Nogger's Blog

CBOT Closing Comments

Wheat

Mar CBOT wheat closed at USD5.44 3/4, up 3 3/4 cents; Mar KCBT wheat at USD5.40 1/2, up 2 1/2 cents and Mar MGEX wheat at USD5.51 1/4, up 2 1/4 cents. Wheat closed higher "just because" - the market is heavily oversold and there are plenty of ideas that the funds will be in as big buyers come 2010.

Soybeans

Jan soybeans closed at USD10.36 ¼, down 1 ¾ cents, November beans at USD10.15, down 3 cents, Jan soymeal at USD316.20, up USD1.3, and Jan soyoil at 39.49, up 6 points. An announcement of US soybean sales to China of 348,000 MT by the USDA was supportive, although potential record production out of South America isn't.

Corn

Mar corn closed at USD4.13 ¾, down 3 1/4 cents, and December corn at USD4.42, down 3 1/4 cents. Energy futures were higher, with crude topping USD79 on another week of smaller inventories. A trade survey shows modest expectations of 550-800,000 for weekly USDA export sales in the morning.

EU Wheat Closing Comments

March Paris milling wheat futures ended unchanged at EUR133.75/tonne and London May feed wheat futures closed up GBP0.35, at GBP111.90/tonne.

There really is nothing left to say, it's a very quiet trading session and the market looks set to stay that way until January.

The bulls need to pin their hopes on a resumption of fund buying activity, there doesn't seem like much else to set the market on fire to the upside apart from that.

The bears just need to sit and wait.

EU Rapemeal Prices

Basis FOB Lower Rhine in euros/tonne:

Jan             153,00  
Feb             148,00  
Feb/Apr         142,00   
May/1st h Jly   126,00  
Aug/Oct 10      121,00  
Nov/Jan 11      129,00  
Nov/Apr 11      130,00 

Story Of The Day: Pigs Run Loose On M11

The Beeb tell us today that a lorry carrying more than 80 pigs has crashed on the M11 near Stanstead, closing the motorway as "a large number of the animals escaped and many are now wandering on both sides of the central reservation." I'm surprised frankly that they aren't all hogging the middle lane.

"A vet has been called as one pig appears to have injuries to its back," they tell us. Presumably he'll be rubbing some oinkment on that straight away then?

"The southbound road will remain shut until the afternoon to remove the lorry and carry out an investigation," police said. I reckon, after careful consideration (it's not a rasher decision), that the driver is for the chop.

Babe's akimbo

Market Snippets

Crude oil is around USD79/barrel, despite US stocks rising yesterday by 1.7 million barrels according to the American Petroleum Institute. The market seems to be focusing more on a drawdown in US gasoline and distillate stocks instead. The US Energy Dept will report on crude inventories this afternoon, they usually concur with the API around 75% of the time. The current cold snap gripping the US should help demand, the pundits are saying.

Those two old supermarket sluggers of Tesco and Asda (hums theme tune from Rocky) have both announced that they won't be raising the VAT rate back up to 17.5% on "thousands" of lines come Jan 1st. Exactly how long the offer will last is unclear, will it go the distance and end on a cliff-hanging split decision? Meanwhile Waitrose, played by Burgess Meredith, say that they've had a great Christmas -its most successful ever - with sales up over 20% for the w/e Dec 26th.

UkrAgroConsult peg the 2009 Ukraine wheat crop at 20.8 MMT, corn production at 9.5 MMT and barley output at 11.3 MMT. Their figures for 2008 production were 24.2 MMT, 10 MMT and 11.8 MMT respectively. They estimate 2010 wheat output at 18.7 MMT, up 700,000 MT on their original October forecast. Meanwhile, the local Ag Ministry say that the country have exported 12.2 MMT of grain during the current marketing year (to 10th Dec).

According to the Conab, many Brazilian farmers chose to plant soy instead of maize this season, due to lower production costs and greater resistance of the grain to drought. If the weather conditions are favourable in the main growing areas, then the soybean harvest fpr 2009/10 may increase 12.9% over the 2008/09 crop, which totalled 57.16 MMT, coming in at a record 64.56 MMT, they say.

Uruguay is expecting a record wheat crop for the second year running in 2009/10 while the barley harvest is forecast as the largest in the last ten years according to the Statistics Office from the Ministry of Agriculture, Livestock and Fisheries. Winter crops area was estimated in 721,000 hectares of which 546,000 was wheat (70,000 more than last year). To find similar areas planted with wheat Uruguay must look back over thirty years, to 1976/77 when 543,000 hectares were sown. The estimated crop will be above 1.8 MMT, an all time record and for the second year running. The yield of 3.336 kilos per hectare is also a historic record, say the Ministry. Barley covered 140,000 hectares this year, 8% more than the previous crop and the largest area in the last ten years. Yields so far are in the range of 3.294 kilos per hectare, second only to the 2006/07 crop record. Meanwhile summer crops in Uruguay this season are estimated to cover a million hectares, 30% higher than last year, with soybeans taking the highest share at 848,000 hectares.

CBOT Closing Comments

Soybeans

Jan soybeans closed at USD10.38 up 9 cents, Jan soymeal at USD314.90, up USD4.50 and Jan soyoil at 39.43, down 20 points. Beans managed to follow through from Monday's gains, and has now reversed more than half of December's losses. Fund buying was estimated at around 4000 contracts on the day. Volume was thin as participants stand aside in typical holiday trade.

Corn

Mar corn closed at USD4.17, up 1 cent, December corn ended at USD4.45 1/4, down 1/2 cent. US corn losses could amount to as much as 100 million bushels this season, with a severe winter storm meaning very little has been harvested this week, analyst say. Normally the US corn harvest would be well over and done with by now.

Wheat

Mar CBOT wheat ended at USD5.41, down 9 3/4 cents, Mar KCBT wheat at USD5.38, down 8 cents and Mar MGEX wheat at USD5.49, down 7 3/4 cents. Speculative funds increased their net short positions in CBOT wheat futures and options to 37,258 contracts as of Dec. 22 from 19,530 contracts a week earlier, the CTFC revealed. Analysts estimate that a further 2,000 contracts were added to that short today.

EU Wheat Closing Comments

Paris March milling wheat futures closed Tuesday unchanged at EUR133.75/tonne, and London March feed wheat ended GBP0.55 higher at GBP108.85/tonne.

As was widely expected it was a quiet, uneventful day in what promises to be a subdued week's trade. Even a sharply higher close in US wheat futures last night failed to ignite much interest today.

The EU granted export licenses for 374,000 MT of soft wheat for the week ended Dec. 22, according to customs data. That brings total exports for the marketing year to date to 8.2 MMT, 25% down on the 11 MMT worth granted this time twelve months ago.

It still seems that wheat's best chance of pushing significantly higher in the new year rests with fund/spec money re-entering the market.

Russia remain the most aggressive seller in the market, and logistical problems caused by harsh wintry conditions might be Europe's best hope of picking up a few spare export orders over the next few months.

CBOT Closing Comments

Soybeans

Jan Soybeans closed at USD10.29 up 29 ½ cents and November Soybeans at USD10.10, up 20 ¾ cents; Jan Soy meal was at USD310.40, up USD9.00, and Jan Soy oil at 39.63, up 117 points. Strong weekly export inspections (51.9 million bushels), a weaker US dollar, and firmer outside markets helped beans reverse half of December's losses. Fund buying was estimated at around 4000 contracts.

Corn

Mar corn closed at USD4.16, up 7 ½ cents and December corn at USD4.45 3/4, up 5 ½ cents. A winter snowstorm bringing up to two feet of snow was helped propel corn higher with 5% of the crop in the field. That equates to around 38% of carryover. The weaker US dollar and higher energy prices were also supportive.

Wheat

Mar CBOT Wheat was at USD5.50 3/4, up 26 ¼ cents, Mar KCBT wheat at USD5.46, up 24 ½ cents and Mar MGEX wheat at USD5.56 3/4, up 25 ¼ cents. Most contracts closed at their highest levels since early December. Weekly export inspections were only 10.7 million bushels, highlighting the slow pace of US exports following last week's sales of little more than 200,000 NT.

Paris Wheat Closes Higher Monday

Paris wheat futures closed higher in thin holiday trade Monday with January milling wheat ending up EUR2.50 at EUR131.25/tonne.

Trade was understandably quite with London shut for the Bank Holiday, but Parisian futures managed to edge higher, supported by a firmer US market on the overnight eCBOT market.

A recent cold wave in Europe that spread across Ukraine into Russia produced a light blanket of snow (1-5 centimeters) that now covers most northern hemisphere countries above 45 N latitude, says Gail Martell of Martell Crop Projections.

Winter kill may have occurred in Russian wheat, especially the Volga District, where extremely cold conditions were observed for several days. Snow cover was not sufficient to insulate wheat from bitterly cold weather. The fact that Russia's wheat crop was also affected by drought increases the chances for winter crop damage, she concludes.

It will be some considerable time before we know the extent of any significant damage however.

One early report suggests that the Ukraine wheat harvest for 2010 will total 18.7 MMT, around 2 MMT lower than 2009's production.

CBOT Early Call

CBOT corn and wheat are called 5 to 10 higher, with soybeans called 8 to 12 higher. A weaker dollar and firmer crude oil and metals are supportive elements from the outside markets, as too is an anticipated steadier opening on Wall Street.

News that the US Treasury will provide unlimited capital support to mortgage lenders Fannie Mae and Freddie Mac over the next three years, sees shares in both trading 20%+ higher.

A severe winter storm across large parts of the US over the weekend brought 10-15 inches of snow to many parts, hardly a help for corn still (just about) standing in the fields.

Cold high pressure will dominate Central United States this week dropping temperatures 3-9 F below average, says Gail Martell of Martell Crop Projections. That will keep corn feeding rates elevated on cattle ranches in the Great Plains. December weather has been much colder than anticipated with El Nino in effect. Typically, El Nino winters are mild in the Great Plains and Upper Midwest, says Gail.

Last week's strong export sales for corn and soybeans lay add a bit of support too, although weather conditions in Argentina seem to be generally hugely better than they were twelve months ago. A record soybean crop in 2010 there looks highly likely.

EU Rapemeal Prices

Guide prices basis FOB Lower Rhine in euros/tonne:

Jan           154,00  
Feb           147,00  
Feb/Apr       142,00  
May/1st h Jly 125,00  
Aug/Oct 10    121,00  
Nov/Jan 11    128,00  
Nov/Apr 11    129,00 

A Quick Christmas Summary

There is no trade today, Monday, on the London market - although Paris and the overnight eCBOT markets are open and trading will recommence on CBOT tonight.

Thursday's CBOT closes saw January soybeans close 1 3/4 cents lower at USD9.99 1/2, just below the key USD10/bushel level. May corn closed 3 1/2 cents higher at USD4.18 3/4 and CBOT wheat ended 4 1/2 cents lower at USD5.24 1/2.

For wheat the big story last week was another set of poor weekly export sales, which at 221,000 MMT was a marketing-year low. For corn however export sales were large at 1.59 MMT, well above trade expectations of 650,000-850,000 MT. As of last Sunday 5% of the US crop still remains unharvested.

Soybean weekly export sales were also impressive at 1,369,100 MT. China took 806,800 MT of that, including 173,500 MT of next season's crop. The US Census Bureau pegs the November crush at 168.61 million bushels, a rather large 17% increase on November 2008.

EU futures were subdued all last week, and look set to do nothing spectacular this week either. The pound is back below USD1.60 which may support London wheat a bit, as too may the imminent opening of the Ensus bioethanol facility on Teesside.

Algeria bought 300,000 MT of wheat of unspecified origin last week, the trade seems to be assuming that it was probably French.

Once we get past what will probably be a low volume quiet week, what happens in 2010 may initially depend on whether fund money returns to the agri-commodities arena.

In Brazil they are itching to get started with the soybean harvest in some areas, but persistent and heavy rains in Mato Grosso are thwarting early attempts. Heavy rains have also returned to Argentina, hugely improving soil moisture profiles in almost all of the major soybean growing areas on year ago levels.

Early season drought, followed by a sharp plunge in temperatures - coupled with a lack of snow cover - may have caused some damage to winter wheat in parts of eastern Europe, although snow has recently arrived to alleviate the risk of further problems. Either way, we won't know the extent of any potential damage until the spring.

The overnight eCBOT market is firmer across the board on ideas that another major snowstorm for the US Midwest across the holiday period will have caused further problems for corn.

Crude oil prices above USD78/barrel are also supportive. US stocks fell by almost 5 million barrels last week, the US Energy Dept said. The recent severe wintry weather and a pick-up in holiday season demand may have added further to offtake.

Merry Nogmas

As you may have noticed I've taken a couple of days off to organise things for the festive period.

Mrs Nogger is useless when it comes round to buying in enough beer. In fact all women are like that I find. "You've got ten cans there, how many more do you need?"

Ten cans, ten bloody cans, what about after breakfast darling? If the Indian government would like to pop round to my house right now, I'll show them what a strategic reserve really looks like.

But it won't be all fun and games over Nogmas, I've got loads of work to crack on with and hope to be unveiling some interesting new features in the New Year.

Hopefully I will resume emailing the headlines out to people again too. Far too many were getting kicked back by anti-spam software, so I've been investigating ways around that which will cost a few pennies but hopefully a sponsor or two will cover that. Get in touch if you're interested.

I read in the paper today that Gordon Brown has received 150 dog turds in the post during 2009! So come on, who's sending the others?

Merry Nogmas!

CBOT Closing Comments

Soybeans

January soybean futures finished 11 cents lower at USD10.01, January soymeal ended USD4.60 lower at USD300.80, and January soyoil finished 5 points lower at 38.28 cents. As you can see both beans and meal closed very close to psychological levels of USD10/bushel and USD300/tonne. With the long break looming, it seems most likely that prices will fall below these levels on book-squaring ahead of 2010. Trade estimates ahead of tomorrow's weekly USDA export inspections range from 45 to 50 million bushels.

Corn

March corn futures settled 2 ¼ cents higher at exactly USD4.00. What about that for another psychologically important level? The USDA's should have reported tonight on harvest progress last week but because of a severe snowstorm that report is delayed until tomorrow. Harvest progress last week was at 92% done. Trade estimates ahead of tomorrow's weekly USDA export inspections range from 28 to 32 million bushels. It seems like corn may be the easiest of the three to make out a bullish case for in 2010 based on ethanol-led demand and reduced South American production.

Wheat

March wheat futures at the CBOT closed at USD5.19 ½, down 8 ½ cents; KCBT ended at USD5.16 ¼, down 8 cents, and MGEX closed at USD5.26 ½, down 8 ¾. Wheat stocks figures just keep getting higher, and combined with year-end pressure that seems likely to drive prices still lower yet as we get through the festive period. News that Egypt appear to be attempting to forge closer ties with Russia on wheat supplies looks like more bad news for US grain. Trade estimates ahead of tomorrow's USDA weekly export inspections report range from 13 to 17 million bushels.

EU Wheat Drifting Aimlessly

EU wheat futures continued to drift along aimlessly Monday, in what has all the classic hallmarks of being a typically very subdued week.

March Paris milling wheat futures closed up EUR0.25 at EUR131.75/tonne, and London May feed wheat futures ended up GBP0.55 at GBP109.80/tonne.

It's extremely unlikely that anything too significant is going to happen this week (or next) as the entire trade winds down for the festive period.

January might be interesting and provide far more fireworks. The long-awaited opening of the Ensus bioethanol refinery on Teesside, coupled with the possible re-emergence of fund money flowing back into the grains sector, is the best hope that the bulls might have of a rally.

It is certainly quite possible however that too many long holders are pinning all their hopes on these two factors saving the day in 2010.

More than one pundit is looking at the GBP8.25/tonne premium that Nov10 is currently commanding over Jan10 and saying that this is too high. It seems that the UK are in for a wheat crop of at least 1 MMT more next year, and quite likely nearer 2 MMT more, which immediately negates any extra demand from Ensus.

What about Vivergo? Well, who'd like to stake a large quantity of cash on that facility starting up on time right now? Certainly not me.

Meanwhile the price of wheat might not be great, but the price of barley is a total disaster. That means that the EU will produce a wheat crop some 3.6 MMT higher in 2010, according to Strategie Grains, and in addition to that there is the small matter of Lord knows how much intervention barley we will have looking for a home by then too.

Chinese Whispers

Despite widespread doubts as to the validity of official Chinese claims to have had another bumper harvest year in 2009, China's Ministry of Agriculture insist that they are not talking complete rubbish.

A story today on the thoroughly excellent Agrimoney.com quotes the head of the planting administration department at the Ministry downplaying talk of drought damage earlier in the year.

Not only that, he even goes one step further revealing that winter wheat plantings so far have reached 22.5 million hectares, a nice convenient modest increase on year ago levels. Steady away.

Isn't it incredible how China never have so much as even a mini crop wobble, let alone a disaster?

It can't be a coincidence that the most popular dice game in China is called Liar's Dice.

Congestion Problems In Rouen

The port of Rouen handled 6.35 MMT of grain in 2008, according to it's website (here), but congestion is causing problems in France's leading grain port I hear.

The recent decision by the world's leading wheat importer, Egypt, to only accept vessels of 60,000 MT panamax size is a major problem for Rouen as it can't accommodate vessels that large.

Things have got so bad that the leading grain storage facility at the port, the Senalia silo, is full and has stopped taking further deliveries of grain.

That potentially leaves the grain trade with a major headache, as Senalia is the sole delivery point for Euronext milling wheat futures.

What happens if you want to make delivery but they haven't got the room? That certainly might cause some erratic behavior with the January future over the next few weeks until the situation is resolved.

CBOT Closing Comments

Soybeans

January soybean futures closed at USD10.12, down 10 cents; January soymeal futures at USD305.40, down USD2.00; January soy oil futures are at 38.33, down 31 points. Informa increased their estimate for the 2009 US soybean crop to 3.42 billion bushels, up from 3.333 billion last month and 102 million above the USDA's November figure. The did however cut their 2010 planting estimate to 77 million, down 500,000 from the area sown in 2009.

Corn

March corn futures closed at USD3.97 ¾, up ¾ cent; May corn futures at USD4.08 ½, up ¾ cent. Informa reduced their estimate for the 2009 US corn crop from 13.64 billion bushels to 12.97 billion. They increased their estimate for 2010 US seedings to 89.5 million acres, 3.1 million more than the area sown in 2009, and the second largest area on record. China have reduced the import levy on ethanol from 30% to 5%, under pressure to green up it's act, that might lead to increased demand from the world's largest polluter.

Wheat

March CBOT wheat futures closed at USD5.28, up 9 ½ cents; March KCBT wheat futures at USD5.24 ¼, up 9 ¼ cents; March MGEX wheat futures at USD5.35 ¼, up 6 cents. Informa said that US farmers will reduce winter wheat area by almost 4 million acres - from 43.31 million to 39.45 million - the lowest for a decade. This is likely due to disenchantment with the low price and slack demand for wheat, and also the lateness of the US corn and soybean harvest in some states this year.

EU Wheat Closing Comments

EU wheat futures closed with very little change Friday with Paris January milling wheat up EUR0.25 at EUR128.25/tonne, and London January feed wheat up GBP0.20 at GBP104.20/tonne.

The trade appears to be slipping quietly into festive mode, and it seems unlikely that there will be much in the way of action now until 2010.

Heavy snow fell across large areas of western Europe Thursday/Friday, with widespread coverage down the eastern side of the UK. That will help protect winter wheat from frost as temperatures dip below freezing.

Snow also fell in eastern Europe and Ukraine, easing winterkill concerns in some areas.

Export business is slow with the UK only managing to ship 582,000 MT of wheat and 323,000 MT of barley in the first four months of the marketing year. The EU has only granted export licences for 7.8 MMT of soft wheat 24 weeks into the MY, 28% down on the 10.8 MMT granted at the same time last year.

Strategie Grains say that the EU-27 will produce 3.6 MMT more soft wheat in 2010 than we did this year, and 1.9 MMT of that will come from the UK. EU-27 barley output is seen down 3 MMT, and corn production up 1.7 MMT. Durum wheat output is also seen higher, up 500,000 MT.

eCBOT Close, Early Call

The overnight grains closed a little firmer, but well off session highs, with beans around 4 cents higher and wheat & corn 2-3 cents higher.

A weaker dollar led to what turned out to be only a very modest correction from last night's steep losses.

Crude oil is up close to USD75/barrel after news emerged that Iranian forces had surrounded an Iraqi oil well.

China has bought 116,000 MT of US soybeans for the 2010/11 marketing year, the USDA have reported today.

China, under pressure from the green lobby, has lowered the import tariff on ethanol from 30% to 5%, which may stimulate some demand for the fuel from the Far East.

The IGC forecasts global wheat production for 2010/11 down by 23 MMT to 645 MMT, but there might be some more pain to get through first.

India's winter wheat plantings are at 23.1 million hectares, fractionally higher than a year ago, but still leaving around 5 million ha to sow to meet government targets.

More heavy rain is in the forecasts for southern Brazil and northern/eastern parts of Argentina. In Brazil certainly they will be wishing it might stop sometime soon. Asian rust will be hoping it doesn't.

Gold is down to a one month low on profit-taking and year-end book-squaring. The dollar is down, but off intra-day lows set earlier this morning.

Early calls for this afternoon's CBOT session: corn called 1 to 3 higher; soybeans called 3 to 5 higher; wheat called 1 to 2 higher.

New Malting Barley Variety In Town

Syngenta's newest malting barley arrival to make the HGCA's Recommended List is Propino, which they say is the highest yielding spring malting barley variety in the UK.

Propino joins it's big brothers, the evocatively named Tipple and Quench, in the seed catalogues this spring.

Do they pay money to people to come up with these names or do they just go down the pub and pick one from a hat?

What about a variety called Ginger-haired Stepson (nobody wants it) or Big Issue (hardly anyone buys it)?

It's easy this, I can think of loads. Herpes, Boomerang, Millstone, Titus Bramble, Betamax. How many more do you want, and when do I start Syngenta?

I had a dog once called Minton, just so that every time it was naughty I could say "Bad Minton". And I can't even begin to tell you the story behind what our other dog was called...

Ukraine Winter Seeded Area Up On Year Ago

The Ukraine State Statistics Committee say that farmers have planted 3.7% more winter grains for the 2010 harvest than a year ago.

They must think that they know something we don't, as they must be one of the few nations on the planet to think they've spotted an opportunity in the barley market.

Ukrainian farmers have decided to inexplicably increase barley plantings, up from 15.3% of seeded area last season to 18.6% this time round. Good luck with that one Ukraine, but I think that you might be better off sticking to the Eurovision Song Contest.

Wheat's share of the sown area is down slightly from 78.8% to 77.9%.

Indian Finance Minister 'Mad As A Box of Frogs' - Analyst

Market analyst claims that the Indian Finance Minister, Pranab Mukherjee, is as mad as a box of frogs have been angrily denied.

When questioned by reporters if there was any truth in the reports, Mukherjee said "no". Angrily.

So there we have it, a split decision on the sanity of Pranab Mukherjee. He thinks he's OK.

More as we get it....

Next week on Nogger's Blog we investigate rumours that India's junior agriculture and food minister K.V. Thomas can't fight his way out of a paper bag.

Indian Food Inflation At Decade High

Indian food price inflation has soared to a decade high of 19.95 percent in the week to December 5. A Parliamentary panel investigation blames to Government, citing the "inability to import on the part of the public sector agencies is also suggestive of the abject failure of the Government's market intervention policies to meet demand-supply gaps in essential commodities".

The finance ministry are singled out for their "failure to make timely interventions and squarely address the burning issue (inflation) with due seriousness".

The Finance Minister, Pranab Mukherjee, tried to reassure reporters that he was on the case and that he did, in reality, have a clue what he was doing.

"The government has taken a number of important measures to improve the domestic availability of essential commodities and to moderate their prices to help the common man from the pressure of inflation," he said.

I for one, and I suspect many others too, remain unconvinced. The government are said to be still "considering" whether to lower the minimum tender price for state-owned wheat from around USD300/tonne.

Figures on farmers' progress with winter wheat plantings are expected later today.

EU Rapemeal Prices

Guide prices basis FOB Lower Rhine in euros/tonne:

Dec            N/A
Jan           145,00  -1,00
Feb           140,00  -1,00
Feb/Apr       135,00  -2,00
May/1st h Jly 120,00  -2,00
Aug/Oct 10    117,00  -1,00
Nov/Jan 11    124,00  -1,00
Nov/Apr 11    125,00  -1,00

EU Wheat Exports 28 Pct Down

Almost halfway through the marketing year the EU has granted export licences for 7.8 MMT of soft wheat, 28% down on the 10.8 MMT granted at the same time last year.

The figures make pretty gruesome reading, total GRAIN exports are even further behind, 40% down at 9.6 MMT.

Unfortunately this situation is mirrored here in the UK where July-Oct wheat exports are half that of twelve months ago at 582,380 MT, whilst wheat imports are actually up by over 100,000 MT to 526,730 MT. That means that we've imported almost as much wheat as we've exported!

I've cancelled my order for a Nintendo Wii and asked Santa for a bioethanol refinery for Christmas instead, I suggest that you all do likewise.

Ukraine Harvest Finished

The 2009 harvest in Ukraine is finally just about finished, producing a crop of 48.5 MMT in bunker weight (before screening/cleaning), say the Ag Ministry.

Of that, 21.7 MMT was wheat, 12.7 MMT barley, 10.7 MMT corn and 1 MMT rye. Farmers have also gathered a rapeseed harvest of 1.8 MMT, say the Ministry.

They haven't as yet issued any clean weight figures, but have recently been working on 3.75% less, implying a grain crop of around 46.7 MMT, 12.4% down on last year's 53.3 MMT.

That would also suggest final wheat output of around 20.9 MMT, 5 MMT or 19% down on last season's record output.

Just Before You Slash Your Wrists

The IGC are forecasting world wheat production to decline to 645 MMT in 2010/11, a third year of falling output, and stocks will go down as well.

Great, it's not even 2010 yet and already we are wishing it was 2011.

Full story here

Things That Really Annoy Me #2

I was up and down like a bride's nightie yesterday. Two new pizza menus, one from the Chinese, the Thompson Local, a parcel for next door then double glazing.

Double glazing salesmen, who do they think they are? As I work from home I assume that our house is the only one with a car on the drive at 10 o'clock in the morning, so they target our house.

"Hello Sir, I'm from Pastic Wondows, the local experts in double glazing. We were just in your area and wondered if you'd considered how much money you could save, blah, blah, blah."

Well they can't be that much of an expert if they haven't spotted that we've already got double glazing can they?

The people that fitted that were a hoot. We took the extended credit option then cancelled the direct debit after five months. When they rang up to ask what was going on, I told them that the salesman had said it paid for itself after six months.

Honest, it's true.

Chinese Crop Figures As Honest As Tiger Woods In A Brothel

Nogger's favourite website Agrimoney.com carries a very interesting article today, suggesting what I've always suspected, that official Chinese crop production figures are about as honest as Tiger Woods in a brothel.

With corn and wheat crops well over a hundred million tonnes each every year, 10% overestimated is a hell of a lot of kit. Multiply that up over a number of years and we are talking telephone numbers.

It's not the first time I've mentioned this subject on here. China will supposedly have over 60 MMT of wheat in 2009/10 ending stocks, according to the USDA. That's more than the US, Russia, the EU-27 and Canada combined, and almost a third of all the wheat stocks on the planet. It's also supposed to have more than a third of global corn ending stocks.

A mate of mine married a Chinese girl once. It was when I worked in Liverpool, his name was Albert and he'd never even had a girlfriend until he was well into his 30's. Whenever the lads in the office would be having a little moan about their WAGs Albert would always pipe up with "well I wouldn't know, I'm a single man myself" or something similar. So he got the nickname Singlebert. Then one day he announced that he'd met this girl in Chinatown and got her pregnant and he was going to have to get married. Whereupon his nickname changed to Singlebert Humpachink.

It's true, honest. Truer than the Chinese crop figures anyway.

CBOT Closing Comments

Soybeans

January soybean futures closed at USD10.22, down 37 ½ cents, January soymeal futures at USD307.40, down USD9.50, and January soy oil futures at 39.05 cents, down 1.70 points. Outside markets drove the complex lower, as did year-end book squaring. Soybean export shipments of 1,663,100 MT were mostly to China at 1,303,900 MT. That proves that they are still about, although they are widely expected to switch to South America early in 2010.

Corn

March corn futures closed at USD3.97, down 13 ¼ cents, May corn futures were at USD4.07 ¾, down 13 ¼ cents. The sharply higher U.S. dollar and lower gold prices had a major impact on commodities despite good export sales today Weekly export sales for corn at 1,227,100 MT - a marketing year high - were well above trade expectations. Wheat and bean sales were in line with expectations.

Wheat

March CBOT wheat futures closed at USD5.18 ½, down 18 ¾ cents; March KCBT wheat futures at USD5.15, down 15 ½ cent and March MGEX wheat futures at USD5.29, down 15 cents. Japan bought 126,000 MT of wheat - 86,000 MT of that will be US origin. Weekly export sales of 345,000 MT were in line with estimates of 300,000 to 400,000 MT. The main homes were Japan (138,000 MT), Indonesia (68,000 MT) and Nigeria (66,000 MT).

EU Wheat Closing Comments

EU wheat drifted lower again Thursday with January Paris milling wheat futures ending down EUR1.00 at EUR128.00/tonne, and London January feed wheat trading down GBP0.60 at GBP104.00/tonne.

Strategie Grains say that EU corn production will rise to 57.7 MMT in 2010 from 56.0 MMT this year. Meanwhile soft wheat production will increase by 3% to 133 MMT they say, that's at the expense of barley output which is seen down 6% to 58.7 MMT.

They are probably on the low side for EU wheat production. They peg UK wheat output at 1.9 MMT more than in 2009, that's around 13% up. OK, I know we've got Ensus and maybe Vivergo starting up, but I just don't see it working.

UK YTD wheat exports are only 582,380 MT, well below the 1.18 MMT exported at this point in 2008/09. There is far too much reliance being placed on the biofuel industry bailing out the UK wheat longs in my opinion.

eCBOT Close, Early Call

The overnight grains closed lower across the board, pressed by a firmer US dollar. Beans finished around 7 cents lower, with corn down 5 and wheat down 9-10.

While the Fed left rates unchanged as expected, the announcement that liquidity measures would expire in February 2010 is being seen as a big positive for the greenback, which is up around 1.3% on the day against the euro and 1.5% against the pound.

Whilst not entirely unexpected, Greece getting another downgrade from S&P is also knocking the euro.

Weekly export sales for corn at 1,227,100 MT - a marketing year high - were well above trade expectations. Wheat and bean sales in line with expectations. Soybean shipments of 1,663,100 MT were again mostly to China at 1,303,900 MT.

Strategie Grains say that EU corn production will rise to 57.7 MMT in 2010 from 56.0 MMT this year. Meanwhile soft wheat production will increase by 3% to 133 MMT they say, that's at the expense of barley output which is seen down 6% to 58.7 MMT.

Japan bought 126,000 MT of wheat - 86,000 MT of that will be US origin. Taiwan purchased 58,000 MT of US soybeans overnight too, and private exporters reported another 116,000 MT of US beans sold to China.

The Arg Ag Ministry say that this season's soybean area will be 300,000 less than they previously estimated at 18.2 million hectares. They seem to think that less corn acreage will be switched to beans than most other pundits believe. Even so 18.2 million is easily a record.

There is some talk of excessive rains in southern Brazil possibly leading to an upswing in Asian rust incidences.

Early calls for this afternoon's CBOT session: corn called 3 to 5 lower; soybeans called 6 to 8 lower; wheat called 8 to 10 lower

USDA Weekly Export Sales

For the period December 4-10 the USDA today report the following sales/export activity:

Soybeans

Net sales of 934,700 MT were a little above estimates for sales of 750,000 to 850,000 MT. The main takers were China (668,500 MT), Mexico (91,700 MT) and the Netherlands (77,400 MT). There were also net sales of 10,000 MT for delivery in 2010/11 which were for Japan.

Exports of 1,663,100 MT were to China (1,303,900 MT), Turkey (88,800 MT), the Netherlands (77,400 MT), Mexico (43,700 MT) and Italy (34,100 MT).

Corn

Net sales of 1,227,100 MT were a marketing-year high and well above estimates ranging from 550,000 to 750,000 MT. Mexico (291,800 MT), Japan (278,000 MT), Egypt (180,000 MT), South Korea (152,000 MT), Costa Rica (97,500 MT) and unknown destinations (92,800 MT) were the main buyers.

Exports of 776,500 MT were a bit above the prior 4-week average. The primary destinations were Japan (303,300 MT), Mexico (107,700 MT), Ecuador (63,400 MT), South Korea (54,300 MT), Guatemala (42,700 MT), Panama (31,200 MT) and Cuba (27,500 MT).

Wheat

Net sales of 345,000 were in line with estimates of 300,000 to 400,000 MT. The main homes were Japan (138,000 MT), Indonesia (68,000 MT) and Nigeria (66,000 MT).

Exports of 338,100 MT went mainly to Indonesia (68,000 MT), Israel (55,500 MT), Mexico (53,400 MT), Japan (28,500 MT), Guatemala (28,200 MT) and Haiti (20,900 MT).

EU Soymeal/Pellet Prices

Guide prices basis CIF Rotterdam/Amsterdam in USD/tonne unless otherwise stated:

Brazil pellets 48%        
     
Afloat        428,00-426,00         
Dec           426,00     
Jan/March     410,00     
May/Sep       360,00 
      
Argentine pellets 44/45%       
              
Afloat        420,00       
Jan           415,00     
Jan/March     408,00     
May/Sep       350,00     
       
Dutch Hipro 49%      
    
Dec           438,00 FOB    
Jan           438,00 FOB    
Feb/Apr       426,00 FOB    
May/Jul       376,00 FOB    
May/Oct       377,00 FOB    
       
Argentine Hipro 49%       
       
Afloat        432,00-428,00          
Dec           426,00    
Jan/March     420,00     
May/Sep       367,00 

EU Rapemeal Prices

Guide prices basis FOB Hamburg/Lower Rhine in euros/tonne;

Dec           150,00  
Jan           146,00  
Feb           141,00  
Feb/Apr       137,00  
May/1st h Jly 122,00  
Aug/Oct 10    118,00  
Nov/Jan 11    125,00  
Nov/Apr 11    126,00 

Ukraine: Where The Gullible Deserve To Be Gulled

The Ukrainian State Statistics Committee report that grain stocks in the country (excluding very small scale operations) stood at 20.9 MMT on Dec 1st. Of that total supplies of the three main grains stood at: 9.4 MMT of wheat, 4.6 MMT of barley and 4.7 MMT of corn.

The Ag Ministry reported that Nov 30th grain exports this marketing year (started Jul 1st) were 11.3 MMT (incl 5.7 MMT wheat; 3.54 MMT barley and 1.93 MMT corn).

With an annual domestic grain consumption of 27 MMT, it seems clear that exports simply can't continue at the existing rate before stocks become exhausted.

The official Ministry estimate for grain exports in 2009/10 still stands at 20 MMT, although some private estimates are as high as 24 MMT. Where is it all going to come from, and keep the people fed?

My calculations suggest that they need three quarters of their 20.9 MMT stocks to see them through until the next crop year, leaving little more than 5 MMT to export between Dec 1st and then. And they exported close on a million tonnes of that between Dec 1st and Dec 10th alone!

Blimey, who'd want to be Ukrainian? It's 15 below zero. The Russian gas man is knocking at the door. You've just had to drop your pants to the IMF for USD2 billion to pay him what you already owe. That's on top of the USD11 billion that you've already had. And now you're having to sell the food off your own table just to pay the interest on what you owe already. You're not exactly going to be rushing down to the local farm shop to buy fertiliser and pesticides either are you?

A cold, long and hungry winter lies ahead.

I hope that the IMF aren't expecting their money back anytime soon. Ditto all the grain exporters owed VAT by the government. A report I read on a message board recently about business in Ukraine sums it all up. It said that in Ukraine the prevailing attitude is that the gullible deserve to be gulled.

It seems like there's been a lot of that going on recently.

Argentina: Ag Ministry Cut Soybean Acreage Estimate

According to the Ag Ministry Argentine farmers will plant 18.2 million hectares of soybeans this season, 0.3 million less than their previous forecast, with plantings 64% complete so far.

The revised acreage estimate is 600,000 ha less than the USDA's current prediction, and 800,000 ha below that of the Buenos Aires Grain Exchange.

Even so, the Ministry estimate would still be a record, easily beating the 16.6 million ha sown in 2007/08.

They clearly see less of a switch into soybeans from corn than the BAGE, pegging corn area this season at 3.16 million ha, a drop of less than 10% on last season. The BAGE have corn acres falling substantially to 1.875 million ha, 45% down on year ago levels, partly after soil conditions were largely too dry to plant in September and October.

The ongoing conflict between farmers and the government, and lower input costs for soybeans, are also likely to have been a significant factor.

With the country likely to be only barely self-sufficient in wheat this season, with a crop of around 7 MMT, maybe a tad more, it seems that the Ministry are using a bit of artistic licence in calling the corn crop higher than it actually is. Lying is another way of putting it.

Having periodically slapped export bans (or quotas as the government like to call them) on both corn and wheat in the last couple of years, Argentine farmers are acutely aware both those commodities are likely to be short supply again this season. Therefore earnings potential from those crops is likely to be severely curtailed, as exporters who can't export don't buy.

Whilst the hefty export tax on soy still remains in place, despite all the farmers' protestations, the crop still offers significantly higher potential returns than planting corn.

The Ministry say that 76% of the corn crop has been planted to date and that the crop "is in good or excellent condition" - but then again you wouldn't expect them to say anything else would you?

In this case 76% of the crop might in reality be as good as it gets.

Ukraine: Abrupt Temperature Change May Have Harmed Winter Wheat

A dramatic and abrupt fall in temperature, combined with a lack of early season moisture, may have harmed winter wheat crops in Ukraine, says Gail Martell of Martell Crop Projections.

The transition from active growth to dormancy was abrupt, as temperatures fell an astonishing 75 degrees F between December 1 and December 14, says Gail.

Wheat was not well established in the fall because of extremely low field moisture. Weather data and satellite imagery indicated that both surface and subsurface moisture during August and September were the lowest in recent years, according to Foreign Agriculture specialist Mark Lindeman.

Rain showers finally arrived in October. However, wheat growth was still sub-standard on a late November satellite image of crop vegetation. Late arriving rainfall may have reduced development time, causing sparse vegetation and lower yield potential, Gail concludes.

CBOT Closing Comments

Soybeans

January soybean futures closed at USD10.59 ½, up 4 ½ cents, January soymeal futures at USD316.90, up USD0.10 and January soy oil futures at 40.33 cents, up 0.69 points. China keep buying US beans, in the past four marketing days alone they've purchased 638,000 MT of soybeans for 2009/10 delivery. Whilst they will inevitably switch to South America before too long, they need to otherwise current USDA export predictions will prove woefully inadequate. Weekly export sales estimates for tomorrow's USDA report range from 750,000 to 850,000 MT

Corn

March corn futures finished the day USD4.10 ¼, up 2 ¾ cents, May corn futures were at USD4.21, also up 2 ¾ cents. Crude oil was sharply higher today which helped, as did spillover support from beans. Tomorrow's weekly export sales estimates range from 550,000 to 750,000 MT.

Wheat

March CBOT wheat futures closed at USD5.37 ¼, up ½ cents, March KCBT wheat futures at USD5.30 ½, up 4 cents, and March MGEX wheat futures at USD5.44 ¼, up 7 cents. Weekly wheat export sales projections for tomorrow range from 300,000 to 400,000 MT. Egypt bought mostly Russian wheat in a tender once again today. Current 2009/10 US ending stocks are estimated at a 10-year high, and global stocks are at an 8-year high, according to the USDA.

EU Wheat Mostly Lower

EU wheat futures were mostly lower Wednesday with January Paris milling wheat futures falling EUR0.50, at EUR129.00/tonne, and London January feed wheat dropping GBP0.90 to GBP104.60/tonne.

The pound was firmer against the US dollar, which did little to help the cause of UK wheat. UK wheat exports to the end of October at 582,380 MT are only half of what they were a year ago.

More demand is needed, a bioethanol plant on every street corner might help.

Egypt were back in the market, buying 360,000 MT of wheat today, unfortunately only 60,000 MT of that was EU wheat (French). No surprises to hear who picked up the rest of the order - that's right Russia.

If we can gain some small crumb of comfort, the Russian wheat was all at USD192.75/tonne, less than a dollar below the price paid for French wheat.

It is also interesting to note that the new regulations recently introduced by the state-owned wheat buyer GASC already appear to be not throwing up the savings hoped for. Under the new conditions the minimum tender size must be 60,000 MT and the goods can only come from one single port.

Nidera offered French wheat at USD3.87/tonne cheaper from a two port load option, whilst Invivo were at a USD5.20/tonne discount for two ports.

Invivo were also more than USD2/tonne cheaper for a 30,000 MT French cargo than the price GASC paid Glencore for a 60,000 MT shipment.

CBOT Closing Comments

Soybeans

January soybean futures closed at USD10.55, unchanged; January soymeal futures at USD316.80, up USD0.60, and January soy oil futures at 39.64 cents, up 0.01 points. The USDA announced private exports of 290,000 MT of soybeans sold to China, for 2009/10 delivery. Some reports suggest that December could be a record month for Chinese soybean imports, exceeding the 4.7 MMT brought in in June. Celeres say that soybean planting in Brazil is 91% complete.

Corn

March corn futures closed at USD4.07 ½, down 1 cent, May corn futures at USD 4.18 ½, down 1 cent. Harvest is normally at 100% this time of year compared to the 92% reported by the USDA yesterday. Those states that are still significantly behind normal harvest dates are the same states that have had weather issues most of the fall; Illinois at 90%, Michigan at 89%, Minnesota at 91%, North Dakota at 60% and South Dakota at 92%.

Wheat

March CBOT wheat futures finished at USD5.36 ¾, down 6 ¾ cents, March KCBT wheat futures at USD5.26 ½, down 7 ½ cents,and March MGEX wheat futures at USD5.37 ¼, down 10 ½ cents. The combination of large stocks and slow export demand are a bearish influences on prices. Fund interest seems to have waned in wheat, at least until the new year, without that it is difficult to see wheat rallying much from here.

EU Wheat Futures End Generally Slightly Lower

EU wheat futures mostly slid a little Tuesday with January Paris milling wheat futures falling EUR0.50, at EUR129.50/tonne, and London May feed wheat dropping GBP0.05, at GBP110.20/tonne.

It was another desperately dull day with only 114 lots trading in London, clearly everybody has shut up shop for Christmas.

The UK exported 144,211 MT of wheat in October, bringing YTD exports to 582,380 MT, well below the 1.18 MMT at this point in 2008/09. Spain remains our largest buyer taking 301,676 MT so far this marketing year.

Those figures show just how far behind last year's pace we are. Hurry up Ensus is all I can say to that.

There is no global shortage of wheat, and demand is so-so at best, in addition competition is fierce. Russia seemingly have any amount available, of any quality you want, all priced to sell.

Unless, or until, the Black Sea run out or get frozen out the rest of us will end up fighting for the scraps.

Ukraine Grain Merchants Owed Huge Amounts Of VAT Refunds

The Ukraine government owes grain merchants in the country enormous sums of money in VAT refunds, according to a report on WorldGrain.com.

They say that 3.5 billion (GBP270 million) in the local hryvnia is outstanding, and that Louis Dreyfus Commodities Ukraine have got so fed up with the situation that they've stopped buying grain at local elevators.

Under Ukraine law VAT paid on grain exported from the country is refundable, and as we know they exported a record 25.2 MMT of grain in the 2008/09 marketing year, and a further 12.2 MMT has already left it's shores in 2009/10.

There's just one teeny weeny problem, the government have run out of cash. They've recently had to beg USD2 billion from the IMF just to keep the wolf from the door, after reneging on promises to get their internal house in order. They've already had already had USD11 billion from the IMF this year, who then wisely suspended the release of any more cash in October. They've subsequently relented, throwing the country another USD2 billion to pay the gas bill.

When things are this desperate, the matter of VAT refunds to grain merchants becomes small beer.

It seems that domestic cereal prices are now being driven lower as the only price most trading houses are prepared to now pay for grain discounts the VAT that they know they probably aren't going to get.

The flip side of that is that prices are now so low that many farmers can't afford to pay for fertiliser and pesticide inputs this coming season. It's going to be a long hard winter.

EU Soymeal/Pellet Prices

Guide prices basis CIF Rotterdam/Amsterdam unless otherwise stated in USD/tonne:

Brazil pellets 48%       
         
Afloat        431,00-425,00     
Dec           425,00     
Jan/March     402,00     
May/Sep       357,00 
     
Argentine pellets 44/45%       
  
Afloat        417,00         
Jan           416,00     
Jan/March     402,00     
May/Sep       348,00     
       
Dutch Hipro 49%      
   
Dec           443,00 FOB    
Jan           442,00 FOB    
Feb/Apr       426,00 FOB    
May/Jul       375,00 FOB    
May/Oct       376,00 FOB    
       
Argentine Hipro 49%       
       
Afloat        444,00-431,00           
Dec           430,00  
Jan/March     418,00     
May/Sep       363,00 

Ukraine Grain Exports Up 10 Pct Despite Lower Crop

Despite reduced output this season grain exports out of cash hungry Ukraine are running at record levels, 10% above last season's pace.

The Ag Ministry say that 12.2 MMT of grain has been exported so far this marketing year (Jul 1 - Dec 10), of which wheat accounts for 6.1 MMT (2008: 5.9MMT), barley 3.6 MMT (4.3 MMT) and corn 2.3 MMT (0.85 MMT).

An additional 1.43 MMT of rapeseed has also been exported, they add.

Revised figures suggest that this season's grain harvest will total 46.2 MMT in clean weight, 13.3% down on last season's record 53.3 MMT.

The official Ministry estimate for total exports this season is still 20 MMT (25.2 MMT last year). Some pundits are predicting that this figure will rise to closer to 23-24 MMT, that certainly looks possible given the current pace of exports. The question is are they robbing Peter to pay Paul?

Ukraine's own domestic grain consumption is estimated at 27 MMT, sure there will have been a carryover from last season's bumper crop, but what about the state of the crops in the ground right now for harvesting in 2010?

Air temperatures over the weekend feel as low as -16-17 °С in the north east of the country close to the Russian border, with lows elsewhere of -8-10 °С. The USDA's latest snow cover map here shows virtually no protection at all from these freezing temperatures, making winterkill a real possibility, although we are unlikely to get any official confirmation of this any time soon.

With an election looming in January, truth might be a bit thin on the ground. The existing Tymoshenko government are hardly going to say: "hey guess what, we've been exporting more grain than our stocks warrant, because we're desperate for cash. The IMF don't fancy our credit rating much, so we've been raising cash by selling the only thing we've got of value. Sorry about the lack of food. Vote for us!"

CBOT Closing Comments

Soybeans

December contracts went off the board mid-session, which explains some of the strange closes today. January soybean futures closed 20 cents at USD10.55. December soymeal futures expired at USD326.50, up USD12, while the new front month January contract closed USD9.70 higher at USD316.20. December soyoil futures expired at 39.40 cents, up 18 points, while the new front month January contract closed 6 points higher at 39.63 cents. Bean export inspections for the week ending December 10 were on the low side at 53.608 million bushels. NOPA say that the Nov soybean crush was 160.3 million bushels, that's up 5 million from October, and almost 7 million more than what had been expected.

Corn

December corn futures expired at USD3.92, up 2 ¾ cents, while the new front month March contract settled at USD4.08 ½, up 4 cents. The USDA today reported 116,000 MT of US corn sold to unknown. The USDA also reported 28.088 million bushels of corn were inspected for export, which fell towards the low end of trade estimates. After the close they indicated that the US corn harvest had limped from 88% complete a week ago to 92% done as of Sunday.

Wheat

December wheat futures at the CBOT, KCBT, and MGEX all expired higher on their last trade day. Chicago SRW finished 5 ¾ cents up at USD5.25. Kansas City HRW finished 8 ¾ cents higher at USD5.26. Minneapolis spring wheat finished 5 ½ cents higher at USD5.33. The new front month March contracts all finished higher as well. Spillover strength from beans and corn helped wheat, as too did a lower dollar. Export inspections of 13.035 million bushels of wheat were towards the low end of expectations.

EU Wheat Closing Comments

EU wheat futures closed mostly moderately higher with January Paris milling wheat futures trading up EUR1.25 at EUR130.00/tonne, and London May feed wheat closing up GBP0.35 at GBP110.25/tonne.

There are some concerns developing that very cold weather pushing in from the east might cause some crop damage.

Temperatures across Ukraine, the Volga region of Russia and the FSU plunged to 12 F across the weekend, yet large parts of this area have scant to no snow coverage at all. This makes winterkill a serious threat.

A very dry September/November period led to poor establishment, which is never a good thing in a cold climate, says Gail Martell of Martell Crop Projections.

For now however, export demand remains poor, with Egypt further muddying the waters by announcing even more stringent terms and conditions to it's standard wheat tenders.

These include a minimum vessel size of 60,000 MT and a strict one loading port rule, which hasn't been favourably met with by the trade.

Currency fluctuations and the influences of outside markets still remain a major factor, as too does the participation (or otherwise) of fund activity in the grains sector both here and in the US.

Egypt Rewrites The Wheat Rule Book - Again

After revelations earlier in the year that anything vaguely resembling wheat was good enough to clear Eygptian customs, things appear to have moved full circle.

Once-upon-a-time 54,000 MT of horse manure casually sprinkled with 1,000 MT of some moldy old feed wheat left over from three years ago would fly through as high grade milling wheat. Egypt now has some of the toughest contractual criteria in the world.

It's currently a buyers market, and Egypt as the largest wheat buyer in the world can afford to be picky.

New rules introduced last month dropped the maximum amount of bug damage from 2% to 1%.

Now the state-owned wheat buyer GASC is moving the goalposts again, insisting that the minimum tender quantity is 60,000 MT (they've previously been perfectly happy buying 30,000 MT cargoes), and also stipulating that vessels can only load from one single port.

The largest exporter of wheat to Egypt is Russia, with France the second biggest. Ukraine have long since been kicked into touch as consistently failing to deliver on quality. Australian and US wheat get a look in periodically, although freight isn't as cheap as it was from those destinations. Germany too feature from time to time.

GASC appear to believe that the recent changes will provide a cost saving, and make it easier to police the quality of imports.

The French aren't too keen, their major grain export facility of Rouen can't physically handle 60,000 tonners. Indeed only two ports can, according to Reuters - La Pallice and Dunkirk - and both of those involve increased shipping costs.

Even Russian exporters are saying that they'd frequently prefer to export in smaller lots, and that the new rules could push the rates for 60,000 MT vessels disproportionately high.

For now at least GASC aren't listening, but they may be forced to reconsider once faced with a situation where 30,000 MT tenders are significantly cheaper than 60,000 MT tenders. After all, cash talks - and cash was how this whole thing got started in the first place.

eCBOT Close, Early Call

The overnight grains all closed a little lower, with beans corn and wheat all down 2-3 cents.

The dollar is flat and crude oil is below USD70/barrel. The market feels a bit better than it did last week after Abu Dhabi stepped in with a USD10 billion loan for Dubai World, and Citigroup says it's going to repay USD20 billion of US government bailout money.

The USDA are today reporting 116,000 MT of US corn sold to unknown. Tonight they will reveal how much corn is still left to be harvested, it was 12% as of last Sunday.

Today sees December contracts disappear off the board for corn, wheat, meal and oil.

NOPA say that the Nov soybean crush was 160.3 million bushels, that's up 5 million from October, and almost 7 million more than what had been expected.

Over 80% of Australia's second highest wheat producing state of NSW is gripped by drought, according to the state government. That's sped the wheat harvest to an early finish, but has also affected production and crop quality.

Indian wheat plantings are in line with last season, but 20% behind the five year average at 21.7 million hectares.

Early calls for this afternoon's CBOT session: corn called 1 to 3 lower; soybeans called 2 to 4 lower; wheat called 1 to 3 lower.

The Most Beautiful Girl In Farming?

That's what the headline in the appropriately named Meat Trade News is calling 22 year old babette Izzy Whittaker.

Judge for yourselves

Izzy has recently started working for breeding company Cogent, featuring in their recent Sexed Semen Roadshows, apparently.

As I'm sure you are well aware, Nogger is no stranger to the fairer sex, all my ex-wives have been women for a kick off. Izzy does indeed look rather fetching, although I'm sure that she's modest enough herself not to personally claim the crown of "the most beautiful girl in farming".

Note that Cogent's spokesman is tantalisingly called Hugh Pocock, surely he could have tweaked his name slightly by deed poll just for me? I'd have altered my Christian name to Hip and left it at that.

A more complicated alternative option would have been to change it to Chicken Kung and add a question mark at the end of my surname. I could then get myself a job in a Wigan Chinese restaurant, so I could both introduce myself and proffer the chef's daily recommendation all at the same time. I'm a marketing genius me.

Then there's the option of naming your first born son Limpo so that everyone starts the day with a laugh whilst the teacher marks the register. And you get the name of a new highly contagious African medical condition all rolled into one. The possibilities are endless.

EU Rapemeal Prices

Guide prices, basis FOB Hamburg/Lower Rhine in euros/tonne:

Jan           142,00  
Feb           138,00  
Feb/Apr       134,00  
May/1st h Jly 120,00  
Aug/Oct 10    116,00  
Nov/Jan 11    122,00  
Nov/Apr 11    123,00 

Coceral EU 2009/10 Crop Production Estimates

Coceral peg the 2009/10 EU-27 wheat crop (excluding durum) at 130.8 MMT, a reduction of 7% on last season's 140.9 MMT.

Durum wheat adds a further 8.3 MMT to the pot, giving us a total EU all wheat crop of 139.1 MMT, 7.5% down on last year's 150.5 MMT crop.

Wheat production in the UK is seen at 14.2 MMT, 18% lower than last year's 17.4 MMT. For my Irish readers, wheat production in the Republic only mustered 490,000 MT, more than 50% down on 2008/09's 1 MMT.

EU-27 soft wheat consumption in 2009/10 is seen rising slightly to 118.0 MMT, although exports are expected to fall meaning that carryout will rise a tad from 16.1 MMT to 16.7 MMT - of that 1 MMT will end up in intervention, say Coceral.

We also produced 62.2 MMT of barley with which to adorn the intervention sheds of Europe, 5% less than the 65.6 MMT knocked out in 2008/09. The UK accounted for 6.7 MMT of that (4.2 MMT of it spring barley), up half a million from last season. Ireland was at 1.1 MMT, down slightly on 1.3 MMT a year previously.

EU-27 barley consumption is seen up slightly to 54.5 MMT from 54.2 MMT, but higher opening stocks are seen pushing carryout to 20.0 MMT from 16.2 MMT a year ago. Of that intervention stocks will increase from 1 MMT to 4.5 MMT, they say.

Rapeseed production came in at 21.2 MMT, an 11% increase on the 19.1 MMT produced in 2008/09. The UK produced 1.9 MMT of that, very similar to last season. Top producer Germany knocked out a crop of 6.3 MMT this year for a 21% increase on 2008/09's 5.2 MMT. France also saw output sharply higher at 5.6 MMT, up 19% from 4.7 MMT a year ago. Poland came in third at 2.4 MMT (from 2.1 MMT last season).

Australia: Over 80 Percent Of NWS Gripped By Drought

The New South Wales Minister for Primary Industries and Rural Affairs, Steve Whan, says that 80.8% of the state is in drought, 14.8% is marginal, and just 4.4% is considered satisfactory.

The State Government said over the weekend that it would extend aid measures to farmers affected by the drought. These include a 50% subsidy for those needing to transport feed and water to keep their animals alive, as well as many being forced to sell or slaughter animals prematurely.

The drought was described by one farmer as "one of the worst in the last 140 years" - with some destocking completely.

The drought also means that the grain harvest is already over in many areas, in one of the earliest finishes on record in some places, Whan added.

ABARE cut it's wheat production forecast for the state to 5.1 MMT last week, 26% down on last year's 6.9 MMT, and 19% lower than what had been expected as recently as September.

As well as quantity, it looks like quality could also be a problem this season. To add insult to injury, a resurgent Australian dollar is a big problem when you rely so heavily on exports. That means that domestic prices are also particularly depressed Down Under.

Despite an anticipated wheat crop of 22 MMT this year, Australia only consumes around 7 MMT per year domestically. In addition she only consumes around half of the anticipated 8.3 MMT barley crop.

Some reports I am reading suggest feed wheat prices in the low A$150's delivered (around GBP86), with feed barley values as low as A$100 delivered - that is the equivalent to just GBP55!

Weekend Musings

The fertiliser market is going up on the back of India being short to the tune of a million tonnes, amongst other things, is what many of the newswires are saying.

Meanwhile wheat plantings in India are currently running in line with year ago levels at 21.7 million ha, the Indian government told us on Friday. What they forgot to mention though was that the wheat crop is normally almost fully planted by now. The five year average at this time of year is 27.1 million ha. The total average wheat area planted over the last three seasons has been 28 million ha.

Winter wheat only has a relatively short growing season in India, with plantings in November/December and harvesting March/April. A combination of a late planted crop, a lack of fertiliser and the worst summer monsoon season since 1972 makes India very much one to keep an eye on over the next few months. They are, after all, the second largest consumer of wheat in the world, the summer drought has cut rice production from 99 MMT last year to 81 MMT this time round, which some see as being likely to increase wheat demand further in 2010.

In short, these boys badly need to bring in a decent crop this season. With an estimated 60% of the country's farmland non-irrigated, they depend heavily on Mother Nature to lend a hand. Just recently she hasn't been overly cooperative:



That's a map of Indian rainfall for the week to Dec 5th with the main wheat growing area shaded in white. Virtually the entire country only received trace amounts of rainfall during that period, and things haven't gone much better since.

The government were supposed to have 25 MMT of wheat in store as at December 1st, and have steadfastly thus far been ignoring millers' appeals to release stocks onto the open market.

Maybe they're going to need it.

CBOT Closing Comments

Soybeans

January soybean futures closed at USD10.35, up 8 cents; December soymeal futures at USD314.50, up USD1.40; December soy oil futures at 39.22 cents, up 0.13 points. Demand remains robust for US soybeans ahead of harvesting in South America. Private exporters report sales of 232,000 MT soybeans to China Friday, and the US has shipped a record 9.6 MMT to China so far this year. Dec and Jan imports could be 4-4.5 MMT each, analysts say. El Nino related rains appear to have arrived just in time for plantings in Argentina, but if anything there is already too much rain in Southern Brazil.

Corn

December corn futures closed at USD3.89 ¼, up 12 cents, and March corn futures at USD4.04 ½, up 11 ½ cents. In the US 12% of the crop was still in the fields as of last Sunday. It is not expected that the harvest will have moved on greatly this week as heavy snow, sleet, rain and strong winds have all battered what's left standing. Taiwan purchased 60,000 tonnes of US corn overnight. Corn planting in Argentina is 80% done, sowings are seen sharply lower at 1.875 million hectares according to the Buenos Aires Grain Exchange, as farmers there jump on the soybean bandwagon. That's around 600,000 ha or 24% down on last year.

Wheat

December CBOT wheat futures closed at USD5.19 ¼, up 1 ½ cents; December KCBT wheat futures at USD5.17 ¼, up 2 ¼ cents; December MGEX wheat futures at USD5.27 ½, down 2 ½ cents. The USDA this week raised world production and lower consumption, leaving us with a 2.6 MMT increase in world ending stocks to 190.9 MMT. "After several years of tight world wheat supplies, stocks are rebuilding on the back of consecutive bumper harvests," they said. The harvest in Argentina is around a quarter done, with final production generally seen at around 7-7.5 MMT, the lowest since the late 1960's.

EU Wheat Closing Comments

EU wheat closed generally with only small changes at the end of a very uninspiring week. March Paris milling wheat ended up EUR0.75 at EUR131.00/tonne, and London May feed wheat finished down GBP0.25 at GBP110.00/tonne.

Little more than a hundred lots traded all day in London.

US wheat continues to slide, with December CBOT wheat falling 17 ½ cents on the week, as Russia and Ukraine continue to market their grain aggressively, picking up the lion's share of any export interest around.

The EU has granted export licences for 7.5 MMT of soft wheat so far this marketing year (July 1st to Dec 8th), that's almost 28% down on the 10.4 MMT approved for export this time last year.

The USDA this week raised world production by 2 MMT to 673.86 MMT. Global consumption was also reduced by around 1.6 MMT, mainly in the US, the EU and surprisingly India. That leaves us with a 2.6 MMT increase in world ending stocks to 190.9 MMT.

That puts the world stocks to usage ratio at 29.5%, its highest since 2001/02, and equivalent to more than 3 1/2 months supply. In the US the stocks:usage is highest in at least the last twenty years.

On a brighter note, Ensus is gearing up to start production sometime this month, reportedly taking in around 5,000 MT of wheat on Tuesday alone. They expect to be in full production early in 2010, when the plant will use 3,000 MT of wheat a day.

eCBOT Close, Early Call

The overnight grains were firmer, with beans around 10 cents higher, corn around 3-4 cents higher and wheat up 5.

The outside markets are all slightly friendly. The dollar is down a tad, crude oil up a little after briefly dipping below USD70/barrel yesterday and stocks and gold also a bit firmer.

It is not expected that the US corn harvest has moved on greatly this week from the 88% done last Sunday, as heavy snow, sleet, rain and strong winds all batter what's left in the fields.

In South America the outlook is for heavy to excessive rains across Southern Brazil today (centered on Sao Paulo) and now, substantial and important rains for Argentina over the next seven days to two weeks, say QT Weather. Increasing and persistent rainfall across Argentina will be particularly important, as corn and beans are still being sown (corn 80% complete, beans 71%).

The Argy rains will come too late to help the wheat crop, that's already around a quarter harvested, if anything these rains will harm not help what is only expected to amount to a crop of around 7-7.3 MMT this year.

Delivery intentions are picking up for corn despite the weather at 1,052 contracts, whilst for wheat they are falling away at 505 contracts.

Yesterday's USDA stocks numbers still weigh as being a little bit higher than anticipated for beans, corn and wheat.

Taiwan purchased 60,000 tonnes of US corn overnight.

China 'only' imported 2.89 MMT of soybeans in November, that seems less than I'd have thought, although Dec and Jan imports could be 4-4.5 MMT each.

Indian wheat plantings are only in line with last season's pace at 21.7 million hectares, despite an early start and government urgings to increase production.

Early calls for this afternoon's CBOT session: corn called 2 to 4 higher; soybeans called 8 to 10 higher; wheat called 3 to 5 higher.

Who's Next to Go Bust?

I'll have a tenner on Ukraine please. To win.

A report in the FT suggests that they've asked the IMF for a further USD2 billion emergency loan. It's already had USD11 billion from the IMF, but they suspended the release of any more cash in October after Ukraine failed to keep promises to get it's house in order.

One of the measures required was an increase in the heavily subsidised domestic gas prices, but with an election looming in January the government is caught between a rock and a hard place.

This is one reason I think that grain exports have been running at record levels this marketing year. The warning signs are there for all to see, "quick, whatever we've got to sell, let's sell it now for whatever we can get."

The implications for the agricultural sector are potentially very serious. Inputs in 2010 could plummet for one, a combination of a bad winter and a lack of inputs could lead to a sharply reduced harvest next year.

And the agricultural sector has been the only one in the Ukraine seeing any growth in 2009, what happens if that goes down the tubes too?

On a different note, what happens when they don't pay the gas bill? Anyone getting deja vu?

French Truckers And Milk Producers Threaten Strike Action

We all know that the French love a good strike, almost as much as their fondness for illegally handling the ball. Well it seems that they fancy a bit of time off over Christmas so their truckers' five main unions are threatening an indefinite walkout starting this weekend, unless employers organisations agree to increased pay demands.

The unhappy dairy sector have now decided that they might like to join forces with the truckers. So French milk producers are suggesting that they might also strike (again) in an effort to cause maximum disruption over the festive period.

If you're planning whisking your nearest & dearest off to Gay Paris for a romantic spot of Christmas sightseeing, you might also like to think again. Museums, theatres, libraries and other major landmarks have all hit by workers striking over staff cuts too.

The Musée d'Orsay, the Arc de Triomphe, Notre Dame, the Louvre, the Château de Versailles and the Pompidou Centre all had to close their doors to the public last week.

EU Wheat Export Licences Running 28 Pct Down

The EU has granted export licences for 7.5 MMT of soft wheat so far this marketing year (July 1st to Dec 8th), that's almost 28% down on the 10.4 MMT approved for export this time last year.

Total grain exports are even further behind (down 40%) at 9.3 MMT versus 15.6 MMT a year ago.

Grain imports however are also unsurprisingly lower, down 27% to 4.5 MMT.

London Wheat Futures Surge

November 2010 London wheat futures surged by a record ten pence a tonne today (it's a record today as nothing else has traded - picky) to an eye-watering GBP113.00/tonne, reports somebody very bored with nothing better to do.

In what brokers are describing as a feeding frenzy, in which eleven lots have traded already and it's not even lunchtime, futures soared to their highest levels since yesterday.

"It's an impressive technical retracement of the one year fibonacci thingy," said one leading chartist.

"As soon as November was 5p up, it triggered a massive wave of computer-generated buying which propelled wheat a further 5p higher just like that," he added excitedly.

"Long term underlying bullish fundamentals could push this market all the way to GBP113.25 quite easily," he concluded.

Fertiliser: If You Don't Buy It Now You Won't Get It

I love this time of year, carol singers, tinsel on the tree, chestnuts roasting on an open fire, and the fertiliser market reports landing on the mat.

It make me smile, like hearing Mistletoe and Wine on the radio somehow Christmas isn't complete without panic in the fertiliser market.

It's a bit like running round the Marks & Spencers at 4.30pm on Christmas Eve, well you've got to go for a few beers with the lads first when you knock off at lunchtime haven't you?

Then suddenly it's well I wanted a black basque and matching suspender set, but that pair of Bridget Jones knickers and the one remaining winceyette dressing gown with the bunny rabbits on it will have to do. It doesn't matter what size it is, I don't care what the price is either, here's my card, just wrap it up luv.

Now I will be the first to admit that the recent price hike in the ferts market does not have the same look of the enormously large rodent that it did last year. Perhaps it's more of a small fluffy gerbil this time round.

Apparently the Indians are buying anything they can get their hands on, the Chinese are about to slap a large export tax on their stuff, Russia and Ukraine want to keep everything for themselves and loads of other production facilities have closed down.

Strong, compelling and convincing arguments them all. If they didn't sound so amazingly familiar. They must keep these in boxes along with the Christmas decorations I reckon.

"Ah, look what I've found it's the old Chinese tax excuse, I remember first making that one up at school in 1983. Bless. Let's put that one here, next to the Russian plant closures."

Supermarket Wars

Wm Morrison, Britain's fourth largest supermarket, has seen its share of Britain's grocery trade grow to a record high of 12.1% in the past three months, according to figures from analysts TNS Worldpanel.

Morrison's market share grew year-on year at twice the rate of the rest of the market, they say. It stood at 12.1% for the three months to 29 November against 11.7% in the same period last year.

However, Marc Bolland (didn't he used to be in T Rex?), its chief executive who has largely been credited with the supermarket chain's turnaround, has since stepped down to become the boss of Marks & Spencer. He's refused a company car as he had "a bit of an argument with a tree" in his last one apparently.

The USDA On Wheat

Amongst a plethora or revised world supply and demand data released yesterday, the USDA had this to say about the wheat market:

"After several years of tight world wheat supplies, stocks are rebuilding on the back of consecutive bumper harvests.

"A key different from other periods of world stock growth has been the dramatic build up in US stocks relative to stocks held by the traditional foreign exporters (Argentina, Australia, Canada and the EU). In just 5 years US stocks have expanded over 50% (8.5 MMT), while traditional foreign export stocks have fallen 30% (14 MMT). With US wheat priced out of many markets and with other exporters unwilling to incur the cost of holding stocks, US stocks have soared."

The report went on to say that the US is at a "competitive disadvantage" to other global exporters, citing freight and other logistical advantages.

Overall they raised world production by 2 MMT to 673.86 MMT. The main adjustments coming from an increase of 2.5 MMT in Canada to 26.5 MMT, and a 1 MMT decrease in Australia to 22.5 MMT.

Argie production was left unchanged at a probably too high 8 MMT, Chinese output was also left unchanged at a questionable 114.5 MMT. EU-27 production was tweaked slightly higher to 138.34 MMT.

Global consumption was also reduced by around 1.6 MMT, mainly in the US, the EU and surprisingly India. That leaves us with a 2.6 MMT increase in world ending stocks to 190.9 MMT.

That puts the world stocks to usage ratio at 29.5%, its highest since 2001/02, and equivalent to more than 3 1/2 months supply. In the US the stocks:usage is highest in at least the last twenty years. Blimey, and only two years ago we were running out of the stuff!

Amazingly The Chinese Are Still At It

The official Chinese state news agency Xinhua are reporting that police have arrested three people in the northwestern Shaanxi province on suspicion of selling milk powder tainted with melamine.

Obviously the death penalty isn't enough of a deterrent for some people.

That's hardly going to help boost already low public confidence in the domestic dairy industry is it? Still, New Zealand exporters like Fonterra won't be complaining about that, they'll be milking it for all it's worth.

Major Russian Port Sees Grain Shipments Up 68 Pct

The major Russian Black Sea port of Novorossiysk reports that it shipped 7.56 MMT of grains during Jan-Oct this year, a 68% increase on shipments during the same period in 2008.

In total a massive 71.9 million tonnes of cargo was shipped from Novorossiysk during the first ten months of the year, 3.8 million tonnes more than in 2008.

Fertliser shipments were also up sharply, by 20.4% during the same period.

CBOT Closing Comments

Soybeans

January soybean futures finished at USD10.27, down 1 ½ cents, December soymeal futures at USD313.10, down 1.10 points and December soyoil futures at 39.09 cents, up 0.19 points, USDA increased 2009/10 exports by 15 million bushels, cutting ending stocks to 255 million bushels. A larger cut had been anticipated given the pace of recent exports to China. Weekly export sales of 927,700 MT were a little above expectations, whilst shipments of of 2,067,300 MT were up 59 percent from the previous week, with almost 1.5 MMT heading to China.

Corn

December corn futures closed at USD3.77 ¼, up 9 ¼ cents, March corn futures finished at USD3.93, up 9 ½ cents. Corn exports were cut by 50 million bushels and that was added to ending stocks in this morning's monthly USDA Supply Demand report. That gave us ending stocks of 1.675 million bushels, against expectations of 1.650 million bu. Weekly export sales however were robust at 847,700 MT. US weather does not look conducive to getting much of the remaining corn crop into the barn this side of Christmas.

Wheat

December CBOT wheat futures closed at USD5.17 ¾, up 2 ¾ cents, December KCBT wheat futures at USD5.15, down ½ cent and December MGEX wheat futures at USD5.30, down 1 ¼ cents. The monthly USDA Supply/Demand report out this morning showed a slight increase in ending stocks to 900 million bushels. That was a bit more than the trade had been hoping for, weekly export sales of 245,200 MT were also a tad disappointing. World ending stocks were also raised to 190.91 MMT.

EU Wheat Shows Little Change

Liffe/Euronext close: London wheat +GBP0.10 at GBP105.15, Paris wheat +EUR0.25 at EUR128.00, Paris rapeseed -EUR0.75 at EUR280.25, Paris corn -EUR0.50 at EUR131.50.

EU wheat futures closed with very little change Thursday, in another low-volume session.

At the risk of repeating myself, the market has definitely gone to sleep ahead of Christmas, and there seems like little likelihood of any significant price movements now until the New Year.

On a positive note, it looks like the long-awaited opening of the Ensus refinery is now imminent. Once operational, the facility will produce around one-third of the UK's total bioethanol requirements, and consume in excess of 1 MMT of wheat per annum.

A similar sized plant is expected to open early in 2010 in Rotterdam, before another UK facility opens in Hull sometime in the second half of next year.

That should help take up some of the EU over-supply, but not by any means all of it.

Winter wheat prospects seem to be developing well across much of Europe, with increased production in the UK, France and Germany on the cards for next year unless the weather throws up any problems.

Things aren't quite so promising in the Black Sea, with large parts of western Ukraine and the Volga region of Russia suffering from inadequate moisture at the moment.

The USDA today raised it's estimate for US 2009/10 ending stocks to 900 million bushels, more than the 875 million the trade had been expecting. Weekly export sales were also disappointing at 245,200 MT.

Rotterdam/Amsterdam Soy Arrivals

 
                Brazil pell. Arg. Pell     ETA/ETD   Destination
----------------------------------------------------------------       
United Challenger 40000+hp              11-14 Dec etd Amsterdam 
Grain Harvester   34000+hp              10-11 Dec etd Amsterdam 
Silver Pegasus                20000     10-12 Dec etd Rotterdam 
Globulus           6000       30000     10-14 Dec etd Amsterdam 
Malaspina Castle  15000hp               14-15 Dec etd Amsterdam 
Dyna Voyager                  40000        15-Dec     Amsterdam 
Aquitania         40000+hp                 21-Dec     Amsterdam 
Selinda                       25000        20-Dec     Amsterdam 
Hamburg           35000+hp                 22-Dec     Amsterdam 
Eden Maru         10000       49000        21-Dec     Rotterdam 
Agios Makarios    15000+hp                 23-Dec     Amsterdam 
Lucija                        19000        24-Dec     Rotterdam 
Hokuetsu Ace       8000       25000        31-Dec     Amsterdam 
Glorious Sakura    6000       38000        10-Jan     Amsterdam 
Sea Prince        41000+hp                 10-Jan     Amsterdam 
Global Explorer               30000        13-Jan     Rotterdam 
Ariso             15000       40000        14-Jan     Amsterdam 
Sendai Spirit     6000hp                   15-Jan     Amsterdam 
Forestal Pacific              25000        18-Jan     Amsterdam 
Rotterdam Trader  25000+hp                 20-Jan     Rotterdam 
Cristal Pioneer   15000+hp                 20-Jan     Amsterdam 
Crimson Mercury               35000        21-Jan     Rotterdam 

USDA 2009/10 Ending Stocks, Early Call

The USDA today pegged the 2009/10 soybean carryout at 255 million bushels, slightly higher than trade expectations of 235 million. They obviously haven't been looking at their own weekly export sales to China recently.

Corn ending stocks were forecast at 1.675 million bushels, against expectations of 1.650 million bu., and wheat carryout pegged at 900 million bu. compared to forecasts of 875 million bu.

So all three came in above trade expectations. That has to be bearish, although the weekly export sales were supportive for beans and corn.

Corn may also garner support from the fact that 12% of the crop is still out there sitting in the snow!

Wheat looks the most bearish of the three, coupled with the poor export sales.

Early calls from the CBOT floor - corn flat to 2 lower, beans 1-2 higher, wheat down 1-2 cents.

I'll take wheat to end much lower than that.

USDA Weekly Export Sales/Shipments

In it's regular weekly statement for the period November 27-December 3 the USDA report the following:

Soybeans

Net sales of 927,700 MT were up 41 percent from the previous week, and right at the upper end of expectations for sales of 600-900,000 MT. Once again China took the lion's share at 613,700 MT. The Netherlands (130,400 MT), Japan (113,300 MT), Indonesia (72,400 MT(, Germany (65,100 MT) and Egypt (47,500 MT) were also buyers.

Shipments of of 2,067,300 MT were up 59 percent from the previous week, with almost 1.5 MMT heading to China.

Corn

Net sales of 847,700 MT were up 29 percent from the previous week and towards the upper end of expectations of 450-900,000 MT. Japan (271,000 MT), Cuba (122,800 MT), Mexico (103,600 MT), South Korea (91,700 MT), Colombia (72,000 MT), Syria (55,000 MT), and the Dominican Republic (39,800 MT) were featured buyers.

Exports of 706,500 MT were down 20 percent from the previous week. The primary destinations were Japan (188,700 MT), Mexico (183,900 MT) and South Korea (173,200 MT).

Wheat

Net sales of 245,200 MT were down 37 percent from the previous week and below expectations of 300-500,000 MT. The main buyers were Nigeria (98,300 MT) and Japan (57,900 MT).

Exports of 306,600 MT were down 20 percent from the previous week. The primary destinations were Nigeria (54,000 MT), Taiwan (50,100 MT), Japan (44,000 MT), the Dominican Republic (32,700 MT), Canada (26,000 MT) and Mexico (24,900 MT).

BoE Leaves Rates/QE On Hold

As widely expected the Bank of England's Monetary Policy Committee today left UK interest rates on hold at 0.5%, and made no addition to the GBP200 billion asset-purchase program.

We won't know until the minutes of the meeting are released later this month, if any of the MPC wanted to add to last month's GBP25 billion increase in QE.

The pound is flat just under 1.63 against the dollar and around 1.1050 against the euro.

China Execute Rogue Trader

No siree, they certainly don't muck about in China. One teeny weeny little bit of rogue trading and that's it. Well, USD9.5 million worth of rogue trading actually:

Reuters

Hurry Up Ensus

Christ, it's like hanging around waiting for a gig to start. Just press the bloody button, it'll be all right. Don't worry about that banging noise, they always do that when they're new, it's just erm bedding in. Smell? What smell? I can't smell anything burning. Nah, it'll be fine, can you make it go a bit well...faster? A lot faster, actually. We've got all this wheat to get shot of you see and there's fields full of more of the bloody stuff out there, just sitting there, growing. Looking at us and pulling funny faces. It wasn't our fault, we didn't want to plant it, the voices made us do it. What happens if I turn this dial up to where it says "DANGER"? What are all them alarm bells for? Can you build another one?

Nogger's Thoughts On Climate Change

As world leaders and their entourages head off to Copenhagen to discuss climate change, the first thing I'd like to know is how are they getting there?

Yes, they're going by plane, and not just one plane either, loads of planes from all around the world will be belching out their exhaust fumes on the tarmac in Copenhagen.

That's going to help isn't it?

Some 'experts' say we should eat less meat, that will sort the job out. We'll have fewer cows and pigs farting away, destroying the precious ozone layer that we've worked so hard to protect.

If the Polar ice caps are melting, send them for counselling. Get ACAS involved, they'll be able to spin the whole thing out for years no problem.

If we're going to be basking in 80 degree sunshine every summer, then I won't need to go abroad will I? That should help my carbon footprint. And if the tide's come in a little bit further than normal, than I won't have to walk so far when I fancy a little dip either will I? More energy saved.

Keep me well away from cabbage, sprouts and baked beans for safety reasons, you can just see the hole in the ozone layer getting smaller as I type.

Feed me lots of good quality meat, from local farms and I'm a happy bunny. Danish bacon, no thanks, keep it in Denmark. More energy saved.

Here's a radical idea, let's walk to the local shops for our groceries every day. Let's buy fresh local produce from Peter the butcher, and Sally the fruit & veg girl. Or do you actually like getting pushed and shoved round Adsa, sending all your money to Wal Mart Towers. Buying strawberries that have been flown in from Kenya to go with your Christmas dinner, then finding that somebody has removed the wing mirror of you car with their shopping trolley whilst you were gone?

EU Rapemeal Prices

Basis FOB Hamburg/Lower Rhine in euros/tonne:

Dec           146,00  -2,00
Jan           140,00  -2,00 
Feb/Apr       131,00  -2,00
May/1st h Jly 117,00   unch
Aug/Oct 10    113,00  -2,00
Nov/Jan 11    120,00  -3,00
Nov/Apr 11    121,00  -4,00

CBOT Closing Comments

Soybeans

January Soybeans closed at USD10.28 1/2, down 15 1/2 cents, December soybean Meal at USD314.20, down USD2.40, and December soybean oil at USD38.90, down 1.21 points. Trade estimates for tomorrow’s weekly export sales report range from 600,000 to 900,000 MT. Brazil's IBGE pegs the 2009-10 soybean crop at 64.9 MMT, Conab say 64.5 MMT. both estimates are well above last season's output of 57.1 MMT. The crop is 85% planted say Celeres. The USDA supply/demand report will be out Thursday, analysts estimate US soybean ending stocks at 235 million bushels, down from 270 million in the last report.

Corn

December Corn Futures closed at USD3.68, down 1 1/2 cents, and March corn futures at USD3.83 1/2, down 1 1/2 cents. Estimates range from 450,000 to 900,000 MT for tomorrow’s weekly export sales report. Analysts are estimating 2009/10 corn ending stocks at 1.646 billion bushels for Thursday's USDA supply/demand report, up from 1.625 billion bushels in November. Weak outside markets also limited gains.

Wheat

December CBOT Wheat closed at USD5.15 down 4 1/4 cents, December KCBT Wheat at USD5.15 1/2, down 1/2 cent, and December MGEX Wheat at USD5.31 1/4, down 2 1/2 cents. Trade guesses for all wheat ending stocks range from 937 to 800 million bushels with an average guess of 887 million bushels. Export sales estimates range between 300,000 and 500,000 MT for tomorrow’s USDA weekly export sales report.

EU Wheat Ends Lower Again

EU wheat futures closed lower again Wednesday with January Paris milling wheat down EUR1.00 at EUR127.75/tonne, and London May feed wheat down GBP0.65 at GBP110.25/tonne.

The trade seems to have shut up shop until January, although futures are drifting lower.

Reports suggest that the Holy Grail Ensus refinery took in some 5,000 MT of wheat on Tuesday, and that this will somehow save the world, although I don't quite see it myself.

I'm naively looking at the market reports from Dow Jones tonight as if they will provide me with some inspiration. Sadly, but not surprisingly, they don't. You might as well ask a snake how to peel a banana.

I strongly suspect that come January we will be looking for buyers, and that Ensus apart, they may be few and far between.

eCBOT Close, Early Call

The overnight grains closed narrowly mixed with corn around 3 cents higher, beans 1-2 cents lower and wheat flat to one down.

Crude oil is a little firmer but off earlier highs at USD72.90/barrel. The American Petroleum Institute yesterday shocked the market my announcing an inventory fall of 5.8 million barrels last week, when the market had expected an increase of around half a million. The US Energy Dept will release their stocks numbers later today, something of the same magnitude increase as the API would boost crude and might help grains this afternoon.

The world has got the jitters after Greece and now Spain had their credit ratings/outlook downgraded this week, following on from the Dubai problems recently. Moody's have indicated that both the UK and US might get a similarly embarrassing downgrading of their AAA status if they don't get their fingers out.

All that makes for a volatile forex market with the dollar, sterling and euro vying for the star prize in "Who Want's To Be a Pauper".

On the weather front, the intense early winter storm, now over Lake Michigan, has left enough snow across the Corn Belt to push harvest 2009 well into 2010, say QT Weather.

Damage will be widespread from this weather event, with only one of the concerns being the deep snowpack and drifts that linger over the yet to be harvested cornfield, they add.

Delivery intentions for wheat are 1,134 contracts, and 832 contracts for corn.

Reports continuing to come out of Australia suggest that a combination of frost, heavy rains, high winds and a prolonged period of 30+ C days have all taken their toll on wheat.

Tomorrow we have the USDA's supply & demand report and their weekly export sales to look forward to.

In the US soybean 2009/10 ending stocks are seen falling to 235 million bushels, down from 270 million in the last report. Corn ending stocks are seen at 1.646 billion bushels, up from 1.625 billion bushels in November. Wheat ending stocks are expected to show a small increase from 885 million bushels in November to 886.

The weekly export sales will be interesting too, particularly to see the size of China's purchases of soybeans this past week.

Early calls for this afternoon's CBOT session: corn called 2 to 3 higher; soybeans called 1 to 3 lower; wheat called mixed.

Let's Get Ready To Crumble

Well, that didn't take very long did it? In answer to my question who's going down with Greece, Standard & Poor have just revised the outlook on Spain to negative from stable.

Serves them right for clamping my hire car for no reason at all back in 2000 if you ask me. How am I supposed to read the signs if they're in Spanish?

That's 50% of the PIGS in the sh*t already this week and it's only Wednesday.

Right, who's next? The Irish haven't had much luck lately have they?

EU Rapemeal Prices

Basis FOB Hamburg/Lower Rhine in euros/tonne:

Dec           148,00  
Jan           142,00    
Feb/Apr       133,00  
May/1st h Jly 117,00  
Aug/Oct 10    115,00     
Nov/Apr 11    125,00 

Greece On The Slippery Slope, Who's Going Down With Them?

Fears over the solvency of Greece have reached new levels after Fitch downgraded the Mediterranean country's sovereign debt to BBB+, with a negative outlook.

Fellow ratings agency Standard & Poor's have also warned Greece that it may have its credit rating cut on worries over the government's ability to reign in its public finances.

This throws up a string of questions such as will Greece be looking to the rest of Europe to throw it a lifeline? And if so, how will Europe respond? And who else might get downgraded next?

Britain has already been warned that its AAA credit rating is not written in stone, but then again neither is that of the US.

Predicting likely future currency movements has never been easy, but surely has it ever been this hard?

Step forward our very own Knob in shining armour, Alistair Darling. I wouldn't trust him to fight his way out of a paper bag, but this afternoon he's going to tell us how he will halve our record budget deficit inside four years.

According to the Telegraph within that time frame almost 10p in every pound of tax paid by British families and companies will go straight towards interest payments on the national debt.

Next week Darling will unveil his plans to solve the Middle East problem, whilst immersed in a glass tank full of water, fifty feet up in the air in the middle of Hyde Park.