Nogger's Blog

USDA Report: Summary For Wheat

Production

The USDA raised it's all wheat production estimate for the US to 57.5 MMT, in line with other analysts estimates. They lowered production in Argentina by 1.5 MMT to 9.5MMT, which is probably nowhere near enough, lopped 1.5 MMT off Canadian output and 1.3 MMT off the EU-27. Production estimates were raised in Russia by 1 MMT to 60 MMT despite other analysts like SovEcon lowering their estimates earlier in the week. Ukraine and Kazakhstan saw increase of half a million each.

Consumption

There were only minor tweaks on the consumption front, half a million down in Canada being the most significant, global consumption was raised by around three quarters of a million tonnes.

Stocks

Ending stocks were lowered in Canada by 1.2 MMT and the EU-27 (by 2.7 MMT) to 14.7 MMT. That is 3.2 MMT lower than EU-27 average for the last ten years, so much for the "we are awash with wheat" brigade. Ending stocks were raised by 1.6 MMT in the US, with only very minor tweaks elsewhere.

Exports

Argentine exports for the year ahead were reduced from 4 MMT last month to 2.5 MMT, Canadian export were dropped half a million. Increases are forecast for Kazakhstan and Russia (half a million each), and a million for Ukraine, plus half a million for the US.

Imports

Only relatively minor adjustments, amounting to an increase of 600,000 MT globally.

CBOT Closing Comments

Soybeans

July beans closed at $11.28 ¼, up 17 ¾ cents, November at $9.17, up 1 cent. The market clearly does not think that the USDA ending stocks are correct for old-crop, and neither do I. They are clearly guilty of trying to avoid panicking the market by coming out with a figure of 100 million bushels or less. Stocks will be incredibly tight this year, they just don't want to admit it. Having said that, I am not bullish at all on new crop. We are likely to see three record high crops in a row. The US in Sep/Oct, Brazil in Feb/Apr and Argentina in Apr/Jun.

Corn

July corn closed at $3.45 ½, up 2 cents, whilst December corn was at $3.38, down 2 cents. US weather forecasts are very promising for US corn development over the next few weeks, and after that the crop is pretty much made. Global ending stocks for Argentina increased from last year by .13 MMT, for China by 4.05 MMT and decreased by .4 MMT for South Africa and 1.5 MMT for Brazil. Today’s CFTC report showed continued liquidation of net long positions in the corn by the Large Specs and continued addition of net longs by the index funds.

Wheat

July CBOT wheat closed at $4.91 ¾, down 2 ½ cents. The USDA numbers were a bit bearish, US all wheat production was pretty spot on with the average trade guess at 2.112 billion bushels, compared to expectations of 2.107 billion. incidentally, 2.112 billion bushels is around 57.5 MMT. World wheat production estimates were cut in Canada, Argentina and the EU-27. They haven't cut Argy production anything like enough though at 9.5 MMT, that's over 50% more than the Buenos Aires Grain Exchange are now saying.

EU Wheat Follows America Lower

EU wheat followed the US lead, closing lower with Paris November milling wheat down EUR0.25 or at EUR143/tonne, and London November feed wheat closing GBP1.25 lower at GBP112/tonne.

Today's USDA report was a little negative for US commodities, but they did reduce Canadian, Argentine and EU wheat production estimates from last month.

Farmers remain reluctant sellers at current levels, yet the trade seems surprised by this.

Egypt appear to have finally sorteed out their problems with Russia over quality issues, whish may be negative for Eu and US wheat demand when they are next in the market to tender.

The harvest is upon us in Russia and Ukraine, but early yield reports are questionable.

eCBOT Close, Early Call, Report Reaction

The overnights closed mixed, with beans mostly around 3-7 cents lower, wheat mainly 3-4 easier and corn a half to 2 cents higher.

It was a quiet eCBOT market, with just a little light book-squaring ahead of the USDA report.

Overall, I'd say the report is a little bearish, but largely in line with expectations.

For US ending stocks there was no stand-out shock, predictably they couldn't bring themselves to come out with an old-crop soybean number any less than last month's 110 million bushels, although in reality things are probably quite a bit tighter than that.

For new-crop stocks they raised beans above the average guess, but not hugely, and probably not enough. Maybe they know that their old crop number is too high, so they are compensating for that because they suspect that the carry-in from this season will in fact be lower than the figure they are using?

All wheat production was pretty spot on with the average trade guess at 2.112 billion bushels, compared to expectations of 2.107 billion. incidentally, 2.112 billion bushels is around 57.25 MMT.

World wheat production estimates were cut in Canada, Argentina and the EU-27. Astonishingly the USDA number is within 150,000 of my own Nogger estimate! They haven't cut Argy production anything like enough though at 9.5 MMT, that's over 50% more than the Buenos Aires Grain Exchange are now saying. Sort it out Tibbs.

There you go it's history already.

Of more import today might be crude oil going down the toilet, at $58.96/barrel, that's the lowest since May, and around $15 off the mid-June highs, and the largest weekly fall since January.

US weather outlook remains promising, at least for developing crops, not so great for advancement of the winter wheat harvest.

South Korea purchased 110,000 tonnes of corn overnight. Tunisia has bought 92,000 tonnes of optional origin wheat. Egypt says it has agreed inspection criteria with Russia on future wheat shipments.

Early calls for this afternoon's CBOT session: corn called 5 to 10 lower; new crop soybeans called 5 to 8 lower; wheat called 4 to 6 lower.

USDA World Crop Production Numbers

In addition to US stocks data the USDA have also been consulting with clairvoyants for a stab at some fresh global crop production numbers, here's what they've come up with in MMT:

                     USDA Jul       USDA Jun
Australia wheat        23.00          23.00
Canada wheat           23.50          25.00
Argy wheat              9.50          11.00
China wheat           113.50         113.50
EU-27 wheat           134.65         135.96

USDA Supply & Demand Report

What have the USDA thrown at us this time? Here's the magic numbers:

                  USDA Jul   USDA Jun   Trade Range   Avg Est.
All wheat           2.112     2.106     2.076-2.167    2.107
Winter wheat        1.525     1.492     1.484-1.544    1.521
Spring wheat        0.507      NA       0.468-0.546    0.505
Durum               0.081      NA       0.082-0.088    0.085
--------------------------------------------------------------
08/09 US End Stocks   
Corn                1.600     1.600     1.600-1.850    1.692
Beans               0.110     0.110     0.086-0.130    0.107    
--------------------------------------------------------------
09/10 US End Stocks
Corn                1.550     1.090     1.290-1.828    1.567
Beans               0.250     0.210     0.115-0.384    0.229
Wheat               0.706     0.647     0.589-0.776    0.693

French Crop Estimates

FranceAgriMer (formerly ONIGC) say that this season's French soft wheat crop will come in at 35.8 MMT, down 3.2% on last season's 37 MMT. Durum wheat production will be 2.0 MMT this season, down from 2.2 MMT last year, they say.

Barley output will be 12.2 MMT (from 12.3 MMT last year), triticale 1.9 MMT (unchanged), oats 470,000 (also unchanged) and rye 120,000 MT (from 130,000 MT).

For the 2008/09 old crop marketing year they say that domestic wheat usage will be 14.9 MMT (14.2 MMT in 2007/08), exports 15.1 MMT (12.2 MMT) and ending stocks 2.8 MMT (2.7 MMT).

UK Pork Figures Scandalous

A shocking 59% of all pork and pork products consumed in the UK are imported, according to figures released by Parliament.

Lib Dem Shadow Environment Secretary Tim Farron says that allowing the supermarkets to impose their own voluntary code of labelling has allowed imported meat to legally use the Union Jack flag to imply it is British.

Farron says: "Within the meat industry, British producers stand proud because of their high animal welfare standards. But under this Government, higher standards have meant higher prices, leading to the situation we have today where only 41% of the pig meat eaten at our kitchen tables is produced on a British farm.

"Many of the animals which are imported and then sold as "British" have been reared according to standards which would be considered illegal in the UK.

"The public have the right to know the origin of the food they are buying. If people want to buy British food, they should be able to go into a shop and find those products."

Frankly I'm surprised at the supermarkets, I thought that they were working with the best interests of their hard-pressed British customers and suppliers in mind at this cash-strapped time. It's not about profit, it's gone beyond that, it's all about everybody pulling together. They've made that quite clear. This must just be a clerical error or something.

HGCA Planting Survey

Better late than never I suppose, just as the combines start rolling the HGCA have released their 'provisional' planting figures for GB cereals and OSR.

In it they peg the English winter wheat area at 1.76 million hectares, down 9% on 1.935 million last year. The largest drop in plantings coming in the North East (-28.6%), the South West (-16.8%) and the West Midlands (-16.6%). Not too many surprises there, certainly the NE and SW had terribly wet conditions in the Autumn. The lowest decrease in plantings, again unsurprisingly coming in the Eastern region, down 3.9%. Plantings in the soggy old land of the gingers, Scotland, were down 20.5%, and in Wales (also gingers I believe) down 15.5%. Overall, GB plantings were down a net 9.7%, they say, with a total area of 1.869 million hectares.

Winter barley seedings were 1.4% higher overall, with all of that coming in England. the biggest increase was the South East at 19.2%, and the largest decrease the poor old North East again at -16%. The total GB planted area came in at 416,800 hectares.

Spring barley plantings jumped 22.1% nationally, up 32.1% in England with some huge increases in the North East (+85.2%), the West Midlands (+63.5%) and Yorkshire (+54%). Total planted area was 727,500 hectares.

OSR plantings are down only 5% nationally they say to 568,300 hectares, with the largest drops in the North East (-28.6%) and the West Midlands (-56.6%). The biggest increase coming from the North West, up 23.4%.

Including oats, the total GB cereals area was only 2% lower overall at 3.146 million hectares, add on the OSR area and we get a total cereals/OSR reduction of just 2.4%.

CBOT Closing Comments

Soybeans

July soybeans finished at $11.10 ½, up 26 ½ cents, and November at $9.16, up 24 cents. Strong export sales of 1,228,651 MT supported the soy complex from the off, 283,500 MT of that was Chinese old crop purchases. That is going to keep old crop supplies very tight, especially considering that we are probably in for a late US harvest this year. in Bloom were about 50% behind normal in Illinois, Indiana and Ohio on the last progress report. US weather is pretty ideal, providing hot-house conditions ideal for good crop development. Tomorrow we have the USDA out with their latest supply & demand reports, which could provide a few fireworks.

Corn

July corn closed at $3.43 ½, up 4 ¼ cents and December at $3.40, up 5 ¾ cents. Support today came from a correction from oversold conditions ahead of tomorrows USDA report. Export sales were strong yet again, coming in at 1,164,600 MT. There are strong seasonal tendencies historically for the grains to rally the week after the July USDA S&D report, but the last five years have not been consistent. US weather however is pretty much ideal for excellent crop development.

Wheat

July wheat finished at $4.94 ¼, up 5 ¾ cents. Export sales were above trade estimates and wet weather in the US might be helpful for corn and beans, but hinders winter wheat harvesting. There was some element of buying from heavily oversold funds today ahead of tomorrow's USDA report. There are wheat crop concerns in Canada and eastern Europe, and Egypt appears to be back in the market, and shunning Russian wheat for now, which is also supportive for US product.

EU Wheat Market: 50,000 Monkeys Can't Be Wrong

EU wheat futures closed higher Thursday, despite the impending harvest and the pressure that traders anticipate that will cause.

Paris November milling wheat closed EUR2.50 higher at EUR143.25/tonne, London November feed wheat closed GBP1.25 firmer at GBP113.25/tonne.

Trading in London was particularly light with only 112 lots traded all day.

Various newswires say that buyers are bewildered by farmers' lack of enthusiasm for selling at knock-down prices with harvest upon them.

"Traders say they are stumped over why wheat futures remain strong given bearish fundamentals in the short-term horizon," say Dow Jones. Well, I'd hardly call the drop witnessed since the start of June 'strong', but we'll let that go for now.

Maybe the farmers are learning a lesson or two to confound the merchants? Virtually every European trading house report I am reading is saying "you'd better sell now before it gets worse, this market can only go one way and that's lower."

"Harvest pressure, burdensome stocks, huge carryover weighing on the market, lack of demand, recession etc."

Perhaps there are one or two shorts out there 'talking their own book'? Or maybe they believe it? They've said it so many times that it must be true. As they say, 50,000 monkeys can't be wrong, can they?

A market is supposed to be all about supply & demand. But what happens if we have supply, we just don't have sellers who want to let that supply go at current levels?

If the demand side want it then they'll have to up the ante a bit. If the demand side really aren't that bothered whether they have it or not, then what's all the fuss about? If they can buy it at better money elsewhere then go on and be my guest.

Suppose everybody else followed this strategy?

eCBOT Close, Early Call

The overnights closed mostly firmer with the exception of front month July soybeans which were down 2 1/4 cents. For beans new crop was in the main around 10-13 cents higher, with corn mostly 3-5 cents firmer and wheat up 5-6 cents.

Oil was a bit firmer and the dollar weaker, which is usually a good start for the grains.

The large inverse between old and new crop beans continues to unwind.

Egypt bought some US wheat yesterday, which is also a positive, plus weekly export sales came in well above expectations.

Weekly sales for corn and beans were also highly respectable, both coming in at over 1 MMT each. China took another huge chunk of soybeans, including old crop.

Weather conditions are certainly favourable for crop development, which will suit corn and beans, although widespread rains won't help the winter wheat harvest.

Serious concerns remain too for wheat crops in Canada, particularly Alberta, where crop development is lagging due to drought and late plantings.

Estimates for the Russian grain crop are shrinking as the harvest progresses, and early yield reports out of Ukraine are showing up significantly lower than last year.

Book squaring may be a feature ahead of tomorrows USDA S&D report.

Early calls for this afternoon's CBOT session: corn called 2 to 5 higher; new crop soybeans called 10 to 15 higher; wheat called 4 to 6 higher.

USDA Weekly Export Sales

The USDA today reported on weekly export sales for the week ended July 2nd, sales were as follows:

Corn: 1,164,600 MT in total, split 749,200 MT 2008/09; 415,400 MT 2009/10. Trade expectations were for 800,000-1 MMT. The main corn buyers were Japan, South Korea & Egypt.

Soybeans: 1,228,600 MT in total, split 287,000 MT 2008/09; 941,600 MT 2009/10. Trade expectations were 800,000-1.1 MMT. For soybeans the main feature undoubtedly has to be China booking 283,500 MT of old crop plus a further 830,000 MT of new crop. They keep saying that old crop sales are drying up and China will go away, but not on this evidence.

Wheat: 584,200 MT against expectations of 250,000-400,000 MT. Wheat also came in well above expectations, which may reinforce the opinion that wheat sales are due a pick-up.

Very respectable numbers all round, all coming in above trade expectations.

For the actual exports themselves corn was solid at 967,900 MT, the primary destinations being South Korea (281,900 MT), Japan (253,000 MT) and Mexico (131,000 MT). Soybean exports were 417,900 MT, the primary destinations were Mexico (127,200 MT), China (115,500 MT) and Egypt (66,000 MT). For wheat exports were 368,100 MT, the primary destinations were Nigeria (67,300 MT), Iran (58,900 MT), Egypt (57,700 MT) and Taiwan (44,500 MT).

Ukraine Harvest Latest

As at July 8th Ukraine had brought in 18% of it's 2009 grain harvest, producing 5.8 MMT, from an area of 2.3 million hectares, according to the Agricultural Ministry.

Some 12% of this year's wheat has now been cut, producing 2.1 MMT of the grain, it said. Wheat yields have so far averaged only 2.5 MT/hectare, implying a final wheat crop of around 17.5 MMT.

That would be below current trade estimates for production of 18-20 MMT this year, and represent a cut of almost a third on output last year when yields averaged 3.5 MT/hectare.

The barley harvest is 28% advanced, producing 3.6 MMT off 1.3 million hectares.

USDA WASDE Report Expectations

Those lovable scamps at the USDA are out with their July Supply & Demand report Friday, doubtless they've been working furiously to bring us the most accurate data possible. Here's a note of what the trade are expecting:

                  USDA Jun   Trade Range   Avg Est.
All wheat          2.106     2.076-2.167    2.107
Winter wheat       1.492     1.484-1.544    1.521
Spring wheat                 0.468-0.546    0.505
Durum                        0.082-0.088    0.085
-----------------------------------------------------
08/09 US End Stocks   
Corn               1.600     1.600-1.850    1.692
Beans              0.110     0.086-0.130    0.107
Wheat              0.669     
-----------------------------------------------------
09/10 US End Stocks
Corn               1.090     1.290-1.828    1.567
Beans              0.210     0.115-0.384    0.229
Wheat              0.647     0.589-0.776    0.693

Alberta Drought Conditions Worsen

Wheat and canola production in the Canadian state of Alberta remains under threat from severe drought.

The state's provincial government says that subsoil moisture has deteriorated from 49% poor to 58% poor in the last three weeks. During the same period the percentage rated good has fallen from 14% to 9%.

Additionally, a combination of late plantings and drought have stunted crop development, leaving wheat and canola potentially vulnerable to freeze conditions later in the season.

Canadian Prairie rainfall departure from normal April 1 - July 7: here

Canadian Prairie spring wheat production map: here

ADM Just Added EUR10 Million To Their Bottom Line Today

ADM have had their fine for their part in a citric acid price-fixing and market-sharing cartel reduced by the European Court of Justice from EUR39.69 million to EUR29.4 million.

The court ruled that ADM should not have been classified as a leader in the cartel, which also included four other high-profile names. All five were hit with a total of over EUR135 million in fines back in 2001.

Who were they Nogger, come on spill the beans?

Not quite as guilty as we were before

Extreme Farming

A group of Indian farmers are so upset with the lack of assistance from the government, following years of only scant monsoon rains and failed crops, they are threatening more than just the odd demonstration or two:

Brothers In Naans

Egypt Shuns Russian Wheat Again

Just in case you missed it, Egypt shunned Russia for the third time in recent weeks yesterday, buying US and French wheat in a tender. Of the 175,000 MT taken 120,000 MT was French wheat at a reported price of USD186.45/tonne, despite reports that Russian wheat was offered as low as USD169 in the same tender.

It would appear that, despite both sides protestations to the contrary, Egypt does still have a problem with Russian wheat.

Incidentally my information is that the USD169 offer, which was the cheapest on the table, was from Cargill not an Egyptian trading house. That would seem to me to enforce the view that the current problem is one of country of origin, not names.

How long this will go on for is anybody's guess, I'm sure that in the long run Egypt must realise that it needs Russia, just as much if not more so, than the other way round.

Still, lets enjoy EU wheat getting a look in whilst we can.

South American Soybean Stocks Down 20 MMT Year-On-Year

Soybean stocks in South America (Brazil, Argentina, Paraguay and Uruguay) stood at 53.1 MMT on July 1st, 20 MMT less than year ago levels, according to Oil World.

Brazilian reserves stood at 27 MMT, from 35 MMT in July 2008, and in Argentina reserves are down to 24.2 MMT from almost 35 MMT in July 2008. The sharp drop is due to lower production due to drought, particularly in Argentina, aggressive exports and increased domestic crush, they say.

“US soy reserves are expected to reach a minimum towards the end of August, which could cause difficulties for future deliveries in the first two to three September weeks, particularly if the crop suffers delays”, adds the forecast.

Whilst I agree, the market doesn't appear to see it that way judged by old crop CBOT soybeans movements in the last few sessions.

ABF Q3 Sales

Feed compounder, sugar refiner and purveyor of fifty pence flip flops ABF reports Q3 sales up 15%, boosted in particular by a 21% increase from Primark.

For the financial year to date sales overall are up 19%, it says.

In the midst of a recession, we all still need a Sex & Drugs & Sausage Rolls T-shirt for a pound, it would seem.

Do they do wedding dresses? I could make an honest woman of Mrs Nogger #3 for less than an Ayrton. I'll ask her tonight.

"Darling, would you do me the honour of giving me yet another shot at getting it right for less than the price of a forty Silk Cut?"

What woman could resist such a romantic gesture?

Cack In The USSR?

Russian Deputy Agriculture Minister Sergey Korolev said Wednesday that Russian grain output this season will only total 85 MMT.

That is a sharp reduction of more than 21% on last year's 108.1 MMT.

Whilst it seems pretty clear that Russian output will not fare so well this year, it seems a little strange to me that all of a sudden these guys are coming out with huge reduction estimates on last season.

Am I just getting too cynical in my old age or what?

Only yesterday Alexei Gordeyev, the ex-head of the Russian Ministry of Agriculture, was forecasting a Russian grain crop of just 75-80 MMT. Yet a few weeks ago other private estimates were as high as 100 MMT.

It seem like now we have a margin of error of 25 MMT, how are we supposed to trade on that?

Reasons To Be Bullish (Part 3)

OK, it's an Ian Dury parody, there haven't been parts 1 or 2 so far, but it's the best I can do at this time of night.

"Why are you so bullish on wheat?" somebody asked me the other day, "when all the signals are so quite clearly pointing down."

A good question I have to say, and it's often not easy going against popular opinion, but something I enjoy nevertheless. As some of you may recall, I was also bearish on wheat, contrary to popular opinion, twelve to eighteen months ago.

Back then wheat was going through the roof, and not surprisingly everyone planted more of it. Despite this well documented fact almost everybody to a man assured me that "things are different now, we've never been in a market like this before, the rule book has gone out of the window."

So why on earth should I be bullish now, can't I see all the signs, the bleeding obvious? Let me guess? Are "things are different now, we've never been in a market like this before, the rule book has gone out of the window."

OK, it's harvest time, the market is normally depressed at this time of year, can't anyone see beyond that?

Here's a few (3 following on with my Ian Dury theme) reasons to be bullish:

1) World wheat stocks are increasing. What? Run that by me again, that's why everyone is bearish isn't it? Yes, world stocks are increasing in China and India mostly, apart from the odd million tonnes or so from the latter what difference does that make? China's stocks could be 30 MMT, 60 MMT or 90 MMT, it might alter the world balance sheet, but it makes balls all difference to world trade. They don't buy on the global market or sell on it normally, so what the hell difference does it make? None.

2) The world is awash with wheat. Yes, if I see this one more time I swear I will scream, but there you go, the world is awash with the stuff, so why get bullish? Erm, the world's top exporting nations are who exactly? The ones that trade wheat, not hoard it? US, with 10-11 MMT lower production in 2009; EU-27, with around 15 MMT lower in 2009; Russia 5-8 MMT lower in 2009; Canada, bad drought, maybe 5-7 MMT lower or more in 2009; Ukraine 7-8 MMT lower in 2009; Australia, early days but El Nino is coming; Argentina, enough said, won't even be an exporter in 2009.

3) Consumption is falling. Yes Sir, we are for sure in a credit crisis so people will cut back on purchases of non-essential items. What? Bread you mean? Food? Erm, I think that there are more pressing things to cut back on than food, or feed that goes to make food. Egypt, the world's largest importer, don't seem to be cutting back, indeed they seem to be expanding their buying away from Russia, purchasing French and US wheat in various recent tenders. Yes, but if they are buying elsewhere then Russian and Ukraine wheat has to go somewhere? Indeed it does, but there will be substantially less of it looking for a home in 2009/10. And isn't there the little matter of increased consumption from the bioethanol sector?

If we use London wheat as an example, that went (from memory) from an post harvest 08 low of around GBP85 to a May high of GBP135, with all this extra burdensome old crop wheat in circulation. What could it do this time round without it?

You Can't Kid A Kidder, Our Kid

Argentine farmers have planted just 1.6 million hectares of winter wheat so far this season, according to our old chums the Buenos Aires Cereals Exchange. And we are now about three quarters of the way through the normal planting period for wheat.

That leaves a further 1.2 million hectares waiting to be planted in the next three weeks or so to meet their current projected planting estimate of 2.8 million hectares.

We are ten weeks into a thirteen week planting window, but we are going to plant 43% of our crop in the last three weeks?

Yes we've got to plant our socks off just to meet our target of getting the lowest crop in 100 years into the ground.

We hate the government, we hate the export restrictions, and we are gripped by a terrible drought that's lasted eighteen months, and we've got no money.

Hmmmm, I'm not convinced they'll do it, are you?

CBOT Closing Comments

Soybeans

July soybeans closed at $10.84, down 49 ½ cents, November beans at $8.92, down 3 cents. The very sharp sell-off on old crop beans continues, with the July/November inverse having almost halved in just a few weeks. US weather conditions look highly favourable for soybean development, encouraging some liquidation and profit-taking ahead of Friday's important stocks and production reports from the USDA. Some reports suggest that China have just about finished buying US soybeans and will use their domestic stocks from now on. Private exporters subsequently reported to the USDA export sales of 180,000 MT of soybeans for delivery to China during the 2009/2010 marketing year.

Corn

July corn closed at $3.39 ¼, up 3 ¼ cents, December at $3.34 ¼, down 1 ½ cents. Corn is attempting to divorce itself from soybeans, and doing quite a good job. Corn is not nearly so overbought, indeed nervous shorts are being tempted to cover sales ahead of Friday's USDA report, after recent big surprises from the USDA they could do worse than cash in their chips now. Trade estimates for 2009/10 carry out average 1.567 with a range of 1.29 to 1.828 billion bushels. Crude oil went for a bath, getting within 2 cents of crashing below $60/barrel, certainly that didn't help corn's cause today.

Wheat

July wheat closed at $4.88 ½, up 3 ½ cents. Egypt bought 175,000 tonnes of US and French wheat, spurning Russian wheat again, prompting ideas that US wheat exports might be about to finally start to pick up. The hot and wet Midwest conditions might be ideal for corn and soybean development, but they are adversely affecting winter wheat harvesting. Deteriorating crops in Canada and Russia are also encouraging a belief that US wheat will also begin to attract more buying interest.

EU Wheat Ends Mostly A Tad Higher

EU wheat closed mostly a little higher Wednesday in relatively quite trade. Paris November milling wheat ended up EUR0.25 at EUR140.75/tonne, whilst London November feed wheat closed up GBP0.25 at GBP112/tonne.

With the French harvest poised to kick off in full swing today was a subdued affair, farmers don't like the current depressed levels, but consumers seem to fancy a bit more downwards pressure to come yet.

Egypt shunned Russia for the third time in recent weeks, buying US and French wheat in a tender. Of the 175,000 MT taken 120,000 MT was French wheat at a reported price of USD186.45/tonne, despite reports that Russian wheat was offered as low as USD169 in the same tender.

This is proving to be quite an interesting development, as both Egypt and Russia have publically declared that neither side has a quality problem with each other anymore.

This could potentially give EU wheat a tremendous boost for the remainder of 2009, if Russia continue to prove to be persona non grata.

FranceAgriMer cut their French soft wheat ending stocks as at the end of June to 2.78 MMT from 3.24 MMT.

eCBOT Close, Early Call

The overnights closed mixed, after a bit of a late sell-off having been in positive territory for most of the eCBOT session.

Beans staged a bit of an earlier correction from last night's steep losses on ideas that a near limit down move might generate some buying. But yet another slump in crude oil prices, falling close to $62/barrel on continued economic worries and a firmer dollar saw beans fall back at the end.

July soybeans closed 7 1/4 cents lower, with November 1 1/4 cents higher. Wheat and corn closed around 1-2 cents firmer.

US weather looks pretty perfect for the next couple of weeks, with rain falling where it's required and warm temperatures turning the Midwest into an equatorial hothouse, ideal for crop development.

All eyes are again turning to the USDA for Friday's WASDE report, and trying to second guess what surprises they will throw at us this time.

This will be their first go at marrying up last week's acreage numbers with yields and production figures to give us some proper final ending stocks projections for next year.

There's plenty of room for manoeuvre in that lot and a surprise or two seems inevitable.

With question marks like that hanging over the market, consolidation and book-squaring looks the sensible thing to so. That might support heavily oversold wheat, but lead to further fund liquidation of beans as was witnessed last night.

Early calls for this afternoon's CBOT session: corn called 1 to 2 higher; old crop soybeans called 5 to 10 lower, new crop steady to 2 higher; wheat called 2 to 4 higher.

Another Disaster Waiting To Happen?

This very interesting article on the Motley Fool website, paints a scary picture suggesting that prime mortgages in the US are about to become the new sub-prime.

It suggests that prime mortgage holders are now more inclined to walk away from their liabilities if the negative equity gets large enough. It's an interesting scenario, and one that's quite different to the sub-prime fiasco.

With sub-prime people where given loans they either couldn't afford to repay, or they were such a bad credit risk that they defaulted anyway.

What this is suggesting is that we are about to witness a whole new wave of defaults, indeed the wave has already started, it just hasn't built up to tsunami height yet.

The new wave consists of prime borrowers who may choose to walk away, whether they can afford the payments or not. An interesting slant on everything has a price. You might have a great credit record, you might know that walking away will wreck that and you will never be able to borrow again. But how large a temptation does the negative equity you are in have to get to make you think, hey here's the keys back I'm off?

In addition to that, this article also paints the scary picture that many of these prime mortgage holders are simply sub-primers who got lucky. They cashed in their equity before the crash, and paid off their existing loans thereby elevating themselves to prime status as they improved their credit score.

Doesn't exactly sound implausible does it?

Look away now if easily upset: Scream if you want to go faster

Ukraine 2009/10 Wheat Exports Seen 38 Pct Lower

A dollar-hungry Ukraine exported a monster 25.3 MMT of grain in the marketing year just ended July08/June09, according to UkrAgroConsult.

That's a sixfold increase on exports of just 4.2 MMT in the previous marketing year.

According to the Ukraine Agricultural Ministry, grain exports for 2009/10 will fall by around a third this 2009/10 marketing year to around 17 MMT.

Wheat exports accounted for 12.6 MMT of last season's exports, a gigantic fourteen times greater than 2007/08's 895,000 MT.

With a sharply lower harvest anticipated this time round, Ukraine's wheat exports for 2009/10 will fall 38% to 7.75 MMT, say UkrAgroConsult.

El Nino Is Coming

The Australian Bureau of Meteorology website says that an "El Niño event is developing across the Pacific Basin. Conditions have reached a point that, should they persist at such levels through the remainder of the southern winter and into spring, 2009 will be considered an El Niño year.

"Leading climate models indicate that warming of the Pacific will continue for the next few seasons, with very little chance of the current development stalling or reversing."

The last two El Niño years were 2002/03 and 2006/07 when national wheat production was slashed to 10.1 MMT and 10.8 MMT respectively.

Current predictions are for a wheat crop of 22-23 MMT for 2009/10.

Looks Like Russian Grain Output Really Is Falling

Following on from yesterday's news that Alexei Gordeyev, the ex-head of the Russian Ministry of Agriculture, was forecasting a Russian grain crop of only 75-80 MMT this year, other analysts also seem to be revising their production estimates lower too.

According to Allendale's website the Institute for Agricultural Market Studies have dropped their estimate by 3 MMT to 94 MMT.

SovEcon, hot off the press, are about to revise downwards their most recent estimate of 93-100 MMT to 91-95 MMT, due to drought in Volga & Urals. Early yields in the south are coming in at 5-10% lower than last season, they say.

This season's Russian wheat crop is now being seen by SovEcon coming in at around 55-60 MMT in clean weight, that's down on last month's projection of 58-61 MMT and last season's bumper crop of 63.7 MMT.

At this stage it would still seem that Mr Gordeyev had either had too many vodka's when he came up with his estimate, or it was an attempt to make the real output look like an achievement when the final figure is known.

Even so, production in the region of 90-95 MMT represents a shortfall of around 12-17% on last season's 108.1 MMT.

Pound Under Pressure

The pound is back under the cosh this morning, as risk aversion rears it's ugly head again.

In early trade it fell as low as $1.6048 against the dollar, a one month low, and 1.1560 against the euro.

Poor manufacturing data released yesterday continues to weigh on sterling today.

Halifax house prices fell 0.5% in June after a 2.6% m/m rise in May, which was not as bad as feared, but the market reaction to the news was muted.

The BoE starts it's usual two-day policy meeting today, is more QE on the cards? That seems to be what the market is expecting, and that comes at a cost.

Wall Street lost 161.27 points last night, which spilled over into Asian and European trade, which also lent to the negative tone.

CBOT Closing Comments

Soybeans

Beans had a very bad day at the office, with July settling 66 1/2 cents lower at $11.33 a bushel, and Nov finishing 68 cents lower at $8.95. Limitless July was 81 cents down at the low of the day. US weather is largely non-threatening, hot and wet is good. China might keep buying beans, but they don't seem to want US poultry, with stories now circulating that China intends to cut off shipments of US chickens entirely in a tit-for-tat dispute it is taking to the WTO. That won't do anything for soymeal supplies in the US, with July closing $20.20/tonne lower tonight. The Chinese story got the market spooked, as that has been the main driving force recently, and the large fund longs crashed out all at the same time just ahead of Friday's WASDE report.

Corn

July corn closed at $3.35 ½, down 7 ¾ cents, and December corn at $3.35 ¾, down 8 ½ cents. A more genteel day for corn, although there was some inevitable spillover from bean weakness. That said, the December contract had a low of $3.35, within 30 cents of the contract-life low of $3.05 posted September 15th of 2006. US weather looks good for the week ahead and crude was weak, closing below $63/barrel, and a firmer dollar also didn't help corn's case today.

Wheat

Sep wheat fell 6 3/4 cents to close at $5.12 1/2 a bushel. In many ways wheat is completely different to beans and corn at the moment. We are in the middle of harvesting US winter wheat, making it much less of an unknown quantity. In addition, wheat peaked a long time before the other two, making it seem logically likely that it will bottom first. Reports coming out of Russia, Ukraine and now Canada suggest that all is not well with wheat crops there, and that existing production estimates from the likes of the USDA have been overstated. They will get the chance to correct that on Friday with their latest WASDE report, but as we all know the USDA are famously slow at getting their arses into gear.

EU Wheat Ends Around Unchanged Tuesday

EU wheat futures closed around unchanged Tuesday in stark comparison to what was going on in US markets late in the European trading session.

Paris November milling wheat closed unchanged at EUR140.50/tonne, whilst London November feed wheat also closed flat at GBP111.75/tonne.

In Chicago however things were quite different with soybeans crashing close to limit down on fund liquidation.

That will almost certainly spill over into European futures trade in the morning, especially for rapeseed. Wheat and corn in the US only posted relatively modest losses, so that may not affect EU wheat too much.

Whilst the wheat harvest is underway in Russia and Ukraine, reports coming out of these countries are mixed with yields and also quality variable.

Eventual production numbers want closely monitoring, as there is a pretty wide disparity between the bottom and top end of trade estimates for Russian grain production in particular.

Consumers are still predicting harvest pressure, whilst producers are still eyeing the big carry premiums.

eCBOT Close, Early Call

the overnights closed firmer, with beans up modestly on old crop, but around 7-8 cents firmer on new crop, wheat closed around 4-5 cents firmer and corn 2-5 cents higher.

A surprise deterioration in crop condition ratings from the USDA after the close last night, and a correction from a sharply weaker close set the tone for trade.

A weaker dollar and slightly firmer crude oil also helped.

Good to excellent ratings for corn fell one point, beans two and spring wheat four, contrary to expectations of a slight increase. Those cheeky chappies at the USDA like a nice surprise don't they!

US weather is largely non-threatening, and should be conducive for reasonable crop development, although there is little doubt that things are a bit behind normal.

Only 14% of the soybean crop is blooming compared to the five year average of 24%, and only 8% of corn is silking compared to the five year average of 16%.

Wheat is being harvested in Ukraine and parts of Russia, early reports suggest slightly disappointing yields, and lower production. Drought in Canada is also a concern for wheat and rapeseed.

The API is expected to reduce crude oil stocks by around 2 million barrels later today, although gasoline inventories are expected 750,000-1 million higher.

European stocks are slightly firmer, and the Dow Jones IA is expected to open a tad higher.

Early calls for this afternoon's CBOT session: corn called 3 to 5 higher; old-crop soybeans 2-3 higher, new-crop soybeans called 5 to 10 higher; September CBOT wheat called 4 to 5 higher.

Going Into Administration Today We Have

Coffee Republic.

According to the BBC they have 187 UK outlets, yet only 153 staff - and 26 of them work in head office. So that leaves 127 people to man 187 shops, no wonder it's not working, do they have a little honesty box next to the Expresso machine?

The assorted ne'er-do-wells that hang around these places must love that.

"Get me another freebie latté with sixteen sugars will you Swampy me old China? That will compliment this half-eaten bags of chips I've just foraged from the skip over there a treat."

Ukraine Harvest Latest

The harvest in Ukraine is progressing at a rapid rate, with 13.6% of the planted area already cut, producing 4.375 MMT of grain.

Yields are still running behind last season, with the wheat area harvested so far only producing 2.5 MT/hectare.

A final yield like that would see this season's wheat harvest come in at less than 17 MMT.

Dry spring growing conditions and reduced plantings are expected to cut Ukrainian wheat production this season. A lack of available credit has also forced Ukraine farmers to cut back on fertiliser and pesticide applications this season.

The Russians Appear To Be At It Again

Newswire reports suggest that Alexei Gordeyev, the ex-head of the Russian Ministry of Agriculture, and the current governor of Voronezh, is forecasting a Russian grain harvest of just 75-80 MMT this year.

That is substantially lower than last season's 108.1 MMT, 26-30% lower in fact, and also 10 MMT under the official Ministry estimate of 85-90 MMT, and well below the estimate of 96 MMT from the US attaché.

Drought and pests have had a significant effect on Russian crops this year, he says, noting that lack of credit has led to reduced agro-chemical and fertiliser application.

A shortage of combines may also cause problems and crop losses at harvest-time, he adds.

Well, I might be the only one around here who is bullish on wheat, but even I am going to reserve judgement on this one until we have some more evidence. Weren't they forecasting a crop of 85-90 MMT last year around this time, before pulling a 108.1 MMT rabbit out of the hat?

Canadian Drought 'Worst In 50 Years'

The worst drought in years has already caused nine counties in Alberta to to declare agricultural states of emergency, with farmers calling in the loss adjusters to claim on their crop insurance.

The last big drought to hit the Canadian wheat belt was in 2002 when production was slashed to 14.6 MMT, and Environment Canada are calling this one the worst drought in 50 years.

The most recent report available from the Canadian Wheat Board is dated June 11th, in which they cut their estimates of wheat, durum and barley production to 29.7 million tonnes in the 2009 crop year, down almost 20 per cent on last year.

"Production estimates have dropped significantly in the past two weeks from what had been average yield expectations," they warned.

And in many of the worst affected areas it hasn't rained since.



Links:

Crop outlook bleak as drought ravages Prairies

Farmers start to write off year as drought parches Prairie land

USDA Crop Progress Report

Corn

The USDA pegged the crop at 8% poor to very poor, 1% worse than last week and 71% good to excellent, also 1% lower than last week. That's a bit of a surprise although 71% G/E is better than the 65% we would normally have at this time of year. The later than usual crop is only 8% silking compared to the five year average of 16%.

Soybeans

Soybeans also posted a surprising decline in condition, also only 14% of the crop was blooming compared to the five year average of 24%, highlighting the lateness of this year's crop. Soybean conditions deteriorated from last week by 2% in the poor to very poor category and also dropped 2% from last weeks good to excellent rating.

Winter Wheat

Winter wheat is 90% harvested in Texas, 83% harvested in Kansas and 98% harvested in Oklahoma. The national total is at 56% harvested compared to 59% on the five year average.

Spring Wheat

The spring wheat crop condition deteriorated by 4% in the good to excellent category to 72% from 76% last week. And the poor to very poor increased to 8% from 6% last week. That's a pretty big deterioration in crop conditions in what the market thought was a pretty good week.

There's something bullish for corn, beans and wheat in tonight's report which may add a bit of support in the overnight session after some pretty steep losses today.

EU Wheat Closing Comments

EU wheat futures ended modestly lower Monday with Paris November milling wheat down EUR0.25 at EUR140.75/tonne, and London November feed wheat closing down GBP0.25 at GBP111.75/tonne.

Prices are drifting gently lower but seem to have arrested the steep declines witnessed during most of June.

Weaker crude oil and falling equities were bearish influences today, but a sharp rise in the dollar tempered losses.

The barley harvest is well advanced in Eastern Europe, with wheat cutting next on the agenda, that might bring some further pressure although farmers are reluctant sellers ar current levels.

According to Coceral the EU-27 will produce a wheat crop of 137.6 MMT in 2009/10, of which 128.6 MMT will be soft wheat. That's down 8.6% on an all wheat crop of 150.5 MMT in 2008. Yields for soft wheat are forecast at 5.6 MT/ha, 6.7% lower than 6.0 MT/ha in 2008.

CBOT Closing Comments

Soybeans

July soybeans settled 43 cents lower at $12.00 a bushel, and November soybeans also finished 43 cents lower at $9.63. Beans were under pressure from the start following a sharply weaker overnight session following the holiday weekend. Favourable weekend weather, and a promising forecast for the week ahead, combined with a firm dollar and weak crude oil to send beans crashing lower. The USDA announced 14.12 million bushels of soybeans were inspected for export on Friday, slightly above the 13.30 million bushel needed to meet USDA’s estimates for the year.

Corn

July closed down 2 1/2 cents at $3.43 1/4 a bushel, and December corn closed down 13 1/4 cents at $3.44 1/4. Largely ideal weekend weather and a promising outlook for the week ahead kept corn on the defensive throughout the day. Crude oil prices fell to their lowest levels in over a month today, whilst a flight to the safe-haven of the dollar also weighed on prices.

Wheat

September wheat closed down 9 3/4 cents at $5.19 1/4 a bushel. Weakness from soybeans spilled over into wheat, with the strong dollar also a bearish factor. Funds are heavily short wheat, and sold a further estimated 3,000 contracts today, leaving this market vulnerable to a technical correction at some point. The US harvest is progressing reasonably well and export demand remains slack which is also depressing prices.

EU Grain Production/Stocks Estimates

According to Coceral the EU-27 will produce a wheat crop of 137.6 MMT in 2009/10, of which 128.6 MMT will be soft wheat. That's down 8.6% on an all wheat crop of 150.5 MMT in 2008. Yields for soft wheat are forecast at 5.6 MT/ha, 6.7% lower than 6.0 MT/ha in 2008.

Barley production is seen at 59.7 MMT, that's 9% down on last season's 65.6 MMT.

Corn production is pegged at 56.1 MMT, 7% lower than the 60.5 MMT produced in 2008.

Overall the total EU-27 cereal crop will be 285.3 MMT, 8% down from the 310.2 MMT produced last season.

eCBOT Close, Early Call

The overnights closed lower, with soybeans leading the way crashing around 30 cents easier, corn closed around 6-10 cents lower and wheat down around 6 cents. It is worth noting that the day after the 4th July holiday there is often a strong sell-off on beans and corn.

Beneficial weekend weather and a favourable forecast for the week ahead were bearish influences this morning, as too was a firmer dollar and weak crude oil.

US jobs data late Thursday is still weighing on the market today. US job losses surged by more than expected to 467,000 in June, pushing the unemployment rate to a new 26-year high of 9.5 per cent, that indicates that demand for crude oil from the world's largest consumer is unlikely to pick up anytime soon.

Crude has been as low as $63.40/barrel this morning, almost $10 below it's recent high set only last Tuesday, and currently resides at $64.19/barrel.

The jobs data also prompted a flee to safety on ideas that the recession is far from over and that those green shoots are really banana skins. That gave the dollar a boost, further hurting the grains sector.

Tonight we get the latest crop progress and condition reports from the USDA, with things generally expected to be in pretty good shape, expect increases in good/excellent for both corn & beans. We will also get to know just how far the winter wheat harvest has progressed.

After that attention will shift to Friday's WASDE report.

Old crop beans keep pouring out of America, and Brazil too for that matter who exported over 6 MMT in June alone. Meanwhile late last week the USDA reported 600,000 MT of new crop sales to China plus 152,400 MT sold to 'unknown'.

Clearly current prices aren't rationing demand too much just yet, and a late US harvest could still see a sting in the tail from old-crop.

The potential is there for ending stocks to dip below a very tight 100 million bushels on beans, although I think it unlikely that the USDA will be able to bring themselves to come out with a number that low.

The wheat market is heavily oversold, leaving it vulnerable to a corrective bounce at some point. Harvesting is underway in Russia and Ukraine and parts of Europe which will undoubtedly bring some pressure, although lower production is expected across much of the region.

In a widely expected move, India removed its 20-month ban on exports of wheat, saying it will allow 900,000 MT of exports by state-owned trading companies.

Saudi Arabia bought 440,000 MT of EU, US and Canadian wheat over the weekend.

European equities are lower, and Wall Street is expected to follow suit after closing 223.32 points down on Thursday.

Early calls for this afternoon's CBOT session: corn called 8 to 12 lower; soybeans called 30 to 35 lower; CBOT wheat called 5 to 7 lower.

Russian Grain Harvest Progress

Russia farmers in the Southern Federal District had harvested nearly 2.8 MMT of new crop grain as of Friday July 3rd, according to Elena Skrynnik, the Minister of Agriculture of Russia.

She says that Russia will harvest 85 MMT of grain this year, a 21% reduction on last season's bumper crop of 108.1 MMT. That is also 5 MMT less than the government were predicting a month ago.

Around 2.1 million hectares of spring crops perished due to drought, with over 25% (600,000 ha or 70% of sowings in the region) located in the Samara oblast, Skrynnik said. Also, Orenburg, Saratov, Volgograd and Penza oblasts, and the Republic of Tatarstan and the Republic of Bashkortostan suffered from drought, she added.

With a domestic requirement of almost 76 MMT, that certainly won't leave Russia with anything like so much grain to export in 2009/10, even allowing for a sizable carryover from last season.

Having said that, it's entirely possible that Ms Skrynnik is being economical with the truth, a not entirely unknown Russian trait for those that remember last year's regular announcements from the Agriculture Ministry.

Cargill Opens New Russian Feed Mill

Cargill have opened a new US$12.5m 250,000 MT/per annum feed mill at it's Efremov site in the Tula region of Russia.

The mill will manufacture animal feed using the by-products from a group of Cargill-owned facilities in the area including a corn sweeteners plant, a malt plant, an additional sweeteners plant using wheat and a vegetable oil refinery.

The plant will produce feed for the Russian beef, poultry, dairy and pork industries.

Ukraine Harvest Latest

Ukrainian farmers had harvested 2.8 MMT of grain as of Friday July 3rd from 8.8% of the planted area, according to the agriculture ministry.

Yields to date are running at 2.51 MT/hectare they say, that's 18.5% lower than 3.08 MT/hectare at the same time last year.

Yields will have to improve on that considerably if Ukraine is to produce the ministry's forecast of a grain crop of 42-43 MMT. Private analysts say that's a bit optimistic and that grain production will be 38-39 MMT this year compared to 53.5 MMT in 2008.

Wheat accounts for around half of the country's grain crop with estimates for this season in the 18-20 MMT range, compared to 25.9 MMT in 2008. Barley production this season is seen around 10 MMT from 11.8 MMT in 2008.

Crude Oil Breaks Below USD64

Crude oil broke below $64/barrel Monday as the dollar firmed on its safe-haven status.

It's a jittery start to the week, with Asian and European stocks lower as appetite for risk evaporates.

News last week that US job losses had surged by more than expected to 467,000 in June, pushing the unemployment rate to a new 26-year high of 9.5 per cent, indicates that demand for crude oil from the world's largest consumer is unlikely to pick up anytime soon.

Crude oil has now slumped by more than $9 from last Tuesday's high above $73/barrel despite fresh militant activity in Nigeria over the weekend.

News that rebels had hijacked a chemical tanker with six foreign crew members aboard, destroyed a strategic facility owned by US oil group Chevron and claimed responsibility for an attack on a Royal Dutch Shell facility in the Niger Delta, would have sent the markets soaring twelve months ago.

Instead, in the wake of this recession, we have crude $1.78 lower at $63.85/barrel.

Something That Made Me Chuckle

Flicking through the Telegraph at the weekend...My Top Ten Michael Jackson Hits.

Christ, I thought, I think I'd be struggling to come up with half a dozen I thought were OK, let alone have to whittle them down to 'just' ten of my most favourite and then put them in order.

"Will you come and tuck me in Daddy?"

"Piss off, you're a blanket, tuck yourself in."

Australia Crops Latest

Grain production in Western Australia, the nation's most productive state and the one responsible for most of the country's wheat exports. will fall from 13.6 MMT in 2008 to 10-12 MMT this year, according to the state’s Department of Agriculture and Food.

“A late start and below-average rainfall through the April-June period has contributed to lower-than-normal crop potential through much of the central and north-eastern wheat belt,” they say.

Western Australia (which normally accounts for around 40% of national output) could see wheat output of 5.6-7.7 MMT from the 8.9 MMT produced last year, according to the region's monopoly grain storage facility Cooperative Bulk Handling.

The country is bracing itself for further possible cuts in production if the expected El Nino weather event materialises. The Climate Prediction Centre recently warned that the development of El Nino was 'likely' this year.

The last two El Nino years were 2002/03 and 2006/07 when national wheat production was slashed to 10.1 MMT and 10.8 MMT respectively.

The Bureau of Meteorology is set to release it's latest review of El Nino potential on Wednesday.

US Weekend Weather

Much of the US saw beneficial rains over the long holiday weekend with 48-hour precipitation totaling one to three-inches hitting Iowa, Missouri, Illinois, Indiana, Kentucky, Tennessee, the Delta and parts of the southern Plains, according to Allen Motew of QT Weather.

More rain is on the way this week and stressing heat will be slow to develop. When the heat does arrive, it will not last long, he adds.

Thursday/Friday will see some heat developing, with highs in the mid to upper nineties, but rain quickly returns Saturday, and the temperature drops, he says.

Sounds like they've had a favourable weekend and a decent week is in store for developing crops, no surprise then that eCBOT is sharply lower this morning.

Pound Sharply Lower

The pound is sharply lower this morning, trading at $1.6110 against the dollar and 1.1585 against the euro.

Risk appetite appears to have gone out of the window this morning, with crude oil also sharply lower around $64/barrel.

Gordon McBroon warned over the weekend that the recession may get worse and the Times said that the BoE was set to increase it's QE spending by another £25 billion.

It doesn't take a lot to set off a run on sterling at the best of times, let alone in this jittery day and age.

Still, that may provide an element of underlying support for London wheat later today.