Bailouts R Us

Unless you've been living in a cave, by now you will probably know that Bush's Big Bailout finally got it's approval Friday night by a vote of 263-171.

US President George W. Bush hastily signed the bailout bill that could cost American taxpayers $700-billion and then, in a short Rose Garden appearance, told them they would probably get their money back, sometime.

"The government will purchase troubled assets," he said. "And once the market recovers, it is likely that many of the assets will go up in value. And over time, Americans should expect that much, if not all, of the tax dollars we invest will be paid back."

Although the bill got passed it wasn't without much wailing and gnashing of teeth.

"Nobody in East Tennessee hates the fact that I am going to vote yes more than me," said Representative Zack Wamp. "On Monday, I cast a blue-collar vote for the American people," he said before voting. "Today, I am going to cast a red, white and blue-collar vote with my hand over my heart for this country, because things are really bad and we don't have any choice. We're out of choices and our backs are up against the wall."

Maybe Zack noticed the news Friday that more than 159,000 American jobs disappeared in September, roughly twice the pace of job losses previously this year.

Anecdotal reports tell of sharp drops in the last two weeks of consumer purchases of big-ticket items, especially motor vehicles, either because they are afraid to buy or can't get financing. And businesses are getting cut off from the cash they need for day-to-day operations.

"We're hearing more and more stories about small businesses that just got shut off from credit and missed a payroll," said Jim Wilcox, an economist at the Haas School of Business at UC Berkeley.

There was no burst of confidence in the locked-up credit markets late Friday. Interest rates that financial institutions charge on loans to one another remained in the stratosphere as they continued to shy away from lending and instead put free cash into US government securities.

Interesting times lie ahead.

Crude Ends Week With Largest Percentage Fall Since 2004

Crude oil for November closed the week at $93.88 a barrel, posting the commodity's largest weekly fall in percentage terms since 2004.

Prices fell 12 percent for the week amid concerns that the much-publicised $700 billion bailout plan will do little to stimulate the US economy or demand.

The US consumes around a quarter of the world's oil and a recession there is obviously going to have a major impact on consumption.

US fuel demand averaged 19 million barrels a day during the past four weeks, the lowest since October 2001, the Energy Department said Wednesday.

$4/gallon at the gas pumps was clearly the trigger point, but with prices now down to around $3.65 there is little evidence of consumers cranking their usage back up again anytime soon.

Grains Market Review Of The Week

EU and US grains markets set multi-month lows during the week as fears over the looming global economic recession grew.


Harvest pressure, an increased stocks figure from the USDA, sharply weaker crude and a slow down in exports all conspired to give soybeans a hammering throughout the week. A firmer opening Friday on hopes that the revised $700 billion dollar rescue package would aid demand gave way late in the session and beans closed in negative territory once again. On the week Nov beans lost 172c, or nearly 15 percent, to close at $9.92, the first time futures have dipped below $10/bushel in almost twelve months.


Harvest pressure, declining demand, weaker crude and the continued exit of spec money all featured to drive corn sharply lower. Dec corn lost 89c, or over 16% on the week to close at $4.54/bushel. Spot corn hasn't traded at these levels since the first week of 2008.


Wheat declined, although not as much as beans and corn, pressured lower by the general malaise in commodities as a whole. Export interest is better for wheat than the other grains at the moment, and the US have a quality advantage over some other major exporting nations. Dec wheat lost 75 3/4c or just over 10 percent on the week, to close at $6.40 1/4c, a level last seen for a spot month at the beginning of August 2007.


November LIFFE wheat fell £4/tonne or around 4% on the week as futures continued to slide on a large crop, lack of quality and poor export interest. Prices for the spot month slipped below £100/tonne for the first time since the beginning of June 2007.


November closed the week at EUR160/tonne, EUR5.80/tonne lower, posting a loss of around 3.5 percent, on lack of export interest, large world crops and weighed down by falling global markets. The last time spot futures were sub-EUR160/tonne was June 2007.


November closed the week with a loss of EUR18.20/tonne, or 5 percent. Sharply weaker crude oil and US soybeans pressured rapeseed throughout the week. Spot rapeseed is now levels last seen in Aug 2007.


November corn closed the week EUR10.70/tonne easier, or 7.3%, on harvest pressure, lack of demand and weaker US markets. Spot corn is now at it's lowest level since August 2006.

Informa Crop Production Estimates Higher Than Sept USDA

Private analytical firm Informa Economics released their latest US crop production estimates Friday, ahead of the USDA's figures due on Fri 10th Oct.

They estimate the 2008-09 US corn crop at 12.219 billion bushels, with a yield of 154.1 bushels per acre.

Soybean production will come in at 3.001 billion bushels, with a yield of 40.9 bushels per acre, they say.

Both numbers are higher than FC Stone's ideas, and last month's USDA estimates.

Earlier in the week FC Stone issued a corn estimate of 12.026 billion bushels, with a yield of 151.7 bushels per acre. Soybeans would come in at 2.889 billion bushels, with a yield of 39.4 bushels per acre, they said.

The USDA last month put corn output at 12.072 billion bushels with a yield of 152.3 bushels per acre. Soybean production with them was 2.934 billion bushels and yield at 40.0 bushels per acre.

LIFFE Closing Comments

EU wheat futures closed mixed, mostly lower Friday, although off session lows as Chicago futures came in higher late in the session.

Paris November milling wheat closed down EUR0.50 at EUR160.00/tonne and London November feed wheat ended flat at GBP99.00/tonne.

It was a low volume session with many participants in Munich for the European grain bourse.

Reports circulating that Spain has/will import up to half a million tonnes of Ukraine wheat during September/October will certainly put a damper on UK grain prices as Spain is normally far and away our biggest export home.

With an estimated 3.5mmt to export this year we have to be asking where the hell is it all going to go, and exactly how much are we going to carry into the 2009 crop year?

The imminent arrival of a large EU corn crop onto the market will do little to help feed wheat prices, and is of course also weighing on corn. Paris-based November corn closed down EUR1.75 at EUR134.50/tonne.

Rapeseed had a torrid week with Chicago soybeans and crude oil falling out of bed. November rapeseed closed down EUR3.50 at EUR344.00/tonne, to cap a loss of EUR18.20/tonne on the week.

CBOT Closing Comments


Corn futures traded mostly choppy Friday to only close unchanged from the previous trading session. Trading limits were expanded to 45 cents today but will revert back to the norm of 30 cents on Monday. Profit taking and some short covering helped prices higher, but it was the same story today and prices sold off at near the close. Weather is forecast to be dry with normal to above normal temps throughout the weekend but possible chances for scattered showers early next week. Israel issued a tender for 24,000 tonnes. Dec +0 at 4.54.


Soybeans started higher after the first bell, then traded mostly sideways until late in the session and closed softer. House approved the Senate's rescue plan after voting occurred Friday, some believe it may be too late or will not be as beneficial as the first plan proposed. Weather conditions are bearish for prices, beans are drying down at an accelerating rate allowing for harvest to speed up and delivery beans to the supply chain. Crude oil traded higher at times but closed lower adding pressure to bean futures. October Bean Oil had 3,552 deliveries posted against it. Nov -12 at 9.92; Oct Meal -4.50 at 264.90; Oct BO -71 at 42.00.


Wheat futures bounced higher despite declines in soybeans and corn settling unchanged. Wheat futures did receive little technical help, as most contracts were due for some type of a bounce after aggressive selling. Drier weather should help winter wheat plantings and in some southern regions plantings may be finishing up, if that is the case scattered rains next week would be beneficial to crops and continue to weigh in on prices. Reports of rain falling in dry areas in parts of Argentina should benefit crop conditions. Dec CHI +10 at 6.46; KC +4 at 6.40; MLPS -1 at 7.02.

eCBOT Close/Early Call

eCBOT futures closed mixed overnight with corn 2-3c higher, wheat up 1-2c and soybeans around 4c lower.

The US grains market continues to get dragged down by a general malaise across virtually all commodities markets.

The Reuters/Jefferies CRB Index of 19 commodities has fallen 9.9 percent this week, the largest drop since at least 1956, as a worsening global growth outlook sent prices for crude oil, corn, soybeans, nickel and gold tumbling from peaks reached this year.

Platinum headed for its biggest weekly drop in at least 21 years in London. Palm oil futures plunged to a 18-month low overnight, and crude is heading for its largest weekly loss in four years.

If the US House of representatives fail to pass the revised $700 billion rescue package tonight then all hell could break loose on the markets. If it does go through, then doubts already exist that it might be a case of too little too late.

Early calls for this afternoons CBOT session: Corn futures are expected to open 1 to 3 higher; soybeans 3 to 5 lower; wheat 1 to 3 higher.

EU Wheat Futures Down, Rapeseed Sharply Lower

EU wheat futures are in negative territory again Friday, with London feed wheat heading for it's thirteenth weekly loss out of the last fourteen.

November feed wheat is £0.75 lower at £98.25/tonne. Spot month futures have now fallen in almost a continuous straight line down from a high of £192.25/tonne since mid-March.

November Paris-based milling wheat is EUR2 lower at EUR158.50/tonne. That too has fallen continuously from a high of EUR295.50/tonne at the beginning of March.

Paris November rapeseed is EUR5.75 lower at EUR341.75/tonne, again spot month futures stood at a high of EUR521.50/tonne at the start of March.

Heavy losses across the board on last night's CBOT market are adding to the weak tone, as is a distinct lack of export interest and burgeoning world stocks.

Russian 2008/09 Grain Exports To Increase More Than 50Pct

This season (2008/09 MY) Russia will be able to export nearly 40 mln tonnes of grain as opposed to just over 26 mln tonnes in the previous season, reported Alexander Korbut, the vice-president of Russian Grain Union, on October 2 during the Seventh International Conference "Grain industry 2008".

4-grade soft wheat will form the main exports volumes of food grain. 3-grade wheat share will total 5-7% from the whole exports volume, according to A.Korbut. Logistics problems, especially lack of railway cars will be the main limitations for future exports.

According to the vice-president, Russia will harvest over 101 mln tonnes of grain, including 60 mln tonnes of wheat, 22 mln tonnes of barley and 6 mln tonnes of maize.

Agri Shares Plunge

Shares in agri-businesses around the world slumped Thursday as the credit crisis buffeting U.S. financial markets may limit next year's corn, wheat and soybean planting if farmers face difficulty getting loans to buy seeds and fertilizer, U.S. Agriculture Secretary Ed Schafer said.

Potash Corp. of Saskatchewan, the world's largest producer of its namesake crop nutrient, fell 26 percent on the Toronto Stock Exchange, the most since it sold shares to the public in November 1989. Syngenta, the biggest maker of agricultural chemicals, fell 9.5 percent, the most in almost 8 years, to close at 206.1 francs.

Mosaic fell 41 percent, the most in four years, in New York and Israel Chemicals Ltd., the world's third-largest maker of potash, fell 14 percent to 44.25 shekels, the biggest drop since at least January 1995.

K+S AG, Europe's largest producer of potash used in fertilizers, was down 12 percent and Yara International ASA, the world's largest fertilizer producer, lost 16 percent in Oslo.

Shares of Bunge Ltd., the biggest seller of fertilizer in South America, fell $12.84, or 20 percent, to $50.16 in New York. The decline was the biggest since trading in shares of White Plains, New York-based Bunge began in August 2001.

Monsanto dropped $15.83, or 16 percent, to $82.01 in New York trading, the biggest drop since the St. Louis-based company's initial share offering in October 2000.

Inter-Bank Borrowing Rates Climb To Record

Before its even been passed by the House, a growing feeling that the U.S. government's $700 billion financial-rescue package will fail to revive confidence among banks, is circulating the globe.

The euro interbank offered rate, or Euribor, that banks charge each other for three-month loans increased to an all-time high of 5.34 percent today and the Libor-OIS spread, a gauge of cash scarcity among banks, widened to a record.

The world's financial institutions are refusing to offer each other loans for any longer than a day even as central banks pump record amounts of cash into money markets.

The Libor-OIS spread, the difference between the three- month dollar rate and the overnight indexed swap rate, climbed to 273 basis points today. It's the third consecutive day the spread has risen to an all-time high. The average was 8 basis points in the 12 months to July 31, 2007, before the credit squeeze began.

Tax Changes, Red Tape, Put Soufflet's Ethanol Plans On Back Burner

Tax changes, announced last Friday in France's draft 2009 budget, have been condemned by biofuel producers as going against commitments to back biofuel investments as part of national environmental targets.

Government plans to phase out tax breaks for biofuels by 2012 raised fresh doubt over the viability of ethanol production, despite falling feedstock prices.

Construction of an ethanol production plant located in the Aube department of northeast France by the country's largest grain trading group Soufflet also continues to be held up by legal challenges from local opponents after a year-long delay, the company said on Thursday.

After obtaining the necessary planning permits earlier this year, Soufflet has decided to delay construction pending further court appeals by a local association.

Although Soufflet insist that they have not dropped the project they concede that the plant will not meet its target launch date of early 2009.

US Attaché Sees Australian Wheat Crop Now 21.6MMT

The US agricultural attaché revised down his estimate for Australia’s wheat production in 2008/09 to 21.6 mln t from the previous figure of 22.4 mln t due to a reduction in the acreage to 13.5 (14.0) mln ha, while yields are unchanged at 1.60 t/ha.

The forecast for Australia’s barley output remained unchanged at 7.9 mln t on an acreage of 4.5 mln ha and at an average yield of 1.75 t/ha.

UK: Winter Bean Plantings To Increase

Following two difficult years, the winter bean crop is making a comeback, says the Farmer's Guardian. Reports of high yields from this harvest and a significant increase in the planned area for planting this autumn, means winter beans could provide growers with fresh opportunities for a break crop, they say.

Whilst this season’s crop has, like the cereal harvest, been delayed by rain, there are promising signs of high yielding and good quality crops being taken across the country. Coupled with this, with the rising cost of farm inputs and difficulties in drilling oilseed rape currently being experienced by many growers, there could well be a resurgence in the area of winter beans to be planted this autumn, they conclude.

Fertiliser Shares Slump Thursday

With grain prices falling and the credit crunch biting farmers' ability to get cash for next year's planting season is under scrutiny.

This promped a large-scale sell-off in the agri-sector Thursday with fertiliser manufacturers leading the way down.

These boys have been raking it in over the last 18 months, and despite grain prices tumbling, the cost of inputs like ferts has continued to rise.

Shares in Mosaic tumbled almost 40 percent late on Thursday on the New York Stock Exchange while peers CF Industries shed 37 percent; Intrepid Potash dropped 14 percent; Terra Industries tumbled 24 percent and Potash Corp of Saskatchewan fell 27 percent.

Farm-equipment makers were also hit with Deere & Co's shares down 15 percent .

Shares of Monsanto Co fell almost 20 percent. The herbicide and biotech seed producer announces fourth-quarter results next Wednesday.

Other shares in the ag-sector that took a beating Thursday included Corn Products International down 21 percent and ADM down 13 percent.

Shares of fertilizer companies had surged in the first half of 2008 as grain prices soared. However, since mid-June the sector's valuations tumbled due to a sell-off in commodities and a pullback in grain prices.

Drax To Become Largest Single Site Renewable Generator In UK

An engineering, procurement and construction contract, to supply direct injection biomass co-firing systems to all six coal-fired generating units at the 4,000MW Drax Power Station in North Yorkshire, was signed this week with Doosan Babcock Energy Limited. On completion of the £10 million contract, the biomass co-firing facility will, says Drax, be the largest of its type in the world, which alongside its existing co-firing capability will provide a total of 500MW of renewable electricity. The biomass co-firing facility will reduce Drax Power Station’s emissions of CO2 by over two and a half million tonnes per annum.

Work on the project will commence immediately, says Drax, with the detailed engineering design and procurement of key items of equipment. Installation of the direct injection systems is scheduled to be complete towards the end of 2009. All six generating units will be commissioned in parallel with the delivery of the biomass handling and processing plant programme.

Dorothy Thompson, Chief Executive of Drax, said: "This contract marks the next critical step in the execution of our co-firing project and we are very pleased to be furthering our working relationship with Doosan Babcock.

"In August, we were pleased to announce that the identification of biomass sources in excess of our direct injection project requirements meant that we could run the new facility alongside our existing co-firing capability to give us a total renewable capacity of 500MW, making us the largest single site renewable generator in the UK."

Baltic Dry Index Falls To Lowest In More Than 2 Years

Weakening demand for raw materials has led to a drop in freight costs. The Baltic Dry Index, a measure of shipping costs for commodities, fell 1.2 percent to 2,990 points Thursday, according to the Baltic Exchange in London. That's the first time the index has fallen below 3,000 points since July 2006.

Overnight grains

For once there's not a lot of activity on the overnight eCBOT markets. Maybe its a grain bourse in Munich today keeping things quiet, maybe its a will-they-won't-they approach to tonight's vote in the House of Representatives.

Corn and wheat are around a cent firmer and soybeans a couple of cents lower.

Still the overall trend is firmly downwards. Turmoil in global financial markets has driven investors to take cash out of commodities, say analysts. The Reuters/Jefferies CRB Index of 19 raw materials is down 9.9 percent this week, the most since at least 1956.

Wheat has declined 11 percent this week, the most since March 21, and the sixth straight weekly loss.

Nov soybeans yesterday touched $9.9225, the lowest since Nov. 1. The oilseed has fallen 14 percent this week and is down 39 percent from a record $16.3675 on July 3.

In early overnight trade Dec corn touched $4.53, the lowest since Dec. 31. Futures have lost 43 percent from a June 27 peak of $7.9925.

Crude Leads Way Lower

Crude oil is lower again Friday morning, and heading for its largest weekly loss in four years.

Oil has dropped 13% this week against a background of rising stocks, falling demand and scepticism over the planned $700 billion bailout plan.

In a sure sign that spec money is leaving the table, futures open positions in New York fell to their lowest levels in more than two years. this week

Not that the spec money had anything to do with prices soaring to $147/barrel you understand, that was market forces and demand. Oh, and several large investment banks that don't even exist anymore.

Yesterday, futures dropped $4.56, or 4.6 percent, to $93.97 a barrel in New York. At 8.50am BST November crude is $93.46/barrel. Brent is hovering perilously around the $90/barrel mark, having briefly flirted with $89.66/barrel overnight.

All eyes tonight will be on the House of Representatives.

Australian Wheat A$10 Lower

Australian wheat futures are sharply lower overnight in line with CBOT closing deep into negative territory.

At 8.30am BST Jan ASX was A$10 lower at $282/tonne, having earlier hit A$280/tonne, its lowest since September 2007.

Outside markets continue to have a strong influence with crude oil sharply lower and economic uncertainty abounding.

A weaker A$ which fell to near a 14-month low yesterday of US$0.7702 is failing to add little support to wheat.

CBOT Closing Comments


Corn futures closed at or near limit down as they continue on a downward trend. Panic has arrived in commodities as Congress attempts to restructure their bail out plan; Senate has passed their version and now lies in the House's hands for approval. Terms of the revised plan is not setting well with the general public or with traders as they show by selling off commodities in an aggressive way. USDA Weekly export sales were 568,500 MT, up about 4% from the previous week. Crude oil was also sharply lower. Dec -30 at 4.54.


Soybeans closed around 50c lower on economic woes and uncertainties. USDA export sales were below trade estimates for last week, totally 471,000 tonnes. Weather is favorable for harvest and maturing late beans. There has been talk of rumours that prices HAVE to be bid higher in order to entice farmers to grown more of one crop rather than another, but that can also be achieved by which commodity declines the least, fundamentals are mixed, yield variations is adding some support. Nov -49c at 10.04; Oct Meal -11.40 at 269.40; Oct BO -149 at 42.71.


Wheat futures followed corn and soybeans lower on what appears to be another broad base selloff. USDA reported export sales of 671,900 tonnes of wheat; sales were about most trade estimates which were 300,000-500,000 tonnes. South Korea bought 23,000 tonnes of US wheat. Wheat exports are surprising better than expected of late. Record global crop and recently strength in the dollar should be bearish to US wheat. Dec CHI -33.75c at 6.36.

EU Wheat Follows US Lower

EU wheat futures closed lower again Thursday following the lead from sharply weaker CBOT markets as recession fears persist.

November Paris milling wheat closed down EUR2.25 at EUR160.50/tonne and London November feed wheat ended down GBP1.50 at GBP99.00/tonne.

A stronger dollar underpinned losses, but the market keeps drifting lower in an attempt to stimulate export interest.

Losses were extended late in the day after Chicago opened sharply lower.

Speculative money continues to exit the commodities markets with Brent crude losing almost $5, and now in danger of breaking through support at the $90/barrel mark.

A quiet day may be in store Friday as many participants will be attending the European grain bourse in Munich.

Stats Canada Release Latest Crop Estimates

Stats Canada say 2008 all wheat production there will reach 27.266mmt, up more than 7mmt on 2007, and almost 2mmt higher than last months estimate.

Canola production is seen at a record 10.87mmt, 1.34mmt up on 2007 and almost half a million tonnes more than previously estimated.

UK 2008 Wheat Area Was Up 13.1% To 2.1M Ha

DEFRA say that the final 2008 UK wheat area was 2.1m ha, an increase of 13.1% on 2007's 1.8m ha. Barley plantings were up around 11% to 1.0m ha, they say. Some of the extra area came from set-aside and some from rapeseed plantings which were 11% lower.

What will be of far more interest now is what area will be given over to wheat and barley in the coming season.

I haven't seen any estimates for that yet, they don't normally seem to circulate until around February. You don't need to be a genius to figure out they will be lower. The $6m question is by how much?

Anecdotal evidence tells me that there are a lot of enquiries around for peas & bean seed this year, with the wheat price having fallen below £100/tonne.

I'll stick my neck out and go for wheat plantings of 1.7m ha and barley 0.9m ha.

USDA To Cut Soybean Exports And Increase Stocks?

Oct 10 sees the USDA release its revised WASDE report. There are expectations around that they will be making cuts to its estimates for soybean exports for this crop year of some 50-120m bushels.

The Quarterly Stocks report Monday that increased Sep. 1 stocks from 140 m bu to 205. Add that extra 65m to an export reduction of 50-120m and we get 2008/09 ending stocks maybe being raised from the current tight 140m to a much more healthy 250-320m.

All that of course assumes that they leave 2008/09 production unchanged. Reports of early cut soybeans appear to be indicating disappointing yields.

eCBOT Close/Early Call

eCBOT grains closed mostly lower Thursday with wheat around 3c easier, corn unchanged to -1c and soybeans around 6c lower.

Prices had a slightly softer tone as investors remained cautious amid concerns about demand for commodities, despite the Senate passing the $700 billion rescue plan.

Some analysts said the bailout package might eventually prove bullish for commodities as it may improve liquidity.

Early calls for this afternoon's CBOT session: Corn futures are expected to open 1 to 2 lower; soybeans 4 to 6 lower; wheat 3 to 5 lower.

Mosaic Discover Magic Money Mine But Shares Still Fall

The Mosaic Company announced yesterday net earnings of $1.2 billion, or $2.65 per share, for the first quarter ended August 31, 2008. These results compare with net earnings of $305.5 million, or $0.69 per share, for the quarter ended August 31, 2007.

Mosaic's gross margin for the first quarter fiscal 2009 was $1.6 billion, or 38.1% of net sales, compared with $521.8 million, or 26.0% of net sales, a year ago. First quarter operating earnings were $1.5 billion, compared with $449.6 million for the first quarter of fiscal 2008. Financial performance during the quarter continued to benefit from higher selling prices compared to the prior year. The significant increase in selling prices was due to strong agricultural fundamentals and positive fertilizer supply and demand factors. Mosaic also recognized a foreign currency transaction gain of $86.7 million.

A pretty decent set of figures for the largely Cargill-owned company you'd have thought? But no. Sales in Mosaic fell $12.67, or 19 percent, to $54.84 in overnight trade from Wednesday's close on the New York Stock Exchange. Shares were $163.25 as recently as June 18.

"Nobody cares about the quarter ended in August," said one hard-to-please analyst. "The focus is the outlook for the next quarter and the rest of the fiscal year."

The company said in a prepared statement that it will reduce phosphate production by 500,000 to 1 million tons in "the next several months" in response to increasing inventories.

HBOS Shares Surge

Shares in troubled HBOS leapt almost 18% Thursday amid mounting confidence its proposed takeover with Lloyds TSB will go ahead.

HBOS declined to comment on a report that Commonwealth Bank of Australia has offered to buy its Australian business BankWest. CBA also declined comment, but analysts said the banks are likely to be in talks.

HBOS shares had traded at a 35 percent discount to the proposed Lloyds' offer this week as fears mounted that shareholders may not approve the deal or Lloyds could revise terms, but the shares have rallied and the discount narrowed as investors said they backed the deal.

At 11am BST HBOS shares were up nearly 18% to 174.20.

Australian Wheat Futures A$8 Lower

Australian wheat futures closed with January A$8 lower at A$292/tonne Thursday, pressured by a weaker CBOT market and rain forecast for South Australia.

After one of the driest Septemebers on record, southeastern agricultural districts of South Australia can finally expect rain this weekend.

On Friday afternoon, rain will spread over the southeast, from about Adelaide to Karoonda and Lameroo in the Murraylands. Falls of 10mm will occur, with widespread falls of 5mm. Further north and west, totals are likely to be less than 5mm.

Showers will re-develop on Sunday as a cold front moves over South Australia, and this front is likely to bring the coolest temperatures since mid September.

Temperatures will then remain close to or below average for the next week.

The cooler conditions and rain will provide some relief to crops suffering after recent very warm, windy and dry weather.

Wheat production in the region is now forecast at 2.71 million tons, down 17% from a month ago but still up 15% from last year, according to some reports.

UK House Prices Fall Most On Record

The average UK home lost 1.7pc of its value in September, leaving prices 12.4pc lower than they were a year ago. The drop eclipses the worst annual fall during the house price crash of the early 1990s, when in the final three months of 1990 prices were 10.7pc lower.

According to the widely-watched survey, the average home is now worth £161,797, down from £164,654 in August.

A chum who works for a national firm of estate agents told me last week that her office had completed on just one house in the whole of September. Normally they would complete on about ten per month.

Crude Falls On Bearish Stocks/Usage Data

Crude is lower Thursday as the dollar neared a one-year high against the euro and U.S. fuel demand dropped to the lowest since the last recession.

U.S. fuel use over the past four weeks averaged 19 million barrels a day, the lowest since October 2001, according to Energy Department data.

An Energy Dept report yesterday said that crude inventories rose more than forecast last week. Stockpiles climbed 4.28 million barrels to 294.5 million.

Senate approval of a revised bank rescue proposal is supporting the dollar which is also weighing on prices.

The November future was $1.22 lower at $97.31/barrel at 10.30am BST.

Senate Approves Bailout; House To Vote Friday

The U.S. Senate strongly endorsed the $700 billion economic bailout plan on Wednesday, leaving backers optimistic that the easy approval, coupled with an array of popular additions, would lead to House acceptance by Friday.

In stark contrast to the House rejection of the plan on Monday, a bipartisan coalition of senators — including both presidential candidates — showed no hesitation in backing a proposal that had drawn public scorn, though the outpouring eased somewhat after a market plunge followed the House defeat. The Senate margin was 74 to 25 in favour of the White House initiative to buy troubled securities in an effort to avoid an economic catastrophe.

Why Are American Kids So Fat?

Some breakfast cereals marketed to U.S. children are more than half sugar by weight and many get only fair scores on nutritional value, Consumer Reports said on Wednesday.

A serving of 11 popular cereals, including Kellogg's Honey Smacks, carries as much sugar as a glazed doughnut, the consumer group found.

And some brands have more sugar and sodium when formulated for the U.S. market than the same brands have when sold in other countries.

Post Golden Crisp made by Kraft Foods Inc and Kellogg's Honey Smacks are more than 50 percent sugar by weight, the group said, while nine brands are at least 40 percent sugar.

UK: Biscuit Brand Found To Contain Melamine

The Food Standards Agency is today alerting the public about a brand of biscuits from China on sale in the UK that have been found to contain low levels of melamine (4.98 mg/kg).

Batches of 49g packets of Koala brand biscuits manufactured by Lotte China Foods Co. are being withdrawn from sale and their destruction arranged by local authorities. The product has been distributed to Chinese supermarkets and other independent retailers across the UK.

FC Stone Crop Production Extimates

FC Stone released their latest 2008 US crop production estimates Wednesday.

The firm pegged the 2008-09 U.S. soybean crop at 2.889 billion bushels, with a yield of 39.4 bushels per acre.

Corn production they say will come in at 12.026 billion bushels, with a yield of 151.7 bushels per acre.

The company's September estimate for soybeans was 3.003 billion bushels, with a yield of 41.0 bushels per acre, and for corn 12.159 billion bushels, with a yield of 153.4 bushels per acre.

The USDA is set to issue it's latest estimates Oct 10th.

Grain Pouring Out Of Russia

During the 2008/09 marketing year, Russia has exported 5.2 mln tonnes of grain, including 4.65 mln tonnes of wheat, 549,000 tonnes of barley and 2,700 tonnes of rye, according to the Ministry of Agriculture.

During September 1-23 period alone, Russia exported 1.95 mln tonnes of grain, including 1.75 mln tonnes of wheat, 195,000 tonnes of barley and 2,700 tonnes of rye.

Garlic In Feed Reduces Methane

Provimi are doing research into adding garlic to animal feed to reduce methane emissions apparently, which as we know is all the rage at the moment.

According to researcher Sander van Zijderveld, garlic influences the methane producing bacteria in the rumen. He says that garlic therefore has a positive effect on the energy balance in the animal. "That is logical because when methane is released, energy is lost", he added.

On average, a cow released 400 grams of methane per day. By using feed additives, this can be reduced by 15%.

He sounds interesting doesn't he? Bet it's a laugh a minute in the van Zijderveld household?

The world has truly gone mad.

Dollar Steady On Bailout Hopes

The dollar rose steadily throughout the day Tuesday and has largely held those gains in early trade Wednesday on hopes that a revised US bailout package would be voted through by the US Senate later tonight.

Senators plan to include a provision that would raise the limit on federal insurance for bank deposits to $250,000 from $100,000, a move demanded by some of the rescue plan's critics.

The dollar is around 3 cents firmer against the pound from early yesterday morning at $1.7815, and $1.4140 against the euro from around $1.45 in early trade Tuesday.

US Senate To Vote Today On Re-jigged Bailout Plan

US Senate leaders will vote later today on a $700 billion financial bailout package after agreeing to add tax breaks and a higher limit for insured bank deposits in a bid to attract enough votes to reverse a shocking defeat in the House and send legislation to President Bush by the end of the week.

After a day of behind-the-scenes manoeuvring, top lawmakers said the Senate proposal would include a tax package as well as a plan endorsed on Tuesday by both major presidential candidates and the Bush administration to raise government coverage for bank deposits.

Sweden's 2008 Wheat Quality Poor

The Swedish wheat harvest this year is the worst in terms of quality across Europe, industry sources say. Sweden will therefore be obliged to import record amounts of wheat in order to meet demand for basic products such as bread. Higher bread prices are to be expected as bad weather has taken its toll on wheat harvests. Almost all the harvest collected in central Sweden is of such poor quality that it can't be used for bread and is only sitable for animal feed.

Australian Wheat Output Cut To 20.8MMT - NAB

The National Australia Bank Ltd. today slashed it's Australian 2008 wheat output estimate to 20.8mmt from it's 24.3mmt forecast in June.

The forecast is towards the low end of trade expectations and 1.7mmt below ABARE's recent estimate of 22.5mmt.

Still, output is seen well above 2007's drought-ravaged 13mmt crop.

ASX January wheat closed A$6 higher overnight at A$300/tonne.

NAB also forecast barley production in 2008 at 7.4mmt against ABARE's 7.8mmt and an actual 5.9mmt in 2007.

Canola production was forecast at 1.3mmt compared with ABARE's 1.65mmt and an actual 1.07mmt last year.

I See The Chinese Are At It Again Then

Hot on the heels of defaulting left, right and centre on now very expensive palm oil purchases, the "a contracts not a contract unless we say it is" Chinese insurance group Ping An are wanting to renegotiate over their agreed $3 purchase of half of Fortis's asset management arm.

Fortis, baled out by the Benelux countries at the weekend, had agreed a sale to Ping An in March. However the value of the assets has fallen considerably since.

Ping An, which bought 4.2 percent of Fortis in November for 1.81 billion euros, had its biggest two-day drop in four years in Hong Kong trading this week after warning it may take further provisions for losses from its holding. The insurer booked a 10.5 billion yuan ($1.5 billion) loss on the stake in the first half.

They are clearly looking to re-coup some of these losses by renegotiating a lower price.

Overnight grains steadier

The overnight grains markets are steadier this morning with corn up around 10c, beans up around 12-15c and wheat around 4-8c firmer.

The work-shy Argies have kicked off again which is adding a bit of support (can't really see it myself but there you go).

Of more significance are stories circulating of a salvage operation for the failed $700 billion bank-rescue plan.

Crude is steady back above $100/barrel which is also adding some stability to the recently very volatile markets.

US crude & gas stocks data are due out this afternoon, which could prove interesting now that refineries are slowly getting back into production following hurricane closures and disruptions throughout September.

EU Wheat Gains Slightly

EU wheat futures closed with mostly modest gains Tuesday in a slight bounce from Monday's steep losses.

Paris November milling wheat closed up EUR1.50 at EUR161.25/tonne and London November feed wheat closed flat at GBP99.50/tonne.

CBOT wheat futures bucked the weaker trend set by soybeans and corn Tuesday, rebounding from a 13-month low on a bullish U.S. wheat stocks figure and as traders covered short positions.

USDA showed U.S. September 1 wheat stocks at 1.857 billion bushels, below the average trade estimate of 1.909 billion. Analysts said the figure implied strong demand for wheat from the livestock feeding sector.

Still, EU prices remain heavily influenced by crude oil and other outside markets said one trader, and the recent downwards trend remains firmly intact.

CBOT Closing Comments


Corn futures closed sharply lower with the Dec contract closing below $5/bu for the first time since January. Corn continued its downward trend of late on Tuesday, aiding to that trend was a bearish USDA quarterly stocks report which indicated increased corn supply due to curving livestock consumption and slowing of ethanol plants. Funds sold an estimated 7,000 contracts on Tuesday as a result to the bearish news. Late maturing corn should be getting close to black layer, decreasing the chance for a yield loss due to a frost. Higher moisture content in corn fields may delay harvest as farmers elect weather to help dry rather than pay for expensive energy to dry manually. Dec -25c at 4.87.


Soybeans struggled again on Tuesday losing nearly 50 cents in nearby Nov contract and $1.19 per bushel so far this week! Nearby Nov contract fell below $11/bu for the first time since April, and hasn�t closed this low since last December! Funds were net sellers of 5,000 bean contracts, 2,000 meal, and 2,000 bean oil contracts. The financial chaos has spoke volumes in corn, soybeans, and livestock, indicating the panic some investors have, with continued liquidation and new speculation that prices CAN go lower despite some bullish fundamental values. Crude oil gained about half of yesterday's losses being up over $5/barrel but did not give support to corn or beans. Nov -49 at 10.45 Oct Meal -16.30 at 279.40 Oct BO -163 at 44.00.


Wheat futures received some bullish news from USDA quarterly stocks report with a smaller than expected figure giving support to a wheat market that has collapse over the past month. Funds bought an estimated 2,000 CBOT contracts but are still skeptical, record large world crop and financial jitters weigh in. USDA pegged wheat stocks at 1.856 BB which was below that average trade estimate at 1.909 BB, however, '08 production increased 38 million bushels from the August report. Winter Wheat plantings are well underway and are just slightly behind the five year average with 14% being emerged. Wheat does not have expanded trading limits today. Dec CHI +12 at 6.80; KC +7 at 7.12; MLPS +0 at 7.46.

Who's Drinking All This Milk?

Brokers will have to be rationed to four modest portions of meat and one litre of milk a week if the world is to avoid run-away climate change, warns a report cited in The Guardian.

The report, by the Food Climate Research Network, based at the University of Surrey, also says total food consumption should be reduced, especially "low nutritional value" treats such as alcohol, sweets and chocolates.

Well, you can blame me for most of those. I have four 'modest' portions of meat for breakfast most days. A couple more modest ones for lunch and a substantial one for dinner. My alcohol consumption is also well documented, and I confess to being no stranger at the sweetie counter at my local Londis.

What I want to know is who's the Charlie drinking all this milk? Morning cereal is for girls, hairdressers and estate agents, we all know that. The average male broker's daily diet consists of a full English with a mug of tea, followed a couple of bottles of Lucozade (for energy purposes).

A light lunch consists of a pie or two, maybe a Scotch egg, a couple of packets of crisps and a few more pints of lager (more on a Friday). For his evening repast, a typical heterosexual broker like myself will consume something like a full-on steak dinner with all the trimmings followed by copious quantities lager before bed.

Not a lot of milk there is there, so where's it all going?

My money is on Spanner letting the side down with his lightweight milk-guzzling ways. I'll be keeping a very close eye on his supping at the next trade dinner. A pint of Baileys my arse. That's gold top with a dash that is.

Or possibly Ken Page, I bet he can eat muesli like its going out of fashion.

I See The Russians Are At It Again Then

The Russian Ag Ministry reported Tuesday that the 2008 Russian grain harvest has yielded 104.17mmt as of 30th Sept with 10.8% of the crop still to be harvested.

This makes the harvest more than 22mmt ahead of the same time last year, but those wily old Russians are still being coy about eventual output and sticking by their latest reluctant estimate of 95-100mmt "clean weight."

Still it wasn't that long ago that they were saying that output would be 85mmt, just 3mmt up on 2007.

I wouldn't like to buy a used car off a Russian, would you? Just 500 genuine kilometers, only ever been driven by my mother, like new, yes the side panels do look a different colour comrade, it's that special two-tone paint, we paid 50m roubles extra for that, have another vodka.

USDA Quarterly Stocks Report Highlights

USDA's Quarterly Grain Stocks report indicated corn stocks as of September 1 were 1.624 billion bushels, about 83 million bushels more than the average pre-report estimate of 1.541 bb and 320 mb more than the 1.304 bb for the same period a year ago.

Soybean stocks September 1 were 205m bu, compared to an average of 145m bu for pre-report estimates and 574m bu a year ago. For soybeans, June-August indicated disappearance was 471 million bushels, down 9 percent from the same period a year earlier.

Wheat stocks September 1 were 1.857 bb, compared to an average of 1.909 bb for pre-report estimates and 1.717 bb a year ago.

LIBOR Posts Largest Ever Daily Jump

The interest rate at which banks lend money to each other has soared overnight to record levels, says the British Bankers' Association (BBA).

The Libor rate for borrowing dollars overnight hit 6.87% - the highest for more than seven and a half years and a record daily jump.

The rise came despite huge cash injections by central banks after the rejection of the US bail-out plan.

Libor reflects how banks perceive the risk of borrowing money.

While central banks set official rates, Libor is seen to show the real rate of interest being used by the largest global firms to borrow from one another.

With banks still reluctant to lend to each other, it has been a key indication of the impact of the credit crunch.

Mortgage lenders in the UK have pointed to rises in Libor when increasing the costs of new deals, despite falls in the Bank of England's base rate.

eCBOT Close/Early Call

eCBOT grains rebounded from earlier losses closing mixed to mostly higher Tuesday.

Monday night's losses were extended in early trade with soybeans hitting fresh ten month lows on the failure of the US House to pass the proposed $700 billion rescue plan.

However later in the session, fundamentals began to come a little more into play than recently, and wheat closed with gains of around 12-14c and corn up 8-10c with soybeans mixed either side of unchanged levels.

Soybeans had been 30c down earlier.

Early calls for this afternoon's session: Corn futures are expected to open 5 to 10 higher; soybeans steady to 2 lower; wheat 12 to 16 higher.

Wiseman To Increase Milk Price

One of Britain’s biggest milk suppliers said yesterday that it was putting up its prices.

Robert Wiseman, which supplies milk to Tesco and Sainsbury’s, would not reveal the scale of the increase, but said it was necessary to combat rising oil, utility and packaging costs and falling bulk cream prices. The company said it also intends to pay farmers more for raw milk supplies.

The company supplies the milk for Tesco’s Fresh’n’Low milk, which had its price reduced from £1.44 to £1.06 last month, sparking a price war between the leading supermarkets. After Tesco’s announcement, Asda and Sainsbury’s cut the price of a two-litre bottle of milk to 99p, and Asda slashed the price of a two-pint bottle from 80p to 50p.

I don't see the farmers getting much in the way of the "intended" price increase somehow.

Chinese Arrest 22 Over Milk Scandal

Chinese police have arrested 22 people suspected of producing melamine - the chemical found in milk products which have made thousands of babies ill.

The arrests took place on 17 September, but were only reported widely on Monday evening.

Police are said to have raided dairy farms and milk purchasing stations in northern Hebei province, and seized more than 220kg (485lb) of melamine.

Chinese milk products have been recalled from all around the world.

As well as making about 50,000 babies ill, the tainted milk products have also been blamed for the deaths of four babies.

The Chinese news agency Xinhua said that of the 22 people detained, 19 were managers of 17 pastures, breeding farms and milk purchasing stations.

More than 800 police were involved in the raids on 41 locations in Shijiazhuang, the capital of Hebei, Xinhua said.

Police said the melamine had been produced in underground plants and then sold to breeding farms and purchasing stations.

Xinhua quoted one of those arrested as saying he had been producing "protein powder" containing melamine since last year.

Another suspect was quoted as saying his milk had always been rejected by Sanlu, the company where the toxic milk was first discovered last month which is headquartered in Shijiazhuang.

He said he was told that lacing his milk with melamine could increase the proportion of protein and would help his milk pass the Sanlu test. So he began tainting the milk, Xinhua reported.

HBOS Shares Hit New Low As Lloyds TSB Deal Hits Snags

Shares in HBOS fell to a new low Tuesday as rumours began to circulate that the recent Lloyds TSB rescue deal would not go through in its current form.

HBOS shares are around 10% lower this morning after falling 18% yesterday.

Edinburgh-based HBOS was on the brink of collapse two weeks ago until Prime Minister Gordon Brown personally intervened to broker a takeover by Lloyds TSB.

One high profile investor said: "There is something about this deal that has never quite hung together. It started to look potentially over-ambitious when analysts began to circulate very large numbers for the amount of additional capital that Lloyds TSB might need."

Some analysts are suggesting that Lloyds' management could use the ongoing financial crisis, and the subsequent further demise of HBOS shares, as an excuse to renegotiate the terms of the merger.

Dairy Crest To Close Dairy, Reduce Staffing

Dairy Crest says it hopes to make "significant savings" by closing its Nottingham dairy in an attempt to fight soaring costs.

The site employs 215 people and was bought by Dairy Crest from Express Dairies only two years ago. There will also be job losses at the company's head office it says.

In a trading statement this morning, Dairy Crest said it was making the move to cut costs in its dairies division by opening a new regional distribution centre in the West Midlands.

First half profits are likely to be down as the company battles against soaring input costs such as higher milk prices, packaging and energy.

At 11am BST Tuesday shares in Dairy Crest were almost 5% lower at 388.75p.

Commodity Long-Only Funds Drop USD50 Billion Since July

Investments betting that commodity futures prices will move higher have drastically diminished over the past two months due to the global credit crisis, according to data released on Monday.

The amount of so-called long-only money has shrunk by as much as $50 billion, with the sharpest drops in agricultural futures and oil markets.

Commodities seemed insulated from the slump in stocks and real estate through the first half of 2008, with oil racing to a historic high of nearly $150 a barrel by mid-July, fueling an inflation run-up in most other raw materials.

But as the dollar rebounded from record lows against the euro and the U.S. banking crisis reached epidemic levels over the last 10 weeks, some of the most bullish investors in energy and agricultural markets began to flee.

"The tidal wave of investment into commodities which occurred in the first quarter has collapsed," CitiGroup said in a research note on Monday. It said that since July, the net long position has collapsed from $58 billion to $8 billion.

While investor interest in U.S. crude oil has hit its lowest level in more than two years, Swiss bank UBS noted that some of the sharpest fund outflows have thus far been money invested in agricultural futures through commodity indexes.

"Large outflows from agricultural index investments continue, this past week amounting to $1.44 billion," UBS said, basing its estimate on data released by the U.S. Commodity Futures Trading Commission, or CFTC.

"Over the past quarter, index investors have sold $9.1 billion worth of agricultural index positions, reversing the inflows of 2007 and 2008," UBS said.

The CFTC had estimated at the end of June that there was a total of $200 billion tied to index-related commodity investments, which included "short" positions, in which investors were betting on lower prices.

CitiGroup estimated on Monday that total positions on commodities indexes had dropped to around $100 billion.

Among agricultural futures, U.S. corn has seen some of the biggest declines in long-only money. The net-long index trader position in corn on the Chicago Board of Trade fell by 30,180 contracts since the week of Sept. 9, CFTC data shows.

At 5,000 bushels per contract and CBOT corn trading between $5.00 and $6.00 a bushel in that period based on Reuters price graphs, corn had seen estimated outflows of $755 million to $905 million since Sept. 9.

Sept. 9 was the week before the U.S. banking crisis reached global levels following the bankruptcy of Lehman Brothers, the distressed sale of Merrill Lynch and the government takeover of giant insurer AIG.

Today's Banking Bailout Is...

Dexia, a French-Belgian lender who has just got a $9 billion handout from public shareholders to help keep it afloat today.

Ever heard of them? No, neither have I. The point is surely if it takes $9 billion to keep them afloat how much is needed to keep them all going? All over the world? A lot more than the "mere" $700 billion on the table I'd say.

After all-night negotiations, the Belgian government announced that it and other Belgian stakeholders would invest $4.26 billion in Dexia. The French government is contributing $1.42 billion, the French state-controlled Caisse des Depots $2.84 billion and the Luxembourg government would also invest $518.82 million, according to a statement from the Belgian prime minister's office.

Trading in Dexia's shares were suspended Tuesday on the Euronext exchange as Prime Minister Yves Leterme of Belgium announced details of rescue, which follows a bailout of Fortis, a Belgian-Dutch lender on Sunday.


Australian Wheat Closes Below A$300

Australian ASX January wheat futures closed below A$300/tonne for the first time since November 2007 Tuesday.

Following a sharply weaker CBOT market and the rejection of the US rescue package for the financial markets wheat has simply got caught up in a broad-based commodity meltdown.

As credit lines continue to tighten, speculative investors continued to exit positions in grain futures, an analyst said.

A Queensland farmers group said Tuesday that the state expects its biggest wheat crop in a decade.

ASX Jan hit $290/tonne before settling A$6 lower at A$294/tonne Tuesday.

Ukraine Wrapping Up Harvest And Replanting

As of September 29, Ukraine harvested 0.7 mln tonnes of maize throughout 178,000 ha or 7% of planted area according to the Ministry of Agrarian Policy.

Further Ukrainian farmers harvested 1.62 mln tonnes of sunseed throughout 1.13 mln ha with an average yield of 14.3 c/ha.

Farmers also harvested 236,000 tonnes of buckwheat throughout 220,000 ha and 213,700 tonnes of millet throughout 123,000 ha, 11,500 tonnes of rice throughout 2,000 ha, 87,500 tonnes of soybean throughout 61,300 ha.

Meanwhile Ukraine continues its winter grain sowing campaign. As of September 29, the country had sowed 2.26 mln ha with winter grains (30% of the planned territory), including 2 mln ha of winter wheat (32% of planned area).

According to the Ministry, also farmers sowed 1.13 mln ha with winter rapeseed (88% of planned area).

Ukraine Exports Continue At Rapid Pace

As of September 26, and since the beginning of the current marketing year (June 2008 - July 2009), Ukraine exported nearly 6 mln tonnes of grain, including 2.92 mln tonnes of wheat, 2.65 mln tonnes of barley, 421,000 tonnes of maize and 20.400 tonnes of other grains, according to the Ministry of Agrarian Policy.

In August, Ukraine exported 2.16 mln tonnes of grain, including 927,000 tonnes of wheat and 1.11 mln tonnes of barley, according to the Ministry. Since the beginning of this MY, Ukraine has exported 1.036 mln tonnes of oilseeds, including 1.035 mln tonnes of rapeseed.

Overnight grains

eCBOT grains are mixed, mostly lower, in overnight trade Tuesday morning on follow through momentum from last night's weak close.

Soybeans are posting the largest losses, down around 30c, adding to last night's limit down 70c move.

Corn, which also closed locked in limit down Monday night has also extended it's losses, currently around a further 5c lower. Wheat is in slightly positive territory this morning up around 2-3c.

Beans are at or near 10-month lows this morning in the continued fallout from the rejected rescue plan by US lawmakers.

Asian stocks tumbled overnight, putting them on course for the biggest monthly decline in more than a decade.

Crude oil had its largest fall in dollar terms in 17 years last night, and despite being steady in early morning trade, is now gathering more downwards momentum, currently $2.53 lower at $93.84/barrel.

Queensland Expects Biggest Wheat Crop In Decade

Queensland's 2008 wheat crop is expected to be more than double output in 2007 a farmer's lobby predicted Tuesday.

However storage is likely to be a problem this year as much of the nation's bumper 2.7mmt sorghum crop still remains in storage silos looking for a home.

Output is likely to be in the region of 2.0mmt, amking it the largest crop in a decade, compared to 910,000mt in 2007.

Harvesting will begin in the next few weeks and is usually completed by the end of November.

Western Australia is the nation's largest producing state, usually accounting for around 45% of total national output.

Crude Steadies After Largest One Day Fall In 17 Years

Crude is steady in early trade Tuesday after a sharp decline Monday as US lawmakers rejected the proposed $700 billion rescue plan of the world financial markets.

Yesterday, oil fell $10.52, or 9.8 percent, to $96.37 a barrel, the biggest slide in percentage terms since Nov. 15, 2001, and the largest dollar decline since Jan. 17, 1991, when U.S.-led forces expelled Iraq from Kuwait.

At 7.50am BST November crude was $96.12/barrel.

Speculators are being forced out of commodities, and particularly the most fluid and speculative of them all crude, because of the margin requirements. With no credit, people have to hoard cash.

Additionally a US and global economic meltdown will continue to see demand for crude falling.

EU Wheat Tumbles On Outside Markets

EU wheat futures began the week sharply lower, giving in to bearish pressures from outside markets.

The world banking crisis continues to see money flowing out of all commodities and wheat has got caught up in a wholesale exodus of speculative money.

Paris November milling wheat hit a fresh 15-month low before closing down EUR6.00 at EUR159.75/tonne. London November feed wheat broke below £100/ton for the first time since June 2007, ending down £3.50 at £99.50/tonne.

Although many of the fundamentals have gone out of the window, weekend rains in Argentina and Australia added to the bearish tone.

Crude oil was sharply lower and that weighed on prices throughout the day as traders remained cautious ahead of the result of the crucial rescue plan vote in the US.

Expect the markets to open lower again in the morning after Chicago closed locked in limit down on soybeans and corn, and near limit on wheat after the result became known.

November Crude closed more than $10 lower at $96.37/barrel.

CBOT Closing Comments

U.S. grains fell sharply on Monday as investors bailed out in full force after lawmakers surprisingly rejected a $700 billion rescue plan for the financial sector.

There was a sell-off across commodities, with oil slumping 10 percent to $96 a barrel, and the Dow Jones industrial average suffering its largest ever one day drop.

Corn and soybean futures on the Chicago Board of Trade fell by their daily trading limit, with wheat not far behind.

CBOT December corn futures settled down 30 cents, or 5.5 percent, at $5.13 a bushel. November soybeans settled 70 cents, or 6 percent, lower at $10.94 a bushel, closing locked at the 70-cent daily trading band. December wheat fell on 48 cents, or 6.7 percent, at $6.68 a bushel.

Stocks Plunge As US House Rejects Rescue Plan 228-205

Markets plunged Monday as the US House of Representatives rejected, by a vote of 228 to 205, the $700 billion measure to authorize the biggest government intervention in the markets since the Great Depression.

The Dow Jones index lost 770 points - 6.9% - its biggest one-day point drop yet as Congress surprised observers by not backing the rescue plan.

Meanwhile the Nasdaq index fell 9.1% and London's FTSE 100 index lost 5.3%.

Confidence had already been smashed by the rescue of US bank Wachovia and Bradford and Bingley's nationalisation.

The Dow Jones closed at 10,365.4 points after the bail-out result threw efforts to calm the US financial crisis into disarray. The tech-heavy Nasdaq ended down 200 points at 1,983.7.

US Farmers To Plant Least Cotton Acres For A Century In 2009

They may have to change the words of that song "Them Old Cotton Fields Back Home" to "That Old Cotton Field Back Home" before long.

US farmers will plant between 7 and 8 million acres of cotton in 2009, the lowest in more than a century, according to experts.

In 1983, U.S. farmers planted 7.93 million acres, the lowest since the Department of Agriculture began keeping records in 1909.

The U.S. began the marketing year Aug. 1 with stockpiles of 9.9 million bales, the highest since 1967, according to USDA data. A bale weighs 480 pounds.

Texas is the biggest grower in the U.S. followed by Georgia and Arkansas. Farmers there are being wooed away from cotton by more profitable crops such as soybeans, corn and wheat, according to Globecot, a division of FCStone.

eCBOT Close/Early Call

eCBOT grains closed sharply lower overnight Monday influenced by a broad-based sell-off in the commodities markets.

Corn and wheat closed around 15-17c lower, with soybeans off around 30c.

A sharply higher dollar was also a negative feature.

Commodities fell, led by oil, copper and lead, on concern the U.S. plan to spend $700 billion propping up America's banks will fail to unlock credit markets and avert a slowdown in the world's largest economy.

Early calls for this afternoon's session: Corn is expected to open 15 to 17 lower; soybeans 28 to 32 lower; wheat 15 to 17 lower.

The Rumour Mill: VeraSun May Have A Buyer

Shares of corn ethanol giant VeraSun Energy Corp shot up 32% Friday in heavy trading, on speculation that the company is close to striking a deal to sell itself.

The company's practice of not buying corn requirements far ahead of time hit a brick wall when the June Midwest floods caused a major spike in grain commodity prices.

The company clearly panicked, and went long corn during the upswing, and now is riding on an undetermined loss on commodity trading and corn inventories. In its now-cancelled equity offering prospectus filed on September 16, VeraSun estimated third quarter corn costs would be $6.75 to 7.00 per bushel, and the company would record a third quarter loss of $63 to $103 million based on input and output prices and various assumptions including a New York Harbor ethanol price of $2.35 to $2.45 per gallon.

Currently, NYH ethanol is trading 9 cents over $2.24, or about $2.33/gallon. Chicago corn is around $5.30/bushel.

Likely interested parties include the usual suspects, Archer Daniels Midland (ADM) and Cargill, although the latter company may have lost its taste for corn ethanol as it helped create Biofuel Energy.

More likely suitors could be two foreign multinationals, both already in the ethanol and biofuel business in the USA. These include Cilion, backed by Virgin Fuels, part of Richard Branson's Virgin Group, and Khosla Ventures. Cilion has two corn ethanol plants under development in New York State.

Another potential suitor is Hong-Kong based Noble Group, which is an international agriculture and commodity trader with 2007 revenues of $23 billion US and $19.9 billion US in the first half of 2008. Noble has interests in several ethanol plants and markets ethanol for ten plants across the US.

If an oil company were to decide to take the plunge into ethanol refining, it probably would be Marathon Oil (MRO). Marathon partnered with The Andersons, a well-run grain handling, rail transport and ethanol production company, to open ethanol plants in Ohio, Indiana and Illinois. The partnership might be interested in becoming a major ethanol producer with a VeraSun acquisition.

Competitors of VeraSun such as Poet, Aventine and Hawkeye probably lack the deep pockets required to do a deal. They might hope for a bankruptcy sale of assets.

Investment advice

If you had purchased £1000 of Northern Rock shares one year ago they would now be worth £4.95.

With HBOS, earlier this week your £1000 would have been worth £16.50.

£1000 invested in XL Leisure would now be worth less than £5.

But if you'd bought £1000 worth of Carlsberg Special Brew Lager one year ago, drank it all, then took the empty cans to an aluminium re-cycling plant today you would get £214.

So based on the above statistics the best current investment advice is to drink heavily and re-cycle!

London Wheat Dips Below GBP100

London wheat futures dipped below the psychologically important £100/tonne mark Monday tracking a broader decline in commodities amid financial market concerns as U.S. lawmakers got ready to vote on a $700 billion rescue package.

At 11.30am BST Nov feed wheat was down £3.50/tonne at £99.50/tonne, its lowest level since June 2007.

Questions abound as to whether the proposed US rescue plan would restore confidence to shaky markets and head off a deep recession.

Commodities fell, led by oil, copper and lead, on concern the plan will fail to unlock credit markets and avert a slowdown in the world's largest economy.

Nov crude was more than $3 lower at $103.75/barrel.

Pound slips on mortgage woes, credit crisis

U.K. mortgage approvals slipped to a fresh record low of 32K from 33K in July, signaling that the downturn in the housing market may get worse as U.K’s biggest mortgage lenders find themselves in troubled waters.

The dollar received a boost from relief that U.S. lawmakers were set to vote on a $700 billion bailout fund to alleviate the credit woes.

The euro fell against the dollar as Belgian-Dutch financial group Fortis was rescued in a state buyout after European Central Bank President Jean-Claude Trichet held emergency talks with Dutch, Belgian and Luxembourg officials.

Sterling was hit as authorities prepared to nationalise troubled mortgage lender Bradford & Bingley and were discussing the sale of its savings deposits and branches, people familiar with the matter said.

At 11am BST the pound was $1.8030, more than four cents lower than Friday's close. The euro was $1.4355 around 2 1/2 cents down from Friday's close of $1.4610.

Bradford and Bingley Shares Suspended

Today's announcement regarding the nationalisation of Bradford & Bingley is the final nail in the coffin for shareholders of the beleaguered bank. The former building society had its shares suspended this morning.

This means that the taxpayer inherits the liability for the bank's outstanding mortgage debt - presently valued more than £1bn.

Savers have been given some respite, as the savings division of the bank is being sold off to Spanish giant and fifth largest bank in the world Banco Santander, which has recently scooped up Alliance & Leicester, following on from its acquisition of Abbey in 2004.

It is viewed as a sound institution and, in any case, ministers have already promised that the deposits of savers with Bradford & Bingley will be protected.

The share price has collapsed from £5 just two years ago to 20p at the end of last week. In the past 12 months alone shareholders have watched the value of the stock plummet by a punitive 93%.

Shareholders now have to hold fire and wait for a Treasury appointed independent 'valuer' to decide how much, if any, compensation they might receive.

However, experts generally anticipate that this will be close to nothing leaving investors seriously out of pocket.

Australian Wheat Futures Dive

Australian wheat futures closed sharply lower Monday with ASX January dipping below the psychologically important A$300/tonne level at one point.

At the close of trading Jan finished A$10 lower at A$300/tonne and Mar A$15.60 lower at A$301.80/tonne.

Good rains over the weekend in Western Australia of 20 to 40mm should pretty much ensure the crop there.

Rains of up to 50mm are forecast for southeastern Australia later in the week which should also benefit crops there.

A sharply weaker CBOT market added to the downside pressure, traders said.

Weekend thoughts

Just got back from a weekend away on the Yorkshire coast. On the drive across Friday there were still combines out cutting wheat! And its October in a couple of days. One thing that really struck me was the number of unploughed fields with wheat stubble still poking through. These far outnumbered the ones that had been readied for re-drilling.

I saw a mate whilst I was there who works for one of the big seed houses. He told me twelve months ago that they'd sold 50% more wheat seed than they'd ever sold. This year they aren't so busy, wheat seed sales are "at best, back to normal."

This ties in with a Yorkshire compounder who told me recently that his fertiliser sales for last month were a third of what they were a year ago. With Lithuanian AN around £365/tonne at the moment compared to £140/tonne a year ago, its not hard to see why.

As a side issue, another chum I met up with works for a national firm of estate agents. Her office have completed on just one house in the last four weeks.