Oklahoma: Too Much Wheat, To Few Railcars (Video)
With the bumper wheat harvest just about complete in Oklahoma, silos are full to the brim, and a shortage of railcars is causing a logistical headache for grain elevator managers.
Review of the week: huge losses across the board
Soybeans
Ouch, what a week. Aug CBOT beans lost a total of 145 1/2 cents this week closing with heavy losses every day bar Wednesday. To highlight how bad a week beans have had, out of the four out of five sessions this week where beans have lost, their best day was Monday when they finished down "just" 33 1/2 cents!
"The sharp downturn in crude oil pulled soybean futures down hard," said Doane Agricultural Services. "Adding to the losses were forecasts for favourable weather in the Midwest."
The USDA reported weekly old-crop soybean export sales at just 2.3 million bushels, which was off almost 60% from the seasonal average, and only one-third to one-half of general trade expectations. The export outlook for U.S. soybeans also darkened further after the Argentine Senate voted to reject the controversial export tax on soybeans.
Corn
Sep corn didn't fare much better losing 81 1/2 cents on the week, with Weds also the only plus day.
A bushel of U.S. corn was worth 12% less by the end of the week, concluding a complete collapse which has seen the market value of that key feed grain fall by more than $1.50 per bushel from record levels reached in late June.
"The recent highs did ration some demand, as traders are now realizing," said Benson Quinn Commodities analyst Kevin Kjorsvik. "The slow pace of shipments have some analysts concerned that the USDA will cut U.S. corn exports, thus raising this year's carryout."
The falling price of crude has done little to enhance ethanol demand, and thereby corn a trader added.
Wheat
Sep CBOT wheat turned in a better performance than corn & beans losing "just" 26 3/4 cents on the week.
The futures market is doing better than the cash market midway through the winter wheat harvest. The cash value of U.S. wheat waned on the week, diving about 3-4%, to 1 1/2-month lows for winter-grown varieties, and eight-month lows for hard red spring wheat.
"Large new-crop wheat supplies may continue to weigh on wheat prices, with total U.S. wheat production now expected to be up more than 19% from a year ago," noted Brock Associates. The USDA currently forecasts total domestic wheat production of 2.46 billion bushels, far in excess of the previous five-year average of 2.12 billion.
"Strength in the dollar was bearish for wheat," added Doane. "Expectations for a record world wheat crop will make the export market particularly competitive, making wheat prices very sensitive to the value of the dollar."
Crude Oil
Sep NYMEX crude lost $16.19 on the week, it's largest weekly drop of all-time in dollar terms.
US stocks came in substantially higher than expected and the general market malaise seems to have finally spilled over into the "Golden Child" that is crude.
European Markets
Nov LIFFE feed wheat lost £4.50/tonne on the week, Nov Paris milling wheat lost EUR7.70, Nov Paris rapeseed lost EUR24.75 and Nov Paris corn EUR8.25.
The French are reportedly all but finished on the barley harvest and around halfway through the rapeseed harvest. Depending on the they expect to be "well into" the wheat harvest across the weekend. Rain has delayed progress here in the UK and in Germany but better weather forecast for next week should enable some progress to be made.
Egypt bought wheat on the export market this week but there wasn't even a clause in the contract including French origin. Ukraine and Russia are where its at at the moment as they are "wall-to-wall wheat" as one broker put it.
Australian Wheat
ASX Jan wheat lost A$15 on the week with beneficial rains falling, particularly in Western Australia, and with more forecast across the weekend.
Mortgage drought deepens on 32% lending fall
(Times Online) -- UK mortgage lending fell by 32 per cent in the year to June and is will worsen further if the Bank of England raises interest rates in a bid to combat inflation, mortgage lenders warned today.
Figures from Council of Mortgage Lenders (CML) show that during June - traditionally one of the busiest periods in the housing market - gross mortgage lending fell 3 per cent to an estimated £23.8 billion as buyers struggled to secure new home loan deals.
The CML said today the pace of decline in the mortgage market was accelerating, with lending in the first three months of this year down 11 per cent and by 21 per cent in the second quarter.
But there was a glimmer of hope for homeowners as Halifax, the UK's biggest mortgage lender, announced it was cutting some mortgage rates by up to 0.15 per cent. This comes after Nationwide Building Society cut some of its rates earlier this week, although it increased rates for borrowers who have less than a 10 per cent deposit.
However, Michael Coogan, director general at the CML, said that lenders' funding shortages was hampering the mortgage market and indicated that the Government needed to step up support.
US: Midwest weather latest
(Freese Notis) -- Rainfall coverage continued to expand in the northwestern Corn Belt over the past 24 hours. Areas of South Dakota to the north of Interstate 90, much of the southern third of Minnesota, southwestern Wisconsin, much of the northeastern half of Iowa, the southern half of Nebraska, and northern Kansas are the areas that have done quite well with rainfall (i.e. a half inch or better) over the past 24 hours. In that area in can find rainfall totals of more than an inch for Mason City, Spencer, and Cedar Rapids; and more than two inches for Des Moines, Ames, Fort Dodge, and Waterloo.
Things have quieted down quite a bit early on this Friday, with most of the rain found over northeastern Kansas. However, with the frontal boundary responsible for this week's rain still well to the north on the Corn Belt and still just slowly sagging southward, the rainfall chances are far from over. There are rainfall chances for the entire Corn Belt, but especially the northwestern half, for today right through the end of the weekend and severe weather looks possible on any of those days. Flash flood watches have been posted for southeastern Iowa and southeastern Wisconsin in anticipation of more heavy rain for those areas.
We have not gotten all of the northwestern Corn Belt the rain that they need (places like Sioux Falls, Norfolk, and Sioux City have recorded little so far this week) but at least that area still does have more near-term rainfall chances.
Models are not in good agreement on next week's outlook, but it is highly unlikely that it will be completely dry and I will maintain my contention that the best rains shift to more northeastern parts of the region for especially the middle and latter parts of next week. Temperatures will continue to be warm, but we are still probably a week away from any potential for extreme heat. Middle 80s to low 90s will be seen on most days from today through next Thursday. I still target the July 25th time frame as one where temperatures may go to more extreme levels, but again will emphasize that to be the case mainly for western and northwestern parts of the region.
UK: Growers already considering early drilling of wheat
(Farmer's Guardian) -- THE majority of UK wheat growers are considering an early September start to drilling this autumn to ease their workload and reduce weather risk, according to the latest management study conducted by wheat breeder, RAGT Seeds.
The study, involving nearly 350 arable enterprises with over 120,000 hectares of wheat currently in the ground, shows more than half seriously considering early September drilling.
“Easing autumn workload pressures is the main reason behind growers’ enthusiasm for an earlier than normal start to wheat drilling,” said study co-ordinator, Chris Black.
“Many growers have much larger areas of winter cereals to be established with limited labour and machinery these days. They are also having to get used to increasingly uncertain autumn weather. Under these circumstances, it really isn’t surprising that an early start to drilling is becoming a management consideration.”
Good standing ability, good disease resistance and a relatively slow speed of development stood out as key characteristics that growers are seeking in varieties for early September drilling
CFTC: Much Ado About Nothing?
In what looks like a continued "going throigh the motions" move the Commodity Futures Trading Commission's Agricultural Advisory Committee have announced another public meeting for July 29th.
The agenda, according to a notice in the Federal Register is:
I. Convergence and Basis; II. Settlement Prices, Margin Requirement and Credit; III. Agricultural Swaps; IV. Ongoing Research.
Will they actually do anything about the unregulated role of the large funds activities in the markets this time I wonder?
eCBOT Close/Early Call
Overnight grains on the eCBOT market closed mixed Friday morning with corn 3-4c lower, wheat 2-3c lower and soybeans 6-7c firmer.
Grain futures were mostly stable or lower on Friday in line with a broad sell-off in commodities markets as worries over the weather eased.
But soybeans recovered slightly after a heavy slump on Thursday. The contract settled down 52 cents at $15.21 a bushel on Thursday as the market was hit by the Argentine Senate's decision to reject a tax hike on soybean exports that had sparked a political crisis and paralyzed trade in one of the world's leading soy exporters.
Corn could suffer more losses in the days ahead as crop conditions improve for the heart of the U.S. Midwest, a prime production region, analysts said.
“Unless the weather pattern changes the market has no power to go up at the moment,” said Genichiro Higaki, head of the proprietary fund management team at Sumitomo Corp in Tokyo.
“There is overall weakness in the commodities markets, that is another reason.”
Mild weather across the U.S. Midwest should be favourable for corn and soybean development for at least the next week, a forecaster said on Thursday.
For Friday afternoon's CBOT session earliest calls are: Corn futures are expected to open 3 to 4 lower; soybeans 6 to 8 higher; and wheat 1 to 3 lower.
As price of corn rises, catfish farms in US dry up
(Herald Tribune) -- The catfish industry is in free fall, unable to cope with the soaring cost of corn and soybean feed. Producers across the South are draining their ponds and wondering what comes next.
"It's a dead business," said John Dillard, who pioneered the commercial farming of catfish in the late 1960s. Last year Dillard & Company raised 11 million fish. Next year it will raise none. People can eat imported fish, Dillard said, just as they use imported oil.
As for his 55 employees? "Those jobs are gone."
Corn and soybeans have nearly tripled in price in the last two years, for many reasons: harvest shortfalls, increasing demand by the Asian middle class, government mandates for corn to produce ethanol and, most recently, the flooding in the Midwest.
This is creating a bonanza for corn and soybean farmers but is wreaking havoc on consumers, who are seeing price spikes in the grocery store and in restaurants. Hog and chicken producers as well as cattle ranchers, all of whom depend on grain for feed, are being severely squeezed.
Perhaps nowhere has the rise in crop prices caused more convulsions than in the Mississippi Delta, the hub of the nation's catfish industry. This is a hard-luck, poverty-plagued region, and raising catfish in artificial ponds was one of the few mainstays.
Keith King, the president of Dillard & Company, calculates that for every dollar the company spends raising its fish, it gets back only 75 cents when they go to market.
"What's happening to this industry is sad, but being sentimental won't pay the light bill," King said.
Dillard and other growers take their fish, still squirming, to Consolidated Catfish Producers in the hamlet of Isola, where workers run the machinery that slices them into filets. With fewer fish coming in, Consolidated Catfish is resorting to layoffs.
One hundred employees were let go in the last month, and an additional 200 will be cut soon. President Dick Stevens predicts that by the end of the year the company will have jobs for only 450, about half the number at its peak. That might not be enough to keep the plant open.
"The industry is going to implode," Stevens said. He blamed the government's ethanol mandates for making fuel compete with food for the harvest of the nation's farmland. "Politicians were in a rush to do something, and it became a terrible snowball."
Across the highway, one of the local feed mills, Producers Feed Company, has already shut down. The ripple effects have begun: between the grain mill and the fish plant was Peter Bo's Restaurant, locally celebrated for, naturally, its catfish. Hanging on the door is a "for rent" sign.
Ukraine: grain yield forecast for 2008 increased to 42 mln tonnes
"APK-Inform" increases the forecast for 2008 yield of grains and grain legumes in Ukraine from 39.7 mln to 42 mln tonnes.
The experts changed the forecast after the State Statistics Committee had published information regarding the sowing areas under grains in Ukraine in 2008, and on the basis of the operative information about the harvesting campaign. The experts also used information of Hydrometeorological Center of Ukraine about grains productivity forecasts to make their own forecasts more precise.
According to the latest forecasts of "APK-Inform", Ukraine will harvest 20.2 mln tonnes of wheat (against 19.7 mln in the previous year), 10.3 mln tonnes of barley (against 8.7 mln tonnes), 8.9 mln tonnes of maize (against 8.7 mln tonnes).
Overnight markets
eCBOT grains are mixed this morning with soybeans around 7-10c higher on ideas that last night's heavy losses, the most in more than a week, were a bit excessive and there is some need to factor back into the market the tight supply situation according to one analyst.
Still, at over $15/bushel, I'd say that the tight old-crop supply situation is factored in already! However, whilst there are some lingering doubts as to exactly what the Argy government's next move will be, having sensationally lost the Senate vote Wednesday night, it's highly unlikely that we will see a lot of downside in old-crop.
Pres Fernandez had said that she would "respect" the Senate's decision. But then again she is a "dirty cheating, penalty box diving, hand of God Argy," as one analyst said.
New crop and beyond is a different matter. The jury is obviously still out on the US weather across the rest of the summer so that crop could do anything. Add into the equation that Argentine plantings for next season look like they will be sharply higher from 2008's record crop and there is scope for downside potential.
Corn and wheat are dithering around either side of unchanged in early trade this morning, waiting for crude to make up its mind what it is going to do today.
Crude currently stands at $130.23/barrel and has just had it's biggest ever three day decline (in dollar terms) so I guess a bit of consolidation or a technical bounce today wouldn't be out of the question.
Production has been disrupted in lawless Nigeria this week, exactly why that should surprise anyone I don't really know. Production in lawless Nigeria is always disrupted.
"The market is sensitive to any real or potential supply disruptions,'' one analyst is quoted as saying. He must have had a day off on Wednesday when the US Energy Dept "found" 6 million barrels more oil stocks than analysts were expecting.
The pound is back below $2 after a report in today's FT suggests that the Treasury's new guidelines on spending would allow for the breaking of limits on public-sector debt. The pound is currently $1.9915.
Crude falls to close below USD130 - biggest three day decline ever
(MarketWatch/AP) -- Crude-oil futures fell for a third straight day on Thursday, ending below $130 a barrel for the first time since June 5, as worries continued that slower economic growth will curb oil demand. After rising $2.15 to an intraday high of $136.75 in early morning trading, crude for August delivery closed down $5.31, or 3.9%, at $129.29 a barrel on the New York Mercantile Exchange. Crude has lost $15.89, or 11%, in the last three days. Thats it's biggest three day decline ever.
Oil is now more than 10 percent cheaper per barrel than it was on Monday; natural gas prices are down more than 20 percent just since the Fourth of July.
Natural gas futures for August delivery fell more than 8 percent Thursday, marking their biggest one-day drop in nearly a year, according to Nathan Golz, researcher at Wachovia Securities in St. Louis. Prices for the key heating, cooking and power generation fuel settled 86.1 cents lower at $10.537, their lowest point since April.
Heavy Rains Forecast For Western Australia
Only two days after strong winds and widespread rain, a large area of Western Australia is on target for another, possibly more severe weather event. It is likely to be more severe, particularly in terms of winds which may exceed 125 km/h. A Severe Weather Warning has been issued due to the prospect of destructive winds and abnormally high tides from Geraldton to Merredin to Hopetoun.
An intensifying cold front and low is mapping out a path across a large area of southwest WA and will be the cause of the severe weather including widespread rain and a cold change. Rainfall may be more than a few days ago in south of about Perth and should spread a little further north and east also. Anywhere south of about Perth and east of about Albany could receive 25 to 50 millimetres on Thursday night and Friday. Some locations on the hills near Perth already picked up 50mm a few days ago.
USDA Weekly Export Sales
The USDA released their latest weekly export sales report for the week ended 10th July at 13.30BST today.
Here's what they had to say compared with trade expectations in parentheses:
Wheat 748,600MT (est 400-650,000MT)
Corn 07/08 369,200MT; 08/09 460,800MT (450-850,000MT)
Soybeans 07/08 63,500MT; 08/09 39,000MT (175-500,000MT)
Soymeal 07/08 61,200MT (50-200,000MT)
Soyoil TBA 07/08 5,900MT(5-60,000MT)
Early call on Chicago/eCBOT close
CBOT grain and soybean futures were lower overnight. Soybeans were pressured by the Argentine Senate's rejection of a grain export tax, which will please farmers and reduce the chance of another strike, a trader said.
The trader added that outside markets could further pressure grains and soybeans. There is little news in wheat, he said, and U.S. corn belt weather forecasts are not bullish.
Dec corn was down 7 1/2 cents to $6.69 3/4 per bushel, Nov soybeans were down 5 1/2 cents to $15.42 3/4 per bushel, and Dec wheat was down 9 cents to $8.48 1/4.
Early calls say corn futures are expected to open 5 to 7 lower; soybeans 5 to 7 lower; and wheat 7 to 9 lower.
Overnight developments: grains mixed, crude lower
Soybeans are around 4-6c higher as at 8.30am BST on ideas that forecasts for above normal temperature and below normal precipitation in parts of the U.S. Midwest next week will stress the crop.
Corn is lower depite the weather forecast as traders focus on reduced ethanol demand in the light of yesterdays surprisingly high crude oil and gasoline stocks data. Corn stands around 6c lower this morning.
Nearby wheat is also around 6c easier, following corn, after climbing yesterday on speculation that a weak dollar will boost US exports. Although Iraq and Japan are both in the market at the moment, this is business that the US would normally get anyway. Although US origin wheat was an option in an Egyptian tender earlier in the week, this wheat will most likely come from Ukraine or Russia, a trader said.
Crude fell under $134/barrel this morning as the trade continues to digest yesterday's astonishing stocks numbers.
"Sentiment is getting more bearish now," said Tetsu Emori, fund manager at Astmax Ltd. in Tokyo. "Investors were focusing on bullish factors last week, but now the market is beholden by bearish factors of weak demand, slowing economy and rising inventories."
Crude oil for August delivery fell as much as $1.20, or 0.9 percent, to $133.40 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $134.10 at 8:36 a.m. London time. Futures are up 81 percent from a year ago.
Yesterday, oil fell $4.14, or 3 percent, to settle at $134.60 a barrel. Prices dropped 7.3 percent in the past two days, the biggest two-day decline since January 2007.
"U.S. drivers continue to curb travel whenever possible with retail gasoline prices above $4 a gallon," Harry Tchilinguirian, a senior oil market analyst at BNP Paribas SA in London, said in a report. "Prospects for the U.S. economy and gasoline demand go hand in hand."
USDA Weekly Export Sales Report Expectations
The USDA release their latest weekly export sales report for the week ended 10th July at 13.30BST today. Traders expectations for the reports are as follows:
Wheat 400-650,000MT
Corn 450-850,000MT
Soybeans 175-500,000MT
Soymeal 50-200,000MT
Soyoil 5-60,000MT
The Fannie and Freddie Show Latest
(MarketWatch) -- The quick rescue for Fannie Mae and Freddie Mac hammered out on Sunday doesn't look like it'll be quite that quick.
Shares of Fannie and Freddie rose dramatically on Wednesday after five straight days of losses. But while shares of each company climbed by a whopping 31%, the rescue plan still appeared to have some political distance to go as of Wednesday.
"It's looking slower today than it did yesterday," said David John, an expert on financial institutions at the Heritage Foundation.
The plan got support from House Financial Services Committee Chairman Barney Frank, D-Mass., on Wednesday but Republicans in both the House and Senate have voiced skepticism about the plan, which would extend an unlimited line of credit for both companies for 18 months and give the Treasury the authority for 18 months to buy stock in both companies.
House and Senate lawmakers are aiming to pass a bill including the plan by the end of next week. That's not a moment too soon, says John.
"Some indication needs to be made and made quickly that Fannie and Freddie will not be allowed to fail," John said in an interview on Wednesday.
Concern about what one Republican senator called a "blank check" is one obstacle to congressional blessing of the plan to help the struggling companies. The other is the means by which to approve it.
Democrats are aiming to attach the measure to a housing bill that includes a $300 billion program to head off foreclosures, as well as long-debated regulatory reforms for Fannie and Freddie But Republicans are throwing cold water on that idea. House Minority Leader John Boehner, R-Ohio, has called for hearings about the aid plan and said it shouldn't be linked to the foreclosure program.
To be sure, Congress isn't known for its lightning-fast movements. But at the same time, analysts say, it'd behoove lawmakers to get their acts together to help the companies and help shore up confidence in the mortgage market.
"I think it will go through. I think there's a sense of urgency about this," said Peter Morici, a business professor at the University of Maryland. "Because it has to go," he said, citing the $5.2 trillion of home mortgages owned or guaranteed by both companies.
Not everyone is optimistic about passage, though.
"I think it's going to get slowed down," said Bob Moulton, president of the Americana Mortgage Group. "I think it's going to cost taxpayers a fortune," said Moulton, echoing concerns raised by some senators on Tuesday.
OECD Publishes Scathing Report On Biofuels
The OECD has today released a scathing report on biofuel policies in member countries. According to the report, Economic Assessment of Biofuel Support Policies, government support of biofuel production in OECD countries is costly, has a limited impact on reducing greenhouse gases and improving energy security, and has a significant impact on world crop prices.
The report says biofuels are currently highly dependent on public funding to be viable. In the US, Canada and the European Union government support for the supply and use of biofuels is expected to rise to around $25 billion per year by 2015 from about $11 billion in 2006. The report estimates that biofuel support costs between $960 to $1700 per tonne of greenhouse gases (carbon dioxide equivalent) saved.
Support policies include budgetary measures, either as tax concessions or direct financial support for biofuel producers, retailers or users. Blending or use mandates require that biofuels represent a minimum share of the transport fuel market and result in increased fuel costs to consumers due to the higher production costs of biofuels. Trade restrictions, mainly in the form of import tariffs, protect the domestic industry from foreign competitors but impose a cost burdon on domestic biofuel users and limit development prospects for alternative suppliers.
The report calls on governments to refocus policies to encourage lower energy consumption, particularly in the transport sector. It also calls for more open markets in biofuels and feedstocks in order to improve efficiency and lower costs. The report recommends a clear focus on alternative fuels that maximise the reduction of fossil fuel useage and greenhouse gas emissions. Further, research to accelerate development of second generation biofuels that do not require commodity feedstocks is suggested.
The reduction of greenhouse gas emissions is a primary reason for current biofuel policies but the savings are limited. Ethanol from sugar cane - the main feedstock used in Brazil – reduces greenhouse gas emissions by at least 80 percent compared to fossil fuels. But emission reductions are much smaller from biofuels based on feedstocks used in Europe and North America.
Biofuels produced from wheat, sugar beet or vegetable oil rarely provide emission savings of more than 30 to 60 percent while savings from corn (maize) based ethanol are generally less than 30 percent. Overall, the continuation of current biofuel support policies would reduce greenhouse gas emissions from transport fuel by no more than 0.8 percent by 2015.
The impact of current biofuel policies on world crop prices, largely through increased demand for cereals and vegetable oils, is significant but should not be overestimated. Current biofuel support measures alone are estimated to increase average wheat prices by about 5 percent, maize by around 7 percent and vegetable oil by about 19 percent over the next 10 years.
Taking into account the 2007 US Energy Independence and Security Act and the proposed EU Directive for Renewable Energy, 13 percent of world coarse grain production and 20 percent of world vegetable oil production could shift to biofuel production in the next 10 years, up from 8 percent and 9 percent in 2007, respectively.
Columbia wheat harvest looks promising
Wheat harvest is getting started in the Mid-Columbia and officials are optimistic about what they see. "It's going to be a good quality year," said Damon Filan, manager of Tri-Cities Grain. Harvest is about on time this year, he said, and business is starting to pick up.
It's hard to tell at this early stage what yields farmers will get this year, said Tom Mick, CEO of the Washington Wheat Commission. But "the winter crops look very good," he said.
Many of the state's 2.1 million acres of wheat land produce soft white wheat, but farmers also grow hard red winter and hard red spring wheat, Mick said.
Chris Shaffer of Walla Walla is a long-time wheat farmer and grows mostly soft white wheat. The cooler spring weather this year could produce a slightly higher than average yield, he said.
Ukraine exports over 700,000 tonnes of grain in two weeks of new marketing year
Ukraine over the first two weeks of the new marketing year (from July 1 to July 14) exported over 700,000 tonnes of grain to foreign markets, according to Agriculture Minister Yuriy Melnyk.
From July 1 to July 14, from the start of the new marketing year, over 700,000 tonnes of grain was exported," he said at a press conference in Kyiv on Tuesday.
He said that the present pace of growth in exports is in line with the grain supplies usually made to foreign markets in peak periods.
The minister said that the government plans to promote grain exports, which would help to maintain the stability of prices on the market and free up grain storage facilities.
Earlier, the ministry forecasted that grain exports in the 2008/2009 marketing year would be 13.5-14 million tonnes. That would be around 10 million tonnes up on the 2007/2008 marketing year's 3.7 million tonnes.
Ukraine: grain stocks totalled 5.4 mln tonnes as of July 1
As of July 1, 2008, at the Ukrainian agricultural enterprises (except small ones) engaged in storing and milling of grains, grain stocks totaled 5.4 mln tonnes, up 29% as compared to the same date of 2007, reported State Statistics Committee of Ukraine Wednesday.
Wynnstay Group PLC - Possible Acquisition
The Board of Wynnstay, the agricultural and retail group, announces that it has entered into non-legally binding heads of agreement relating to the acquisition by Wynnstay of the balance of the issued share capital of Welsh Feed Producers Limited not already owned by the Group.
Wynnstay currently owns 50% of the issued share capital of WFP, an animal feed manufacturing business based in Carmarthen, South Wales. A further announcement will be made if and when this transaction is completed.
eCBOT Close/Early Call
Wednesday's CBOT session is seen opening with corn futures expected 2 to 4 cents lower, soybeans 6 to 10 lower and wheat 5 to 7 lower.
Corn and wheat were lower for much of the overnight eCBOT session, but soybeans were mostly firmer before selling off late to also close in negative territory.
September beans closed 9 3/4c lower at $15.18 1/4, Sep corn 3 1/2c lower at $6.44 3/4 and Sep wheat 7 1/4c lower at $8.03 3/4.
Favourable US weather, wheat harvest pressure, weaker crude oil and spillover economic pressures from outside sectors are all bearish influences today a trader said.
However the market remains nervous as crude could bounce this afternoon depending on the latest stocks data from the EIA, the trader warned.
UK cereal harvest kicks off
The UK cereal harvest has kicked off this week with winter barley being cut in several areas. With crops ready in many areas, it’s just a matter of getting the weather to get on with it, says the Farmer's Guardian.
Some growers have made a start in the south west, according to Owen Cligg, trading director at farmer-owned business Wessex Grain, based in Somerset: “We’ve had a bit of barley offered to us from Dorset,” he said. “And we did hear of some cut in Somerset for own use.” However, rain has held up progress. “Feed barley would have been ready last week, but the rain kept it off,” said Mr Cligg.
Martin Cook trader at Grainfarmers in Cheltenham reported a slow start. Growers in the area were 'just nibbling at a bit of barley'. “They’ll get going at the end of the week if the weather stays fine,” he said.
In Germany, about 40 per cent of the barley harvest is complete, but yields are reported to be highly variable, ranging from five tonnes per hectare in the west to eight tonnes in the east. The wheat harvest is likely to begin next week.
"Harvest is not in full-swing everywhere, but it is underway in many places," said a Paris-based dealer. "Quantities will be there, but so far quality is hit or miss."About 80% of the French winter barley crop has now been harvested with farmers quickly turning to rapeseed and milling wheat, according to the dealer.
The dealer added that so far quality in southern Italy had been good, but is much more variable in the North.Export business remains quiet and there has been some local price pressure in parts of southern Europe due to some supplies of Black Sea wheat coming in.Egypt bought 240,000 tons of wheat Tuesday, but the optional origins didn't include E.U. wheat.
In Poland, total cereal production at 25.5 million tonnes is forecast to be at least 1.7 million tonnes lower than last year. Good progress has been made in Hungary and Romania, but there are some concerns over grain quality.
Ukraine grain harvested nearly 8MMT, Ministry to revise output estimate next week
As of July 15, Ukraine had harvested nearly 8 mln tonnes of spring grains and grain legumes from the area of 2.6 mln ha, 20% from the plan, reported Yuriy Melnik, Minister of Agrarian Policy of Ukraine on July, 15.
3.92 mln tonnes of wheat were harvested from the area of 1.23 mln ha, 18% from the planned acreage.
3.9 mln tonnes of barley were harvested from the area 1.26 mln ha, or 29% of the planned acreage.
6.300 tonnes of rye harvested from the area 2.900 ha, 1% of the planned area.
The Ministry said it plans to review its own forecast for 2008 yield due to high crop capacity. The new forecast will be presented in a week. As a reminder, earlier Ministry of Agrarian Policy forecasted yield at the level of 40.4 mln tonnes of grain against 29.3 mln tonnes last year.
Overnight developments in the grains
Grains are mixed overnight with eCBOT soybeans 10-12 cents firmer on ideas that last night's steep losses were overdone. Corn showed little change.
Soybeans have declined 5 percent in the past two days on speculation that favourable weather in parts of the U.S. Midwest will boost crop prospects. Corn lost 6 percent in the two-day period. Dry weather helped revive crops ravaged last month by floods along the Mississippi and Iowa rivers, and timely rains fell in some growing areas.
There is evidence of some investors trying to get out of commodities to make up for losses from stocks or for cash , one analyst said.
Wheat is 4-5c lower this morning after wheat regions in Western Australia state, the nation's biggest grower of the grain, have received their "best rain'' of the cropping season, CBH Group said today.
There was between 10 millimeters (0.4 inch) and 40 millimeters of rain overnight, Michael Musgrave, operations manager for CBH, the state's largest grain handler and marketer, said. Rain fell across the majority of the wheat belt, he said.
US Midwest Weather - Near Perfect, But Maturity Lags
(Freese Notis) -- Crop condition ratings released this week showed that the Nation's corn and soybean crops continue to grind their way back towards respectability. Corn ratings at 49 percent good/15 percent excellent compares to ratings at just 48 percent good/9 percent excellent just four weeks ago and is not far below last year's crop which was 46 percent good/18 percent excellent at this same time. Historically this is a time frame when corn ratings have generally held steady or even dipped a bit, which makes the improvement seen over the past month that much more impressive. Soybean ratings did not improve all that much this week with the rating of 48 percent good/11 percent excellent, but has shown some improvement since the middle of June (when it was 49 percent good and 7 percent excellent) and is also not far below the ratings of last year (49 percent good and 13 percent excellent at this same time).
Chances are good that we will see at least steady, if not improved, ratings for next week's report. Coming into this week, clearly the area of the Corn Belt that needed the rain the most was the northwestern part of the region, and that same area is in a near-perfect set-up for a widespread soaking for the middle and latter parts of this week. I still expect that this activity will get kicked off tonight, and very well could last through a good part of the coming weekend. South Dakota, Minnesota, Nebraska, Wisconsin, and northwestern Iowa look to be target areas for rains that will eventually total at least one to two inches and locally much, much heavier. It is going to be a while before any of that rain works into southeastern parts of the Midwest, but excellent rains in a lot of that area last weekend means that crops should improve there this week despite the lack of rain.
Rather than crop ratings, maybe the biggest fear right now should be how slow the crops are maturing. Corn crops in most of the Midwest have barely begun to tassel, while normally we are well over one-third of the way through that stage and we were around halfway through that stage last year at this time. Agronomists have determined that it takes about 60 days for corn to reach maturity after the time its starts to silk. We have just 13 percent of the Nation's corn crop silking this week, so we will have 87 percent of the crop maturing this year sometime after September 11 (versus the 5-year average of 64 percent and 50 percent with last year's crop).
Lehman Bros - Who Wants Them?
LONDON (MarketWatch) -- After a drastic slide in Lehman Brothers shares, speculation about clients leaving and a reported search for new strategic options, now would be a good time to acquire the struggling brokerage firm, analysts say. But bidders may be thin on the ground.
"I'm hard pressed to give you many viable buyers of Lehman," said Jeff Harte, a securities industry analyst at Sandler O'Neill & Partners. "Most large banks are focused on their own capital issues."
Even if a bidder did come forward, it would have to win over a lot of Lehman employees -- who control around 30% of the stock -- or risk losing them once the deal was complete, Harte said.
"The employees are not particularly willing to sell, especially at such bargain-basement prices," agreed Stefan-Michael Stalmann, an analyst at Dresdner Kleinwort in Frankfurt.
Shares in Lehman have tumbled more than 80% this year, including sharp falls in recent sessions on speculation that some clients are starting to cut back their business. Those rumors have been denied by the firm and some of its major trading customers.
Lehman is now mulling a handful of options, including a strategic alliance with a partner that it hopes will restore investor confidence, an asset sale, or a possible share buyback, The Wall Street Journal reported on Monday, citing unidentified people familiar with the matter.
Still, Lehman shares slumped 14% to close at $12.40 on Monday, their lowest level in roughly a decade.
Comparisons have been made to Bear Stearns, which was forced to sell itself to J.P. Morgan Chase in March after clients abandoned the brokerage firm.
EU Maize Imports At 13.4 Mln T July 2007-May 2008
(ANSA) -- The 27 European Union (EU) member countries imported a total 13.4 million tonnes of maize for the period July 2007 to May 2008, the latest official statistics of the EU, elaborated by the research office of Italian trade fair centre CremonaFiere, showed.
The member countries imported a total 5.1 million tonnes of maize for the period July 2006 to May 2007 and a total 2.4 million tonnes of maize for July 2005 to May 2006. The imports rose by 464 pct for the three-year period, the report also showed.
The sorghum imports of the EU countries stood at 49,000 tonnes in the period July 2005 to May 2006 and reached 5.3 million tonnes in the period July 2007 to May 2008.
According to CremonaFiere's research office regarding the marketing and sale campaign for the period July 2008 to May 2009, which started on July 1, 2008, the situation in the European grain markets will improve due to the expected increase in the domestic output determined by the growth of the planted areas. The grain planted areas in Europe increased to 59.9 million ha from 56.6 million ha, CremonaFiere's research office added. No further details were available.
EU Suspends Review of AB Foods' Buy of GBI Assets
The European Commission on Tuesday suspended its review of Associated British Foods' plan to buy some assets and subsidiaries of GB Ingredients BV of the Netherlands.
The suspension means the Commission, the EU's top competition regulator, has sought missing information. The suspension will end when the parties provide needed materials.
GB Ingredients is a producer of yeast.
Russia Permits Low Level Presence of GMOs in Animal Feed
Russia has said that all animal feed can now contain a low level GMO presence of up to 0.9% and still be considered biotech free.
The country’s Federal Service for Veterinary and Phytosanitary Surveillance (VPSS) has declared feed is biotech-free if 0.5 percent or less of each component contains non-registered biotech products and if 0.9 percent or less of each component contains registered biotech products.
Both ‘registered’ and ‘non-registered’ refer to the status of GMOs in Russia.
Russian authorities have made the decision after conceding low level presence of biotech substances is unavoidable. The move is sure to increase the pressure on the European Commission which has been charged with finding a ‘technical solution’ to the region’s zero tolerance approach to the presence of unapproved GMOs in feed.
The hope is that by clarifying the levels at which feed may be declared ‘GMO-free’, VPSS will harmonise interpretations at customs.
One US expert said: “Such clarification is necessary, since VPSS has many laboratories that are capable of determining slight traces of biotech components. Given that most feeds on the world market have or may have biotech components, VPSS’s new definition may encourage feed importers to register more feed as biotech.”
Premier Foods plc - Trading Update
Trading update for the half year ended 28 June 2008. Highlights:
* Group sales up 7%
* Price rises achieved to recover cost inflation
* Group Trading profit(2) in line with first half of 2007
* Hovis rejuvenation underway
* RHM and Campbell's integration accelerated
* Synergy delivery accelerated
* On course to deliver our profit expectations for the full year
Robert Schofield, Chief Executive, said:
"I am pleased to report that Premier Foods made good strategic and operational progress during the first half of the year, despite the difficult economic and trading environment that all consumer businesses are facing. Against this background we have recovered the commodity cost inflation we have seen to date and we expect pro forma Trading profit for the first half of the year to be in line with the same period last year.
"The integration of Campbell's and RHM is proceeding ahead of its original schedule. Our manufacturing rationalisation programme is progressing well with the closure of the Bristol and Droylsden factories in June. We have now closed five out of the nine factories scheduled to close through this programme with the remaining four to close over the second half of the year.
"Premier's broad portfolio of staple food products and leading brands, supplied through a wide range of customers, provides us with a resilient base as consumers' buying patterns evolve. We have good forward sight of inflationary pressures and have plans in place to mitigate them as they occur. Our expectations for the year remain unchanged with progress weighted to the second half as the benefits of synergies from the manufacturing rationalisation programme, price increases achieved to date and the rejuvenation of Hovis flow through."
Premier's trading performance in the first half of 2008 was in line with our expectations with Group sales up by approximately 7% on the same period last year. The driver of the sales growth has been price rises to recover the significant input cost inflation, which began during the second half of 2007. Trading profit continues to be in line with our expectations with, as previously indicated, the synergies from the integration of Campbell's and RHM being broadly offset by the delay in recovering cost inflation and lower bread volumes compared to the same period in 2007.
Sales for the Baking & Milling division are approximately 16% ahead year on year for the first half, driven by pricing activity. We achieved price increases across our bread and flour ranges in the first half, reflecting continued pressure from wheat and other input costs. We have seen sales volumes of Hovis stabilise during the first half of the year albeit at lower levels than the same period in 2007. We are pleased by the response of consumers and customers to the new recipe and packaging for the Hovis white loaf and look forward to rejuvenating the whole of the Hovis range over the second half.
Following a review of our flour milling operations we entered into consultation with employees regarding the proposed closure of our Rotherham mill, which, if agreed, will be scheduled to close by the end of 2008.
Overnight markets
eCBOT grain futures have bounced modestly higher overnight following last night's steep losses.
The USDA crop progress report released after the close showed corn and soybean progress lagging. Whilst this was not unexpected it was enough to encourage some light buying this morning.
Corn good/excellent was raised 2 points to 64%, in line with expectations, soybeans good/excellent were left unchanged at 59% when a modest improvement had been anticipated.
Wheat contained the biggest surprise in last night's report where 61 percent of the U.S. spring-wheat crop was rated good or excellent as of July 13, down from 69 percent a week earlier, the USDA said. Temperatures were as much as 4 degrees Fahrenheit warmer than normal in parts of North Dakota and Minnesota, hurting plants that were sown late because of wet weather.
Wheat is around 4-5c firmer overnight, with corn around 3c firmer and soybeans around 10c higher.
USDA Crop Progress Report Highlights
In Monday night's USDA crop condition report corn rated good/excellent rose two percentage points to 64% G/E. This was in line with analyst's expectations for an increase of 1-3 points. Corn percent silking was seen at 13%, well below the five year average of 36%.
Soybeans good/excellent was unchanged from last week at 59%. Analysts had been expecting an increase of 1-3 points. Soybeans blooming was seen at 26%, well below the five year average of 45%, but in line with trade ideas of 25%.
Winter wheat was seen at 62% harvested, slightly lower than the five year average of 70%. This is in line with trade expectations.
Perhaps the biggest surprise was in spring wheat with the good/excellent category pegged at 61%, eight points lower than last week. Traders had been expecting conditions to remain unchanged to two points lower.
USDA Attache: Record 2008-09 Wheat Area Seen In Australia
Total area planted in 2008/09 to wheat in Australia is forecast by the US attache at 14.0 million hectares, up on the previous forecast submitted. If achieved, this area would represent an all time record easily surpassing the 13.4 million hectares planted in 2004/05. Record high wheat prices combined with record low sheep numbers has likely driven planted area to record levels.
The attache forecasts total wheat production for 2008/09 at 22.4 MMT, down on his previous forecast. Below average rainfall in some key grain growing regions has reduced expectations for wheat production despite an increase in forecast planted area. Given average climatic conditions, and allowing for some variation in the final area number, the atache sees the scope for Australian wheat production varying between 20.2 and 24.7 MMT. Climatic conditions outside of those considered "normal" would likely push production outside this range.
This production forecast assumes an average yield of around 1.6 MT/Ha. This figure remains slightly under the 10 year average of 1.64 MT/Ha, according to historic ABARE data.
London wheat crashes lower
London wheat futures are sharply lower today taking a lead from eCBOT. November is down GBP1.50 at GBP141/tonne and March down GBP2.70 at GBP144.80/tonne.
November is down GBP14/tonne in the last fortnight.
The USDA Friday forecast the world wheat crop at a record high 664 million tons, which is up 1.3 million tons from last month's projection and an increase of 53 million tons or 8.8% on the year, which is adding some pressure.
Helping to drive the upward revision, USDA raised its forecast for European Union wheat production 1.7 million tons to 141.70 million. This is a jump from 119.5 million in 2007-08.
Amplifying the large crop sentiment, the French Agriculture Ministry Friday forecast French soft wheat output to rise 19% on the year to 37 million tons.
The Spanish Agriculture Ministry last week raised its estimate for the country's winter cereal crop to 18.95mmt from 15.81mmt previously, mainly due to favourable rains during spring / early summer.
The Association of German farming cooperatives estimates the German 2008 cereal crop at 46.1mmt, an increase of 14% on last year. Wheat crop is estimated at 23.332mmt, an increase of 13%.
Recent rains in Europe, and particularly the UK, are delaying the harvest and may affect quality increasing the amount of feed grade wheat available.
The barley fields around here are looking just about ready to cut if they could get a week without rain. Certainly some of the fields I was looking at yesterday contained some very bold looking samples.
Petrol prices: stop whinging you Septics*
I filled the car up at the weekend as we were going away to the coast for a few days. It's a not particularly large Peugeot 206 diesel. Times are hard, with all this free blogging I do etc, etc.
It was over sixty quid to fill the thing, certainly the dearest fill-up I've ever done. With consumers in the US baulking at the price of "gas" over there topping $4/gallon I did a quick Google and £1.32/litre for diesel here is equivalent to a fiver a US gallon, or in round figures $10. More than double what the Septics* are whinging about!
In the US taxes account for around 19 percent of the price of fuel at the pumps, over here its 81.5 percent!
Meanwhile in oil-rich Venezuela, petrol is cheaper than milk at 12c/gallon and you can fill up a truck for the price of a Big Mac. Add to that Caracas reputedly has the highest women:men ratio in the world. Where did I put my passport?
*Septic = Septic tank = Wooden plank = Yank
Tom Hanks plural, Americans
Oil price eases back to $143 a barrel
Oil fell by $2 to around $143 a barrel this morning as the dollar rebounded following a United States plan to restore confidence in its financial sector.
The US government at the weekend unveiled an emergency plan to shore up embattled mortgage giants Fannie Mae and Freddie Mac - which control $5 trillion in debt - easing concerns about the wider economy and helping the dollar bounce off its near-record against the euro.
US light crude for August delivery was $1.76 down at $143.32 a barrel by 10am. London Brent crude was $1.59 down at $142.90.
US crude hit a record high of $147.27 last Friday, as concerns about threats to global oil supplies and a deteriorating US economic landscape hit financial markets, driving investors to seek the relative safety of commodities.
Oil initially fell by more than $2.50 today, but pared those losses as Brazilian oil workers began a five-day strike, once again highlighting supply fears in a tight market.
Traders were also on the watch for any news of supply disruptions from Nigeria, where militants abandoned a ceasefire, and from Iran amid tensions with Israel and the west.
"Oil's fall this morning is generally due to gains in the US dollar as well as some profit-taking in the market," said Gerard Burg, a commodities analyst from the National Australian Bank in Melbourne.
Ukraine Harvests 6.478 Million Tons Of Grain To July 11
The harvest in Ukrain is progressing well with 6.478mmt cut as of July 11th according the the Ag Ministry there.
Although harvest pace is a little behind 2007 (when heat reduced the crop but afforded for an early start to proceedings), yields continue to impress.
Last year Ukraine harvested 7.2 million tons of grain to July 11 on 3.9
million hectares with the average yield of 1.84 tons a hectare.
This year's 6.478mmt has come from just 2.216 million hectares, with an average yield of 3.08 tons a hectare.
The official government estimate for this season's grain crop is 40mmt, of which approximately half is wheat. Other private estimates peg total grain output higher at around 43.5mmt, with wheat accounting for approximately 22mmt.
If yields continue to come in 50% up on 2007 then the crop could be even bigger than that. Last season's output was 29.3mmt.
Exactly where all this grain is going to go is another question. The country reputedly only has commercial storage facilities for around 27mmt, and is said to be still carrying around 7mmt of grain & oilseeds from 2007's crop.
Its not surprising therefore that they are mopping up much of the world export business at the moment, a trend which looks set to continue awhile yet.
Czech grain harvest seen 8% higher this year
Prague, July 11 (CTK) - Czech grain harvest is estimated by the Czech Statistical Office (CSU) at 6.88 million tonnes this year, up 7.9 percent year-on-year, and oilseed rape harvest is expected to be 7.6 percent higher at 1.11 million tonnes.
Based on this year's first estimates, statisticians said Friday that per hectare yield will be 9.4 percent higher at 4.79 tonnes.
