch of the new F-150 by two months because dealers cannot shift the outgoing model, and converting an F-series plant in Mexico to build the relatively tiny new Fiesta, which Europeans will get this summer—more than a year before American buyers.

GM has gone further, closing four truck and SUV factories and putting its Hummer brand up for sale. Analysts reckon GM’s $20 billion cash pile is being depleted at a rate of $1 billion a month, making it a near-certainty that it will have to tap shareholders for new funds before long. And this week Chrysler said it would slash production of the Dodge Ram and shut one of its two North American minivan factories. Chrysler’s minivans have long been regarded as the firm’s “crown jewels”, but sales this year have suddenly slowed.

So just how bad are things for the Big Three? Their survival has been in doubt before. But two things are different this time. The first is that the carmakers’ finance arms used to bring in cash even in hard times. That is not happening now. More buyers are defaulting on their car loans, and the resale value of SUVs and pickups has collapsed so catastrophically that the finance offshoots are losing huge sums on vehicles returned after lease.

The second change is that it seems increasingly unlikely that consumers will eventually shrug off the high price of fuel and return to their old buying habits, which means that Detroit’s old business model is now obsolete. Jim Farley, Ford’s head of global marketing, describes the market as crossing a “watershed”. The problem is that the smaller, more efficient cars that buyers now want, and which will come on stream in a year or two, are far less profitable for both manufacturers and dealers. Denny Fitzpatrick, a GM dealer in California, observes that he makes more money selling ten Chevy Tahoes (a bloated SUV made by GM) than he does selling 50 Honda Civics (a compact car).

GM and Ford can at least take some comfort from their well-run foreign operations, which are benefiting from growing demand in China, Russia and Brazil. But Chrysler has no such cushion. Worse, it is planning to replace only half its fleet in the four years after the 2009 model year (compared with Honda’s 72% replacement and Nissan’s 80%). John Murphy of Merrill Lynch believes this is “an active decision by the new owners to rationalise the product portfolio in advance of a break-up or sale”. It may not be long before the Big Three become the Not-So-Big Two

US Midwest Weather Outlook

(Freese Notis) -- While overnight rains in Missouri were heavy as expected (1.50 to 2.50 inch amounts common in much of the northern two-thirds of the state; a handful of counties were under flash-flood warnings), rains were heavier than expected in Michigan and northwestern Ohio.

Radar is estimating that anywhere from 2.50 to 5.00 inches of rain fell overnight in an area from just west of Grand Rapids southeastward to the Toledo area. I can confirm 3.36 inches of rain at Grand Rapids, and around 3.5 inches at Toledo. A few counties along the Michigan-Ohio border were still under flash flood warnings here late Thursday.

Rains will continue to press southward today so that they impact mainly areas in the Ohio River Valley, with areas along the Ohio River and points southward still having rain chances tomorrow.

For the bulk of the Corn Belt, the holiday weekend is looking dry and it still looks to be getting started on a cool note. Especially areas east of Interstate 35 will have a tough time seeing highs above the 80 degree mark for today right through Saturday.

Beyond that the weather maps continue to advertise a warmer trend on temperatures as we go into the middle of this month. That will especially be the case for the Missouri River Valley and points westward, with highs there potentially reaching the 90s on Sunday and again for Tuesday through largely the rest of next week.

The July 11-13 time frame could be one where those 90s spread eastward to cover a bigger part of the Midwest.

The next rainfall threat for the region is still expected for roughly the Monday/Tuesday time frame of next week, and I still think that the models are having a tough time in depicting exactly how that event will play itself out. It will likely be a situation where some places in the Midwest will get some very nice amounts, but a lot of places will get nothing at all. As a guess (and that is exactly what it is...a guess), the area along the Iowa/Minnesota border and points eastward might fair the best on totals and coverage. Rain chances for later next week likely will favor the eastern Corn Belt versus the west.

ECB raises interest rates to 4.25%

(Guardian) -- The European Central Bank today raised interest rates in the 15-nation eurozone by 0.25% to stem soaring inflation despite mounting political opposition and increasing signs of a contracting European economy.

Its move, decided unanimously by its governing council, could trigger a round of rates increases from other western central banks in the eyes of some observers but Jean-Claude Trichet, ECB president, made plain it did not signal a series of rates increases - for now at least.

The ECB, put on a state of "heightened alert" last month over surging inflation and determined to reassert its counter-inflation credibility, increased borrowing costs from 4% to 4.25% - the first jump since June last year.

Inflation in the eurozone hit a record high of 4% - or more than twice the ECB's target - last month, partly as a result of oil prices which rose to $146 a barrel today, and Trichet repeatedly warned that further rises in food and energy prices could follow.

He insisted that inflation was now the number one issue among the eurozone's 320 million citizens and the ECB would live up to its mandate to deliver price stability - inflation close to but below 2% - in the medium term. "We tell them very solemnly they can count on us," he told a news conference in Frankfurt.

Financial markets had been expecting the ECB to increase rates at least two more times or close to 5% to avert a so-called wage-price spiral in the face of surging energy and food prices. But most economists believe today's decision will be a one-off and the bank will move to start cutting rates next year as the eurozone economy slumps.

Trichet asserted repeatedly that the rates increase would "contribute to our objective of price stability over the medium term", prompting Philip Shaw, chief economist at Investec to comment: "There's nothing to suggest the ECB has an itchy trigger-finger."

But the bank's president coupled his remarks with a warning to companies and pay negotiators that excessive price and wage increases to claw back soaring commodity and energy costs would indeed trigger further rises in borrowing costs. "I have no bias," he said, reasserting a wait-and-see attitude.

USDA Weekly Export Sales/Second Call On Chicago

The USDA today reported weekly export sales for wheat of 668,100MT for 08-09 the marketing year. Corn was 325,900Mt for 07-08 and 302,500MT for 08-09. Soybeans came in at 465,900Mt for 07-08 and 176,500Mt for 08-09.

The soybean numbers are above analysts expectations for a total of 325,000-525,000MT. Soymeal sales were a net 160,100 tons, above trade estimates of 25,000 to 125,000 tons. Soyoil commitments were 6,100 metric tons, within trade estimates of zero to 15,000 tons.

Corn was slightly above the range of traders estimates of 400-600,000MT, as was wheat which was also predicted in the range 400-600,000MT.

Weekly export sales are viewed as bullish wheat, soybean meal and soybeans and neutral to corn, and soybean oil.

Still, the second morning futures calls for this afternoon's pre-holiday session are September corn down 5 to 10 cents, September soybeans down 10 to 15 cents, and September CBOT wheat down 3 to 5 cents.

Chicago Early Call

First calls on Chicago this afternoon are that corn futures are expected to open 6 to 8 lower; soybeans 10 to 15 lower; wheat 2 to 7 lower.

An intersting session lies in store ahead of a long weekend in the US where traders may book some profits as weather models are sending out conflicting messages for the Midwest next week.

On a market like this anything between limit up and limit down wouldn't surprise. Chances are whatever it does tonight it'll do the opposite on Monday!

Utah Turkey Producer Lays Off 65-70% Of Workforce

(Daily Herald) -- Record high corn prices in the wake of the worst Midwest flooding in 15 years are forcing Moroni Feed Co. in central Utah to cut its production and temporarily shutter its processing plants and its breeder farms in Sanpete, Juab and Sevier counties after Thanksgiving. The company hopes to resume operations by March 2009.

The cutbacks will result in the temporary layoff of about 450 workers, or between 65 percent and 70 percent, of the 675-worker turkey farm cooperative. Moroni Feed, which markets its turkeys under the Norbest brand, raises and processes around 5 million turkeys or 100 million pounds of turkey annually. It accounts for about 2 percent of the industry's turkey output nationwide.

The lay-offs will begin at Moroni's Sanpete County hatchery in August, followed by it's main processing plant (120m south of Salt Lake City) in November.

Corn makes up 60 percent of turkey feed, and corn prices have skyrocketed to as high as $7.54 a bushel, due to increased worldwide demand, a weak dollar that has made U.S. corn more affordable overseas, and because 25 percent of domestic corn produced goes to ethanol production. Aggravating the situation are storms and severe weather in the Midwest since Mid-May, which have flooded more than 3.4 million acres of land and caused billions of dollars of damage to crops. About 12 percent of the U.S. corn crop is believed to be decimated by the floods this past month.

"Based on current corn prices, it costs about 15 percent more to produce a turkey than it can be sold for. If we were to continue producing at this rate, that translates to millions of dollars in losses," said Kent Barton, spokesman for Moroni feed. "In the past decade, corn prices have typically ranged between $2.25 and $2.50 a bushel."

"We expect this layoff to have an impact. We've been a major player and the decision we've made wasn't made lightly. We have a $15 million annual payroll in the community. We understand a lot of those dollars are spent locally. There'll be a trickle-down effect, but it's the best decision to preserve our strength so we can remain a contributor."

Elsewhere, poultry processor Perdue Farms is laying off some workers at its plant in Monterey.

Company Vice President Julie DeYoung said a total of 76 employees were told of their layoffs, which take effect when a production line closes July 11.

UK crops looking good, barley harvest expected to start next week - Trader

(FWi) -- Price and yield prospects for new-season wheat, barley and oilseed rape look to be holding up well as the European harvest gets under way, say traders.

Barley harvest has started in France and parts of Germany, with yields apparently up on last year and quality in line with expectations, Glencore's Nick Oakhill said.

"Harvest prices still look good [see table], but the biggest thing that could put downward pressure on UK prices will be crop quality. If we get good weather and quality, it puts us in a healthy position for selling the expected 3m-tonne exportable surplus. But if we get a poor run, that surplus will have to compete with cheap supplies from eastern Europe and the Black Sea regions."

Wheat production across the EU-27 was likely to hit 130m tonnes, compared with 111m tonnest last year, David Sheppard of Gleadell said.

"There will be some rebuilding of world stocks by 15-20m tonnes, but if all crop predictions come in, we will see prices come down." Barley production was expected to be 5.6m tonnes, up 0.5m tonnes on 2007/08, leaving an exportable surplus (malting and feed) of just under 1m tonnes, he said.

Ongoing speculation over crop size and quality around the world was likely to cause further price volatility, especially early in the season, added David Doyle of Grainfarmers.

"You have to accept the volatility is there and take advantages of any rises by locking into a price that makes the business profitable."

But independent grain trader Malcolm Lyons reckoned more growers could be eager to move crops earlier to help cover cashflows stretched by high fuel and fertiliser bills.

"Price prospects look good, but farmers need it with the cost of production for wheat near £125/t in many cases." He expected barley harvest to start in parts of Hertfordshire next week.

Milling wheat premiums were good at about £20-25/t over feed, but with lots of Class 4 varieties in the ground he was concerned mills could use large volumes of Class 4 wheat, bolstered with imported Canadian grain. "If I was a Class 1 grower, I would try to lock into a minimum premium, to at least put a base in the price you'll get."

UK crop expectations

Expected crop (tonnes)

Change on 2007/08 (tonnes)

Harvest price (ex-farm)









Oilseed rape




"I'd never do anything to hurt my chickens" - Quote of the Day?

Chicken farmer Terry Millard vigorously denied mistreating his birds last night as the RSPCA suspended his Somerset farm from its Freedom Food scheme.

The animal welfare charity said it had taken the action following an undercover investigation by animal rights activists.

It said Double Gate Farm would be suspended from the scheme - a labelling system dedicated to improving farm animal welfare - until the RSPCA had completed its own investigation.

Full story: I feel like chicken tonight

Zimbabwe: $30 billion for a tin of beans, $22 billion for a pooh

(Telegraph) -- Zimbabwe's dollar, ravaged by hyperinflation, does not even come in the form of a proper bank note. Instead most bills are 'bearer cheques', marked with an expiry date, but will become worthless long before it is reached.

More recently the reserve bank, which is issuing bills in ever-larger denominations, moved on to 'special agro-cheques', leading to comments about how much 'aggro' people have to deal with.

All three agro-cheques – they come in a brown Z$50 billion denomination, the green Z$25 billion, and the pink Z$5 billion - have a picture of a grain silo on one side. The sad irony is that the national treasury is as empty as the country's grain silos.

On the rare occasions when products are available, the prices are astronomic.

At the TM supermarket in Borrowdale, in Harare's western suburbs, many shelves were bare yesterday. But a kilo of mince cost Z$490 billion, a kilo of sausage Z$170 billion, and a tin of baked beans Z$30 billion.

Despite Zimbabwe's desperate shortage of food, heavy import duties have been slapped onto edible products, and a litre of imported orange juice cost an eye-watering Z$303 billion.

Some prices have trebled from a week ago, when lavatory paper worked out at just under Z$22 million for a single sheet of two-ply. There was none in the supermarket yesterday, but by now there is probably an alternative use for the Z$50 million dollar note.

At one Harare restaurant dinner was Z$875 billion per person, and the house wine a little short of half a trillion dollars a bottle.

In one shop a television was on sale, with a sign marked '1.7'. Asked if that meant trillions, the shopkeeper answered: "No, the next one. I don't know what it's called."

Hurry up, I'm touching cloth here

A Zimbabwe man nipping off for a quick pooh

American Airlines plans nearly 7,000 job cuts

(Herald Tribune) -- American Airlines expects to cut nearly 7,000 employees by the end of the year, or about 8 percent of its worldwide work force, as it reduces flights and grounds aircraft because of high fuel costs, the airline told employees Wednesday.

American said in a regulatory filing that it expected to record a second-quarter charge of as much as $1.3 billion to account for the layoffs and to write down the value of the MD-80 and Embraer 135 regional jets that it is retiring as it eliminates flights.

The job cuts, which appear to be twice as big as those announced so far by any other carrier, could affect as many as 900 flight attendants.

US Midwest Weather

(Freese Notis) -- Small areas of thunderstorms dotting the landscape over the western Corn Belt early on this Wednesday heralded the arrival of the next weather system to impact the Midwest. It continues to look like a situation where the southern Corn Belt will see far heavier rains and much better coverage than the north. Those rains in the south get started tonight and last through tomorrow before ending early on Friday. I still think that large sections of Missouri, Illinois, Indiana and Ohio see more than an inch of rain from this event, with localized rains exceeding two or even three inches. Flash flood watches have already been posted for southwestern Missouri, and we may see a few more of them issued when fresh National Weather Service forecasts are released this afternoon.

The Monday/Tuesday time frame of next week is the other period to expect a significant rainfall threat for the region during the ten-day forecast period. Right now the weather models are not in especially good agreement on how that event will evolve; my best guess is that the best rains at that time are east of the Interstate 35 corridor.

It still looks to be an unusually cool start to the holiday weekend for the Midwest. Below normal temperatures will dominate the region for tomorrow and that will last through Saturday. The 4th of July may feature highs not climbing above the 80 degree mark in most of the Midwest.

After that though I do still see warmer-than-normal temperatures increasing in frequency for the region. Sunday and Monday should be warm days, with some low 90s showing up in far western and southwestern areas. Tuesday to Thursday of next week should be cooler again, but above-normal temperatures return to the western Corn Belt for July 11 and it may very well stay above normal there through the end of the two- week forecast.

Oil soars close to new $146 a barrel record

(Times Online) -- Oil tightened its squeeze on world economies today soaring to a new high of over $145 a barrel.

In London, the continuing threat of an attack on Iran, the world's fourth largest oil producer, sent Brent crude to $145.75 a barrel, while in Asia, oil for August delivery was trading at $144.35 - more than 30 per cent higher than prices at the end of last year.

At the same time, it has emerged in the US that fuel stockpiles are down by 2 million barrels, 800,000 barrels worse than expected, while investors are spooked that Iran could withhold oil supplies if talk of an attack by either America or Israel were to happen. Around 40 per cent of the world's tanker traffic passes through the Strait of Hormuz, and a closure could push prices significantly higher.

Go on Golman Sachs, my hero's, you've got one day left an $4 to move it - Nogger

Overnight markets - all down

The overnight eCBOT markets are all lower this morning, largely reversing last night's gains.

Beans are currently 18-20c easier, corn 7-10c lower and wheat 3-10c lower.

Reasons for the decline so far are sketchy. The much-hyped heatwave forecast for next week maybe won't materialise after all some are saying.

A "technical bounce" is another good one when you haven't really got a reason.

I prefer, "It shouldn't really have been up that much yesterday, so we're down again today."

It's a holiday in the US tomottow remember so absolutely anything could happen tonight. A sharp sell-off ahead of the long weekend? Profit-taking? A sustained rally in case the weather turns? Whatever it does tonight it's highly likely that Monday morning's session will be equally dramatic.

I'll still stand by my call for a very volatile summer, certainly for beans and corn, both probably trading higher on weather scares, before a wholesale sell-off come October once the crop becomes a reality, lower yields or not.

Masterfeeds Inc to Close Feed Plant on Falling Hog and Cattle Numbers

Canadian Masterfeeds has announced it is to close its feed mill at Baden, Ontario, because falling hog and beef inventories in the province have led to a drop in feed demand.

The move comes weeks after the company completed the takeover of competitor Land O’ Lakes, which give the firm the chance for consolidation of locations. The cost of upgrading the Baden mill, which has been in operation since 1957, was also a factor, company President and CEO Rob Flack told Feedinfo News Service

The Masterfeeds Inc chief said the Wingham mill, acquired as part of the Land O Lakes deal, was well-placed and there was no longer the demand in Ontario to support both mills.

“There is less capacity in Ontario at present because hog and beef numbers have dwindled,” he said.

Bunge Acquires Tate & Lyle Sugar Trading Business

White Plains, N.Y., July 2 -- Bunge Limited today announced an agreement to acquire the international sugar trading and marketing division of Tate & Lyle PLC.

The acquisition will strengthen Bunge's position in the sugar value chain by expanding its international trading and marketing activities and by creating a stronger network for sugar origination in Brazil, Thailand and other geographies. The completion of the transaction is subject to the receipt of certain regulatory approvals and other customary conditions.

As a first stage, the operations and employees of Tate & Lyle's international sugar trading business will transfer to Bunge. The working capital in the business will remain with, and be collected and paid by, Tate & Lyle through March 31, 2009, at which point it will be assumed by Bunge upon final completion of the transaction.

"Bunge's strategy is to expand into complementary value chains, and sugar is an essential one," stated Archie Gwathmey, co-CEO, Bunge Global Agribusiness. "In the past two years we have established a sugar marketing and trading operation and purchased a sugarcane mill in Brazil. Strengthening our global team is a natural next step. Tate & Lyle has been one of the world's leading international sugar traders with a long tradition in the business and strong customer and supplier relationships. We are pleased to welcome this team and business to Bunge."

Early call on Chicago

Corn futures are expected to open 2 to 3 lower; soybeans 3 to 5 lower; wheat 5 to 7 lower.

Deflation Next, Bank Warns

Many economists' sights are set on inflationary signs and the stock market is bracing for an August interest rate increase, but now an important world bank is warning that deflationary pressures could be next.

The "central bank for central banks," the Bank for International Settlements, in its annual report released Monday said, "The current market turmoil is without precedent in the postwar period. With a significant risk of recession in the U.S., compounded by sharply rising inflation in many countries, fears are building that the global economy might be at some kind of tipping point.

"These fears are not groundless. The magnitude of the problems yet to be faced could be much greater than many now perceive," it said. "It is not impossible that the unwinding of the credit bubble could, after a temporary period of higher inflation, culminate in a deflation that might be hard to manage, all the more so given the high debt levels."

According to the Wall Street Journal, BIS put much of the blame for this economic crisis on the central banks themselves -- because they didn't set interest rates high enough earlier this decade, allowing the unsustainable credit boom.

What's to be done? The more immediate danger is still inflation, BIS said, so it is advising most central banks to raise key interest rates.

Brazil fines 24 local ethanol producers for environmental crimes

(AP) -- Brazil has slapped multimillion-dollar fines on 24 ethanol producers accused of environmental crimes in the country's dwindling Atlantic rain forest, Environment Minister Carlos Minc said Tuesday.

The companies together face 120 million reals (US$75 million) in fines for operating without licenses and planting sugarcane in illegally deforested parts of one of Brazil's most threatened ecosystems, Minc said. They will also be required to restore 143,300 acres (58,000 hectares) of degraded rain forest.

"We will not let companies that destroy the Atlantic rain forest have any peace," Minc told reporters. "If these environmental crimes continue, they will provide ammunition for those who want to slap trade barriers on the export of Brazilian ethanol."

International criticism of Brazil's massive sugarcane-based ethanol industry is mounting, with opponents saying it encourages environmental destruction and inflates world food prices. Brazilian officials deny those claims and note that ethanol producers are required to preserve much of their land.

The companies fined this week — mostly small Brazilian producers — violated rules requiring them to leave 20 percent of their forest lands untouched, Minc said.

The Atlantic rain forest once lined most of Brazil's coast, but only about 8 percent remains. In contrast, about 80 percent of the Amazon rain forest is intact, as laws there require land owners to keep 80 percent of their property as forest reserves.

Brazil is the world's largest ethanol exporter, and the second-largest producer after the United States. Its sugarcane-based fuel is significantly more efficient than the corn used to make U.S. ethanol.

Pound plunges to new multi-week low against euro

Sterling declined to a new multi-week low against the euro and 5-day lows versus the dollar today after the UK's CIPS/Markit Purchasing Managers' Index, or PMI, for the construction sector fell to 38.3 in June from 43.9 in May, while consensus forecast was 43.1.

According to the latest report from the Markit Economics, the current decline is the sharpest since the survey began in April 1997.The report showed that the input price index recorded its highest-ever reading of 81.5 in June, up sharply from 72.6 in May.

UK housing equity withdrawals totaled GBP5.04 billion in the first quarter, a report from Bank of England showed today. Economists had expected equity withdrawals to fall to GBP5.3 billion. The BoE revised fourth quarter housing equity withdrawals to GBP7.4 billion from GBP7.3 billion.

The British pound that showed strength against the US dollar in Asian trading on Wednesday declined in early European deals. At 10:00 am BST, the pound touched a 5-day low of 1.9854 against the dollar, down from a recent high of 1.9977. The pair was worth 1.9952 at yesterday's close.

Against the European single currency, the British pound traded lower in early deals on Wednesday. At about 10:35 am BST, the sterling touched a new multi-week low of 0.7972, compared to 0.7918 hit late New York Tuesday. Currently, the euro-pound pair is trading at 0.7956.

Lorry protest over fuel prices threatens to gridlock Central London

(Times Online) -- Lorry drivers could bring London to a standstill today in what hauliers claim will be the biggest protest against fuel prices.

Up to 1,000 drivers from across the country are expected to descend on the capital in a last-ditch attempt to convey their desperation over rising petrol and diesel costs and fuel duty.

Backed for the first time by the Road Haulage Association (RHA), the lobby group TransAction 2007 and the Transport Association, the drivers plan to line their lorries along a closed section of the A40 Westway.

Under police control, a series of convoys, each of 10 to 30 lorries will then move into central London while a delegation of hauliers marches to Parliament.

The lobby group are calling for a rebate of between 20 and 25p per litre on fuel duty to allow the British haulage industry to compete with companies in European countries where fuel is significantly cheaper.

Peter Carroll, spokesman for TransAction and a road haulier, said: “Our industry is being driven out of business. Continental hauliers are able to run in the UK using cheaper fuel from abroad. The Government needs to realise that the surge in oil prices has changed the world. It is madness to insist on charging the highest level of fuel duty in the EU on top of a world price that has rocketed. If nothing is done, thousands of UK hauliers will go bust.”

The “essential user rebate” system is already in use with buses and coaches, which claim a discount of 41p a litre, while lorries pay at full rates.

Marks Shares Dive After Profit Warning

Retailer Marks and Spencer shares are down 20 percent today after it issued a shock profit warning and said a consumer downturn was likely to be deeper, and last longer, than previously expected.

Yanks decide To Stay At Home This 4th July

(Automobile Association of America) -- In the US, the world's largest energy user, the number of travellers over the Fourth of July holiday will drop for the first time this decade, after gasoline rose above $4 a gallon, motoring group AAA have said. Compounding the problem, surging jet-fuel costs have led to the failure of at least a dozen airlines in the past six months, grounding planes across the country.

US and EU - Misery Loves Company

(Herald Tribune) -- As Treasury Secretary Henry Paulson Jr. travels through Europe this week, he wants to reassure jittery audiences that the United States will right its economy and its financial markets.

But with both sides of the Atlantic now suffering from a similar combination of sagging growth, rising inflation and shaky banks, Paulson's visit is turning into a case of misery loves company.

"There's no doubt that the second quarter will be a tough quarter," Paulson said during an interview after meeting with the president of the European Central Bank, Jean-Claude Trichet. "There's no doubt in any of our minds that the high oil prices are going to have an impact."

The meeting in Frankfurt came on a day when the European economy, which had recently been more resilient than that of the United States, began showing signs of an American-style slump.

Manufacturing activity in the 15 countries that use the euro shrank in June for the first time in three years, according to an influential survey of purchasing managers released Tuesday.

"I've never been one to accept the decoupling theory," Paulson said, referring to the idea Europe was immune to a malaise in the United States. "In a global world, we're all interrelated."

A weaker Europe has implications for the United States, Paulson said, because the United States has benefited from buoyant economic conditions overseas, in particular through exports.

Now, he said, emerging countries would provide the biggest lift to the global economy. Citing Russia, which he visited Monday, Paulson said that it and other nations with similar economic prospects were still growing robustly, though they, too, are grappling with rising fuel and food prices.

Fears of an inflationary spiral have prompted the European Central Bank to signal that it will raise interest rates this week. Trichet, has come under intense pressure from European leaders not to tighten credit at a time of weakening economic growth. But that is not expected to deter the bank.

Higher rates are likely to drive the euro up against the dollar because, with the Federal Reserve so far resisting a rate increase, it would widen the disparity in borrowing costs between Europe, where the ECB now has a benchmark rate at 4 percent, and the United States, where the Fed's base rate is 2 percent.

Paulson reaffirmed the importance of a strong dollar on his trip, which is scheduled to end Thursday in London.

Forecast for U.S. workers: Gloom - "Slow-Motion Recession"

(Herald Tribune) -- As automakers dropped their latest batch of awful sales numbers on the market on Tuesday, reinforcing the gloom spreading across the economy, the troubles confronting American workers seemed to intensify.

Plummeting home prices have in recent months eliminated jobs for hundreds of thousands of people, from bankers and real estate agents to construction workers and furniture manufacturers. Tighter lending standards imposed by banks in the wake of huge mortgage losses have made it hard for many Americans to secure credit — the lifeblood of expansion in recent years — crimping the appetite of consumers, whose spending amounts to 70 percent of the economy.

Joblessness has accelerated, and employers have slashed working hours even for those on their payrolls, shrinking the size of paychecks just as workers need them the most.

Now, add to that unsavory mix the word from automakers that sales plunged in June — by 28 percent for Ford, 21 percent for Toyota and 18 percent for General Motors — a sharp sign that consumers are pulling back, making manufacturers more likely to cut production and impose more layoffs. Until recently, the weak labor market has been marked more by the reluctance of employers to create new jobs than by mass layoffs.

Among economists, the sense is broadening that the troubles dogging the economy will be stubborn, leaving in place an uncomfortable combination of tight credit and scant job opportunities perhaps well into next year.

"It's a slow-motion recession," said Ethan Harris, chief United States economist for Lehman Brothers. "In a normal recession, things kind of collapse and get so weak that you have nowhere to go but up. But we're not getting the classic two or three negative quarters. Instead, we're expecting two years of sub-par growth. Growth that's not enough to generate jobs. It's kind of a chronic rather than an acute pain."

Read the rest of the story here

Gizza job

Job seekers at a New York job fair recently.

EU Abolish Set-Aside So What's Next?

With the famously militant French newly installed at the helm of the Presidency of the EU it seems anything could happen.

Day1: Permanently scrape set aside. Done. Next....?

Day2: Allow re-introduction of fishmeal into ruminant rations?

Day3: Stop the US "splash & dash" abuse?

Day 4: Regulate the use of Meat & Bone back into some animal feed?

Day 5: Remove incentives for power stations to burn animal feed and "encourage" them to use other renewable sources instead?

What an exhausting first week at the office for Mr Sarkozy, and then he's got some more work on his plate when he gets home to Mrs Sarkozy!

Overnight markets - déjà vu

Soybeans have set a new record again overnight with Nov hitting $16.2275, and currently standing at 11.25 cents firmer $16.19/bushel.

Latest USDA figures show that US farmers may harvest 96.8 percent of the acres planted, down from an earlier forecast of 98.1 percent. The market is now pricing in ideas that the 96.8 percent figure will be revised down further.

Corn rose for the first time in four days as rising crude oil rekindled speculation demand for the grain in biofuel production may increase, leading to a drawdown in inventories. Dec corn is currently up 8.50 cents at $7.6050/bushel.

Wheat is up around 4-5c on speculation that producers of hog, cattle and poultry will seek the grain as an alternative to high-cost corn, analysts said.

Bangladesh Govt Hikes Fuel Prices By Up To 66%

DHAKA (AFP) — Impoverished Bangladesh appealed Tuesday for global action to tame soaring crude oil costs, a day after being forced to hike state-set fuel prices by up to 66 percent.

The government late Monday raised fuel prices by 34 to 66 percent, saying it could no longer afford to sell petrol, diesel, kerosene and gas at subsidised rates set when oil cost just 60 dollars a barrel, against over 140 dollars now.

"It's an international crisis," said M. Tamim, the deputy energy minister in the army-backed government, which took power in 2007 and is slated to restore multi-party rule by the end of the year.

"We think rich countries, oil-producing countries and the United Nations should deal with the issue urgently," he told AFP.

Even with the price hike, the government will have to spend 100 billion taka (1.45 billion dollars) on fuel subsidies, which will consume 40 percent of the South Asian nation's development budget.

"Imagine a situation where crude hits 200 dollars a barrel. All development in Bangladesh will stop," Tamim said, urging world players to halt the price spiral "for the sake of Third World countries."

The price rises are a major blow for the country, one of the world's poorest where nearly 40 percent of the 144 million population survive on less than a dollar a day.

Bangladesh is already reeling from surging food prices, with the price of rice -- a staple -- nearly doubling over the past year.

The government hiked diesel and kerosene prices by 37.5 percent to 55 taka (80 US cents) a litre (0.26 gallons) and petrol prices by 34 percent to 87 taka a litre.

eCBOT close/early call

eCBOT corn closed sharply lower 15-16c down in overnight trade, drifting steadily lower throughout the session.

Beans set record highs 15-16c up early in the session but were also unable to hold onto those gains and closed 1 3/4c firmer to 2 1/2c lower.

Wheat closed around 2-3c lower.

Very earliest calls on Chicago this afternoon are: Corn futures are expected to open 12 to 15 lower; soybeans 2 to 5 higher; wheat 2 to 5 lower.

LIFFE feed wheat drifts lower

London-based LIFFE feed wheat stands GBP0.75-1.00 lower this morning in low volume trade. November feed wheat fell GBP6, or 3.9%, to end at GBP147/ton last night.

A limit down close for corn and a sharply lower close for US wheat futures last night, plus an imminent start to the EU harvest are weighing on prices.

"Market sentiment recently has been all about US wheat and corn, so it's no great surprise to see EU prices lower this week," said a UK-based grain trader.

Paris-based milling wheat this morning is mixed EUR0.75 lower to EUR0.75 firmer. Paris November dropped EUR9.50, or 4.5%, to settle at EUR199.75 a metric ton yesterday.

"On a technical basis we could go lower but traders seem to be waiting to see what happens later in Chicago," a European wheat trader said.

Egypt tendered on Monday to buy 55,000 to 60,000 tonnes of optional-origin wheat for shipment July 23-31 and/or Aug. 1-10 and added Ukraine wheat to the origins sought.

Oil prices rise above $141/bbl after OPEC comments

(AFX News) -- Oil prices jumped beyond $141 dollars a barrel on Tuesday after the president of OPEC said there was uncertainty surrounding future investment in facilities to boost crude output.

New York's main oil contract, light sweet crude for August delivery, was up $1.85 at $141.85 a barrel at 10:08 a.m. Brent North Sea oil for August delivery climbed $2.15 dollars to $141.98 a barrel.

On Monday, crude futures had struck record high levels close to $144, as the U.S. currency remained weak against the euro, traders said. Brent soared to an all-time high of $143.91 and New York crude to a historic peak of $143.67.

On Tuesday the president of OPEC, Chakib Khelil, said the oil producer cartel had concerns about future demand, which led to uncertainty about investment in capacity to increase production.

"The concern we have is about the security of demand," Khelil, who is also Algeria's energy minister, told an energy conference in Madrid.

He told the World Petroleum Congress that there were "big uncertainties" about making huge investments in infrastructure to increase output from members of the Organization of Petroleum Exporting Countries, which pump about 40 percent of world oil.

Lidl renege on German milk price hike

Confirmation that there are indeed downward pressures on the price of milk came from Lidl,which has backtracked on its German milk price increase.

Writing in his weekly news bulletin, milk quota trader and industry commentator Ian Potter states: "The German-sparked European milk strike was cancelled a few weeks ago on the understanding that the discounter, Lidl was to raise milk prices in its 3000 stores by 10 euro cents per litre.

"But having succeeded in calling off the blockade and boycott Lidl has announced the increase will be reduced to seven euro cents per litre and has cancelled a planned increase for butter.

"At last week's European Dairy Farmers Congress, some German farmers claimed to be receiving as little as 26 or 27 euro cents per litre, slightly more than 20p per litre."

Orkney Milk cuts 4p/litre off purchase price

(Glasgow Herald) -- Producers seeking higher prices for their milk had a warning shot fired across their bows when farmer owned co-op Orkney Milk cut the price it pays its 23 members by 4p per litre to 24p.

The few remaining milk producers in the Orkneys are all members of the co-op which supplies Orkney Cheese and which is 70% owned by farmers, 20% by Lactalis and 10% by the Orkney council.

Orkney milk producers have the highest costs of production in the UK and the low milk price is a threat to their viability.

Laying the blame for the price cut at the door of the supermarkets, Marcus Wood, chairman of Orkney Cheese and a milk producer on South Ronaldsay, said: "The cheese market is shaky at the moment and the price cut was a prudent move to keep our cash flow right."

Wood explained that the price cut was simply a seasonal adjustment and pointed out that this time last year the islands' producers were getting 20p per litre plus a quality bonus of 1p per litre.

"This year our quality bonus is 1.5p per litre on top of the 24p per litre basic price. There was also a "thirteenth" bonus payment at the end of last year worth a penny a litre and if we pay the same again this year it will leave producers with a summer milk price of 26.5p."

Wood pointed out that in addition to supermarkets exerting downward pressure on the price of cheese there were also increasing costs pressures from the likes of soaring electricity and fuel.

"Our electricity costs have gone up by 50% as we have just come out of a three-year contract," Wood added.

Russia, Ukraine cornering the grain export market?

The announcement that Russia is to abolish it's grain export duties from today certainly seems to further indicate that whatever export business is kicking around Europe, North Africa, The Middle East & Pakistan is likely to be eagerly mopped up by Russia & the Ukraine.

With a domestic grain harvest of 85mmt expected this season, Russia is anticipated to have 15mmt available for export.

In the Ukraine, where the harvest has just started, they are expecting a 40mmt harvest, around half will be wheat, 9 million tons barley and 9 million tons corn (plus 2mmt "other grains").

Including the grain left over from the previous marketing year, the ministry expects that 46 million tons of grain will be on offer on the Ukrainian market in the 2008-09 marketing year, with domestic demand for milling grain expected at 7.2 million tons and feed grain 14.3 million tons. That leaves a monster 17.5mmt surplus.

Allowing for a bit of carryover exports are expected to rise to between 13.5 million and 14 million metric tons in the 12 months starting July 1, compared with 3.7 million tons this year, according to Agriculture Minister Yuriy Melnyk.

The UK seems to be hanging it's export hat on Spain to take the bulk of our exportable surplus in 2008-09. One report recently suggested that the UK may treble exports there to 3mmt in the coming season. With crops like this kicking around I don't think we will be the only Spanish suitor.

Russia abolishes grain export duty

The Russian Ag Ministry have today confirmed that Russia will no longer charge wheat and barley export duty as of July 1.

The government imposed export duty on wheat and barley Nov. 12, 2007, in order to prevent prices rising on the domestic market due to a poor harvest.

The wheat export duty was originally 10% but was raised to 40% in January; the barley export duty of 30% was imposed in November 2007 and didn't change.

That's a well-timed kick in the cream crackers for European exporters just before the harvest starts.

Farmland continues to defy the credit crunch

(Farmer's Guardian) -- The average value for farmland has continued to increase over the past year, and with banks less worried about the prospects for agriculture they are still keen to lend to farmers looking to buy new land.

A weak pound has also helped buoy the market, making it a more attractive investment for buyers from Ireland and elsewhere in the EU, keen to capitalise on the relatively cheap land in the UK.

Charlie Evans from Strutt & Parker’s national farms and estate department said: “I do not expect the credit crunch will have much of an effect on genuine commercial farms, be they arable or grassland.

“Less commercial farms – grand houses with 100 acres plus of land around them – should also be insulated from the full effects of the credit crunch.

“There are very few grand houses with sizeable acreages on the market at any time, certainly too few to satisfy the demand for them. This keeps prices high. The land that protects the privacy of the house, also helps to protect the value of the property.”

According to the latest figures from land agents Knight Frank, farmland in England rose in value by an average of 38 per cent in the last 12 months with the average value of agricultural land now £5100/acre.

Andrew Shirley, head of rural land research at Knight Frank said: ““Despite the credit crunch and massive increases in fertiliser and other agricultural input costs; farmers, lifestyle buyers and investors are still competing for an extremely limited supply of farmland in the UK.

“Blocks of farmland are still selling for well over £7000 per acre. One of the interesting things about this market is that size seems more important than quality. Large parcels of land are so rare at the moment that even average-quality land is fetching premium prices.

“The big question is how long can this trend continue? My feeling is that prices will continue rising but we have already seen the strongest period of growth.”

The next twelve months are expected to see further growth, with a 14 per cent rise in values expected as investors continue to looks at agricultural land as an alternative to residential property to guarantee them a good return.

Meat is the new Chinese staple

BEIJING -- To understand the changing dietary habits of Chinese, it helps to listen to 6-year-old Lin Xingni talk about her favorite foods.

"I like to eat chicken and fish. I also like pork ribs," she said.

"You see? Everything is meat," said her father, Lin Yong, an entrepreneur.

Not finished with her list, Xingni chattered on: "There's a McDonald's near my home. But my father doesn't let me go."

Chinese are eating more meat than ever. In 1980, the average Chinese ate 32 pounds of meat per year. By 1995, per-capita meat consumption had climbed to 86 pounds. Last year, Chinese wolfed down more than 117 pounds of meat on average, a little more than half of what an average American eats. Yet the carnivorous trend line keeps going up.

A steady dietary transition is under way in China, as the country grows more prosperous. Barely half a century ago, the nation suffered a famine so severe that several million people died of hunger. Back then, the Chinese diet was mostly limited to rice, a limited selection of vegetables, tofu and the rare meat dish.

Now supermarket shelves sag under an array of foods. Meat is widely available. Fast-food restaurants dot the urban landscape, ranging from domestic noodle chains to familiar foreign brands. One chain in particular, KFC, is all over China, with 2,200 outlets in 450 cities. McDonald's trails with 930 restaurants in the country.

And Chinese are consuming not just more meat. Lester Brown, the head of the Earthwatch Institute, a research center based in Maynard, Mass., described the phenomenon as "moving up the food chain," noting that Chinese also are eating more eggs, milk and high-protein foods.

How China will satisfy its rising hunger for high-protein foods is yet to be seen. Its agricultural sector already has made a remarkable transition to satisfy a population that has swollen to 1.3 billion. China produces half the world's pork, 30 percent of the world's rice, 20 percent of the world's corn, a fourth of the world's cotton and 37 percent of the world's fruit and vegetables, according to U.S. Department of Agriculture estimates.

But China now is running up hard into constraints. It imports two-thirds of its soybeans, and wheat production is falling. It's at the threshold of becoming a net meat importer.

China is already the world's largest grain producer, ahead of India and the United States, but experts such as Brown say that the nation's rising meat consumption will force China to go abroad in the future to search for grain to fatten its cows, pigs, chickens and farmed fish.

China has yet to promote agro-industry seriously -- a move that would improve yields -- because doing so would throw many of the country's 345 million small-scale farmers out of work.

"One American farmer does what a village does here," Brown said.

US Wheat: Stocks Up, Plantings Up, Harvest In Full Swing

US wheat had a long-overdue bad day at the office yesterday with most active Sept08 closing 53 1/4c lower, just shy of it's session low of 56c easier.

Unsurprisingly the USDA report showed U.S. growers seeded more acres with spring crops to take advantage of prices that rallied to a record this year.

"When prices get that high, you find every nook and cranny to plant on," said Darrell Holaday, the president of Advanced Market Concepts in Manhattan, Kansas. "This report sets a negative tone for the week."

Growers are expected to harvest 13.8 million acres of spring wheat in the year that started June 1, up from 12.9 million the previous year, the USDA said.

All wheat production is expected to increase 18 percent to 2.43 billion bushels, or 66.2 million metric tons, in the marketing year, the USDA said on June 10.

Inventories of U.S. wheat will more than double to 13.3 million tons by May 31, the government said. Global stockpiles are expected to increase to 132.1 million tons, from 115.1 million.

The USDA said last night that 36% of the U.S. winter crop was harvested, up from 22% last week but below the five-year average of 48%.

However a dry forecast for the US Plains this week means the harvest should move quickly ahead as farmers take advantage of the lack of rain to collect crops in parts of Kansas and Oklahoma, the largest growers of winter wheat.

"We'll have a good week of harvest on wheat," Holaday said. "By next Sunday, you'll be amazed how much wheat in Kansas will be cut."

The USDA said the good-to-excellent condition rating for the U.S. spring wheat crop was 74%, two percentage points above the previous week.

"The spring wheat crop is doing very well," said one analyst.

USDA crop condition summary

It all looks pretty good really.

Spring wheat good/excellent is up 2 points to 75%.

Corn good/excellent is 61%, also up 2 points from last week.

Beans are up one point to 58% good/excellent.

UK: Aldi to Open One New Store a Week until 2013

Aldi has said it will open a new store every week in the UK over the next five years as more consumers turn to discount supermarkets in the face of soaring food prices.

The German hard discount chain announced its plans as a new report showed the harsh economic situation in Britain is prompting shoppers to reduce household expenses.

Aldi Managing Director Paul Foley said the company was set to spend £1.5 billion up to 2013 on its expansion plans – building a new store every week and recruiting 1,500 employees. Aldi, which is in the process of bringing over 200 more stores on-line, said it was confident of reaching its UK target of 1,500 supermarkets.

The Aldi chief said: “We will open one a week for the foreseeable future. We can do it quicker, cheaper and easier than the supermarkets.”

One industry journal quoted Aldi as posting a year-on-year growth rate of 21%.

USDA Quarterly Stocks Report Summary

Today's eagerly awaited June 1st quarterly stocks report from the USDA pegged corn stocks at 4.028 billion bushels, slightly above the average trade estimate of 3.925 billion.

Soybean stocks are seen at 0.676 billion bushels, again slightly higher that the average trade estimate of 0.669 billion.

Wheat stocks are pegged at 0.306 billion bushels, also slightly above the average trade estimate of 0.278 billion.

USDA June Acreage Snapshot

Today's revised acreage estimates from the USDA peg 2008 corn acreage at 87.327m, up from March's est of 86.014m and well above the average trade estimate of 85.676m, and only just short of the highest trade estimate of 87.399m.

Soybean acreage is seen at 74.533m acres, slightly lower than March's 74.793m, but a slightly above the average trade estimate of 74.360m acres.

All wheat acreage is seen at 63.457m, slightly below March's figure of 63.803 and the average trade estimate of 63.818m.

eCBOT Close/early call

Grain futures on the overnight eCBOT market closed mostly higher Monday, with corn mostly 2-3c firmer, wheat around 3-4c higher and soybeans around 10-15c up on old crop and 5-10c firmer new crop.

Soymeal was mixed 50c higher to $1.70 lower and soyoil up 34-59 points, supported by crude.

The very earliest calls on this afternoon's session are corn futures are expected to open 1 to 2 higher, soybeans 5 to 10 higher, and wheat 3 to 5 higher.

This is obviously subject to change once the USDA acreage numbers come out at 13.30BST.

UK Mortgage Approval Declines More Than Expected In May

(RTTNews) - UK mortgage approvals for house purchases fell to 42,000 in May from 58,000 in April, the Bank of England announced Monday. Mortgage approvals reached a new series low since records started in 1999 and stood below 51,000 expected by economists.

Net lending secured on dwellings increased GBP4.1 billion, below the increase in April and the previous six-month average. Annual growth in lending was 8.2% in May compared with 8.7% in April.

Meanwhile, net consumer credit climbed GBP1.4 billion in May, up from GBP1.1 in April. On a monthly basis, consumer credit increased 0.6% and rose 7% annually.

U.K. house prices fall; consumer gloom deepens

LONDON (MarketWatch) - The British housing market continued to stagnate in June, while consumer confidence slipped neared an all-time low amid a darkening economic outlook, according to two separate surveys released Monday.

Hometrack's monthly house price survey found average prices dropped by 1% in June for the ninth consecutive monthly decline. Compared to June 2007, prices were down 3.2% and are off 2.5% since the beginning of the year.

Separately, the GfK NOP Index, a measure of consumer confidence, fell five points to -34, from -29 in May, and near the lowest level ever recorded. Confidence in the economic outlook over the next 12 months fell to a record low of -45 from -39 in May. GfK NOP, a consulting firm, conducts the survey on behalf of the European Commission.

The Hometrack survey echoed other studies that have found the number of housing transactions have shrunk as potential buyers stay away due to the credit crunch.

"New buyer registrations were down 5.7% in June and have now fallen by 52% since the start of the credit crunch," said Richard Donnell, Hometrack's director of research, in a news release.

"This drop in volumes was always possible as around half of all transactions in recent years have been driven by aspirational or non-needs-based movers who are now sitting on their hands," he said.

The drop in transaction volumes threatens to reach levels not seen since the 1970s, Donnell said.

The survey found sellers are now receiving 91.6% of their asking prices, down from 92.3% in May and the lowest level since the series began in 2001. A year ago, sellers were receiving 95.6% of their asking prices.
Meanwhile, it's no surprise consumers are growing increasingly gloomy about their economic prospects, said Rachael Joy, a member of the consumer confidence team at GfK NOP.

"With rising inflation, gloomy forecasts for interest rates and soaring fuel, utility and food prices dominating the front page headlines, it's no surprise that confidence in the general economy is almost in freefall," she said. "It seems unlikely that this trend will reverse in the near future."

Overnight developments - mostly steadier ahead of USDA

It's a big day in the grains markets with the USDA revised report on planting, harvesting & quarterly stocks estimates due at 13.30BST.

The overnight markets are understandably nervous ahead of these figures. Corn continues to push higher, close to it's recent record, heading for the biggest monthly gain in 20 years, on speculation the U.S. government will cut its planting and harvest estimates today. Corn is currently around 3-4c firmer.

Bean acres are also likely to be down on the USDA's last March estimate due to the well-publicised Midwest flooding. Old crop months are 10-12c higher this morning, with new crop 6-8c firmer.

Wheat is up slightly, following corn & in a small rebound from Friday's steep losses. With the US in the middle of harvesting winter wheat the report is not so critical for wheat prices. Wheat is currently 2-3c firmer.

If all that isn't enough excitement for one day don't forget that the USDA will also release it's latest planting progress & crop condition report after the close tonight.

The most significant things to watch for here are a) corn conditions; b) soybean planting progress & conditions c) winter wheat harvest progress and d) spring wheat crop conditions.