Ukraine 08/09 Grain Exports To Increase Almost Fivefold To 17-18 Million Tonnes
(Interfax News Agency) -- Ukraine's Agriculture Ministry has said that the country may export 17-18 million tonnes of grain during the current marketing year (July 2008 through June 2009). That's an increase of almost 500% from 2007/08 when the Ukraine exported just 3.7 million tonnes.
"The Agriculture Ministry believes that the overall supply for grain may reach 50 million tonnes in the 2008/2009 marketing year that will help not only cover the demand of the domestic market, but also allow 17-18 million tonnes to be exported," a source in the ministry told Interfax-Ukraine on Wednesday.
He said that the ministry had assessed the possible export of wheat at the level of up to 10 million tonnes during the current marketing year.
The source said that national consumption of food grain would amount to 7.2 million tonnes and 14.3 million tonnes would be used for fodder.
The Agriculture Ministry earlier forecast this year's grain harvest at the level of 40.4 million tonnes and grain export of 13.5-14 million tonnes in the 2008/2009 marketing year. However, follwoing better than anticipated yields, the ministry recently increased its forecast for gross grain output to 43 million tonnes.
Two More US Banks Fail
(AP) -- US federal regulators closed two small Western banks Friday, bringing to seven the number of US banks that have failed this year.
The banks, owned by First National Bank Holding Co. of Scottsdale, Arizona, will have their deposits and some assets transferred to Mutual of Omaha Bank, according to the Federal Deposit Insurance Corp., or FDIC.
One bank, First National Bank of Nevada, based in Reno with $3.4 billion in assets, also operates as First National Bank of Arizona. The other, First Heritage Bank, based in Newport Beach, California, had $254 million in assets and primarily served businesses. The banks were undercapitalized, the Office of the Comptroller of the Currency said Friday.
Bill Uffelman of the Nevada Bankers Association called the FDIC action "a reflection of the times for the banks." The world's largest banks and securities firms have announced more than $468 billion in writedowns and credit losses since the start of 2007.
Sheila Bair, chairwoman of the FDIC, has said bank failures will increase as foreclosures rise and home sales slump.
Grains Markets Weekly Review
CBOT Wheat
A 23 1/4c gain Friday saw Sep close 7c higher on the week. There seems to be some evidence that US wheat has found it's correct level for the time being around the $8/bushel mark.
CBOT Soybeans
Futures bounced late Friday but Aug still managed to close 71 1/4c lower on the week as crude fell and US weather remains largely non-threatening.
CBOT Corn
Sep corn lost 32 1/4c on the week. Reports are circulating suggesting that two Midwest ethanol plants that had been shut down due to soaring corn prices will soon re-open. However, with crude also falling, the economics of the viability of the ethanol industry are constantly changing.
LIFFE/Euronext Feed Wheat
Nov posted a loss on the week of £6.00/tonne. A favourable weather outlook should enable rapid harvest progress in the coming week. The differential between feed and milling grade is widening.
Gleadell are citing a further downside risk of another £10/tonne for feed wheat given current parities.
LIFFE/Euronext Milling Wheat
Nov milling wheat closed unchanged on the week. There seems to be a trend developing that suggests milling premiums over feed are expanding. Wet weather in France during May and June may have led to some quality losses it seems.
LIFFE/Euronext Corn
Nov corn posted a net weekly loss of EUR5.30/tonne, following the Chicago market lower.
LIFFE/Euronext Rapeseed
Rapeseed plunged in the first half of the week before recovering slightly, however Nov still lost EUR18.50/tonne on the week. The French harvest is in full swing and bits and pieces have been done in the UK. A favourable weather outlook next week could bring more harvest pressure.
The UK physical market is £20/tonne lower on the week according to Frontier.
Falling crude oil has also weighed on rapeseed this week. Sep Crude lost $6.21 on the week to close at $123.26/barrel.
Nebraska Crops Looking 'Very Good'
Well-known Nebraska farmer Roy Smith reports that the crops in his home county of Cass County, Nebraska are looking very good. "We keep getting small rains without having any gully washers in the past two weeks. Corn on the river bottom looks much better. What survived the flood was very short and yellow a month ago. The hot days of the last week were just what the doctor ordered. The conditions for that corn have improved dramatically," says Roy.
"Soybeans are doing well also. Many were planted late. Those are short but growing fast. My big concern is that the heat and humidity are ideal environment for Soybean Rust. Prior years after this disease came to the United States, hot and dry weather in August prevented it from doing much damage. Conditions this year will be the true test of whether it is going to be a perennial problem or not," he added.
Crude falls 2% on rising dollar, economic worries
(MarketWatch) -- Crude-oil futures tumbled more than 2% to below $123 a barrel Friday, extending crude's weekly losses to nearly 5%, as economic worries continued and as the dollar gained ground after the better-than-expected U.S. durable goods data.
"The exhibited selling pressure was a statement of acknowledgement of the adverse effect that high oil prices and credit market woes are having on the global economy," said John Kilduff, an analyst at futures brokerage MF Global.
Crude oil for September delivery dropped 2.4% to an intraday low of $122.50 a barrel. It was last down $2.03, or 1.6%, to $123.47 on the Chicago Board of Trade. Crude is now down about $24 from its highest hit on July 11.
Investors were increasingly worried that economic slowdown will dampen oil demand. Over the past four weeks, U.S. motor gasoline demand has averaged 9.3 million barrels per day, down by 2.4% from the same period last year, the Energy Information Administration reported Wednesday.
In the face of falling consumption, investors sold crude contracts and pushed prices 4.8% lower this week. Crude has fallen seven out of nine sessions since it closed at a record high of $145.18 a barrel on July 14.
"Very Demanding" India Blocking WTO Talks In Geneva - Sources
GENEVA (AFP)--Several diplomatic sources blamed India Friday for a deadlock here in World Trade Organization talks which are facing collapse unless a breakthrough can be found.
"India has come back with a very hard position," said a diplomat, who asked not to be named but who has been taking part in talks between the U.S., the European Union, Japan, India, Brazil, Australia and China.
The source said Indian Trade Minister Kamal Nath had been "very demanding" in his opposition to opening up India's internal markets for farm and industrial products. Another diplomatic source said an agreement "depends today mainly onIndia" and a third source close to the European delegation underlined this.
"Nothing has changed really. The big question today is India," said the third source. "We are worried about the political willingness of India to negotiate."
Beginning a fifth day of meetings Friday, diplomats and negotiators said it would be make-or-break at the end of grueling week of bargaining at the WTO which has produced scant evidence of progress.
Russia Has Capacity To Produce Much More Grain - Minister
Russia should increase grain production, especially in the circumstances of the world food crisis, declared Victor Zubkov, the First Vice-Premier of Russia, on July 24.
In 2008 Russia expects 85 mln tonnes grain crop, up 3 mln tonnes as compared to the previous year.
But Mr Zubkov points out that as long ago as 1992 Russia harvested 106 mln tonnes of grain, and according to the world standards, every country should have about one tone of grain per person, that's why Russia should target to harvest nearly 143 mln tonnes of grain, declared Mr Zubkov.
Overnight markets
Front month beans are around 7-9c higher this morning, effectively reversing much of last night's losses. Wheat and corn are around 2c firmer.
There's no particularly fresh news, its a general recent losses might have been a bit overdone, consolidation ahread of the weekend sort of scenario.
Crude is steady for the time being around the $125-126 level, with the usual concerns over Iran & Nigeria doing enough to stop the market declining any further for the time being.
Asian stock markets crashed to their lowest levels in six weeks overnight after the National Bank of Australia took a big hit. Shares in Australia's biggest bank and the Australian & New Zealand Banking Group, the third largest, plunged the most since the October 1987 stock market crash.
The pound is jittery on recession fears at $1.9875 and one euro is worth 79p.
Citi downgrades Lloyds TSB, sees UK recession
LONDON (MarketWatch) -- Citigroup downgraded British bank Lloyds TSB to hold from buy as it expects the U.K. to fall into a recession in the second half of 2008. It cut earnings estimates by at least 40% on Royal Bank of Scotland, Alliance & Leicester, HBOS and Barclays and retained sell ratings on HBOS and Barclays.
UK: Encouraging winter barley harvest is progressing well
Farmers Guardian -- The winter barley harvesting is going well in the South and Midlands with up to 40 per cent of the national crop now cut, according to Berkshire-based senior consultant, Susan Twining, ADAS.
“There was limited combining activity until the middle of last week, but the dry weather has seen growers in the south making good progress with winter barley,” she said, adding that if the weather held out, the winter barley crop would be ‘pretty much’ cleared by the end of this weekend in southern and Midland areas.
The dry weather has also meant that crops were coming in below 16 per cent moisture, which was keeping drying costs down, she said.
An early indication on yields shows a crop that is average to just above average this year.
“The five-year average for winter barley yields in the South East has been 6.2tonnes/hectare and most yields so far this summer have exceeded that at 6.5 to 7t/ha.”
Further north progress is more limited, with the bulk of the winter barley harvest just beginning this weekend in areas such as the Yorkshire and Lincolnshire Wolds.
World rapeseed supply and demand 2008/09
Informa this month pegged world rapeseed production at 51.5 million tonnes, an increase of 4.2 million tonnes on last year's 47.3 million tonnes.
Oil World expects the world to crush 49.9 million tonnes of rapeseed this year as compared to 48.3 million tonnes last year.
Significant production increases are seen coming from Australia (1.7 million tonnes compared to 1.1 million tonnes in 2007) and the Ukraine (2.5 million tonnes vs 1.1 million tonnes last year).
Informa says that the Ukraine will have up to 2 million tonnes of non-GMO rapeseed to export this year.
Statistics Canada is predicting that Canadian farmers will plant a record amount of canola this year. Informa is forecasting the Canadian canola production number will hit 10.3 million tonnes versus 8.8 million tonnes last year.
The Chinese Minstry of Agriculture and Informa are pegging this year’s Chinese winter rapeseed crop at 11.85 million tonnes this year. That is up 3.8% over last year.
EU-27 production is seen around unchanged depending on who's figures you rely on.
The USDA is forecasting an 18.9 million tonne EU-27 rapeseed crop this year. Toepfer thinks this is optimistic and thinks the number will be closer to 18.3 million tonnes, whilst Oil World sees Europe producing 18 million tonnes of rapeseed this year versus 18.2 million tonnes last year.
Oil World says there is a high probability that oilseed prices will continue to trend lower in the short term unless there is a crop production issue.
So there you have it. According to Oil World & Informa we have a world 4.2 million tonnes production increase partially offset by an extra 1.6 million tonnes of crush, leaving 2.6 million tonnes surplus to requirements.
An amount, maybe coincidentally, maybe not, almost exactly that of the entire production of the Ukraine.
Is it just me or do you feel a bit sorry for Ukraine? We told them we were desperate for wheat & rapeseed this year, they go and produce millions of tonnes more of the stuff, and now we don't want it!
I feel a bit like you do when you're in an Indian restaurant late on and there are some lads in a bit rowdy and p*ssed up. They order everything on the menu then sneak out thirty seconds before it arrives.
They won't fall for that one so easily again next year will they? Still there's always Eurovision 2009, bless.
So, the next time you hear the old "we just can't buy the seed" line, toss them this....
Record grain harvest predicted for south-coast Australia
(ABC News) -- A Western Australian grain handler says the south-coast is on track to producer one of the biggest harvests on record.
Co-operative Bulk Handling is predicting an eight to 10 million tonne harvest this season.
Albany is expected to produce over one quarter of that total.
Operations manager Colin Tutt says Albany should top its previous record of 2.7 million tonnes of grain, based on increased plantings and good rainfall.
Mr Tutt says canola plantings have increased by 30 per cent this year, with growers keen to cash in on high grain prices.
"The Albany zone is just fantastic. They've probably had one of their best starts and there's enormous amounts of plantings this year, in comparison to previous years so that area is set for record production if we can get the rains to keep coming as they have been," he said.
Ray Grabanski: Crash and burn grains into harvest?
Pro Ag -- Grain prices plummeted the past three weeks, losing over $2 in corn and more in soybeans, before finding a bottom this week.
With a $2 corn break, a 33% recovery is 67c, and a 50% retracement is $1 gain which should occur in just a few short days! A dead cat bounce is not what it used to be, but these markets are now much bigger than they used to be. This type of recovery will be a perfect one to sell for those who have not been as aggressive of sellers as Progressive Ag the past few weeks. We've sold anywhere from 1.5-2 crop years of corn/soybeans as 2008 through 2011 offers have all been good ($8 corn 2008, $16 soybeans and $6.50 corn/$15.50 soybeans for 2009 through 2011).
It's funny, but everyone is always most bullish at the highs, and it was surprising how many people were afraid to sell 6.50 corn and $15 soybeans in the past few weeks, even after it seemed the corn market had topped. Crude oil now has dropped from $145 to $124/barrel, and even the crude oil market now appears that it finally formed its high. People are using transit more, and big SUVs are finally are being ignored in car sales instead for the economical Honda/Toyota vehicles. It's possible we have formed not only our yearly highs, but perhaps even decade highs in crude oil, wheat, and corn in the past few months.
While the ship has pulled out on 2008 crops, any sale over $6 corn will still turn out to be heroic in the end (as we have been saying since corn broke $6 months ago), as Pro Ag believes grain prices are finished now with their multiple year bull market (a once in 35 year venture). Now prices will likely trade between 4.50 and $6.50 corn for the next few years, with prices still very profitable for the most part as we need to continue the incentive to pull CRP acres out and expand production more worldwide to meet demand. $10-$15 soybeans might capture soybean trade the next 2-5 years as well. Note we are still in the upper end of those ranges for both soybeans and corn ($14 soybeans and 6.30 corn for 2008 through 2011 crops), so there still is plenty of sales opportunity left in this market.
Are you willing to accept the huge profits still offered on paper from sales of grain? Or has the past 2 year memory of losing hedges/sales going to prevent you from taking advantage of perhaps the best marketing opportunity you will see in your farming lifetime? These are very important questions to answer, and ones which each individual farmer needs to dig deep inside his heart and soul to see what it is made of!
The information contained, while not guaranteed as to accuracy or completeness, has been obtained from sources we believe to be reliable. The opinions and recommendations contained are based on our judgment and do not guarantee that profits will be achieved or that soles will not be incurred. Recommendations should not be construed as an offer to buy or sell commodities. There is substantial risk of loss in trading futures and options on futures.
I thought I'd better throw that last disclaimer bit in for good measure. And you thought I was bearish! - Nogger
USDA Weekly Export Sales Report
The USDA released their weekly export sales report at 13.30BST today. Here's a note of what the figures had to say vs expectations:
Wheat 610,400MT (est 500-700,000MT)
Corn 07/08 - 323,500 MT; 08/09 - 499,600 MT (est total 650-850,000MT)
Soybeans 07/08 - 183,000 MT ; 08/09 - 552,400 MT (est 250-450,000MT)
Soymeal 07/08 - 80,300 MT; 08/09 - 88,000 MT (est 100-175,000MT)
Soyoil 07/08 - 11,200 MT; 08/09 - 8,600 MT (est 20-40,000MT)
Bunge Reports Second Quarter Results
Bunge report total earnings before interest and tax (EBIT) for the quarter ending 30th Jun 2008 at USD1.078 billion, a 311% increase on the same quarter in 2007.
Net sales for the period were $14.365 billion, a 73% increase on 2007.
EBIT for the agribusiness sector contributed $614 million, 329% above 2007.
For the first half 2008 total segment EBIT was $1.52 billion, a 403% increase on first half 2007.
Net income for Q2 2008 was $751 million, an increase of 347%, and first half net income was $1.04 billion.
Q2 earnings per share were $5.45 and H1 earnings per share were $7.56.
Early Call On CBOT
Corn futures are expected to open this afternoon's CBOT session 7 to 8 cents higher; soybeans 5 to 8 cents higher; and wheat 5 to 6 cents higher.
Easyjet and Ryanair cut flights on oil price rises
EasyJet is to cut flights in response to high oil prices, following a similar from budget rival Ryanair last week.
The airline is to cut 12 per cent of its flights from Stansted this winter, as it tries to ‘thin out’ flying at less profitable times. Total growth over winter will be cut back to between four and six per cent.
EasyJet said fuel price rises had hit the firm for £185 million and it expects pre-tax profits to hit between £110 million to £120 million in the coming year. In the last three months passenger numbers grew 16 per cent.
Last week, Ryanair announced the closure of seven European bases and a cut of 250 flights from Stansted – blaming high airport fees and oil prices.
Previously the Irish budget airline had warned is oil prices rose over $130 a barrel, the firm would start to make a loss.
Oil prices recently peaked at $147 a barrel, but have since fallen to around $125.
Sugar beet growers call for GBP30/t beet price
FWi -- Angry sugar beet growers have sent a clear message to British Sugar that 2009 contract prices need to increase to nearer £30/t, otherwise many may not grow the crop next year.
The argument was made at last week's meeting near Peterborough, the outcome of which, forced the NFU to resume 2009 price negotiations with British Sugar. Many of the 300 growers attending said that BS's offers of £24/t with exchange rate escalator, or £25/t fixed would mean the crop was unprofitable on all but the highest-yielding land.
British Sugar tell us that at 60t/ha, they believe the cost of growing beet is about £24/t, but unless you can achieve 70t/ha, this is utterly unrealistic, Cambridgeshire grower Tim Brightman said.
2008 could be the last beet harvest for some growers, unless British Sugar agree to increase prices
Norfolk farmer Ian Robertson said that even with average yields of 26-29t/acre (64-72t/ha), which were up to BS's target 70t/ha, he would cut his acreage if prices did not increase. We need £30/t, and if the price doesn't change, we may grow some beet, but won't set out to grow our full quota. Ultimately, it's British Sugar that'll loose out we can grow other crops, but they can't process anything else.
Brown & Co consultant Tim Young said that costs of production for the firm's clients ranged from £25/t for the top 25% to over £30/t for the bottom quartile. But that's just the cost of production. Farmers need to get a return for growing the crop if they're ever going to reinvest and we suggest that should be 15% on top of production costs. That takes the price to over £30/t.
The price also had to reflect the weather-related risks associated with growing sugar beet, he added. Farmers can shift between the top and bottom 25% over one season, just because of the weather.
Mr Young also said there needed to be a fuel escalator incorporated into the haulage allowance, as many growers were paying £1-1.50/t more than the allowance was worth.
UK Winter Wheat Harvest Underway
FWi -- Wheat harvest is underway in Slough, Berkshire, with the earliest Soissons at Stephen Whitbys Rowley Farm, Wexham, yielding 7.4t/ha (3t/acre).
"That is about average," he said. "It is not all fit but it looks good - its 14% moisture but we havent had any sample results back yet."
Combines are also full steam ahead in Norfolk, where Robin Baines has started on the Pearl winter barley. The 40ha (100 acres) of Pearl cut so far had yielded 7.4t/ha (3t/acre), above average for the land near Norwich. Nitrogen was low at 1.4-1.5%, and progress was just a day or so behind last year, he said.
But further west harvest was still some three weeks away at Ian Spareys Tryfan Barn Farm, Clifton-on-Teme, Worcester. Weve only got winter wheat and spring beans and we need some good sunny weather to ripen it up, he said.
Lioness oilseed rape was taking a long time to dry off in Warwick, and David Brightman did not expect to start harvest for almost a week.
In Berkshire, Jonathan Holland planned to start combining his Excalibur and Catana oilseed rape this weekend (26/27 July). We had quite a late attack of cleavers which is a bit of a shame, but apart from that the crop looks good, he said.
WN Lindsay acquires Glencore's Stracathro grain store
FWi -- Scotland's largest independent grain merchant, W N Lindsay, has acquired Glencore Grain's Scottish grain drying and storage business in a £3m deal.
The 70,000t plant at Stracathro, Brechin, Angus, specialises in the supply of malting barley to the distilling industry.
Talks began a year ago, but stalled due to a clause giving Careston Estates, the original owners of the site, the right of first refusal.
The family-owned Lindsay business handles 200,000t a year from 5000 Scottish farmers and has a long-term agreement to procure, dry and store a significant tonnage of malting barley at Stracathro for leading distillers Diageo.
Stracathro is in the heart of the Scottish malting barley industry midway between Linday's existing stores at Gladsmuir, East Lothian, and Keith, Banffshire.
The acquisition in a key strategic area for maltsters, distillers and growers completes our coverage of the main arable areas of Scotland, said managing director, Andrew Stephen. It will provide growers in Angus and Aberdeenshire with a strong and stable home for malting barley and remove some of the uncertainties of recent years.
USDA Export Sales Report Expectations
The USDA release their weekly export sales report at 13.30BST today. Here's a note of what is expected:
Wheat 500-700.000MT
Corn 650-850,000MT
Soybeans 250-450,000MT
Soymeal 100-175,000MT
Soyoil 20-40,000MT
High corn price sees Japan turn to feeding food scraps
Japan disposes of around 20 million tonnes of food waste per year. The leftovers used to be dumped in landfills where they decomposed, producing methane. However government legislation since 2001 has stimulated the turning food scraps into animal feed. Initially, farmers had been reluctant to feed the recycled food, but rising feed prices have made them more receptive to it. Feed from recycled food is about half the price of regular feed.
This trend has stimulated a former garbage truck driver to set up Agri Gaia System, at the moment the largest food recycling company in Japan. His drivers now cart truckloads of rice balls, sandwiches and milk discarded by 1,200 7-Eleven stores to his factory on the outskirts of Tokyo, where the food scraps are turned into two types of dry feed after a final heating process - one rich in fat and protein, the other lower in fat and protein but with more carbohydrates - and a liquid type, from pasteurized drinks such as milk and chopped vegetables.
A blind test of pork shows respondents tell the difference immediately, according to a university research. The fat of the pigs fed recycled food is sweeter than usual. Another effect of tasty feed is that hens produce more eggs than usual.
The feed is not used for cattle or sheep because of strict health regulations that were imposed to prevent mad cow disease.
Japan imports about 75% of its raw materials from abroad. It is the world's biggest importer of corn used for animal feed. The recent price increases of corn and soy meal have raised demand for recycled feed, but it still accounts for only 1% of raw material use in Japan, or about 150,000 metric tons in 2006, twice as much as in 2003.
Tate & Lyle off to 'satisfactory start'
Tate & Lyle P.L.C. on Wednesday said it has made a "satisfactory start" to the year, with pre-tax profit in the first quarter broadly in line with same period a year ago.
The company said its food and industrial ingredients segment in the Americas benefited from improved byproduct returns driven by "volatile and exceptionally high" corn prices. Partially offsetting the returns were some additional costs related to new technology at the company’s Loudon, Tennessee, U.S., corn mill.
In the company’s European food and industrial ingredients segment, meanwhile, Tate & Lyle said co-product prices compensated for higher energy prices, while the Food Systems businesses continued to perform well.
Sucralose, the low-calorie sugar sweetener that Tate & Lyle markets under the Splenda brand, posted strong sales volume growth in line with expectations, though the company did note that the increase in sales prices was slower than anticipated.
Challenges continued to persist in the company’s European Union (E.U.) sugars business and are expected to do so during the next six months. Tate & Lyle said the business is "operating in a very difficult market while surplus stock is absorbed in anticipation of the first reduction in the E.U. reference prices, which will take place on Oct. 1." As part of that reform, sugar prices are expected to be cut by nearly 40% by 2010.
Tate & Lyle did indicate that the second half of the year may deliver market equilibrium between supply and demand for E.U. sugar.
Queensland gets drenched, wettest July on record in parts
Rain has spread a long way across Queensland in the last few days, further and heavier than in a normal July.
It has spread as far west as Mount Isa and Hungerford but not as far west as Birdsville.
Mount Isa and Cloncurry in the northwest only picked up two millimetres each but this has only happened once in the last 10 Julys.
Rain has been more soaking further east, even in the Maranoa and Darling Downs which has been fairly dry this year. Injune picked up 50mm, nearly twice the monthly average. Oakey gained more than 15mm and now has about 60mm this month, twice the July average. This breaks a six month streak of below average monthly rainfall for Oakey.
One of the wettest spots this month has been Ayr, just south of Townsville, where 105mm has fallen, now their wettest July on record.
Rain is starting to clear as an unseasonable low heads further off the east coast.
Meanwhile much of Western Australia has now had their monthly average rainfall or close to it thanks to several bursts of rain during the last week.
More rain is on the way due to a couple more frontal systems linking up with cloudbands before the end of the month, forecasters say.
Russia to increase grain export in 2008, 9.3MMT carryover from 2007
In 2008 Russia has significant opportunities to increase grain export volumes, reported Stanislaw Aleinik, the Deputy Minister of Agriculture of Russia, on July, 23.
According to S. Aleinik, the majority of Russian regions have already started the harvesting campaign, and to date yield exceed last year's levels. The country has already harvested 24 mln tonnes of grain (bunker weight) and the expected harvest in clean weight will total 85 mln tonnes of grain, he said.
The Ministry plans to export 14-15 mln tonnes of grain in 2008. Also Russia has in storage nearly 9.3 mln tonnes of wheat, barley and oats that remained from last year crop, added S. Aleinik.
Ukraine has already harvested 16.6 mln tonnes of grain
As of July, 23, Ukrainian agrarians harvested 16.58 mln tonnes of grains and grain legumes from the area of 5.166 mln ha reported the media-department of Ministry of Agrarian Policy of Ukraine.
Pound drops on retail sales data
The pound took an early bath this morning with the release of the June retail sales data.
UK June retail sales were down 3.9% on the month, against a consensus 2.6% decline.
Sterling dropped to $1.9836 on the news and is currently just above that low at $1.9850. One euro is now worth 78.90 pence.
Overnight developments
eCBOT is a little firmer this morning, there doesn't seem to be any particularly fresh news out there, it seems to be more of a rebound from a fortnight of heavy losses.
Export market news is supportive, with the U.S. reporting sales of 244,696 metric tons of corn to Japan and 120,000 tons of soybeans to unidentified destinations for delivery in the marketing year that begins Sept. 1, although this news came out before the opening yesterday.
Beans are around 6-7c firmer, corn 6-8c steadier and wheat around 8c higher at 8 am BST.
Crude shows little change on last night's close of $124.44/barrel, 6 cents lower at $124.38.
Buyers: hold your nerve
"You'd better buy it today or you'll lose your allocation."
"We've only got 100/300/500 left to do then that's it."
"We can't buy the seed/get the backstops."
"It's the inverse basis at the stem thingy coupled with the other thing that I can't remember the name of, but I heard the foreign people that set our prices talk about it the last time I was in a meeting with them months ago."
"Everybody else/all your competitors are buying it."
"This is a serious buying opportunity."
How many of those have you heard recently? And how many have you fallen for?
Your the buyer for Christ's sake. The customer. You tell the seller what to do not the other way round.
The market has fallen quite a long way rather quickly hasn't it? From the dizzy record heights we reached who can say how much further prices will fall? Is hipro soya at £265 really cheap? Ditto rape at £150? Wheatfeed at £125? Or bloody sugar beet at £180??!!!
And we haven't even seen any harvest pressure yet.
Crude is around $20 below it's levels of early July. Our chums at Goldman Sachs didn't quite get their Independence Day wish of $150/barrel, but they nearly did. The ethanol/biodiesel industries were crying out for raw materials, well the farmers of the world have grown them. Will they still be required? Will government subsidies remain in place to fund an industry built on some ideological whim? And more importantly would you want to bet on it?
If not where the hell is all this stuff going to go?
Meanwhile, doesn't the image above bear an uncanny resemblance to the charts on the right?
eCBOT Close/Early Call: Crash Bang Wallop
Falling markets, remember them? eCBOT has closed with soybeans around 35c lower, corn 21c lower and wheat around 12c easier.
Since Independence Day beans now languish $2.77-1/2 lower, corn $1.98 lower and wheat "just" 92-3/4 cents easier.
"Weaker oil and a stronger dollar are driving somespeculative trading out of the grain markets," a trader said.
French analyst Agritel added: "Sentiment in the commodities sector is upset by fears of an economic recession, illustrated by the fall in oil prices."
For this afternoon's CBOT session corn futures are expected to open 20 to 22 lower, soybeans 35 to 38 lower and wheat 12 to 15 lower.
EU Rapeseed Market 'In Free-Fall'
Rapeseed futures on the Paris-based futures market continue their alarming fall today with November EUR12 lower at EUR398/tonne.
The contract has fallen EUR80 in a little over a month and is already EUR40 below Friday's high.
"With the French well into their new-crop, and Chicago falling out of bed, the market is in free fall," said one trader.
In the UK the harvest has only just started but reasonable yields and oil levels are being reported in early cut seed. UK delivered prices have fallen around £40/tonne in a week with new crop straight off the combine now down to around £300 delivered, reports one trader. £327 delivered traded as recently as Monday morning, he added.
UK: Barley yields up after later than usual harvest start, early rapeseed yields pleasing
FWi -- Early-cut winter barleys are said to be yielding well, but nitrogen contents are unusually low in a harvest starting up to 10 days later than usual in places.
One estimate was that no more than 5-10% of southern crops had been cut by the start of the week. But with a good forecast, albeit with showers towards the weekend, the picture could soon change, trade sources suggested.
Little oilseed rape had been gathered, timely desiccation often having been thwarted by rough weather. And despite the threat of more changeable weather for the first half of next week, growers were being urged not to rush to combine crops unfit with red seeds.
We're about a week away from getting a clear view on oilseed rape and winter barley, said Charlie Whitmarsh of Frontier Agriculture.
But we're encouraging people not to get into oilseed rape too early. There's a danger that we'll see a lot of red seed, which isn't good news for oil contents.
Early indications are of pretty good barley yields with nitrogens on the low side - a lot at 1.5-1.6 - which could mean wheat proteins will be down.
Grainfarmers' Paul Taylor echoed those barley comments, though few crops had been cut beyond the traditionally early areas, he noted.
Some six-row yields had disappointed, probably due to take-all, but two-rows were doing better.
Pearl and Flagon crops of 3t/acre are commonplace, said Mr Taylor. But we're seeing some very low Ns. I haven't heard of winter barleys below 1.6N for some time because people usually push them to the limit. Perhaps with the price of N [fertiliser] they've been holding back.
Oilseed rape yields were quite pleasing but not a lot's been done yet because some people couldn't get their desiccants on.
Stressing that oil content was mostly built towards the end of crop ripening, he said: Do let them senesce properly. It's money in your pocket.
Weald Granary's John Smith, anticipating a busy week, with more than 1000t of oilseed rape already delivered, said most members seemed happy with yields. Oil contents are slightly over 44%.
Camgrain manager Philip Darke confirmed N contents in first barleys were low, but most growers had only just begun cutting, he said.
Russian areas with grain crops grow to 47.2 million hectares in 2008
(Interfax News Agency) -- Russia increased the area for grain crops by 2.3 million hectares (5.2%) to 47.2 million hectares in 2008, the State Statistics Service said this week.
Wheat was sown on 2.2 million additional hectares, the service said. Seventy-six percent of all grain crops were sown by public farms, and the share of private farmers enlarged to 23% as against 22.5% last year.
Areas for sunflower increased by 16.8% to 6.2 million hectares.
Public farms sowed 64.7% of sunflower, while private farms sowed 34.9%, as against 34.8% last year.
Sugar beet was sown on 0.8 million hectares or 22.7% less than last year. Public farms sowed 87.9% of sugar beat, and private farms sowed 11% (as against 13.3% last year).
Potatoes were planted on 2.1 million hectares (1.6% more than last year) and vegetables - on 0.6 million hectares (2.2%). Most of the potatoes and vegetables (1.8 million hectares and 476,000 hectares correspondingly) were planted by private farmers.
The Russian Agriculture Ministry said that Russia may collect over 85 million tonnes of grain in 2008 as against 81.8 million in 2007.
Resistance to Biotech Threatens EU Feed and Livestock Industries
(Feed Info) -- The animal feed industry is well-placed to influence the turbulent changes taking place in the global agricultural sector but the European Union's hard-line stance on genetically modified organisms (GMO) risks seeing its farmers and feed producers left behind, warns EuropaBio's Willy De Greef.
The Secretary General of the European association for Bioindustries said the animal feed sector is a potent player in world agriculture but the global powerbase is gradually shifting to emerging economies in South America, Former Soviet Union states and especially Asia – due in part to their extensive use of GM crops.
Mr De Greef said: “Animal feed plays a huge role in the overall agricultural policy agenda because it is such a huge customer of the crop production sector. Some 25-30% of annual global production goes to animal feed, which is about 600 million tonnes. That gives the sector a lot of clout and therefore the feed sector is part of the innovation agenda.”
While the growth in importance of countries such as China, Brazil and India may be inevitable, the difficult challenges facing Europe’s feed manufacturers and farmers are exacerbated by the EU’s politically motivated opposition to GMOs, said Mr De Greef.
He points to forecasts that Brazil is trying to oust the US as the world’s leading exporter of agricultural commodities and that China, which was self-sufficient in soybean a decade ago, now imports some 30 million tonnes a year - 98% of which is used in animal feed – as two examples of this power shift in progress.
Mr De Greef said growing demand for meat from the more affluent economies of China and India was now a more important issue than biofuels.
He explained that China’s per capita annual meat consumption has more than doubled to 55kg in the last 20 years - adding that every extra kilogramme of meat consumed by the Chinese triggers a huge increase in demand for animal feed.
“In the last year, there has been a heated debate about biofuels and food cost but people forget that real revolutions in as big a sector as this often come from a trend that is invisible for a while until at some point you start running into supply problems,” he said.
“If the all the Chinese eat 1kg/year more of meat, that means that agriculture has to provide an extra 3-4 million tonnes of maize, wheat and soybean. You can do it for a number of years but then you see the demand curve of the meat industry and the supply curve of the crop industry intersect - and that is when you have price instabilities.”
In the midst of such fundamental changes, Europe’s almost total exclusion of GMOs means it will increasingly struggle to compete in an ever more competitive global agricultural marketplace as its raw material costs go up compared to other regions, said the 53-year-old who has worked for some of the world’s major biotech companies.
He said: “The priorities in food and feed production are safety – and quite rightly nobody wants to compromise on that - and then we want them cheap.
“GM crop producers have very much achieved the feed safety criteria and it is clear by the uptake in the maize and soybean sectors that they create an economic benefit to the farmers. To me the conclusion is clear - if the EU wants to keep those competitive advantages away from European farmers, it will have price consequences.”
He hopes this economic imperative will force a change from the EU and “will keep making the point” that not even EU scientists believe GMOs are unsafe. Hostility to GMOs within the European body is “to a large extent” politically motivated, believes Mr De Greef.
However, the recent announcement that the European Commission is committed to finding a technical solution to its zero tolerance stance on GMOs – which forbids the presence of even the smallest trace of biotech material in EU commodity imports- is good news and “long overdue”.
He said: “We are finally starting to be realistic in the commodity chain discussion that here zero tolerance doesn’t exist. It is simply not compatible with a large scale commodity trading system. The biggest step has been taken - that zero cannot work. It will take a while but we are going to come to a definition of low level presence for approved products. That will give industry the ability to calculate the cost of segregation.”
He explained that the method used to detect the presence of GMOs had improved from 0.1% a decade ago to one part in one million in some cases. In practical terms, this means dust from the shell of GMO soybeans left behind in a ship’s hold could cause an entire shipment of non-GMO soybean to be refused EU entry.
EuropaBio’s position is the world is presently struggling to produce enough food to meet demand in part because the dramatic increases in crop yields following the 1960s’ Green Revolution had flattened out by the 1990s. The best solution, said Mr De Greef, is to increase output by raising yields from existing land, with biotech as part of that solution.
He said: “If we want to provide food, fuel, feed and fibre then clearly we need to increase production and to do that there are only two options; either cultivate more land, which is inherently undesirable because of its impact on biodiversity, conservation etc., or increase yields on a given amount of land.
“And whoever chooses option two, chooses more rapid adoption of modern science and technology - which includes biotech among others. One of the things I dislike hearing is biotech solves or doesn’t solve the problem. Biotech is part of the total technology tool-kit with which we can increase productivity.”
The benefits brought by GM crops depend on those used, he said. Maize brings increased yields and soya decreased production costs. In the US, national average maize yield last year was 9.4 tons/ha, but the average in farm scale testing was almost 50% higher, and the highest yield on commercial farms was 18.7 tons/ha. These figures give some idea of the potential for further productivity gains.
Farmers in northern Argentina using biotech profit because they can grow both soya and wheat in the same year, thereby hugely increasing their yield, he said.
Europe could reap the same benefits, he added but believes the flow of technology has been stifled by the political process within the European Union.
Mr De Greef said: “Trends in cereal yield over the last decade in Europe have been flat. It doesn’t mean we do not have good researchers, it means we must re-establish a plentiful supply at a predictable cost. In order to do that we need to increase the movement of science and technology results from the laboratory to the farm.”
BOE Voted 7-2 To Keep Rates Unchanged
The Bank of England voted 7-2 to keep the current Bank Rate unchanged at 5% in it's most recent MPC meeting on Jul 9th/10th.
The Bank says the decision was a difficult one with Tim Besley voting for a 25 point increase and David Blanchflower voting for a reduction of 25 basis points.
The MPC stated that the path of inflation would likely be higher than forecasted and that the housing downturn has gathered momentum and the slowdown to growth was more pronounced than forecasted. The committee chose to leave the rate unchanged to send a strong message on inflation with Besley calling for the central bank to anchor inflation to ensure credibility.
The perennial dove Blanchflower voted for a 10th consecutive month to cut rates.
Locally Heavy Falls in Southwest Western Australia
An approaching front is bringing heavy rain rates and gusty winds to the southwest of Australia. Ahead of the front there are strong northwest winds with 10 minute rainfall rates reaching 7mm.
Around the Perth district, Rottnest Island received a wind gust of 88.9 km/h. In the Southwest Cape Leeuwin reached a maximum wind gust of 87 km/h. Winds are also picking up along the Southern Coastal region, with Esperance receiving a wind gust of 68.4 km/h.
Along with the gusty winds, there is locally heavy rainfall rates. Heavy falls were especially prevalent around the Perth area. In Swanbourne, rainfall rates reached as high as 7mm in just 10 minutes. Also around the area, Jandakot received 4.8mm in 10 minutes and Rottnest Island with 3mm. In the Lower West, Mandurah received 6.6mm in 10 minutes and in the Southwest, Bunbury received 6.2mm.
Showers will persist as the front passes the south of WA.
eCBOT Close/Early Call
eCBOT futures closed mostly higher overnight in a technical recovery from recent heavy losses. Beans closed around 11-16c firmer, with meal up $3-4.50 and oil mostly 60-70 points higher. Corn closed around 1-2c firmer and wheat 1-3c higher.
Early calls for this afternoon's session are corn futures 1 to 2 higher, soybeans 11 to 15 higher, and wheat 2 to4 higher.
Barley harvest making good progress in Europe
FWi -- Harvest is now under way in Europe, with combining of barley progressing, and wheat now under way or soon to begin. A large EU cereal crop is anticipated, but bad weather could still affect yield and quality results.
In France, barley harvest is complete in the south, and over 80% complete in the north, with yields reportedly good so far. Production has been lowered from the first estimates in June to 36.3m tonnes of wheat (30.8m tonnes last season), and raised for barley to 11.4m tonnes (unchanged). The rapeseed harvest has started, and wheat combining is about 50% complete in the south and is beginning in other regions.
The German winter barley harvest is over 60% complete with good, if variable, yield and quality results. Barley production is expected 1.2m tonnes above last season, and wheat up 2.5m tonnes.
The wheat, rapeseed, rye and spring barley harvests have begun in "early" regions, but have been interrupted by rain, leading to increased quality concerns, particularly for mycotoxins in wheat.
In Denmark, barley harvest is progressing, but the dry spring has significantly lowered yield forecasts. The Hungarian harvest has been interrupted by rain, with wheat cut so far showing excellent quality, and yields of 5.1t/ha.
Rains are expected to continue for the next week, and the quality could decline as a result. Dry weather in Poland has reduced cereal production estimates to 25.5m tonnes, some 1.7m tonnes below last year. The rapeseed crop is also seen lower, and is not expected to be more than 1.75m tonnes.
Here in the UK the winter barley harvest has reallyonly just begun, with the wheat harvest expected to begin near the end of the month. With the UK expecting a wheat crop of 16-16.5m tonnes, and 5.5-6m tonnes of barley, a larger EU crop will put pressure on our exports.
UK wheat competes with French and German wheat to our main export destinations (Spain, Portugal and Italy), with UK barley competing with French, German and Scandinavian barley. Production in Eastern Europe, particularly Poland and Hungary could also affect inter-EU competitiveness.
UK Harvest Highlights: Good weather encourages combining in south of the country
FWi -- Combines are beginning to roll across the south and east of the country, with winter barley and oilseed rape looking reasonable.
Brian Shaw had cut 101ha (250 acres) of Flagon winter barley in Lilley, Beds, which had averaged about 6.8t/ha (2.75t/acre). “We made a start on the Carat last night, and on the oilseed rape this morning (21 July),” he said. “It’s been very slow to ripen, so it will be a fortnight until the last bits are ready.”
Sequel winter barley was also yielding reasonably well in Wiltshire, where David Hues was averaging just over 7.4t/ha (3.5t/acre).
In Dorset Barometer grower Peter Snell started combining his winter barley this morning, and hoped to be into the oilseed rape mid-week.
Richard Cobbald, one of FW’s Farmer Focus contributors in Cambridgeshire, expected to start combining his oilseed rape on Wednesday (23 July). The Tipple spring barley and winter wheat were all still a long way off, he said. “It’s looking pretty good though – I am quietly optimistic.”
Harvest had just begun at Clive Apps’ farm near Romney, Kent, with just under 20ha (50 acres) of Castille oilseed rape in the barn. “We’ve made a start on the best bit – the rest doesn’t look very good,” he said. The first plot yielded about 3.9t/ha (1.6t/acre) but a combination of poor establishment and damage from pigeons and rabbits meant the rest was unlikely to do that well.
Record results for Warburtons
(MEN) -- WARBURTONS , the family-owned bakery giant, defied `unprecedented volatility' in energy and wheat prices to post record profits.
The Bolton company, which now has 13 bakeries nationwide and employs nearly 5,000 people, said profits in the year to last September rose 13 per cent from £43.2m to £48.8m on turnover up 11 per cent at £414m.
Chairman Jonathan Warburton said the higher costs had been passed on to consumers, adding: "In spite of the turmoil in the marketplace, I am delighted that the business has shown continued growth.
"A key feature of the year was a dramatic doubling in the price of UK wheat, due to the lower yields from the year's harvest and worldwide demand pressures. With other increased costs in a number of areas, a selling price increase across the product range became unavoidable."
He said the business was now a national player and in the last year had launched its first-ever national TV advertising campaign.
The accounts reveal that at the end of the financial year the business was debt-free with a net cash balance.
The company invests much of its profits back in the business, but a dividend of £5.4m was paid out.
Founded in 1876, Warburtons has enjoyed fantastic growth over the last decade and is now one of the leading grocery brands in this country.
It has displaced Hovis from top spot as the leading bread brand.
UK: Supermarkets launch fuel price war
(AP) -- British supermarkets have launched a petrol price war, with three of Britain's biggest chains cutting the cost of unleaded and diesel by up to 5p a litre.
Supermarket chain Asda announced it would cut the cost of unleaded and diesel by 3p a litre, and Morrisons swiftly followed suit by cutting the price of unleaded and diesel by 4p a litre.
Sainsbury's said it was cutting petrol by 5p a litre from Thursday for customers who spent £50 or more in stores. The promotion will run for two weeks.
Asda and Morrisons said they were responding to the recent drop in the price of oil. The price of a barrel of oil dropped from a peak of 147 dollars to 130 dollars in recent weeks.
Asda said all 170 of its petrol forecourts across the country would sell unleaded petrol for 113.9p a litre and diesel for 128.9p a litre.
Asda trading director David Miles said: "We are seeing a more stable reduction in oil prices, allowing us to pass on the savings to customers. We urge other retailers to follow our lead at a time when customers need as much help as possible."
Morrisons later said it would cut the cost of unleaded and diesel by 4p a litre at all of its 285 forecourts across the UK, a move that came into effect at 6pm on Monday.
Morrisons group store operations director Mark Gunter said: "The cost of crude oil and refined product has fallen in the last few days and we are ensuring our customers reap the benefit by passing on the saving quickly, for cheaper prices at the pumps."
A spokeswoman for Sainsbury's said: "From Thursday our customers can reap an even bigger reward because we are running a 5p off per litre promotion when they spend £50 or more in-store plus they will also earn Nectar points."
A Tesco spokesman said the supermarket giant was not entering the petrol price war at this stage. He said: "We frequently review our prices across the country to remain competitive and we're confident customers are being given the best possible value at our pumps as well as in-store."
Overnight market developments
Corn and beans have bounced a little this morning following another round of heavy losses last night. Wheat is flat.
Crude oil has rebounded from a six week low and that seems to have taken beans and corn with it a little. Crude is currently $132.01/barrel.
Still, I guess that the market was due some sort of minor correction after corn had it's biggest weekly drop in twelve years last week after Argentina revoked it's controversial export tax increase and the US midwest weather outlook continues favourable.
This mornings gains came after corn and soybeans fell to the lowest in six weeks yesterday on speculation warm, wet weather in the U.S. Midwest will boost the yield potential. Crude was little changed after recovering yesterday as a storm entered the Gulf of Mexico, and Iran resisted demands to suspend nuclear research.
Corn is around 3-4c firmer this morning and beans 18-18c higher, although both products are still net down from Friday night's close after suffering heavy losses Monday.
Wheat is flat to 3c firmer overnight.
Last night's crop progress report showed a surprise jump in spring wheat conditions rated good/excellent.
Australian ASX Jan wheat is A$3 lower at A$317/tonne.
The Rumour Mill: USDA To Announce Early Release Of CRP Acres?
Word has it that USDA is close to announcing a plan for early release of CRP acres in time for winter wheat planting. There is also talk that the release may still involve some sort of penalty. With wheat prices still relatively high many US farmers may well consider a penalty money well spent.
Ukraine Grain Crop Just Keeps Getting Bigger
In the highest estimate seen so far this year Ukrainian agrarians expect record grain harvest at the level of 45-48 mln tonnes, declared Leonid Kozachenko, President of Ukrainian Agrarian Confederation on July 18.
This is an increase of 16-19 mln tonnes on 2007, and surpasses last week's Agriculture Ministry estimate of 43 mln, which was in turn a sharp increase on it's June estimate of 40.4 mln tonnes.
As the country progresses with the harvest yields are coming in consistently higher than originally anticipated.
Ukraine has had some problems, connected with lack of technical equipment, fuel and storage facilities, which have impede the harvesting campaign Kozachenko added.
Queensland about to get drenched
(The WeatherCo) -- Eastern Queensland is in for a drenching more typical of Summer than mid-Winter this week.
Anywhere east of Normanton to Goondiwindi is likely to see 10 mm of rain by Thursday. This will grade to more than 30 mm close to the coastal ranges, with heavy falls of more than 90 mm possible about the Central Coast.
Cloud is already building over eastern Queensland. On Tuesday, patchy rain will develop over most of the coast, and over the inland north of about Mackay. By Wednesday, rain is likely over the entire southeastern quarter.
This is good news for the South East, Burnett and Central Coasts, as well as the Darling Downs, which have so far seen a fairly dry July.
The forecast wet weather is the result of a low pressure trough deepening off the coast, forcing strong, moisture-laden easterly winds over the state. This is quite unusual for Winter, when dry westerlies normally dominate
EU wheat moves lower on harvest pressure
The wheat harvest has started in France. "Initial yields are average (in France) and as a start that is not bad," one European dealer said, noting much of the early harvest was in areas which usually had below average yields.
London-based November feed wheat is £1 lower this morning at £137, and Paris-based November milling wheat EUR1.25 easier at EUR188.25/tonne.
US: Hog Farmers Should Return to Profitability in 2009 – if They can Survive
Under-pressure pork producers in the US should return to profitability in 2009 - as long as they can stay in business until then, analysts Rabobank have said.
Last week, Fiona Boal, Executive Director of Rabobank's Food & Agribusiness Research and Advisory (FAR) department, said the industry was currently in the midst of a ‘perfect storm’ as it battled to cope with high feed prices, an excess of hog supplies and concerns over whether domestic demand can hold up.
In many cases, hog farmers in the US have been in the red for the last nine months. But Ms Boal has added: "While the industry is undoubtedly being forced to adjust to a new, unique, and difficult, operating environment, a 1998-like collapse does not appear likely and those participants with the financial resources and management expertise to survive the next 12 to 18 months should enjoy renewed levels of profitability by the end of 2009."
EU Rapeseed Futures Dive, So Why Isn't Meal Following Suit? Is It Really All Down To Oil?
With the rapeseed harvest well underway in France EU rapeseed futures prices have plummeted recently. The Nov future price has fallen from a recent high of EUR478 set on 16th June to EUR422 this morning.
Indeed, the Nov future closed EUR7.25 lower Friday and is currently down a further EUR10.25 today. That's EUR17.50 in a couple of days. It's somewhat surprising therefore that rapemeal prices today are only £1-2 lower than Friday morning.
Since June 16th seed prices have fallen EUR56/tonne, which is the equivalent of £44.50, yet UK crusher meal prices today are only around £10 lower during the same period.
Ah, its all down to the price of rapeoil the crushers would say.
Fair enough the price of rapeseed oil is substantially lower than 16th June. So lets do the calculations. I've used Liverpool prices just because the oil price there is more readily available to me. For what it's worth Liverpool rapemeal is actually down GBP 2 more than Erith since June 16th:
16th June: Nov rapeseed future EUR478, Nov rapeoil GBP858, Nov rapemeal GBP181.
Rapeseed at EUR478 = GBP382.50 (using a ballpark exchange rate of 0.80 euros/pound).
One tonne of rapeseed yields approx 40% oil and 55% meal and 5% "waste".
So on 16th June with Nov oil at GBP858 and meal at GBP181 we have a "theoretical" crush margin of GBP60.25 over the futures price (858x40/100 plus 181x55/100 minus 382.50).
At today's rates the sums are rapeseed=GBP337.50 (422x0.80). So the same margin over futures price has risen by more than GBP11/tonne (789x40/100 plus 170x55/100 minus 337.50) = GBP71.60.
If today's margin over futures price was still GBP60.25 then the price of November Liverpool rapemeal would be GBP150.45, nearly GBP20 LOWER than it actually is!
Yes I do fully realise that the physical price of seed delivered into Liverpool isn't the same as the Paris futures price, so please don't ring/email me to point that one out! What I am saying is that based on the decline in seed futures over the last month, and allowing for the decline in oil price, meal should be substantially lower than in fact it is. Discuss.
NZ Dairy Feed Production Up 80% On 2007
Feed manufacturers in New Zealand have reported a 287% increase in production of dairy feed in the March quarter compared to the same period in 2007. In 2007 the production of dairy feed also increased almost 80% on the previous year.
"New Zealand dairy producers are increasingly looking to manufactured feeds to help meet the nutrient requirements of their high producing animals" says Michael Brooks, Executive Director of the New Zealand Feed Manufacturers Association (NZFMA). "No doubt, the drought in some areas like the Waikato, has meant that dairy producers purchased more compound feed than they would have in a normal rainfall year" he added.
"But we are also seeing a continuation of the trend which has been observed over the past 18 months, with dairy farmers realising the benefits available from using manufactured feed as a to supplement our traditional grass-fed dairy farming system.
"Manufactured feeds have a number of benefits over other feedstuffs and in many cases can fulfil functions which other feeds simply cannot" said Mr Brooks.
US Midwest Weather Latest
(Freese Notis) -- Weekend rainfall and forecasts for continued favorable weather coming up kept pressure on corn and soybean prices overnight.
Significant about weekend weather was the development of rainfall in a pocket of the northwestern Corn Belt that had missed that rain through early Friday morning. Sioux Falls picked up close to two inches of rain through Sunday morning with a couple of rain events, with Worthington, MN picking up over two inches. That "dry pocket" then got filled in even more late yesterday and overnight as significant rains fell right along the Nebraska/South Dakota border.
This has been quite a stretch of wet weather for a lot of places in the northwestern Corn Belt; seven stations that I track in that area have had at least two inches of rain since last Wednesday, with another four stations recording over three inches. Eastern Iowa and northwestern Illinois were seeing strong thunderstorms move through early on this Monday morning (storms that left behind a lot of wind damage in the Interstate 80 corridor of Iowa; there was an unofficial report of 100 mile per hour winds to the northwest of Des Moines near the town of Dawson).
Rains will be most prevalent in the south-central Corn Belt during the next couple of days, certainly beneficial there given that very little rain has fallen in that area over the past week and it has been hot (99 at St. Louis yesterday, and something similar may be seen today).
A northwest-to-southeast moving rain system is forecast to impact the Midwest later this week as well.
Temperatures for this work-week, especially after today, look cool for eastern parts of the region with highs no better than the 80s or even 70s. Heat that was expected to encroach on the far western/northwestern Corn Belt for late this week looks very muted, and the outlook for next week does not look to feature big heat either.
Overall it is a forecast for the Corn Belt that looks favorable for the rest of this month, so it looks like we will be able to pollinate the bulk of the 2008 corn crop with favorable soil moisture and without extreme heat. That's a notable accomplishment, given how long the pollination season is this year (given the extended period of planting seen back in the spring).
Chinese wheat stocks 56 percent up on year ago
China's state reserves authorities purchased 26.32 million tons of wheat from six provinces between May 20 and July 5 for government wheat stockpiles, according to statistics released by the Henan Grain Administration on July 15.
Active selling by farmers on the back of the fifth straight year of bumper wheat harvests meant that government stockpiles on July 5 stood 56 percent higher than they did on the same day a year ago.
"Farmers are anxious to get the cash to buy seeds and agricultural materials for autumn sowing, which has helped drive wheat sales," said grain expert Wang Xinfeng from Zhengzhou, capital city of major wheat producing region Henan Province.
Feds can't fix Fannie and Freddie
The mortgage giants aren't short of cash. They're stuck with bad loans that aren't going away. Also: Short sellers didn't bring down the lenders -- the lenders did it themselves.
As the Treasury prepares to ride to the rescue of Fannie and Freddie, it's worth noting one little detail: That so-called plan is in reality just a concept.
Fannie Mae and Freddie Mac do not have a liquidity problem that can be solved by the Federal Reserve or even by an injection of Treasury capital. It's a solvency issue. Short-term cash isn't the real problem. Over time, the mortgage giants' liabilities are quite likely to swamp their assets. Thus their assets are contingent, but their debts are forever.
Further, if the Treasury is the only entity left willing to buy shares to shore up Fannie and Freddie, what will happen to other troubled financial institutions? Between now and the year's end, more mortgages will percolate through those institutions' balance sheets, creating losses that will force them to seek capital as well.
As for access to the Fed's discount window, even if Fannie and Freddie use it, that won't change much. Lehman Bros. has had access to the discount window, and that has done Lehman little good. Nor has it healed Washington Mutual, Bank of America, Citigroup, etc.
The rapidly growing disaster the country faces, in addition to the financial one, is a recession that's worsening -- a reality depicted in widespread images of depositors lined up at IndyMac bank. (A friend of mine has also noted lines at multiple locations of Washington Mutual.) I suspect that as this process moves forward, many regional banks will experience modest runs, because fear becomes contagious at some point. And fear eventually leads to panic.
