CBOT Closing Comments
Corn
May corn closed at $4.04 ½, up 2 cents. The market continues to flirt either side of the $4 mark. Cold and wet weather in the western Corn Belt continues to delay planting. Sub-zero temperatures across large swathes of the Midwest this weekend will keep farmers from doing any fieldwork. Spillover strength from soybeans and wheat also helped corn a bit, as too did a weak dollar.
Soybeans
May soybeans finished at $9.95 ½, up 18 ½ cents to post a 78 cent rally on the week. A weak dollar and strong export demand buoyed beans this session. The Argy crop continues to get smaller, and fund buying is starting to emerge. The CFTC Commitment of Traders report released this afternoon showed an increase in fund long positions of 34% in the last three weeks. The Buenos Aires Cereals Exchange cut its forecast for 2008-09 soybean production by 1.8 million tonnes to 39.4 million. That is more than 10 million tonnes below early season expectations, and the crop could get significantly smaller yet some are saying.
Wheat
May wheat closed at $5.63 ½, up 13 cents. Wintry weekend weather for the US, with temperatures set to fall as much as 20 degrees below normal is forecast to bring heavy snow for Nebraska, South Dakota, Minnesota and Iowa. This is on top of the flooding that we had last week in North Dakota, threatening to cut spring wheat plantings. Spring wheat futures on KCBT advanced 59 cents on the week as a whole.
EU Wheat Closes Slightly Firmer
EU wheat futures closed with modest gains Friday in a quiet low-volume session. May Paris milling wheat traded up EUR0.75 at EUR137.00/tonne, and May London feed wheat traded up GBP0.90 to GBP109.40/tonne.
The market continues to trade is a sideways range. A weak dollar, and stronger euro and sterling, plus the ever-present burdensome old-crop stocks capping any attempts at a rally.
Export interest remains relatively light, or at least the big headline-grabbing orders don't seem to be coming our way. Saudi Arabia bought 495,000mt of mostly Canadian wheat at the beginning of the week, although some German wheat also got a look in.
In the UK of course, much of our surplus wheat is only feed grade, and in many cases sub-standard feed grade at that. This quality is getting steadily exported off the radar screens.
All the while farmers are reluctant sellers given the large disparity between old and new crop prices. The May/Nov spread finished at GBP10.10 on Friday, that's almost a GBP1.70/month premium for carrying wheat into new crop. It is interesting to note that Paris milling wheat is offering only a more modest EUR7 carry.
It seems that current prices are actively encouraging farmers to carry old crop into new, but have they got the storage? It's a good question, but we did manage to bring a 17.4mmt harvest in 2008, and are looking at something around 3.4 million tonnes less this season.
Ensus confirmed this week that their new bioethanol facility at Teeside will be up and running this summer and is expected to use 1.1 million tonnes of wheat in 2009/10. Will that be UK wheat? That's another good question, it makes a bit of a mockery of the whole "green" ethos if it isn't.
CBOT Early Call
July corn called 1 to 2 cents lower; July soybeans called 5 to 7 cents higher; July CBOT wheat called 1 to 3 cents higher. A weaker dollar may support the entire complex.
The weekend looks like being cold & wet across the US Midwest, this will delay any hopes of early fieldwork. In North Dakota flooding is expected to put paid to at least half a million acres of spring wheat plantings.
Yesterday's weekly export sales were pretty robust overall, especially for corn & beans. China took some new crop beans, and are rumoured to have bought more today.
Corn is flirting with the $4/bushel level, May closing at $4.01 3/4 overnight, some US farmers reportedly see this as an "acceptable" level in the current climate.
Another dry weekend is in store for Argentina which will help move the harvest on a pace, but do little to improve flagging yields.
US Weather: Cold Weekend Ahead
April is starting out cold and wet for the US Corn Belt, says Allen Motew of QT Weather. The GFS extended model runs show a slow moderation in “storminess” over the next two weeks heightening the fears of slowed planting progress from the Dakotas to Georgia. Another strong storm will cross the Midwest this weekend, he says:
Temperatures behind this storm will be 8-20 degrees below normal for this weekend:
Late next week it will continue cooler than normal in the Plains and East with near normal temperatures for part of the Mississippi Valley, he adds. No “large” warm-up is seen during the next ten days with colder than normal continuing east of the Mississippi.
Happy Birthday Milk Quotas - 25 Years Old
A belated happy 25th birthday to milk quotas. Introduced on Apr 2nd 1984.
When quotas were introduced we were the only country in the EEC producing less milk than we consumed (85%). Yet the UK took the biggest cut at 6.5%, sounds like a familiar story.
Created as a better way of stemming the flow of dairy farmers out of the industry than price cuts.
There were just under 40,000 dairy farmers in the UK in 1984, Now there are around 12,000.
The exodus of farmers from milking could result in Britain having to import more than half its dairy products by 2030, if current trends continues, according to DairyCo.
By then UK production would be just 7.5bn litres. In its latest survey, a further 14% of dairy farmers intended to leave the industry within two years.
Is This The Beginning Of The End For Compound Feeds?
Just musing the news that BOCM are to close their Denbigh plant & open a blending operation in Whitchurch in response to the growing demand for blends.
Is this the beginning of the end for compound feed manufacture in these difficult times? Was Brian Frankland right all those years ago, with his then revolutionary approach?
For those of you too young to remember, Brian Frankland set up the imaginatively named Frankland Feeds to market a kind of halfway house alternative between a traditional compound feed and a farmer mixing his own straights.
I fondly remember his entertaining newsletter "a shovel full of this, and a shovel full of that". OK, things are a bit more technical than that these days, but the title was tongue in cheek even in then. As I recall this was a poke in the eye for compounders who at the time said that Frankland's blends were no more than this.
And here we are twenty five or so years later and everybody is doing them, compounders are selling less compounds and more blends.
Brian Frankland, shine on you crazy blender.
BOCM Pauls To Open New Blending Plant
BOCM Pauls have announced the establishment of a new blending facility at Whitchurch in Shropshire.
The move comes as part of a "realignment of manufacturing capacity" and will trade under the name of Mercia Farm Feeds.
A Division of BOCM Pauls, this purpose built plant has the capacity to manufacture 30,000 tonnes of blends per annum and will be configured to ensure that BOCM PAULS is able to compete effectively in all sectors of the conventional and organic blends market, the company said.
The move coincides with the announcement of the closure of the company's compound feed manufacturing facility at Denbigh, which will see ruminant production switched to Newcastle under Lyme and Preston. Game feed manufacture will switch to Bury St Edmunds and Radstock.
French Rapeseed Needs Rain
Unusually dry weather finally gave way to increasing showers in Germany and Poland after a dry winter, but France rapeseed continues to struggle with drought, says Storm Exchange Weather.
Less than one inch of rain has been received in March, less than half the normal amount. Since December 1, the key rapeseed districts in central and northeastern France have received 30-45% below-normal precipitation. In fact, drought actually began last fall, while farmers were planting, they say.
Winters are usually rainy in Western Europe, bolstering field moisture for spring growth and development, but subsoil profiles are badly depleted in France and moderately dry in Germany and the United Kingdom, they add.
The Grand National Winner
After many hours of form study, my idea of the winner for this weekend's big race is:
KILBEGGAN BLADE
Currently best available price I can find is 25/1 on Betfair. If it comes in then you can all by me a pint via PayPal on Monday.
If you don't want to simply go with the flow, try this....
Horses carrying between 10 stone and 11 stone have an outstanding record in the race, you need to whittle down the numbers somehow, the first place to start is by ruling out everything with over 11 stone. It's not infallible, but it's a decent start that has largely stood me in good stead for many years. Only Hedgehunter with just one pound over this weight has won the race carrying more than 11 stone since 1983.
It isn't a race for outsiders anymore. Look for horses 33/1 or less. That gets us down to about 15 horses carrying 10-11 stone and 33/1 or less, here's my rating of each:
Mon Mome, 10th last year, beaten by Kilbeggan Blade last time out and now almost a stone worse off at the weights. Nogger rated 2/5
Silver Birch, winner in 2007 but now 12 years old, been largely off the course ever since, might get round but unlikely to trouble the judges. 3/5
Butler's Cabin, fell when going quite well last year at Becher's 2nd time round, not done much since. 3/5
Offshore Account, difficult to weigh up, talented and Irish, but something to prove. 3/5
Parson's Legacy, a bit old at 11 and maybe a bit high in the weights. 2/5
L'Ami, not in bad form at all elsewhere, but he's had two cracks at this already falling at 2nd last year. 2/5
Cornish Sett, fair form but only 12th last year and 4lb more this time round. 3/5
Darkness, fair form, goes on the ground but doesn't inspire me somehow. 3/5
Irish Invader, great form as he's won his last three, but over much shorter distances, still respected. 3.5/5
Rambling Minster, in great form & stays well, if he wasn't 11 years old and had his best form on soft ground then he might be my No 1 tip. 4/5
Southern Vic, fair form but doesn't thrill me. 3/5
Kilbeggan Blade, very good chase form over distances, likes the going, beat Rambling Minster fair & square at Sandown back in December and better off at the weights now, been given a couple of sharpeners over hurdles since which is becoming a bit of a trademark for horses running well in the National in recent years. 5/5
Brooklyn Brownie, been running well on this going, but a bit more distance & weight involved in this race. 3/5
Himalayan Trail, very difficult to weigh up, three of his last four were over hurdles and the other one he was pulled up in! 2/5
Maljimar, will only run if something drops out, but decent form nevertheless. Not without hope if he makes the cut. 3/5
CBOT Closing Comments
Corn
May corn closed at $4.02 ½, up 6 ½ cents. Old crop net sales of 1,251,300 MT were even higher than last week and above expectations of 850-1,100,000MT. In addition to that traders also reported 116,000 MT of sales to unknown today. You can say what you like about corn but it is certainly picking up export interest at these rates! Crude finished around $4/barrel higher and the dollar went through the floor. Ongoing wetness in the Midwest may be delaying corn plantings.
Soybeans
May soybeans finished at $9.77, up 25 cents. Old crop net sales of 599,800 MT were up 40 percent from the previous week, new crop net sales of 581,100 MT for delivery in 2009/10 included 412,000 MT for China. Expectations were for combined sales of 500-700,000 MT. Sharply higher crude oil and a weaker dollar also lent support.
Wheat
May CBOT wheat ended at $5.50 ½, up 25 cents. Continued flooding in North Dakota is delaying field progress and hindering spring wheat plantings. With winter wheat seedings already down sharply, US wheat production is continuing to shrink in 2009. Weekly export sales were OK at 283,500 MT for old crop and 100,400 MT for new crop against expectations of 300-425,000 MT.
EU Wheat Edges Cautiously Higher
EU wheat futures edged cautiously higher Thursday mainly influenced by outside markets such as rising equities and crude oil.
May Paris milling wheat closed up EUR3.00 to EUR136.25/tonne, and May London feed wheat traded up GBP0.25 at GBP108.50/tonne.
As has been a feature of many recent sessions there was not a plethora of fresh fundamental news, so outside markets had to come to the rescue.
America was sharply higher late on, which also added some support. US weekly export sales for corn were very robust, well above 1 MMT for the second week running.
Continued wet weather in the Midwest meanwhile is starting to delay corn plantings.
Ukraine Sunseed Production Seen Down 20 Pct, Rapeseed Down 9 Pct
The US agricultural attaché says that the financial turmoil and the credit crunch may result in lower input application and inferior technologies (e.g. decreased use of high quality seeds and hybrids by farmers), probably leading to both lower yield and quality of sunflower seed in the Ukraine in the coming season.
We expect the sunflower yield to decline to 1.35 tons per ha, implying a sunflower seed crop of approximately 5.1 million tons, which is at least 20% less than sunflower seed production in the 2008/2009 marketing year. Most Ukrainian crop analysts forecast sunflower seed crop in a range of 5.1-5.9 million tons, they say.
Meanwhile the area planted with winter rapeseed for the 2009/2010 harvest decreased to 1.44 million ha, compared to 1.6 million ha for the 2008/2009 harvest, mostly due to unfavourable conditions during the winter planting campaign, says the attaché. Weather conditions were generally favorable for rapeseed crops development, except for some frosts in the beginning of January. We expect winter rapeseed harvested area to decrease by 18% compared to 1.33 million ha harvested in the 2008/2009 marketing year.
The area planted with spring rapeseed is expected to increase in the 2009/2010 marketing year. Strong demand from the European Union helped rapeseed prices to stay firm compared to prices of other grains and oilseeds. We expect spring rapeseed harvested area to increase by about 240% from 44.3 thousand ha harvested in the 2008/2009 marketing year. However, this increase in spring rapeseed area will not be able to offset the decrease in winter rapeseed planted area, and the total rapeseed harvested area is forecast to decrease by 9% in the 2009/2010 marketing year.
Ukraine Grain Production Seen Sharply Lower
After a bumper grain and oilseeds harvest in 2008 production in 2009 is seen sharply lower due to a combination of lower plantings and reduced inputs, according to media reports.
The US agricultural attaché forecasts Ukraine to harvest 25% less wheat in 2009/10 at 19.4 million tonnes after 25.9 million in 2008/09.
The harvested acreage is estimated at 6.7 (7.1) million ha, domestic use at 13.4 (14.4) million tonnes, and exports at 7.0 (10.5) million tonnes, leaving ending stocks at 2.2 (3.1) million tonnes.
Corn output may amount to 7.8 (11.4) million tonnes on a harvested acreage of 2.0 (2.4) million ha. Domestic use is seen at 5.7 (6.0) million tonnes, exports at 3.0 (4.0) million tonnes, and ending stocks at 1.3 (2.2) million tonnes.
eCBOT Close, Early Call, Strong Weekly Export Sales
Thursday's overnight eCBOT market posted strong gains on the back of a weak dollar and firmer crude oil and equities. Beans finished with gains of around 22 cents and wheat & corn 6-8 cents.
Crude oil bobbed back up above 450/barrel on (possibly misplaced0 optimism that the G20 meeting will stabilise the global economy and that the worst is over. Hmmmmm.
The dollar was lower which also added a little enthusiasm for grains. The euro rose after the ECB only cut interest rates in the Eurozone by a quarter to 1.25% instead of the half point cut that had been expected. The pound rose against the dollar after the Nationwide said UK house prices rose unexpectedly in March. Traders are cautious on the dollar ahead of key jobs data due later this afternoon.
Corn also gained support on speculation that wet, cool weather may delay crop planting in the Midwest.
On the export front the US missed out on an Iraqi wheat tender, with them buying 50,000 MT of Russian and 100,000 MT of Australian wheat.
In it's weekly export sales report, which only came out after the close of the eCBOT market, the USDA reported another impressive number for corn: Old crop net sales of 1,251,300 MT were even higher than last week and above expectations of 850-1,100,000MT.
Soybean sales were also impressive: Old crop net sales of 599,800 MT were up 40 percent from the previous week, new crop net sales of 581,100 MT for delivery in 2009/10 included 412,000 MT for China. expectations were for combined sales of 500-700,000 MT.
Wheat sales came in at 283,500 MT for old crop and 100,400 MT for new crop against expectations of 300-425,000 MT.
Early calls for this afternoon's CBOT session: Corn futures are expected to open 6 to 8 higher; soybeans 20 to 25 higher; wheat 5 to 7 higher.
Argy Crop Report 'Contains Errors'
Almost a fortnight late, Monday's estimate from the Argentine Agricultural Secretariat pegging 2009 soybean production at 37-39 million tonnes, has subsequently been "pulled" with the Ag Sec saying that "it is a preliminary document that contains errors."
This will only add fuel to the fire amidst claims of skulduggery, and the deliberate withholding of information by the government.
Was the estimate too low or too high? Nobody seems to know. Initial reactions were wow that's on the low side (the current USDA estimate is 43 million tonnes). But then again other private estimates in circulation peg the crop potentially 35 million or less. One report I saw earlier in the week was as low as 30 million tonnes.
The Agriculture Secretariat denies that political meddling is to blame for the delays in weekly and monthly crop reports. "The crop estimations office is being restructured. These are technical issues, they are absolutely not political. As soon as possible, the situation’s going to get back to normal," a Secretariat spokesman said.
But then again, they would say that wouldn't they? The director of the department that produces the report, Mario Camarero, was recently sacked. Daily newspaper Clarin said that the release of this and other reports have been deliberately blocked.
There have been no official reports on grains & oilseed stocks since Oct 1st, and no figures on export sales commitments since June 2008, despite the fact that the official state agency ONCCA requires movements to be faxed through to its offices daily.
It would seem that the government are the only ones who know what grain & oilseed production, movement and stock numbers are. And in their ongoing battle with the farmers, they aren't telling.
The Financial Impact Of The Argentine Drought
In 2008, Argentine soy exports reached 16.5 billion US dollars (23% of all Argentine exports), which in tax revenue terms represented 5 billion US dollars.
This seasons drought-affected crop will see the Fernandez de Kirchner administration pick up an estimated 1.2 billion US dollars less in tax revenues from the controversial soy tax in 2009.
Meanwhile exports of corn in 2009 are expected to more than halve from 15.64 million tonnes to 6-7 million, whilst wheat export licences have already been halted after the crop was slashed from 16 million tonnes last season to around 8.3 million tonnes.
Overall Argentina’s total grains and oilseeds crop in 2009 is expected at around 70 million tonnes, down from the 97 million tonnes of last year and even further distant from the original hopes of over 100 million tonnes.
This graphically highlights how the Fernandez de Kirchner administration can ill-afford to climb down in the dispute with farmers over the 35% soy tax, the books are looking severely imbalanced already.
Brazilian Beef Giant Downsizing
A month after the company commenced a restructuring process under Brazilian and U.S. insolvency laws, Brazilian beef processor Independencia SA announced the closure of three units and the laying off 1,400 workers in response to lower demand for beef and falling prices, the privately-owned company said on Wednesday.
The firm is closing a slaughter house and deboning plant in Mato Grosso in addition to a deboning plant and a distribution centre in Sao Paulo state. The closures are in addition to two other factories, in Goias and Mato Grosso do Sul states, that the company announced were closing last month.
"The closure of these units is part of an ongoing program to adjust Independencia’s operations to the current market reality, which was severely hit by lower international demand, meat oversupply both in the domestic and the export market, and falling meat prices," Independencia said in a statement.
Since the beginning of what the company called its "adjustment program," the company has closed eight of its 23 plants and laid off 6,200 workers.
The Rumour Mill: BOCM To Close Denbigh Mill
No, not a belated Apr 1st headline designed to grab lots of clicks. Word is reaching Nogger Towers that workers at BOCM's Denbigh mill were told yesterday that the plant would shut at the end of July, due to falls in demand for feed.
The mill on the Colomendy Industrial Estate employs around 40 workers produces feed for cattle, sheep and game.
Ruminant feed production is expected to be transferred to Newcastle under Lyme and Preston. Game feed will be transferred to Bury St Edmunds and Radstock it is anticipated.
G20 Meeting
G20 at first I thought that meant that somebody had allowed those fruitcakes off the X Factor to have children. Urgh. But no, it's a group of 19 of the world's largest national economies, plus the European Union, who've been having a little meeting in London to sort out a couple of things. What type of sandwiches to order, where the next meeting is going to be held, who fancies a go at sorting out the global economy, that sort of thing.
Well it's all been kicking off apparently with the French threatening to walk out and not cooperate? Well who'd have thought that, they wouldn't help us get their new chums the Germans out of Paris last time so why should they bother to lift a finger now?
Never before has a nation so richly deserved the title of "cheese-eating surrender monkeys".
At least we did manage to catch a glimpse of Argy President Cristina Fernandez in TV footage last night, a welcome piece of eye-candy compared to sour kraut Angela Merkel.
Our glorious leader Gordon McBroon was there, along with new best mate Obama. At one stage I thought they were going to strike up an impromptu version of "I Got You Babe" the air between them was so thick with sycophancy.
Sarkozy had the temerity to turn up late, at least Angela Merkel had the in-built decency to get there early, but then again she waz only obeying orders:
Anarchy in The UK
Interesting footage on the national news last night of rioting in the City of London. Where were all the police? They seemed to be hopelessly outnumbered in many of the shots I saw.
Some newspapers are carrying shots of one rioter merrily hurling sometheing large throught the window of the RBS, the only people withing 50 yards of him being fellow rioters and a mass of photographers.
"Go on my son, smash the capatalist pigs window, a little to the left please."
It appears that the crowd were a rag-taggle bunch of disillusioned theology students, G20 demonstrators, public school drop outs and skinheads & football hooligans just along for the ride.
Was it just me that was wishing we could throw Sir Fred to the lions at this point?
One anti-capitalist campaigner was ironically selling whistles for a pound. Presumably he must have also paid a pound for them? Or maybe he hand-fashioned them himself out of sustainable willow coppice and all monies collected would go to feeding the homeless macro-biotic pulse and haloumi pitta breads?
Meanwhile the city types helpfully clamoured around the upper floor windows of their office blocks taking pictures on their iPhones and flashing the odd wad of £20-notes.
I doubt that this will be the end of it, the hardline have had too good a time on this day out and will be itching for more.
CBOT Close
Corn
May corn closed at $3.96 down 8 ¾ cents. Corn seems to be struggling to hold above $4 in the wake of only slightly reduced acres in 2009, as reported by the USDA Tuesday. Crude oil also seems to be heading south, and reports that any raising of the limit on ethanol in US fuel sold at the pumps will need to first pass a twelve month feasibility study won;t do corn too many favours just yet. Another week of big export sales is hoped for in tomorrow's weekly export sales report with figures of 850,000 to 1,100,000 MT being mentioned.
Soybeans
May Soybeans closed at $9.52, unchanged on the day. Weaker crude and profit-taking from Tuesday's sharply higher move took the shine off beans today. However, Tuesday's surprisingly low planting intentions figure from the USDA and tight old-crop stocks look set to support beans on any price breaks. Export sales estimates for Thursday’s report are 500,000 to 700,000 MT.
Wheat
May CBOT Wheat ended at $5.25 ½, down 7 ¼ cents. Unlike corn & beans there is not as much uncertainty surrounding the wheat market. Tuesday's acreage numbers came in almost exactly at the average trade guess, as too did the quarterly stocks number. Lingering doubts remain over US production on the Plains. It's too early to say how output in Europe will pan out this season. Export guesses for Thursday’s report are 300,000 to 425,000 MT.
EU Wheat Ends With Little Change
EU wheat futures seem to have pretty much ground to a halt these last few session with prices trading in a narrow range and only closing fractions one way or the other.
Tuesday's USDA report threw up no surprises for wheat in terms of plantings or stocks, providing little in the way of fresh direction for European markets.
May Paris milling wheat closed up EUR1.25 to EUR133.25/tonne Wednesday, and May London feed wheat traded down GBP0.50 at GBP108.25/tonne.
Farmer selling remains relatively light, EU plantings are down for 2009 and many countries, especially in Eastern Europe will see reduced inputs.
Still, old crop stocks are largely burdensome and will likely cap any gains over the next few months unless we get a serious crop scare somewhere important.
Thought For The Day
I'm taking a day off today to go & visit my kids and my brand new grandchild, so there will be no blog posts again until tonight after the close of CBOT.
Meanwhile one thing that has been on my mind recently that I thought I'd share will you all concerns food demand.
Is it falling in this recession? For sure consumers are spending less on non-essentials, but what about food? The latest figures I've seen show food sales growing at a steady-away pace of around 6.4% in the UK.
It seems that people are changing what they eat and how & where they eat it more than anything else. Look at the sort of people reporting above average growth and recession-busting profits recently:
Morrisons, MacDonalds, Domino's Pizza, Aldi, Lidl. Even Sainsbury's seem to be carving out a future as a perceived "value" brand, with a 60% increase year-on-year in its basics range.
Latest figures on how the supermarkets are faring is due next week, although overall sales growth looks set to be down for the likes of Aldi for example, the picture is distorted by the inclusion of sales of non-food items.
"Food sales are growing and they're growing at the same kind of pace as they were growing through the last 15-16 months," said Aldi's MD in a recent interview with Reuters.
Of course it should come as no surprise that food is the last thing that people start to economise on. So don't go slitting your wrists just yet.
I'm being pressed to load up the car & get going now. I might write a bit more on this topic later in the week.
Cheers
Nogger
CBOT Closing Comments
It was all about the USDA planting intentions report today, and it was soybeans that got the surprise package so let's start with them...
Soybeans
May soybeans closed 47 1/2 cents higher at $9.52 a bushel, and Nov soybeans settled 50 cents higher at $8.92. USDA estimated soybean acreage at 76.024 million acres, the average trade guess was 79.25 acres. Total US crop acres are expected to fall 7.5 million acres from last year, this was also a major surprise for the market. Quarterly stocks figures were pretty much in line with expectations, although towards the lower end of the scale.
Corn
May Corn closed at $4.04 3/4, up 18 1/2 cents December Corn closed at $4.35 3/4, up 17 1/2 cents. The USDA estimated planting intentions at 84.986 million acres, broadly in line with expectations. Quarterly stock were also around what was expected for corn. Spillover strength came from soybeans, the DJIA, firmer crude and a weaker dollar. Month-end buying also supported corn as too did South Korea buying 275,000mt of corn earlier in the week, much of it US origin.
Wheat
May CBOT Wheat at $5.32 3/4, up 20 1/4 cents. The USDA estimated 58.638 million acres of wheat, down 4.509 million acres from last year. As with corn, this and quarterly stocks data was pretty much on line with what was expected. The thing that has seemingly thrown everything out of kilter is that IF the soybean figure is correct, how can the corn & wheat figures also be? Where have the missing acres gone? Back into the CRP? Meanwhile the situation in North Dakota remains very important for spring wheat, the state produces 50% of the entire US spring crop, with the current severe flooding situation between 500,000 and 1 million acres of wheat in ND is unlikely to ever get planted.
EU Wheat Ends Narrowly Mixed
EU wheat futures closed narrowly mixed Tuesday with May Paris milling wheat ending down EUR0.25 at EUR132.00/tonne, and May London feed wheat closing up GBP0.25 at GBP108.25/tonne.
The long awaited USDA crop reports provided few surprises for wheat, although it was always expected to be so, if anything fundamentally new was to come along it was always likely to be for corn or soybeans.
As it was the USDA chucked in a curved ball for beans, pegging US spring plantings 3-3.5m lower than anticipated.
Apart from that very little has changed for wheat. Saudi Arabia bought 495,000mt of mostly Canadian wheat yesterday, although some German wheat did also get a look-in.
Egypt bought 85,000mt of Russian wheat at levels around $167-169/tonne, passing on EU and US wheat yet again.
Although Russia keeps picking up the headline news EU wheat is actually moving quietly behind the scenes. Syria took 35,000mt of French wheat this week largely off the market.
Last week's numbers from the HGCA said that the UK had exported 2.3mmt of wheat by the end of January. How much of that got reported on Bloomberg or Dow Jones? Very little if you ask me, all we are getting to hear about is what a massive surplus we have.
"There's a massive amount of poor quality old-crop wheat weighing on the market that must be sold sometime soon," or words to that effect, keep cropping up on various market reports from the popular media.
Erm, with 2.3mmt of UK wheat already departed from these shores by the end of January, compared to less than a million a year ago, we seem to be doing quite well at getting rid of our crap crop thank you very much.
And everybody seems to be ignoring the fact that we will consume more than we produce in 2009/10.
But then again, these were the same news wires that told us that crude was going to $150, $200, $250, $300+ as sure as eggs were eggs a year ago.
USDA Report Reaction, Early Call
The USDA planting intentions report threw up one major surprise, soybean acres at just 76 million, only fractionally higher than in 2008, and just a smidgen above the lowest of all the trade estimates.
Corn acres came in pretty much as expected, 1 million down from last season and wheat was pretty much spot on with trade ideas of around 58.5 million.
Traders are already calling beans 20-30 higher this afternoon, with wheat 3-5 cents higher and corn flat to 3 cents higher.
In other news the Argentine strike may be over for now, but their bean crop keeps getting lower, with the Ag Secretariat there dropping their estimate to 37-39 million tonnes. That may also provide a bit of enthusiasm for the bulls.
Saudi Arabia bought 495,000mt of wheat in a tender, the bulk of it coming from Canada. Jordan and Egypt are tendering this week, Japan has decided not to bother.
USDA Stocks Data
The USDA March 1st stocks data came in pretty close to the average trade estimates, with soybeans towards the lower end of the range:
USDA Avg Range 2008
Stocks
------------------------------------------------
Corn 6.960 7.003 6.888-7.146 6.859
Soybeans 1.300 1.322 1.295-1.353 1.434
Wheat 1.040 1.062 0.980-1.113 0.709
USDA Planting Report - Beans 3 Million Below Expectations
The eagerly awaited USDA planting intentions report pegged soybean acres more than 3 million below the average trade expectation at 76.024 million acres, an increase of just a nominal 300,000 or so and only just better than the lowest trade estimate of 75.9 million.
Corn acres came in a little higher than expected at 84.986 million, a reduction of around 1 million from last season.
Wheat acres came in right on the money at 58.638 million, around 3.5 million down on last season.
Planting Intentions
-----------------------------------------------
USDA Avg Est Range 2008
Corn 84.986 84.548 81.4-89.0 85.982
Soybeans 76.024 79.251 75.9-81.5 75.718
All Wheat 58.638 58.856 56.7-63.0 63.147
EU Rapeseed Crush Up 10 Percent
Oil World says that the EU-27 rapeseed crush in the current 2008/09 marketing year which runs July/June will total 13.7mmt, a 10% increase on last season's 12.4mmt.
Rapeseed oil supply is seen increasing 8% to 8.4mmt from 7.8mmt a year previously.
Total rapeseed use is forecast up 9% to 8.5mmt, with 5.3mmt of that going into biofuel production.
USDA Report Expectations
A quick reminder of what the trade is expecting from this afternoon's key Planting Intentions and Quarterly Stocks reports:
Planting Intentions
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Avg Est Range 2008
Corn 84.548 81.4-89.0 85.982
Soybeans 79.251 75.9-81.5 75.718
All Wheat 58.856 56.7-63.0 63.147
Stocks
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Corn 7.003 6.888-7.146 6.859
Soybeans 1.322 1.295-1.353 1.434
Wheat 1.062 0.980-1.113 0.709
ABF Buy The Alphabet
ABF have been cleared by EU regulators to proceed with their planned EUR385 million purchase of the Spanish sugar giant Azucarera Ebro.
Azucarera Ebro are said to supply around half of the sugar used in Spain & Portugal.
"Having recently bought a feed mill in Flixborough, we've been trying to buy something with a Z in it for ages. Now we own the entire alphabet, we're going to start charging people a small commission every time they use it," said nobody to do with anything.
"The system will work in much the same way as Scrabble, so if your name is NOGGER for example then you will have to pay us N=1, O=1, G-3, G=3, E=1, R=1, that's ten euros every time you write your name. We're going to clean up in places like Poland," he didn't add.
Ukraine Grain Exports Up Fourfold
Ukrainian grain exports in the current marketing year which began on July 1st 2008 are up fourfold on the previous season at 16.4 million tonnes, according to customs data.
Whilst Egypt has restricted its purchases from Ukraine due to quality issues, South Korea has emerged as a large buyer of Ukrainian wheat, taking advantage of lower world freight costs.
South Korea has imported 744,000mt of feed wheat from Ukraine so far in July08/Feb09, and has more material bought for the remainder of the marketing year, say IA APK-Inform.
South Korea, Asia’s second-biggest grain importer, was previously a buyer of US corn for use in the country's feed sector but has now switched almost totally to cheaper Ukraine wheat.
Ukraine wheat has also made significant inroads into the Spanish market, traditionally the UK's largest export home, exporting 2.2mmt so far this marketing year (to end Feb).
Argy Soybean Production Slashed
The Argentine Ag Secretariat finally got around to releasing their March crop report yesterday, almost a fortnight after it was due.
They now peg 2009 soybean production at 37-39mmt, effectively confirming recent reports that the early season drought and very dry March have done the crop few favours. Indeed if we hadn't have had heavy February rains we'd potentially be looking at a repeat scenario of the recent wheat harvest which was almost slashed in half.
Early estimates of a record 50mmt of production this year are well & truly out of the window. Indeed, the Ag Sec's estimate is now towards the high end of most peoples ideas for this season, with some saying 35mmt or less.
Crop quality is also poor in early harvested beans, the hot & dry March prompting beans to ripen early whilst still at the pod-filling stage.
It will be interesting to see what the USDA have to say in their next WASDE report as their current estimate is 43mmt.
Random Chortle Of The Day
Mrs Nogger's daughter had to do some English homework over the weekend (she was at her Dads). Mrs N enquires last night "have you done that homework Jasmine?"
"Yes"
"Can I see it"
Said piece of homework (a poem on homelessness) is produced, she (aged 11) has written the following piece all by herself:
As the sun sets and is changed into shadows
it turns cold in the city at night
I watch as the cracks in the concrete buildings
pour out the night people.
The red bricks of daylight
turn orange and glow in the setting sun
Brightness turns into deeper colors of richer tones of red.
The ivory color stucco towers,
turn a rose pink in the setting sun
The glass windows that displayed the brightness of day
blinding your gaze,
now reflect the stone gray of the clouds
and turn the glass a brown smoke dull
with no reflection, only dusk falling still.
Now at days end, the men in suits
head home to a safe, hard earned place
jackets thrown over the shoulder
And the pretty people go home.
Ladies no longer sit at the sidewalk cafe's
as the night air turns them cold, like the city does.
The bustling streets clear,
drivers emerge with lights glaring
While the night people stare.
Side walk cafe's where the pretty ladies sat
are now seated with high class sellers of flesh
wearing less, not feeling the cold as much.
Waiting for alcohol laden breath to flow over them
with the nostrils of the damned, smelling like death.
Street people covered in this self expression of tats
are shirtless, with arms wide stretched,
are saying; this is my city, barking out in the night
Waiting for the smell of fear to fill the city air.
Dumpsters serve dinner,
trash provides another drink, ten cents a can
the night hunters look for more
all for the wine that numbs the pain
making you forget you have no home.
The eyes of the night people
stare in an empty way
a fear sets in for the ordinary ones,
then they look away.
The movements are slow,
sitting back in the shadows,
waiting for that fear to weaken.
It's odd the separation
of the day and the night
at dark no one can see you hiding there
But, someone watches you...
and sees your every move.
I watch as the cracks in the concrete
pour out the night people
Then suck them back in
with the morning light.
The End
Blimey! She's only 11 too, that's rather good isn't it.
"Are you sure you've written this all by yourself?"
"Erm well Helen (Daddy's tart) helped me a bit"
"Really, can you just explain to me who are these 'high class sellers of flesh' as I don't understand that bit?"
"Erm, well, Helen wrote that bit" (being a tart herself she would understand we assume).
"So you are sure that you definitely wrote this, with just a little bit of help from Helen?"
"Yes"
"Why did you write it in an American accent (gray, color etc)?"
"Erm, they are just spelling mistakes"
"So if I Google the first line of this I won't find it anywhere on the 'net?"
"No!"
"Right then, oh look I've just found it, I think you'd better do it again, personally"
After a small tantrum & ten minutes or so we are confronted with:
The shop doorway is very cold
And full of mould
There's homeless people everywhere
Some over here, and some over there.
The End
Priceless!
eCBOT Close, Early Call
eCBOT grains closed lower with beans down around 12 cents, wheat off 2-3 cents and corn 5-6 cents easier.
Same shit, different week. Global stock markets are a sea of red today on more bad news from the banks and worries about the future of US car makers GM and Chrysler. Crude is under pressure again, and threatening to break below $50/barrel.
Nobody is looking to open up fresh positions ahead of tomorrow's USDA planting intentions and stocks reports.
It looks like the report will show US farmers planting grains and oilseeds on a record 163.7 million acres for 2009.
Soybeans will fill a record 79.25 million acres this year and March 1 corn stocks will be the highest since 1988 as demand from the ethanol sector wanes.
Demand from the feed sector is also slumping as US farmers cut back on cattle, pig & poultry numbers in the face of the recession. This is the first time we have seen herds and flocks across all three sectors contracting at the same time since 1973.
Soybean production in South America seems to be contracting, Argentina's status as a reliable supplier is getting worse, a serious problem for the world's largest supplier of soymeal & oil.
Early calls for this afternoon's CBOT session: Corn futures are expected to open 5 to 7 lower; soybeans 10 to 15 lower; and wheat 2 to 4 lower
More Interesting News About Algae
US company AlgaeVenture Systems is claiming to have made an important technological breakthrough that potentially makes large-scale biofuel production from algae a commercially viable proposition.
"For nearly 40 years, it has been widely accepted that if the cost of removing, harvesting and dewatering algae could be reduced to $50 a ton, algae could become a significant source of fuel," said Ross Youngs, CEO of Univenture, parent corporation of AlgaeVenture Systems.
"We have demonstrated a truly disruptive technology that reduces that cost by more than 99 percent - from $875 per ton to $1.92 per ton," he added. "This breakthrough moves algae back into the spotlight as an economically viable, plentiful source of fuel."
"Do you still want this plant building?" said an un-named Saltend engineer.
Organic Food Demand
Global demand for organic foods is expected to grow by 46% over the coming five years despite the world economic crisis, according to an outlook from the United Nations Trade and Development Agency (UNCTAD).
UNCTAD say that although organic retailers are experiencing consumer resistance to paying more for organics, many consumers have weighed the higher cost of organic food against its benefits, and concluded that organic foods are worth the extra cost.
World sales from certified organic products are expected to reach $67 billion in 2012, up from $46 billion in 2007 and about $23 billion in 2002, they say.
Bloody hell, this has to be one of the most outrageous cases of talking bollox I've come across in many a year.
An organic dairy farmer I know has been so upset by the state of the market in this country recently that he became suicidal. He was so depressed I thought I'd do him a favour & pushed him in front of a steam train.
He was chuffed to bits.
Monday Morning Snippets
Asian and European stock markets are lower after the US government warned that more money may be required to shore up the ailing banking sector, and that bankruptcy might be the best option for GM and Chrysler.
In London the FTSE 100 is down 2.42% at 3804.64. the German Dax is down 3.54% and the French CAC40 2.98% lower. In London banking shares are amongst the largest fallers with Barclays down 13.30 or 7.65% at 160.50, Lloyds are down 7.36% at 70.50 and RBS 6.02% lower at 25 pence. Amongst the topt ten gainers this morning we have leading sausage fanciers Cranswick up 4.13% at 567 pence.
The Nationwide is to take on the ailing Dunfermline Building Society's good bits. The Treasury will take on a billion pounds worth of bad bits.
In Argentina the one-week strike is officially over and everything is supposed to turn back to normal today. Grain deliveries to Parana River fell 80% last week as farmers held onto supplies, according to Bloomberg. Despite the strike being over for now, farmers are generally expected to continue to sit on their stocks this week too.
The news that everything is officially back to normal is highly unlikely to have a flood of foreign buyers lined up at Argentina's door wanting to buy grains, oilseeds & meals. The country has simply proven to be too unreliable a supplier in the last twelve months & nobody in their right mind would think that today's news is likely to be the end of the matter.
The Buenos Aires Cereals Exchange cut it's Argy soybean production estimate to 41.2mmt late Friday. Another private estimate suggested that the crop might only make 36-38mmt. Lord knows how low it would have been if it hadn't rained heavily during February.
In the US it remains a game of two halves, too wet in northern & central States and too dry in the south and east:
The week ahead will see a continuation of wet conditions for the Northern Plains as well as across the Gulf States. Lighter amounts will reach from Oklahoma to Pennsylvania, according to Allen Motew of QT Weather.
Significant conditions over the next few weeks are flooding in the Northern Plains, heavy rains for the Gulf Coast, drought relief in the Southeast, severe drought continuing across the Southern Plains, he adds.
The overnight eCBOT market is lower, dragged down by falling equities and weaker crude oil (down almost $2/barrel). Beans are currently around 14 cents lower, with wheat and corn both a couple of cents easier.
Tomorrow's USDA planting intentions report is expected to show 2009 bean acres up 3.5 million, corn around a million lower and wheat down around 4 million.
