Argy Farmers Resume Strike Action
Argentine farmers have finally grown weary of trying to get a reduction in the soybean tax by fair means, so they have decided to revert to foul.
Announcing a one week strike late Friday, they said that the would man roadblocks and halt the sale of all grains, oilseeds and live cattle until next Friday.
President Fernandez, like her or loathe her, I personally think she's rather foxy, has clearly shown herself to be a formidable opponent. And it seems that the farmers may have under-estimated her.
Announcing a 30% cut of the soybean export tax would go to the provinces, the hotbed of support from the masses for the farmers' plight, is a move clearly aimed at undermining the farmers aims.
I for one wouldn't like to play a game of chess with her. Unless it was strip-chess of course. I'd let her take my bishop.
Cattle prices reportedly jumped by 30% in Mercado de Liniers cattle market on Friday with prime yearlings making US$120c/kg up from 85c/kg three weeks ago.
EU Wheat Ends Week On Quiet Note
EU wheat futures closed with little change Friday in a subdued low-volume session.
Paris May milling wheat closed flat at EUR137.75/tonne, London May feed wheat ended up GBP0.50 at GBP112.50/tonne.
A sharply weaker US dollar, following the announcement of a further $1.2 trillion of "quantative easing" will do little to help EU wheat become more competitive on the export front.
Subdued demand and high stocks seem set to cap potential gains for the time being.
Coceral estimated EU soft wheat production in 2009 down 9% to 128.3 million metric tonnes, from 140.96mmt a year ago. Corn and barley production are both seen down 7 percent.
CBOT Closing Comments
Corn
May corn closed at $3.965, unchanged on the day. December corn finished at $4.28 down ¼ cent. Sales of 116,000mt of corn were reported to South Korea today, the same quantity as they bought Thursday. US exporters also reported sales of 174,000mt of corn to unnamed buyers, the USDA said. Export sales of 174,000mt of corn for delivery to unknown destinations was also reported. Corn has now finished higher on the week for the last four weeks. The USDA acreage numbers on March 31 are the next "big event" for corn.
Soybeans
May soybeans closed at $9.52, up 11 ½ cents, November soybeans closed at $8.93, up ½ cent. The nears gained on the deferred months due to fears of supply disruptions from Argentina. Even the perceived threat of a strike may be enough to encourage some to switch their requirements to alternative destinations. Beans finished with their biggest weekly gain this year on hopes that "quantative easing" from the US will stimulate demand for commodities. US exporters reported sales of 165,000mt to China.
Wheat
Wheat futures for May delivery fell 5 cents to $5.5025 a bushel. the chance for rain across the weekend and into the beginning of next week was enough to put wheat under a bit of pressure today. India's harvest seems set to come in unscathed, around unchanged from last season, circa 78mmt, whilst European wheat emerges from dormancy looking pretty good. It remains to be seen whether the weaker dollar, on the back of the $1.2 trillion stimulus package announced Wednesday night, will help US wheat become more competitive on the export stage.
Argentine Dispute Takes New Twist
In a further twist in the conflict with farmers over taxes, Argentine President Cristina Fernandez de Kirchner announced on Thursday that revenue from the levy on soy exports would be shared between the federal, provincial and city governments.
According to the announcement 30% of income levied on soy exports will be deposited in an emergency fund destined for Argentina’s 23 provinces. This means an estimated 1.8 billion US dollars annually will be invested to build hospitals, schools, water systems and other infrastructure projects, easing the impact of the world economic crisis, Mrs. Kirchner said during a televised news conference.
The move represents an annual 11% increase in outlays to provinces a year, and was harshly criticized by the opposition that argued it was evidence of the government’s attempt to buy support ahead of national elections later this year.
The government will take the remaining 70% of the tax.
Earlier in the afternoon farmers were dismayed after being unable to muster sufficient votes in Congress to repeal the export taxes as had been planned. A majority of the ruling coalition simply was not present and therefore there was no quorum to address the issue.
The new move which will now be implemented with a decree, thus avoiding Congress completely, made it clear once and for all that the Argentine government has no intention of reducing export tariffs.
In some parts of the country furious farmers reacted taking again to the roads blocking traffic, echoing protests last year over government plans to raise farm tariffs and which ended with the Senate rejection.
"This is a new declaration of war on the agriculture sector," said opposition Senator Gerardo Morales. "Farmers see this as an attempt to buy the support of cash-strapped provincial governors" some of whom are close to farmers.
"They’re putting soy money directly into the campaign," Argentine Agrarian Federation head Eduardo Buzzi was quoted in the Buenos Aires television.
The Senate appears set to next week approve Fernandez’s bid to move elections to June 28 from Oct. 25, a move she says is needed to free her up to focus on the economic crisis.
And we all believe that one don't we?
CBOT Close
Corn
May corn finished at $3.965 up 8 1/4 cents. A sharply lower dollar was bullish as to was strongly firmer crude oil. Yesterday's announcement from the Fed of another huge amount of money going into attempting to drag the US economy out of its current malaise has some conflicting consequences.
Soybeans
May soybeans closed at $9.405, up 25 ½ cents. As with the other grains crude & the dollar added a lot of support. Weekly export sales were poor however, and traders seemed to be hesitant to get too carried away in the general euphoria. Question marks remain over South American output and forthcoming spring plantings in the US. Chinese demand is seen as waning, or at least switching to South America.
Wheat
May CBOT wheat settled at $5.55 ¼ up 25 ¼ cents with a sharply lower dollar adding support from the start. Weather worries remain and crop losses seem likely on the US Plains. Despite a lower dollar though, the US continues to miss out on export orders to Russia.
EU Wheat Ends Near Unchanged
EU wheat futures closed with little change Thursday. Paris May milling wheat closed down EUR0.50 at EUR137.75/tonne, and London May feed wheat ended up GBP0.50 at GBP112/tonne.
The dollar weakened dramatically after the Fed announced throwing $1.2 trillion dollars more at mortgage and treasury buy-backs. This boosted ideas that US wheat would improve its competitive edge on the export front.
Russia continues to devour almost all the export business going, leaving the UK, the rest of the EU and the US to argue over the scraps.
Drought conditions on the US Plains still threaten US wheat.
CBOT Early Call
A lot of different factors to report ahead of this afternoon's Chicago open.
The story of the day has to be the dollar falling out of bed big-time following the Fed's decision to throw a further $1.2 trillion into the hat to buy treasuries and mortgage-related debt.
That news sent the dollar tumbling, losing around six cents against the pound for example compared to 24 hours ago.
A weaker dollar makes US exports more competitive, so eCBOT closed sharply higher across the board with beans leading the way around 30 cents higher, wheat up around 15 cents and corn up around 10.
Crude oil has leaped sharply, penetrating $50/barrel to hit its highest since Dec 1st despite stocks rising almost 2 million barrels yesterday.
The Dow is expected to trade higher on hopes that this latest windfall will finally have the desired effect.
I'm not convinced myself, this may just be a brief honeymoon period of feel-good-factor before depression & recession returns next week. If it takes that long.
The weekly export sales may have already put a bit of a dampner on things, with wheat, corn & beans all coming in below expectations. At least for beans exports are running ahead of year ago levels, wheat & corn continue to lag.
There's no further fresh news out of Argentina yet, but Roadblocks R Us could well be open for business over the weekend.
There are a few export tenders kicking around, South Korea has bought some US and also optional origin corn. Our old mates Japan bought some US wheat as they pretty much always do most weeks. Apart from that most of the other wheat sales this week have been optional origin or Russian.
Early calls for this afternoon's CBOT session: corn called 8 to 10 cents higher; soybeans called 25 to 30 cents higher; CBOT wheat called 10 to 15 cents higher.
USDA Weekly Export Sales
The USDA released their Weekly Export Sales Report for the week ended March 12, 2009 at 12.30GMT, here's what they had to say:
Corn net sales of 440,600 MT were down 60 percent from the previous week and 52 percent from the prior 4-week average. Pre-report trade estimates were for sales of 550,000 to 750,000 MT. Export commitments are now 42% behind a year-ago.
Soybean net old-crop sales of 143,300 MT--a marketing-year low--were down 83 percent from the previous week and 76 percent from the prior 4-week average. New crop net sales of 196,500 MT for delivery in 2009/10 were almost entirely for China (192,000 MT). Pre-report trade estimates were for sales of 500,000 to 700,000 MT. Soybean export commitments are 6% ahead year-ago.
Wheat net sales of 213,800 MT were down 41 percent from the previous week and 45 percent from the prior 4-week average. Net sales of 22,000 MT for delivery in 2009/10 were for South Korea. Pre-report trade estimates were for sales of 300,000 to 500,000 MT. Export commitments are 23% behind year ago.
Argentina Latest - My Dad Is Bigger Than Your Dad
The dispute between Argentine farmers and the government is coming to a head nicely, with both sides posturing & gesturing like two kids squaring up in the playground.
Farmers could resume roadside protests as early as tomorrow if the Lower House fails to debate a reduction in soybean export duties today, the farming leaders’ Liaison Committee said.
The farm leaders are calling for grain export duties to be fixed solely by Congress and for a reduction from 35 percent to 25 percent in soybean exports above 1,000 tonnes, below which no export duties would be applicable.
But Deputy Agustín Rossi, the head of the ruling party’s caucus in the Lower House, said that his party will not grant the 129-vote quorum needed for the 257-seat Lower House session to open. Still, opposition leaders said they had secured the presence of 100 legislators and were confident they would attain the minimum votes required.
In a radio interview, Rossi said his fellow ruling party deputies would not attend the Lower House session because "farm leaders are flying election campaign flags". But Rural Society president Hugo Biolcati said the harsh criticism flung at farmers by Peronist Party leader and former President Néstor Kirchner on Tuesday night was meant "to steer attention away from the hottest issues in everyday life."
On entering a meeting at the Coninagro headquarters yesterday, Biolcati said he felt frustrated because "the government officials and us are living in two different worlds."
In a radio interview, Interior Minister Florencio Randazzo stood by the government’s view that a reduction in soybean export duties would eat into funding for other national needs, wiping almost 15 billion pesos off the national budget. "In that case, who should we stop funding teachers or pensioners?" he asked emotively.
eCBOT Jumps On Weak Dollar
The overnight markets are sharply higher this morning after the dollar fell sharply late on news of a new $1.2 trillion stimulus package from the Fed.
In what some are describing this morning as a "Ramboesque" move, the Fed stormed out of it's two-day meeting with all guns blazing.
The Dow Jones IA got a boost, almost hitting 200 points up at one stage, although late profit-taking saw it close 90 points higher.
The dollar slumped on the news, falling to fresh two-month lows against the euro, and it is that dollar weakness that is behind firmer eCBOT grains this morning.
Beans are currently around 26 cents higher, corn up around 9c and wheat 12 cents firmer.
Beans are also aided by news ideas that Argentine farmers may restart blockading roads again if they get short shrift at Congress later today.
“Farmers in the provinces are ready and new blockades could start tomorrow,” one farm leader told reporters yesterday.
Whilst US wheat on the Plains remains under threat from a largely warm & dry outlook, there is some trade concern that too many traditional export orders that the US would normally pick up are going to Russia.
They've picking up some decent orders from Egypt and Syria this past few days at levels around $165 (GBP116-118).
Corn continues to tread water, waiting for some guidance from the USDA when it releases it's 2009 planting intentions report on March 31.
Crude oil is firmer at around $49/barrel on hopes that the US stimulus package will boost demand from the world's largest consumer, the US. That is despite yesterday's Energy Dept report showing that US inventories rose 2 million barrels last week, twice what the market had been anticipating.
Dollar Falls Sharply On Fed Announcement
The US dollar fell sharply in late trade last night as the US Federal Reserve ended it's two-day meeting announcing some surprise swingeing new measures in an attempt to stimulate lending and jump-start the economy.
The package totals almost $1.2 trillion of mortgage-related & treasuries.
With US interest rates effectively at zero, like the Bank of England, the Fed has had to resort to "other measures" to help the economy. Whilst this may be along the lines of what the market had expected, the scale of the package was not.
Wall Street was taken by surprise, jumping almost 200 points at one stage, before settling 90 points higher with the biggest beneficiaries of the move, the banks, leading the way.
The largest chunk of the money, $750 billion, will be used to buy mortgage-backed securities. The idea being that this will free up money to be lent back to US house-buyers to stimulate the housing market. An additional $100 billion will go to government-backed agencies like the ailing Freddie Mac, and $300 billion will buy US Treasuries.
Of course all this comes at a cost, the US dollar fell sharply hitting a two-month low against the euro.
Sterling jumped around 3 1/2 cents, from $1.39 to $1.4250 on the news, but the pound isn't out of the woods just yet. It continued to decline against the euro currently standing at 94.65 pence, or one euro is now worth £1.0570.
EU Wheat Ends Lower On Egypt News, US Futures
EU wheat closed lower Wednesday on news that Russia had yet again usurped Europe and the rest of the world, mopping up 200,000mt of export business to Egypt.
A late sharp fall in US futures also dragged EU grains lower. Paris May milling wheat closed down EUR1.75 at EUR138.25/tonne, with London November feed wheat ending down GBP0.25 at GBP124.00/tonne.
Russia continues to be a thorn in the side of European and US wheat, having been the cheapest origin for a sale of 200,000mt to Syria last week. The same destination is back in the market for 200,000mt again and it will be a major surprise if Russia doesn't get the order again.
UK wheat was higher for a large part of the day after news emerged that unemployment had risen above 2 million sent the pound spinning. A very late sell-off on the dollar as the Fed announced new quantitative easing measures was however enough to send UK futures into negative territory.
CBOT Closing Comments
Corn
May corn settled down 2 cents. Very little fresh news in the market today to guide corn. Crude and the USD were mostly a little firmer, which provided some support. Essentially all eyes are on the Mar 31 USDA planting intentions report, with opinions quite divided as to whether we will see much of a reduction in corn acres in 2009 or not. Early estimates for tomorrow’s weekly export sales report are 500-800MT.
Soybeans
May soybeans finished at $9.15, up 2 cents, whilst November soybeans finished at $8.56, down 5 cents. The nears got support from the ongoing Argy dispute, firmer crude oil and forecast tight ending stocks. The deferred months however were weaker over concerns that US farmers will plant significantly more beans for the 2009 crop. Weekly export sales estimates for tomorrow range 350-900,000MT.
Wheat
May CBOT wheat closed at $5.30, down 22 1/2 cents. Lack of demand & competitiveness for US wheat was the catalyst to drive wheat sharply lower despite the threat to crops on the Plains. Egypy bought 200,000mt of Russian wheat and Iraq passed on US to buy mostly Australian wheat. Weekly export sales estimates for tomorrow range 200-550,000MT.
Yet More Trouble In The US Ethanol Sector
It seems like hardly a month goes by without one or more US ethanol producer getting into trouble these days.
Hot favourites to be next through the door to file for chapter 11 bankruptcy protection are Aventine Renewable Energy. Aventine reportedly has a $15 million interest payment due on 1st April to its engineering and construction contractor, Kiewit Energy. The company says at the moment it doesn't have the capital to make the payment.
Unless and eleventh hour rabbit comes out of the hat via a refinancing package the company may be forced into chapter 11 protection.
“There is substantial doubt as to our ability to continue as a going concern,” the company said in its annual report filed with the Securities and Exchange Commission. “We need additional financing or capital which may be unavailable or costly.”
And Aventine isn't the only alternative energy company in trouble. An auditor for cellulosic ethanol maker Verenium said in a filing Monday that the biofuels company may have to “curtail or cease operations” if it cannot raise additional capital.
With US companies dropping like flies, I wonder if there are any parallels to be drawn within our own European renewable fuels sector?
US Weather Latest
Midwest temperatures are climbing steadily, with 4in soil temperatures in Iowa warming 6-10 degrees in the last two days, reports Allen Motew of QT Weather. This should enable farmers in the state to get their corn planting begun within their preferred timeframe, he says.
With temperatures in the region set to hit as much as 16 degrees above normal for this time of year, and the 8-14 day outlook having normal or below normal precipitation, good early planting progress should be made.
The past seven days have been abnormally dry across large swathes of the Corn Belt with above normal precipitation only in pockets across N Indiana and N Ohio:
The flip side of this favourable outlook is in Kansas where wheat is coming under increasing moisture stress.
eCBOT Close, Early Call
The overnights closed narrowly mixed, with beans around 2-3 cents higher, wheat 1-2 cents lower and corn around a cent easier.
It's pretty much a case of nothing much new really. Fundamentally, the market is treading water until the USDA come out with their planting estimates on March 31st.
The US is a country of two halves with drought continuing in the south & the Plains, and sharply higher temperatures causing rapid snow-melt in the north threatening flooding across North Dakota, N Minnesota, Wisconsin and Michigan, with a chance of spreading into South Dakota.
Most of the major wheat areas are forecast to remain dry over the next few days. In the last 90 days, many of the major wheat areas have seen 40% or less of normal precipitation. In much of Western Kansas, which is the major wheat growing area of the state, less than 20% has fallen.
Nothing concrete came out of the meeting between farm leaders and government representatives in Argentine yesterday. Some media reports suggest that grassroots support is being "mobilised" for roadside protests against the soybean export tax, but the general sentiment so far seems to be of pursuing the matter through Congress, at least for now.
The weather in southern Brazil and Argentina is set to remain warm & dry for the rest of the week. There are some reports that this is encouraging early ripening of beans planted a little later in the season in these areas, which may result in lower final output.
South Korea bought 110,000 tonnes of US corn overnight, but apart from that their is little too exciting to report on the export front.
Crude oil is flat ahead of stocks data from the Energy Dept due later this afternoon.
Also this afternoon the Fed is expected to conclude it's two-day meeting to decide what the hell to do next.
Early calls for this afternoon's CBOT session: corn called flat to 1 cent lower; soybeans called 2 to 4 cents higher; wheat called steady to 2 cents lower.
Argentina Biodiesel Exports Surge
Oil World reports that Argentina exported 288,000mt of biodiesel in the first five months of the marketing year 2008/09 (Oct/Sept). That is whopping 66% above the 174,000mt exported in the same period of the previous year.
The vast majority of these exports went to the US (166,000mt - up from 122,000mt previously), with almost all the remainder coming to the EU (109,000mt vs 55,000mt).
I wonder how much of the stuff exported to the US was simply en-route to Europe with a splash of mineral diesel added? Erm...approximately 166,000mt of it is my guess.
Headline Of The Day
Or in this case, for the pedantic, opening line of the day from the Times:
"Mariann Fischer Boel knows one end of a cow from the other." 
Arla Cuts Organic Milk Price
Arla has cut the price it will pay UK farmers for organic milk by 2ppl from next week, saying that consumers are scaling back their organic purchases in the face of the recession.
It seems to be another case of consumer ethics & ideology going out of the window when cash is tight.
The move will drop the price for a standard organic litre to 33.5p, still a premium of 8.5p/litre above Arla's standard milk price.
The move comes against the depressing backdrop of news that 15,000 UK dairy farmers have quit the industry since 1997.
Worse Just Came
The minutes of the Bank of England meeting showed that policy makers voted unanimously to cut interest rates to 0.5% at their last meeting. The minutes also showed that the MPC also unanimously voted in favour of the GBP75 billion Asset Purchase Programme.
In employment data, UK unemployment has now risen above two million for the first time since 1997, standing at 2.03 million.
February jobless claims rose 138,400, against expectations of an 84,800 increase.
The pound fell to $1.3847 against the dollar and 93.93 pence against the euro shortly after the news.
Pound Plunges On IMF Data, Worse To Come?
There's nothing quite so British as knowing exactly where you stand is there? It's disorientating when the pound is going up against the dollar. It's sort of un-nerving. A bit like watching Edwin Van der Sar constantly bending down to pick the ball out of the back of the net. You get a weird sense of dreaminess. I'm enjoying this but is it really happening sort of thing.
Well, it's good to know that we are back on the downwards spiral again this morning. Brace yourselves...
The IMF is set to revise down UK growth forecast for 2009 to -3.8% and sees the economy to contract by a further 0.2% in 2010. This is a sharp downward revision from the 2.8% contraction estimated for 2009 in January and against BoE estimates for a pick-up next year.
Reuters is quoting leaked IMF documents for the forecast and the IMF is expect to release new global growth forecasts at the end of the week. Indeed, the IMF warns that the UK recession will be deep and longer than in most other countries.
It could get worse yet as the day wears on with the minutes from the Bank of England's last policy meeting, unemployment expected to top 2 million and details of the government's 2009-10 financing remit all due to be released later in the day.
The pound is currently $1.3927 and 93.45 pence against the euro. There, there, if you say it quick it doesn't seem too bad does it?
Doing My Bit For Comic Relief
It's ironic, is it not, that they should chose the slogan "Do something funny for money" for this year's Comic Relief effort, then chose Lenny Henry as a frontman? A bloke who has spent his entire career doing things painfully unfunny for money. The man is about as funny as piles.
And his missus doesn't exactly have my sides aching neither. If I never again accidentally catch twenty seconds of "The Vicar of Abject W@nk" then my life will almost be complete.
To make it fully complete, I'll pledge £100 here and now for Jonathan Toss to simply f*** off.
Rant over.
Argentine Farmers' Dispute Latest
Farm leaders emerged weary from their fourth meeting in as many weeks with Interior Minister Florencio Randazzo, Production Minister Débora Giorgi and Agriculture Secretary Carlos Cheppi.
It seems that they may have finally got the message that, as far as the government is concerned, No means No.
The only surprising feature about this latest escalation in a year-long dispute, principally over taxes on soybean exports, is that is has taken so long for the message to sink in.
It is glaringly obvious that the government needs the revenue generate by taxes on agricultural exports more than ever before. Faced with massive debts that need to be repaid or rescheduled in 2009, whether you agree with the legitimacy of the taxes or not, the government simply can't afford to give them up.
"Regrettably, the government’s main priority is revenue. As from this moment the (farmers’) liaison board sets the debate in Congress as one of its main priorities," said Eduardo Buzzi after yesterday's meeting.
So, for now at least, it seems that the farm leaders are pinning their hopes on fighting their case via Congress. Whether they will again employ roadblocks and sales embargoes on grains and meat to hammer home their point remains to be seen.
Initial reports seem to suggest that on the whole the farm leaders seem to be against such action, wary of losing support from the public.
The farm groups may decide to have one last push via Congress before resorting to Plan A.
EU Wheat Ends Firmer On Currency
May Paris milling wheat closed up EUR0.80 at EUR140/tonne, and with London May feed wheat ending up GBP1.60 at GBP112/tonne.
A stronger dollar, and weak pound, enabled EU futures to move a little higher, although traders are conscious that Black Sea wheat still has the competitive export edge given the acute weakness of the Russian and Ukraine currencies.
Worries over the potential impact of drought in the US remain, especially as plantings there are already sharply lower for the coming crop.
There are question marks too over the size of EU and FSU production this year, particularly with reduced fertiliser applications seeming likely.
India has said that it may have a late season problem with yellow fungus, which may cut yields there in it's soon to be harvested crop.
CBOT Closing Comments
Corn
May corn settled at $3.90 ½, down 1 cent. Corn seems to be a bit of a bystander at the moment, with wheat & soybeans holding centre stage. Until we get a clearer picture of how many acres US farmers will plant this season, that seems likely to remain the case. US weather doesn't look too kind at the moment for early planting progress. Firmer crude oil supported, although a stronger dollar capped gains.
Soybeans
May soybeans finished at $9.13, up 2 cents; November soybeans finished at $8.61, up 10 ½ cents. Not a great deal of fresh news. Firmer crude oil, tight 2008/09 ending stocks and ongoing tensions in Argentina supported beans. A steadier dollar limited gains. Cash soybean bids were steady to firm with only light farmer selling.
Wheat
May CBOT wheat closed at $5.52 ½, up 8 ¼ cents. Wheat was the leader today on continued concerns over the state of health of the US crop on the Plains. Good/excellent conditions in Kansas, the largest producing state, dropped three points Monday, according to the USDA. Firmer equities and crude oil lent some further support, although a stronger dollar made sure that futures didn't get too carried away.
Wynnstay AGM
Wynnstay Group Plc is holding its Annual General Meeting today at which Chief Executive, Ken Greetham, is due to make the following statement to shareholder:
"Wynnstay delivered an exceptionally strong performance in the last financial year to 31 October 2008. Trading results benefited from an out-performance from the Group's raw materials trading activity as raw material prices rose sharply and improved conditions for farmers, with more realistic prices for farm produce.
The Group's trading in the first four months of the current financial year is broadly in line with our expectations. Within our agricultural supplies business, the animal feeds division has seen reduced feed volumes from the dairy sector but sheep and poultry volumes have been particularly encouraging. In the arable division, high prices for fertilizer have affected early orders. However we anticipate some recovery in volumes during the course of the season. Seed sales have been excellent, benefiting from higher Spring demand.
Our specialist retailing businesses continue to perform well. Our Country Stores offering is geared towards the farming community and there is a high degree of predictability and robustness in farmers' spending patterns. Trading at our pet products retailing operation, Just for Pets, remains strong. We have recently opened a new Just for Pets store in Long Eaton, near Derby, and aim to open two further stores during the course of the year.
The general outlook for the UK agricultural industry remains positive as world demand for agricultural produce continues to improve. More specifically, in the short term, the weakened pound has strengthened export demand. Against this background, Wynnstay is well placed to supply a more buoyant industry. We therefore continue to view prospects for the business positively."
eCBOT Close, Early Call
The overnight grains closed mixed, with beans around 5-7 cents firmer and wheat & corn both a cent or so easier.
Heavy rain in some parts of the US wheat areas last week helped improved crop condition ratings slightly. With the USDA reporting after last night's close that wheat rated poor/very poor in Texas had gone from 63% a week ago to 57% as of Sunday night. Oklahoma poor/very poor fell from 43% to 39%, whilst the percentage of the crop in the worst two categories was unchanged at 17% in the US top producing state of Kansas.
Reports of rust problems pointing to lower yields are coming out of India, where the wheat harvest is about to start any day now.
The US missed out on a Syrian tender for 200,000mt wheat yesterday, and is also likely to draw a blank on a similar tender to the same destination as Russia mops up most of the orders going in the Middle East.
Japan and Taiwan however are both expected to buy some wheat of US origin this week.
For soybeans a NOPA crush figure of 128.7 million bushels was above expectations of 125.3 million bushels. Steady crude oil and a weak dollar are also adding a bit of support. The Dow Jones IA is expected to open a tad higher which may also help.
Anecdotal reports coming out of South America suggest that early soybean yields are a little disappointing and that the Brazilian crop will struggle to meet the 57-58mmt being predicted by most of the "usual suspects".
Corn may prove to be the weakest leg of the complex again today as there is little to make a bullish case out of just now. The gap between Friday's Informa & Allendale planting intentions figures highlights just how many "floating voters" are out there, and final decisions may go to the wire. Meanwhile weekly export inspections were poor.
Early calls for this afternoon's CBOT session: Corn futures are expected to open 1 to 2 lower; soybeans 5 to 6 higher; wheat 1 to 2 lower.
US And Mexico In Protectionism Row
President Barack Obama's administration is facing it's first trade dispute as a row over protectionism erupts with neighbouring Mexico.
The dispute centres around US Congress last week cancelling a funding program that allows Mexican trucks full access to all the major American highways in an effort to protect US jobs.
After years of disputes between Mexican and US truckers, the Bush administration finally began to allow Mexican lorries free access to US highways in 2007.
Last week's move has effectively put a stop to that, in breach of the North American Free Trade Agreement (NAFTA), say the Mexicans.
The NAFTA was signed by the US, Mexico and Canada in 1992, initially allowing Mexican trucks access to border areas only where their cargo had to be discharged and redistributed using US transport.
That all changed under George W Bush, despite fierce opposition from US truckers unions and environmentalists. It seems that all bets are now off under the Obama administration. He'd like to re-write the agreement, a move that Mexico are likely to strongly resist, especially in the current economic climate.
In retaliation at last week's move Mexico has said that it will slap import tariffs on US agricultural & industrial goods, without quantifying exactly which goods it is referring to.
It is thought unlikely that they mean staple Mexican foods such as corn or wheat however.
Pound Falters
The pound is down against the euro this morning as investors appetite for risk waivers following the news last night that US credit card defaults are running at their highest level in at least twenty years.
Sterling fell to 92.65 pence against the euro, close to a six week low of 93.20 pence set last week.
A report on German economic sentiment expected at 10.00GMT is likely to set the tone for the rest of the week for the euro.
German ZEW business confidence is expected to have slipped to around -8 from -5.8 in February, as lingering concerns regarding the banking sector and further evidence of a deepening recession weigh on sentiment.**
The pound was also a little lower against the dollar at $1.4049 ahead of the Fed starting a two-day meeting later today to discuss the possibility of issuing new measures, or extending the existing ones, to attempt to further stimulate the US economy.
** Footnote - in a surprise move, when the data came out it had actually improved to -3.5, although the indicator is still well below its historical average of 26.2.
Brazilian Beef Exports Decline
Brazilian beef exports fell last year for the first time in a decade and a further reduction is forecast for 2009, Bord Bia has predicted.
According to a report released by the food marketing body, the volume of beef exported by Brazil will fall to 2.08m tonnes this year, back from a peak of 2.49m tonnes in 2007.
The fall-off in Brazilian exports is attributed to changes in both production and consumption within the country.
It is estimated that production peaked at around 9.6m tonnes in 2006; however, domestic consumption rose to 6.25m tonnes in 2008. This is up from 4.8m tonnes a decade ago and now accounts for 80pc of production.
The Brazilian beef herd has also reduced in size. Numbers reached a high of 180m head in 2007 but the herd is not expected to hit that level again until mid 2010 at the earliest.
The reduced availability of trade finance, together with slowing demand for meat globally, has also hit the sector. Beef companies Independencia and Arantes have defaulted on debt payments and filed for credit protection recently. Brazil’s No. 2 beef exporter, Bertin, could be next, according to Moody’s.
Latest On Brazilian Soy Harvest
With the Brazilian soybean estimated around 20-25% complete, word is filtering through that yields are a little disappointing, and that overall production may fail to hit the 57-58mmt area currently being predicted by the USDA, Celeres, Conab etc.
Agroconsult currently peg the crop at 55.5mmt, saying that early season drought in December and lower fertiliser applications have had an adverse effect on yields.
In Mato Grosso, Brazil's top producing state, the harvest is most advanced with almost half the crop already in, according to local estimates. Here it is estimated that 25% less fertiliser was used this season due to high prices and difficulties in obtaining credit. Yields are said to be coming in around 10% lower than last season at 44-45 bu/acre.
In Parana, the second top producing state, the harvest is around a quarter done, although plantings were the same as last season final production here is expected to be around 15% down on last season.
The harvest has yet to begin in In Rio Grande do Sul, the third largest producing state. Because beans are planted a little later in RGS production is thought not to have been as badly affected by the early season drought as Mato Grosso and Parana.
EU Wheat Ends Higher On Late US Rally
EU wheat futures closed higher after languishing around unchanged for most of the day after America kicked higher late in the session.
Paris May milling wheat ended up EUR1.75 at EUR138.75/tonne, and London May feed wheat closing up GBP1.40, at GBP110.40/tonne.
A late rally was prompted by US futures surging strongly higher late in the day, boosted by firmer crude oil, stocks and a weaker dollar.
Dryness in the Plains also remains a concern for US wheat, with QT Weather reporting the driest Jan/Feb since records began in 1895.
The next decent chance of any significant rainfall won't emerge until Tuesday-Thursday next week, QT Weather suggest.
Syria bought 200,000mt of Russian wheat Monday, and then promptly issued a tender for another 200,000mt.
CBOT Closing Comments
Soybeans
May soybeans finished at $9.11, up 34 ½ cents; November soybeans finished at $8.50 ½, up 26 ¾ cents; May soy meal finished at $288.40, up $11.70. Beans gained as the dollar weakened, crude rose and equities rose. US soybeans inspected for export were near 22.42 million bushels, in line with expectations. The primary destination for the soybeans was China. Fund short-covering was a feature ahead of tomorrow's meeting between the government and farm leaders in Argentina. Various private crop production estimates emerging from South America suggest that official output numbers are too high. Brazil will yield around 54-55mmt and Argentina around 40-41mmt, they say, compared to official estimates of 57-58mmt and 42-44mmt.
Corn
May corn settled at $3.91 ½, up 3 cents. Corn benefited from outside influences such as equities, a weak dollar and firmer crude oil despite OPEC leaving output unchanged at the weekend. Weekly export inspections were lower than expected, at 29.039 million bushels, which conspired to make corn the weakest leg of the complex today. The jury is still out on how much corn will be seeded by US farmers this spring, with conflicting numbers emerging from Allendale & Informa Friday. Until that issue becomes clearer sideways trade may be the order of the day.
Wheat
May CBOT wheat closed at $5.44 ¼, up 26 cents. As with corn & soybeans a weaker dollar and firmer crude oil and the Dow Jones IA lent support. Concern for the welfare of US wheat on the Plains also remains after QT Weather reported the driest Jan/Feb since records began in 1895. Wheat rated good/excellent fell 3 points in the top US wheat producing state of Kansas last week, according to the USDA. Funds still hold a large 41,000 short position on CBOT wheat which leaves the market vulnerable to a short-covering rally if some stop-losses get triggered. May closed just half a cent short of a one-month high of $5.45/bushel.
US Has Driest Start To Year Since Records Began
The US has had the driest Jan/Feb since records began in 1895, says Allen Motew of QT Weather.
Particularly hard hit has been the HRW belt from W Texas into SW Kansas, with only the Dakotas, Minnesota and Michigan escaping, he adds.
March rains have been above normal in parts of the Corn Belt, Mid-Atlantic region and South but dry weather has continued in W Kansas and the HRW belt.
The next chance for appreciable rain crossing Kansas and the HRW belt will be next week in the Tuesday-Thursday period. Meanwhile minor rainfall will occur Thursday to Sunday (less than 0.30inches) with temperatures averaging far above normal (+3 to +12), Motew concludes.
eCBOT Close, Early Call
The overnight eCBOT grains closed higher Monday morning, garnering support from firmer equities and a weaker dollar.
eCBOT soybeans closed 7-8 cents firmer, with wheat around 5 cents higher and corn up 1-2 cents.
Japan's Nikkei closed around 2.2% higher and stocks in London, Paris and Frankfurt were also higher. In London Barclays shares jumped 22% as it revealed plans to sell it's iShares unit to raise capital without selling a stake to the government. It also reported a "strong start" to 2009.
The dollar was weaker as stronger stocks encouraged fund and investor selling of the greenback. Further costly economic stimulus measures may be announced later this week by the US government also pressure the US unit.
Wheat was higher as drought remains a problem in the Plains as temperatures are forecast to warm up considerably this next two weeks.
Syria announced the purchase of 200,000mt of Russian wheat today, and promptly tendered for another similar amount. This kind of news will likely limit any gains by US and EU wheat today.
Whilst Friday's Informa's 2009 planting intention figure showing a five percent drop from 2008 is supportive for corn, Allendale's estimate was barely changed.
Crude oil around $2 lower after OPEC failed to announce any further production cuts over the weekend may also weigh on corn later in the session.
Early calls for this afternoon's CBOT session: Corn futures are expected to open 1 to 2 higher; soybeans 6 to 8 higher; and wheat 3 to 5 higher.
UK Winter Barley Plantings Down By 58 Percent
Having recently reported UK winter wheat plantings down by around 15%, DEFRA say that only 424,000 hectares of winter barley has managed to get into the ground.
That's a 58% drop on 1 million hectares a year ago.
Rapeseed plantings are just 4% down at 572,000 hectares they say, whilst oat plantings are down by almost a third to 93,000 hectares.
Australian Wheat Exports Still Suffering Logistical Problems
Having prayed for a decent harvest after two years of drought, Western Australia is now struggling to this season's bumper wheat crop to market bogged down by ailing infrastructure.
Korean buyers wrote a letter of complaint to the Australian Embassy in Seoul last month asking for the situation to be sorted out quickly, as vessels waiting to load outside Western Australia state backed up causing delays of up to six weeks.
Only a third of this year's harvest has so far been exported, and grower-owned business Cooperative Bulk Handling, which operates a monopoly over all grain exports in the state, is blaming among other things the state's ageing rail infrastructure.
"We have a ridiculous situation where we have trains running at night because the railway lines buckle during the day. They stand idle and yet we have ships waiting for grain," said a CBH spokesman.
"We also have trains which, quite frankly I could walk faster than with a broken leg than they could travel," he added with some typically pithy Oz humour, before appealing for "any vehicle that can comply to the regulations and our code of practice" to come forward to help get this year's harvest to port.
Informa/Allendale Planting Intentions
In case you missed it both Allendale & Informa Economics came out with their 2009 US planting intentions estimates Friday. The acreage numbers make for interesting reading compared to what the USDA had to say at it's February Outlook Forum:
Informa Allendale USDA Forum 2008
Corn 81.419 85.406 86.000 85.982
Soybeans 81.502 80.439 77.000 75.718
Wheat 59.700 57.977 58.000 63.150
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Total 222.621 223.822 221.000 224.850
So it seems that US farmers will plant less of the big three crops generally for the 2009 harvest.
CORN
For corn, one of the most striking this is surely the huge difference between Informa & Allendale's ideas. Informa clearly see quite a large switch away from corn reflecting higher input costs in the current economic environment.
Allendale say that 4.15 billion bushels of corn will go into ethanol production in 2009/10, up from 3.70 billion in 2008/09. Ending stocks for 2009/10 are projected at 1.295 billion from Allendale, sharply lower than the 1.740 billion estimated by the USDA for the current 2008/09 marketing year. Stocks/usage is seen dropping to 10% by Allendale, from 15% in the current season.
SOYBEANS
For soybeans the thing that stands out is how much more the two private firms estimate plantings than the USDA indicated last month. Certainly the biggest surprise to come out of the February Forum was that the wholesale switch from corn to beans that many had anticipated wasn't going to happen on such a large scale, they said. February's guesstimates were too low the private firms are saying, by 3.4 million acres in the case of Allendale, and by 4.5 million in the case of Informa.
Crucially Allendale peg 2009/10 ending stocks at 526 million bushels compared to the USDA's estimate last week of just 185 million in the current season. Stocks/usage is seen increasing from 6% this season to 17% next season by Allendale.
WHEAT
Allendale's figure is very close to last month's USDA Outlook Forum estimate of 58.0 million. The Allendale number is an 8.2% decrease from 2008. Even with a sharp drop in plantings Allendale still see 2009/10 ending stocks at 647 million bushels, a relatively small drop on the 712 million forecast for the current season by the USDA earlier last week.
One reason for that is that Allendale are using a yield of 44 bu/acre for the current crop despite the drought situation in the southern Plains. That is only modestly lower than last season's all-time record of 44.9 bu/acre and would make 2009 the third highest yielding year on record despite the drought.
The Allendale yield estimate may prove to be a bit optimistic, it is a full bushel/acre higher than the USDA projected back in February, yet drought conditions have worsened since then.
I'm Thoroughly Ashamed Of Myself
As a life-long Evertonian is is my duty to hate Liverpool Football Club, all of it's ladyboy players and it's entire rats nest of faux-Scouse Devon-living supporters. And so far I've done a pretty good job of it, even if I do say so myself. Ever since I had an "I hate Kevin Keegan" badge made specially for me at the tender age of twelve.
Forget this "you come from the same city so you should be pleased when they do well" nonsense. I want Liverpool to get beat every game they play, no matter who they play. French, Argentine, Germans, bring them all on, I'll cheer the lot on.
So why then did I get a warm rosy glow inside upon hearing that they'd put four past Man Utd on Saturday?
Why did I feel an inner sense of glee every time that "once a blue, always a blue" Wayne Rooney threw his petulant arms in the air in despair when yet another team-mates pass went astray?
Why was I so delighted at the final whistle when the camera zoomed in on his fat litle face that he looked like he was crying?
And why was I so delighted to see Edwin "I haven't let a goal in for a million years" Van der Saar getting some much-needed practice in bending down to pick the ball out of the back of the net?
Confused.com
Writ? Said Fred
They'll make a docudrama out of this one day that's for sure. North Yorkshire and Merseyside council pension funds have hired ex-PM Tony Blair's "squeeze" Cherie to sue the Royal Bank of Jockland and it's incredibly smug ex-boss Sir Fred Goodwin, report the Telegraph.
Sir - I can hardly bear to type it - Fred and RBS "falsely reassured" investors that the bank was in rude health when it was "effectively insolvent" say the pension funds.
I can't see them having too much difficulty making that one stand up in court.
The lawsuit accuses RBS, it's entire board of hapless directors and halfwit Funtime Freddie of "hubris" for insisting on a disastrous lending and acquisition strategy.
The case will go through the American courts, not British ones, as RBS conducted a significant amount of it's business there. And it won't have escaped the pension fund's notice that it's likely to be far easier to get a massive result there too.
Sir Fred was reported to be so shocked by the news that he dropped his mobile phone.
Hubris: any outrageous act or exhibition of pride or disregard for basic moral laws, according to Wikipedia.
Argy Dispute Latest
Argentine President Cristina Fernández de Kirchner announced Friday that she was bringing forward the mid-term elections from October to June.
Argentine farmers say that this is a sign of political weakness, and an attempt to deflect Congress' attention away from the government's ongoing dispute with them.
The official reason behind bringing the elections forward is that "governability is at risk amid a global economic crisis," say the government.
Not so say the farmers. "This is an electoral manoeuvre. They saw that otherwise, come October, they would be in a very bad shape. The global crisis is just an excuse. Not for bringing forward the election there will be less crisis.
"We fear that this may allow the government to continue to retain a majority (in Congress) to continue with the policies that have affected the farm sector so much. What the government calls "governability" is actually "the cheque book" - is how one of the farm leaders saw it.
The year-long dispute has made the image of the President plunge and the mid-term vote are crucial ahead of the presidential election scheduled for 2011. It has also sparked and exodus of government supporters in Congress that is threatening the Victory Front majority in both Houses.
Argentine Agrarian Federation Director Pedro Peretti said: "There is no institutional risk, nobody advocates a coup. What Kirchner has clearly seen is that they may reach October facing tremendous social conflicts, which would further risk their clout on their ranks and that they could even lose the 129-seat majority in the Lower House and even their majority in the Senate." The move may help the Kirchners to obtain a likely "less disastrous defeat," he added.
The elections — for half of the Lower House and a third of the Senate — are a big test for Fernández de Kirchner, who has seen her popularity plunge since she succeeded her husband Néstor Kirchner to the presidency 15 months ago. Her popularity was a healthy 50 percent when she took office in December 2007 but, by last month, only 29 percent of the public had a favourable image of her, according to a poll by the Poliarquia consultancy.
In another sign of her administration’s weakening hold on power, a ruling party alliance was comfortably defeated in local elections in the Catamarca province last Sunday week.
The President said she would send a bill to Congress on Monday to change electoral laws to bring forward the ballot to June 28 from the scheduled October 25.
OPEC Resists Further Cuts
Having already cut output by 4.2 million barrels per day since September, OPEC said it will keep crude oil production steady at the weekend.
Many analysts had expected a further cut as the cartel aims to get crude back above $50/barrel.
It seems however that the group have become resigned to oil around $45, and are realising that the price isn't going to get back where they'd like it in the current economic environment no matter how much they cut production.
Crude is more then $2 lower early Monday on the news, currently trading at $44.13/barrel.
Monday Morning Forex Review
The dollar is broadly weaker in early trade Monday as Asian and European stocks climb.
The recession will "probably" end in 2009 Fed Chairman Ben Bernanke said in a televised US interview over the weekend.
The Fed are having a two-day meeting Tues/Weds to discuss the possibility of launching new measure to stimulate the US economy, or extending the existing ones. Either way it's going to be expensive.
G20 finance ministers will do "whatever is necessary" they told reporters after they concluded their weekend summit.
And for now it seems that the market believes them, with the pound around two cents higher than Friday's levels at $1.4180, and the euro up to $1.2980.
Australia To Launch New Wheat Futures Contract
Australia's ASX is set to launch a new wheat futures contract, possibly as early as May depending on regulatory approval.
The contract will be based on delivery from the Kwinana port in Western Australia state.
Western Australia is where most of the country's exports are shipped from, so the new contract will be more closely linked to internationally traded wheat than the existing Australian wheat futures contract which has a NSW delivery point.
US Weather Outlook
An interesting week lies ahead for the US as farmers turn their attention to planting with temperatures set to warm up considerably. Temperatures as much as 24 degrees above normal are expected over the Plains this week according to Allen Motew of QT Weather:
These much warmer temperatures are forecast to spread into the following week too, bringing with it the risk of flooding as snow cover melts away. The Northern Mississippi Basin has 4-6 inch water equivalent in North Dakota and Northern Minnesota presenting a greater flood risk than last year, he adds:
