CBOT Closing Comments
Soybeans
August soybeans closed at $10.09 ½, up 33 ½ cents, with November beans following suit at $9.23 ½, also up 33 ½ cents. The entire complex finished the day at the high end of the daily range, with short-covering a feature. Yesterday's steep losses were deemed overdone as the realisation kicked in that China isn't going to find many buyers of state-owned soybeans at $40-50 over the cost of US beans. Old crop stocks remain very tight and the US is still the cheapest shop in town. Whilst US weather is non-threatening it is probably a bit too cool at the moment, and is forecast to stay that way through until the end of the month.
Corn
September corn finished at $3.22 ¼, up 5 ½ cents, December corn closed at $3.31 ½, up 6 ¼ cents. The corn crop continues to make good progress in many areas of the country. As with beans the weather is non-threatening, and the crop looks largely in great shape. With a relatively benign forecast now through until the end of the month, the crop is a fair way already towards being 'made'.
Wheat
September wheat closed t $5.41 ¾, up 8 ½ cents. Large speculative funds remain heavily short of wheat, leaving the market vulnerable to a corrective bounce. More export interest is needed to stimulate the US wheat market, Brazil bought 51,000 MT yesterday finding Argentina with nothing to sell. The US needs to start picking up more of these 'surprise' orders to get the funds covering in some of these shorts. Whilst wet weather may be beneficial to corn and beans, it continues to slow winter wheat harvesting.
EU Wheat Ends Narrowly Mixed Friday
EU wheat futures closed the week a narrowly mixed in quite trading conditions. Paris November milling wheat ended up EUR0.25 at EUR143.75/tonne, whilst London November feed wheat closed down GBP0.50 at GBP112/tonne.
Farmers continue to stand aside from the market, as they don't care too much for current price levels. End users are also reluctant participants, as they see harvest pressure leading to lower prices.
It's a classic stand-off. Producers can at least busy themselves with harvesting, as and when the weather permits.
Current conditions might be bringing back uncomfortable memories of last year's disastrous harvest, especially in the north east of the UK. Heavy showers have also brought the harvest to a halt in much of Germany and France these past few days.
It's too early to get overly concerned about it just yet, but quality if not quantity losses will be worrying a few.
There are some crop concerns around the world, Russia and eastern Europe for example, but until harvesting is more advanced and these can be properly quantified, the market seems set to tread water.
eCBOT Close, Early Call
The overnight grains closed firmer, with beans up around 10 cents, wheat 6-7 cents higher and corn up a couple of cents.
The US dollar is relatively unchanged, crude oil around 50 cents lower and the stock market a tad higher.
Last night's heavy falls in the soy complex are being seen as overdone. China's decision to put half a million tonnes of soybeans up for sale from state reserves knocked the market for six yesterday. The reality of the situation is starting to dawn on people today, exactly how many takers are they going to find at levels around $40-50 over the current price of importing US beans?
US beans remain attractively priced relative to South America too, a fact backed up by yesterday's export sales numbers from the USDA.
Sure, I'm still bearish new crop, but that's a couple of months off yet. I think that the USDA overstated their 2008/09 ending stocks estimates in their last report, and that there will be some acute tightness before new crop gets in.
There are no weather problems on the horizon for US beans and corn, with both crops looking in largely excellent shape.
Weather is more of a problem for wheat however, with one huge wet cloud currently hanging over the UK, France and Germany. There are problems of a different kind further east with wheat and barley in Eastern Europe, Ukraine and Russia all suffering from drought and lack of inputs.
APK-Inform report spring barley yields in Crimea in northern Ukraine are 40% lower than last season, and in Russia 3.2 million hectares of grain, or 7% of the crop, has been completely lost to drought.
Poor monsoon rains in northern India are impacting on sugar cane and rice production now, and might impact on wheat output from the world's second largest producer and consumer later in the year.
Brazil bought 51,000 MT of US wheat yesterday, finding it's Mercosur chum and normal supplier Argentina shut for the indefinite future.
Early calls for this afternoon's CBOT session: corn up 2-3 cents, soybeans 8-12 higher and wheat up 5-7 cents.
EU Grain Exports Start New MY With A Bang
Just a fortnight into the new 2009/10 marketing year EU export licences have been issued for 781,000 MT of grain so far, more than 50% ahead of the same period a year ago.
Of that total export licences have been granted for 531,000 MT of soft wheat, almost triple the amount of a year ago.
Wheat imports two weeks into the campaign stand roughly similar to last season at 672,000 MT.
Carr's Milling Interim Management Statement
Carr's Milling Industries, the agriculture, food and engineering group, says in it's interim management statement released today that it is on-track to achieve market expectations for the full year, which are of an appreciably lower figure than last year's.
This is despite difficult markets for fertiliser (where trading conditions are as adverse this year as they were favourable last year) and animal feed, compensated for by a strong performance in food, the retailing of agricultural machinery and supplies, and fuel oil distribution, they say.
Revenue and profit from compound and blended feed are well below last year's levels, as a result of substantial reductions in demand, driven principally by lower livestock numbers and cheaper home-grown cereals being utilised as feed, following a record harvest, they add.
For fertiliser, they report "very substantial reduction in demand" with revenue for the year to date down by a smaller percentage than volumes, at 23%.
No great surprises in that lot, you can replace the word Carr's with that of just about every other major player in the country.
Bulgaria Harvest Latest
As of July 15th Bulgarian farmers had harvested around 30% of the nation's wheat crop, with yields averaging 3.2 MT/hectare, according to the Agriculture Ministry.
They've trimmed their final wheat production estimate from 3.6-3.7 MMT to 3.5-3.6 MMT, around 20% lower than last season's output.
Around 92% of the nation's barley has been cut with yields averaging 3.4 MT/hectare, the Ministry say, with final production estimated at 755,000 MT, 16% down on last year's crop of 900,000 MT.
The UK Rapeseed Crop This Year And Next
We're almost ready to harvest it, yet opinion is still quite widely divided on exactly how much rapeseed there is in the UK this year.
According to the HCGA/DEFRA there's 568,300 hectares of the stuff, a mere 5% fall on last season's 598,000 hectares.
Copa-Cogeca and the Andersons Centre say 530,000 hectares, a more serious reduction of 11.4% on last year.
BASF say "no more than 500,000 hectares" - a drop of 16.4%.
With yields generally anticipated at around 3 MT/hectare this season, 9% down on last year's 3.3 MT/hectare, that gives us a crop of anywhere from 1.5 MMT to 1.7 MMT or 14-24% lower than 2008's 1.973 MMT.
One thing that the Andersons and BASF seem to agree on is that there will be more rapeseed planted for the 2010 crop, both seeing a return to around the 600,000 hectare level as realistic.
With the general level of dissatisfaction over wheat prices where they are currently, and for the second year running, there could be quite a few prepared to give rapeseed a go for 2010.
In 2007 the planted area was 664,000 hectares, sticking with a 1 in 3 rotation pattern could push plantings for next season up above the 600,000 mark.
Call Me An Old Cynic But...
This Chinese business that sent the market crashing 44 cents on beans and $17 on meal (or thereabouts) last night. Offering half a million tonnes for sale at prices equivalent to $15/bushel is hardly going to start a stampede is it?
Old cynics would say it's a blatant and not tremendously difficult to spot attempt to get the US market down to buy some more, and get rid of these disgusting dollar things that they don't want to boot.
Old crop US stocks are still very tight, and the recent wet weather is likely to delay the harvest a bit more for what was already a late-planted crop.
South America seem to have shipped most of theirs already. China are still buying, weekly export sales from the US this week included 111,200 MT of old crop, as well as more than half a million of new crop.
It's hardly one for Miss Marple is it?
Supermarket Wars Down Under
It would seem that supermarket wars are not confined to dear old Blighty.
In Australia the two leading players have been slugging it out trying to outdo each other too.
Leading pair Coles and Woolworths (remember them?) have gone head-to-head offering a 40 cents/litre discount on petrol to shoppers spending $300 of more on their groceries.
In round figures that's 20p a litre off your fuel when you spend £150 on your weekly shop.
Australian Competition and Consumer Commission are investigating whether the offer, which runs for 72 hours, contravenes any anti-competition laws.
Lack of Monsoon Rains Threatens Indian Crops
Monsoon rains have largely skipped India's most fertile state of Uttar Pradesh, giving the region the driest June in more than eighty years.
Whilst some rains have arrived this past week, Uttar Pradesh has still only received around half of what it would normally expect in July.
This is affecting sugar cane planting in India's top producing state, and yields are also likely to be adversely affected this year, according to the state's director of agriculture. Sugar cane plantings are expected to be 10% lower this year.
Rice planting in the state is also likely to be cut by around 12-15%, he said.
Poor rains now could also have an adverse effect on winter wheat planting and development later on in the year, as the Uttar Pradesh is also India's top wheat producing state, accounting for around a third of national production.
India's main reservoirs are only half full, whereas at this time of year they would normally be overflowing. That could have serious implications for irrigation of winter sown crops like wheat and rapeseed a few months from now.
CBOT Closing Comments
Soybeans
August soybeans finished 44 1/2 cents lower at $9.76, and November soybeans closed 14 1/2 cents lower at $8.90. Pressure today came from the news that China will release 500,000 MT of beans from their strategic reserve next week. That assumes that somebody will want to buy beans at their asking price which is well above US soybean prices and local Chinese cash prices. US weather conditions are favourable for soybean development, but the crop continues to lag as far as progress is concerned.
Corn
Sep corn set a new low at $3.16 1/4 and ended down 12 3/4 cents at $3.16 3/4. Dec corn ended down 12 1/4 cents to $3.25 1/4. Export sales were above the high end of trade guesses. Sales were a combined 1,167,700 MT and the range of guesses had been 850,000 to 1,150,000. Some pressure to corn this morning came from the announcement that China will be auctioning off 2 MMT of corn reserves. As with soybeans, who wants them if they are priced above current Chinese cash levels?
Wheat
Sep wheat finished down 1 1/2 cents at $5.33 1/4. Weekly export sales were a combined total of 422,500 MT, slightly above the low end of trade guesses. Wheat seems to be trying to find a harvest low, with potential production problems emerging from Russia, Ukraine, Canada and elsewhere.
The USDA Are Starting To Frighten Me
Our lovable chum(p)s at the USDA are seriously starting to frighten me when they come out with production numbers very close to my own.
The USDA attache, whilst not officially speaking for the government body themselves, has said that EU-27 wheat production this year will come in at 135 MMT, uncomfortably close to my own estimate of 134.4 MMT.
Barley output will be 61 MMT he says, and that of corn 56.5 MMT.
EU Wheat Follows America Lower
EU wheat futures continued to be heavily influenced by US and outside markets Thursday, ending with Paris November milling wheat down EUR1 at EUR144.50/tonne, and London November feed wheat GBP1 lower at GBP112.50/tonne.
Trading was thin as EU farmers largely stand away from the market. reluctant to sell at current levels.
Farmers seem more content to get on with the harvest and re-assess things after that, certainly current spot prices look unattractive compared to say November levels at around GBP8/tonne premiums.
Weekend weather for the UK, France and Germany looks unlikely to help harvest progress, with plenty of rain in the forecast.
EU wheat is basically lacking in direction, and needs something to grab it by the scruff of the neck and give some fresh impetus.
It seems unlikely that we will get that until after the northern hemisphere harvest wraps up.
eCBOT Close, Early Call
The overnight grains closed lower, with beans leading the way, with Nov down 15 cents to $8.89 1/2, Dec corn down 5 cents to $3.32 1/2, and Sep wheat 5 cents easier at $5.29 3/4.
Crude oil is lower, despite the news that inventories have dropped 13.2 million barrels in the past month. The dollar is also a little weaker.
The Chinese government said that it will sell off half a million tonnes of beans, 2 MMT of corn and 750,000 MT of wheat next week. That got the market on the defensive. The reality of the situation may be somewhat different however, as the prices they are offering at are above market levels, so they may not find too many takers.
US weather is largely non-threatening, cool and wet is the theme for much of the country.
Weekly export sales were solid for beans, corn and wheat, which may provide some support.
Japan bought 108,000 MT of wheat in a routine tender overnight, with 66,000 MT coming from the US.
Early calls for this afternoon's CBOT session: corn called 4 to 6 lower; soybeans called 12 to 15 lower; wheat called 3 to 5 lower.
USDA Weekly Export Sales
For the week ended July 9 the USDA reported weekly export sales as follows:
Wheat 422,500 MT were mainly Nigeria (243,500 MT), Mexico (70,200 MT) and Brazil (51,000 MT).
Soybeans 134,200 MT old crop and 550,500 MT new crop. Old crop sales included 111,200 MT for China and new crop 525,000 MT also to Chinese buyers.
Corn 699,700 MT old crop and 468,000 MT new crop. Japan (281,400 MT) and Mexico (200,400 MT) took the bulk of the old crop and Mexico (203,100 MT) and unknown destinations (110,800 MT) the main new crop buyers.
Traders expected wheat sales from 400,000 to 500,000 MT, corn sales from 850,000 to 1.15 million MT and soybean sales from 500,000 to 750,000 MT.
Strategie Grains Tweak EU Grain Estimates
French analysts Strategie Grains say that this year's EU-27 cereal harvest will come in at 283 MMT, down 300,000 MT from their June estimate.
The changes come principally from a slight upward revision in soft wheat and barley production of 200,000 MT each, and a downwards revision of 900,000 MT for corn.
EU-27 soft wheat production will be 126.5 MMT, they say, mainly due to increased output from central and eastern Europe.
New Teesside Biomass Plant Gets Green Light
The government have given the go-ahead to the construction of a new GBP500 million biomass electricity generation plant on Teesside.
MGT Power say that the plant will be one of the largest biomass plants in the world, capable of generating enough electricity for around 600,000 homes.
The plant will use around 2.4 MMT of woodchips per annum and will operate 24 hours a day, all year round.
Where do you go to get 2.4 MMT of woodchips? They'll be shipped in from America, how green is that?
They could trawl the streets of Middlesbrough collecting and burning discarded Gregg's pastie bags instead, they'd get 2.4 MMT of them most weeks.
German Harvest Disrupted By Rain
Harvesting of barley and rapeseed in Germany is off to a stuttering start after repeated disruptions by widespread rain, according to media sources.
Harvesting of wheat was scheduled to start next week, if the weather co-operates, although forecasts through to Sunday include repeated showers across much of the country.
The German association of farming cooperatives (DRV) currently forecast Germany's winter wheat crop at 24.63 MMT, down 5.2% on last year.
Barley output is generally seen slightly lower this year at around 11.8 MMT, from 12.0 MMT a year ago. This season's rapeseed crop is expected at around 5.1-5.5 MMT, compared to 5.16 MMT a year ago.
Dairy Crest Issue Interim Management Statement
Dairy Crest say that sales in the quarter ended June 30th have improved from that reported in the equivalent three months last year. It traded in line with expectations and the anticipated trends set out in Dairy Crest's Preliminary Results released on 19 May 2009, it said.
Sales of key brands, Clover, Country Life Spreadable, Cathedral City and St Hubert Omega 3 were up in total by 14% in volume and 8% in value terms, they say.
Sales in the Dairies division were down 3% compared to those for the quarter ended 30 June 2008, they added.
They also welcomed 114 dairy farmers to Dairy Crest who were previously supplying around 100 million litres of milk annually to the recently failed co-op DFOB.
Ukraine Harvest Latest
Ukrainian grain farmers are 30% harvested as of July 15th, according to the Agriculture Ministry.
To date, a little over 10 MMT of grain has been produced off 3.9 million hectares, they say, with yields averaging just over 2.5 MT/hectare.
The wheat harvest is 29% complete off 2 million hectares, producing 5.3 MMT with an average yield of 2.65 MT/hectare, a far cry from 3.5 MT/hectare last year.
APK-Inform say that although yields are significantly lower this year, quality is better than last season, with a higher percentage of grades one to three milling wheat. Around 40% of this season's crop should make milling grade they say.
Around 4.4 MMT of barley has also been harvested to date and around 600,000 MT of rapeseed.
CBOT Closing Comments
Soybeans
August soybeans ended 14 cents lower at $10.20 1/2, despite having traded more than 40 cents higher than that earlier in the session. Wall Street closed more than 250 points higher, the dollar was weaker and crude oil was higher. That sent the market higher early on, but later in the day bearish weather news took the market back into negative territory. Certainly there is little in the way of heat stress in the forecast, if anything it is too cool in the Midwest.
Corn
Sep corn ended down 9 cents at $3.29 1/2 per bushel and Dec corn ended down 8 cents to $3.37 1/2. US weather is benign, almost too benign. Outside markets supported early in the session but just ran out of steam. Harvest isn't that far away, crop conditions look great, and the seasonal low doesn't yet normally happen for a couple of months, so what is there to get excited about?
Wheat
Sep wheat closed up 4 3/4 cents at $5.34 3/4. Unlike beans and corn wheat started it's downwards decline a whole lot earlier, so we can expect a bottom sometime sooner as well. Production problems elsewhere around the world are a concern, eg Canada, Russia, India and even Australia looking further afield.
EU Wheat Ends Higher As Sellers Withdraw
EU wheat futures closed higher Wednesday as sellers withdrew from the market.
Paris November milling wheat ended up EUR1 at EUR144.50/tonne, and London November feed wheat closed up GBP1.50 at GBP113.50/tonne.
Trading was light as farmers busied themselves with the harvest, standing away from selling at current levels.
News from Russia suggests that all in not well with harvesting there, and that final grain production could be down in excess of 20% this year.
Meanwhile, Copa-Cogeca say that the upcoming EU-27 cereals harvest will produce around 28 MMT less than last year at 281.32 MMT.
EU-27 cereals output could fall further in 2010/11, they warn, as low harvest prices potentially lead to further reductions in planted area.
Argy Wheat Plantings Continue To Lag
Argentine wheat plantings continue to lag, with less than 2 million hectares planted so far, the Buenos Aires Grain Exchange have yet again cut their 2009 planted area estimate to 2.75 million hectares.
That still leaves farmers in Argentina needing to plant more than three quarters of a million hectares in the last fortnight of July. An unlikely scenario considering that they have only seeded 1.96 million hectares in the preceding 11 weeks of the normal planting window, an average of less than 200,000 ha/week.
"Planting is paralyzed and in many areas the planting window has closed or is very close to," the Exchange said.
Yields only mustered 2 MT/hectare in 2008, and soil conditions have worsened since then. Even if they do manage to plant 2.75 million hectares then that only gives us a crop of 5.5 MMT if they manage to match last season's yields.
The USDA, inexplicably, have production in the coming season at 9.5 MMT.
Chinese Whispers
"Forget China, they've closed the book, they won't be importing any more US soybeans mark my words, they've got huge stockpiles of their own, they'll be cancelling soon etc..."
The USDA have just announced old crop sales of 113,000 MT to guess who?
That's old crop getting even tighter still, meanwhile wet and cool US conditions might not be harming the crop, but they won't be speeding it up will they?
I wouldn't want to be short August or September beans at the moment.
eCBOT Close, Early Call
The overnight grains closed higher with December corn up 1 1/4 cents higher at $3.46 3/4, September wheat 6 3/4 cents higher at $5.36 3/4, and November soybeans 10 cents higher at $9.28.
A combination of a weak dollar and firmer crude oil and equities added strength from the outside markets.
The stock market will be hoping that strong results from Goldman Sachs and Intel yesterday will be replicated by JPMorgan Chase & Co., Bank of America, and Citigroup.
There's still plenty of rain around the Midwest, if anything they may be starting to complain that there's too much before long. Additionally, whist there is no heat stress in sight, a case could be made for saying that things are a little too cool as well!
Computer model guidance says the remainder of July and the first days of August will be cooler than normal for the Corn Belt, according to Allen Motew of QT Weather. Temperatures across large parts of the Midwest are set to be 8-12 degrees cooler than normal this weekend, he says.
A measure of how cold it has been is the accumulation of Growing Degree Day units (GDD’s), most of the Corn Belt from Nebraska to N Ohio is far behind. GDD’s are closer to normal in S Missouri, S Illinois, W Kentucky and SW Ohio only. The July trend has been for increasing departures and deficits all across the Corn Belt from Wisconsin to Virginia as record cold appears on a daily basis, he adds.
Weather concerns are also emerging in India and Russia. Significant crop losses have been reported in the latter with the Russian Ag Ministry dropping their grain production estimate to 85 MMT from 108.1 MMT a year ago.
Although we are in the midst of harvesting in Europe, producer selling remains light. The wheat market frequently bottoms around this time of year both here and in the US, but there could be a bit more downside for the beans yet.
As with last year wheat started it's current decline a little earlier than beans, suggesting that it will be the first to bottom too.
Early calls for this afternoon's CBOT session: corn called steady to 2 higher; beans called 8 to 10 higher; wheat called 5 to 7 higher.
UK Rapeseed Production Down 20 Pct
The EU-27 will produce 17.92 MMT of rapeseed in 2009/10, say Copa-Cogeca. That's a reduction of around 900,000 MT, or 4.7%, on last season.
Output in the UK will be 1.574 MMT, they say, 20% down on last year's 1.973 MMT, with yields coming in at 3 MT/hectare, down from 3.3 MT/hectare a year ago.
Production in Germany is seen flat at 5.171 MMT, compared to 5.155 MMT a year ago, and in France they estimate output at 4.555 MMT, marginally lower than 4.719 MMT in 2008.
EU-27 Cereals Production Down 28 MMT In 2009/10
Copa-Cogeca say that the upcoming EU-27 cereals harvest will produce around 28 MMT less than last year at 281.32 MMT.
That's a decrease of 9.1% on last year, with soft wheat output falling by 10.85 MMT, or 7.8%, to 127.95 MMT, they say.
Barley production is seen down 5.47 MMT, or 8.6%, to 58.25 MMT and maize output down 6.36 MMT, or 10.1%, to 56.43 MMT, they add.
EU-27 cereals output could fall further in 2010/11, they warn, as low harvest prices potentially lead to further reductions in planted area.
BOCM Pauls Expanding Bury Mill
BOCM Pauls are to spend GBP1 million upgrading and expanding their Bury St Edmunds mill, which they say is 'largest speciality feed production unit of its kind in Europe', making it the leading supplier of piglet creep and starter feeds in the EU, they claim.
The article here incredibly ignores the comic value of an export director called Suckling or an operations manager with the first name of Ketill. I wonder if he whistles whilst he works? Or has a wife called Polly?
Nogger, now available for weddings, bar mitzvahs etc.
Indian Breadbasket Missed By Monsoon
Farmers in northern India are getting more than a little anxious over the extremely late arrival of monsoon rains this year.
What scant rains have arrived have done little to replenish parched soils in the country's main breadbasket states of Punjab, Haryana and Uttar Pradesh.
The agriculture belt of north India is now witnessing an overall rainfall shortage of 46%. Uttar Pradesh (the country's top wheat-producing state) tops the list, with a shortfall of 76%. Punjab (the second highest wheat producer) is witnessing a 69% deficit; not far behind are Uttarakhand and Himachal Pradesh with a 66% rainfall shortage. Haryana and Delhi saw some rain, but they are still 57% behind normal.
Here's a map of June rainfall compared with normal, with the main wheat growing area in the red box:
Further east provincial governments in Jharkhand and Manipur have declared a drought and half of Assam's 28 districts have also been declared drought areas, according to the Press Trust of India. Tea prices have soared say industry officials.
Whilst this is affecting planting of rice, soybeans and sugar cane now, lack of rain in northwest could also have a negative impact on winter wheat plantings in a few months time, experts warn.
With the monsoon rains already moving south, the world's second largest consumer of wheat is getting nervous. The recently re-opened export window was slammed shut after just ten days.
Meanwhile, far away in Australia experts say that the poor monsoon rains in India are a direct result of the formation of El Nino in the equatorial Pacific Ocean, which could also threaten crop production there later in the year.
Wheatfeed Ex Mill Anglesey
Apparently one enterprising Anglesey farmer is to build his own flour mill and oilseed press on the Welsh island. And he reckons it's going to be up and running in time for this year's harvest:
Ginger bread?
Pound Hits USD1.64 After Jobs Data
The pound briefly popped it's head above USD1.64 this morning after UK unemployment numbers rose less than feared.
It's a sad state of affairs when the highest unemployment rate since 1971 is bullish, but there we have it.
The number of people claiming unemployment benefit rose 23,800 in June to 1.56 million.
Meanwhile UK unemployment itself rose by a record amount for the three months to May.
Not a tremendous amount of joy there, and no great signs that the UK economy is going to get better any time soon.
Of course, across the pond things are far from rosy either, the market will now turn its attention to assorted US data and earnings reports due later today.
Russian Harvest Off To A Shaky Start
The Russian harvest is off to a shaky start, with 14.4 MMT harvested so far this year yields are coming in around 20% lower than last year, according to the Agriculture Ministry, on a combination of drought and reduced fertiliser applications.
Meanwhile 3.2 million hectares of grain in various growing areas have been lost completely to drought, the Ministry add.
The worst hit areas are the Orenburg Region in the Urals where some 1.12 million hectares have been affected, the Samara Region in the Volga area (591,000 hectares), the Saratov Region in south Russia (495,100 hectares), the Republic of Bashkortostan in the southwest Urals (495,000 hectares), the Republic of Tatarstan in the Volga area (300,000 hectares) and the Volgograd Region in the country's south (200,300 hectares), the Ministry said.
"By today, an emergency regime will have been introduced in the Samara and Orenburg regions and the Republic of Bashkortostan. Emergency measures are expected to be introduced soon in the Volgograd and Saratov regions and the Republic of Tatarstan," the Ministry added.
Irish Barley Harvest Underway
The Irish winter barley harvest got underway late last week, with early crops coming in at around 3-3.2 MT/acre with moisture up at 18-20%, according to media reports.
That pegs yields down by around 10% on last year, with the general consensus being that crops this year are decent rather than great.
Heavy weekend rains however put a stop to the harvest no sooner had it started.
Farmers are confident that a repeat of the last two season's washouts will be avoided. "I've never heard of three wet harvests in a row," said one.
CBOT Closing Comments
Soybeans
August soybeans closed at $10.34 ½, up 16 cents, November bans at $9.18, up 6 ½ cents. July Soybeans expired at $10.74, a 40 cent premium to the August contract, which is the next spot month. US weather forecasts remain benign, but there is still a strong potential, in my mind, for old crop to post a very technical end yet. Fund money seems to be getting cold feet and liquidating the nears, whilst I am still bearish on new crop, I think that there could still be nearby technical problems yet.
Corn
September corn closed at $3.38 ½, up 6 ¾ cents and December at $3.45 ½, up 6 cents. Weather is bearish, but importers keep coming back for more US corn. South Korea bought overnight, and exports have been very strong over the last few weeks. Funds are said to be still heavily short corn, which will leave the market vulnerable to a short-covering rally.
Wheat
September wheat finished at $5.30, down 12 ¾ cents. July Wheat contracts went off the board today with the September CBOT new crop wheat coming on at a premium to the last old crop month, of 28 cents. There seems to be some signs developing of worries over lower wheat production around the world. Russian output is certainly a concern, as too is production in other parts of eastern Europe and Canada.
EU Wheat Ends Slightly Lower Monday
EU wheat futures closed slightly lower Tuesday with Paris November milling wheat down EUR1 at EUR143.50/tonne, and London November feed wheat closing down GBP1 at GBP112/tonne.
It was another low volume session as farmers content themselves with getting on with the harvest. That is likely to be the theme of things for the next few weeks with producers hardly keen at current levels.
Wheat production in eastern Europe seems to be decreasing as the harvest there progresses.
A firmer pound and weaker dollar was bearish for EU grains however.
eCBOT Close, Early Call
The overnights closed mostly a little firmer, with beans mostly 2-5 cents firmer, and corn generally 3-4 cents higher. Wheat was fractions either side of unchanged, taking a breather from last night's strong gains.
Crude oil is firmer, adding to the better tone, getting some of it's strength from a weaker dollar and steadier equities. Wall Street closed 185 points higher last night, and Asian and European stocks followed suit this morning.
There's a little bit more optimism around today, the market has been awaiting Q2 profit figures from Goldman Sachs, and they've just announced profits easily surpassed expectations at $2.72 billion, or $4.93 per share, for the quarter ended June 26th.
Various other US data such as retail sales and inflation numbers are due later today.
US weather remains largely wet, and if anything maybe a little on the cool side. The wet part of the equation won't do any harm to beans and corn at the moment, but will continue to delay the winter wheat harvest.
South Korea bought 110,000 MT of corn overnight, half US and half optional origin. They also booked 55,000 MT of US soymeal.
The USDA crop progress report didn't throw up any surprises or shocks, 71 percent of corn and 66 percent of soybeans were good to excellent, unchanged from the previous week. Spring wheat for the 6 main growing states, was 57% headed compared to the five average of 83%, indicating that the generally late planted crop is lacking in maturity.
Reports from Russia suggest that the wheat crop there is shrinking, not getting larger as the USDA seem to believe.
India agreed to allow the export of around 1 MMT of wheat last week, and have now promptly changed their minds, due in part to the late arrival of monsoon rains in the north. Inflated domestic prices were also a factor.
Early calls for this afternoon's CBOT session: corn called 2 to 5 higher; new crop soybeans called 3 to 5 higher; wheat called flat to 2 higher.
Russia Losing Grain To Drought
Reuters are carrying a story today saying that 3.2 million hectares of Russian grain crops have been lost to drought, up from 2 million hectares just a week ago.
That's quite a jump in just a week, and may explain the Russian Agriculture Ministry's low sounding estimate of a grain crop of only 85 MMT this year.
A state of emergency has been declared in three regions along the Volga River and southern Urals, the report says.
With a planted area this season of around 47 million hectares, the area described as 'lost' represents almost 7%, a not insignificant proportion.
Story here
Landkom Develop New Biofuel Feedstock Variant
Landkom International, the Ukrainian wheat and oilseed producer listed on the AIM, has said it has signed a deal with Sunfuel Ukraine LLC to further develop, sell and process a new oilseed variant feedstock for the biodiesel industry called Isis.
Isis, they say, is similar to oilseed rape, but has the potential to be considerably more cost effective for biofuel production than both OSR and Palm Oil, as it can be grown on marginal quality or fallow farming land with a reduced fertiliser requirement.
After successful trials in Ukraine, Europe and South Africa the two companies say that they are now ready to move onto commercialising the seed.
Asda Selling 'Green' Beef
Asda have launched a new innovative range of low carbon or 'green' beef, claiming to be the first British retailer to sell the product.
The scheme uses dairy bulls, which would ordinarily be exported or slaughtered, and rears them for between 9-11 months so they can be sold as low carbon beef.
Technically classified as a ‘by-product’ of milk production, the CO2 emitted by the calf is offset against the existing dairy farming process.
I've always thought it was a terrible waste that these poor unfortunates were generally slaughtered the moment they were born, this surely has to be better than that.
The animal is smaller in size than standard beef cattle, so portions are easier to manage and are available at lower prices than standard beef. And green matches the Asda uniform as well. Everyone's a winner!
Pound Up As Inflation Falls
The pound jumped this morning after the Office for National Statistics issued a report saying that UK inflation surprisingly fell below the government's 2% target last month, falling from 2.25 in May to 1.8% in June. That is the first time we've dipped below 2% in almost two years.
Cheaper food and energy prices helped to keep the cost of living low, driving down inflation.
That will potentially allow the BoE to continue with it's QE measures, at least for the time being, until inflation finally does kick in.
The pound jumped to $1.6323 and 1.1675 against the euro on the news.
Oil World Drops Rapeseed Production Estimate
Oil World has revised lower it's forecast for worldwide rapeseed production in 2009/10 to 54.4 MMT, 0.8 MMT below last month’s forecast of 55.2 MMT, and 6.2% or 3.6 MMT down on the 58.0 MMT produced last year.
The reduction comes on the back of lower Canadian output due to drought. Production in Canada is now seen at 10.2 MMT, from 11 MMT last month and 12.6 MMT a year ago.
Production in the EU-27 is expected at 18.5 MMT from 18.9 MMT last year, they say.
FEFAC Warn Of Feed Price Rises
The President of European feed manufacturers organisation Fefac, Pedro Correa de Barros, has warned livestock farmers that feed prices may increase significantly at very short notice due to the EU zero-tolerance policy for the presence of trace levels of not yet EU approved GM plants in imported feeds.
Referring to the potential total loss of important soy imports from the US following the positive testing by German authorities of traces of not yet EU-approved GM maize in US soybeans.
Of concern to the EU livestock industry is that it needs to source soybeans and soybean meal from the US at least until the next South American harvest in spring 2010, he said.
Soy prices could rise by at least EUR20/tonne due to additional “risk premiums” for US origin and even significantly higher if the EU could no longer import from the US, due to the lack of alternative supplies from South America, he warned.
Argy President Calls For Talks
Argentine president Cristina Fernandez de Kirchner’s has called for a dialogue with all business sectors and “on all issues” received a positive response from farmers and manufacturers, but they also requested “deep changes” following the government’s defeat on June 28th mid term election.
Eduardo Buzzi, head of the Argentine Agrarian Federation praised President Cristina Kirchner for the open invitation but also recalled that “the presidential Kirchner couple” are not naturally inclined to look for consensus.
“If it hadn’t been for the electoral defeat at the end of June, there’d be no invitation to dialogue”, underlined Buzzi one of the more high profile protesting farmers’ leaders who have been struggling with the Kirchner administration over export taxes for many months.
The whole thing is like a giant game of chess being played by a dozen different people all at the same time. Some concessions to the farmers' demands may have to be made, but these are likely to come too late to influence wheat plantings this year, that window has all but closed.
A reduction of the soybean tax is a possibility, but exactly how the Kirchner's plan to balance the books without all the revenue it generates it is unclear.
Czech Grain Harvest Seen 11.7 Pct Lower
The Czech Statistical Office says that grain production in the country in 2009 will fall 11.7% on last year to 6.622 MMT.
This decrease is caused by both lower sowing areas of basic cereals and lower yields, they say. Forthcoming harvest has also been influenced by the weather, a cold May followed by a June with high precipitation. In comparison with last year it is worth taking into account that the years 2008 and 2004 were the most productive in the history of the Czech Republic, they add.
Winter wheat production, which accounts for 31.2% of planted area, is seen down 10.9% at 3.984 MMT, despite the sown area of winter wheat increasing by 33 thousand ha in comparison with 2008. Lower yields of 5.02 MT/ha are expected, down 0.86 MT/ha on 2008, are responsible for the expected decrease.
Production of spring barley which accounts for 12.6 % of total planted area of agricultural crops, is estimated in an amount of 1.334 MMT, down by 250,000 MT or 15,8% on 2008.
Spring wheat production this year should reach 147,000 MT, they say.
Production of rape (which accounts for 13.9% of total sown area) is expected at 997,000 MT, 5% lower than in 2008.
Russian Minister Confirms Lower Grain Crop Estimate
Elena Skrynnik, the Russian Minister of Agriculture has confirmed that the country will produce 85 MMT of grain in 2009, a sharp 21.3% reduction on last season's bumper 108.1 MMT.
As of July 13, a total of 11 MMT of grains had been harvested, including 4 MMT in Krasnodar Krai, 3.5 MMT in Stavropol Krai and 2.5 MMT in Rostov oblast, she added.
The Minister did not specify how much of this season's harvest would be wheat. Last year around 59% of the Russian grain harvest was wheat, a similar proportion this time round would imply a crop of little more than 50 MMT this year.
It is likely that the Minister is erring on the side of caution, and that a final crop of 90-95 MMT will probably be closer to the truth. That would give us final wheat production this year of around 55 MMT, not the 60 MMT figure released by the USDA on Friday.
USDA Crop Progress
Corn
The crop progress report shows 16% of the corn crop silking compared to 32% for the five year average. Corn crop conditions were 8% poor to very poor, same as last week and 71 % good to excellent, same as last week with 1% moving from good to excellent.
Soybeans
The USDA crop condition report showed 24% of the soybean crop is blooming in the 18 major growing states, compared to the five year average of 43%. Soybean condition ratings were 8% poor to very poor, same as last week and 66% good to excellent, same as last week, except the rating moved 1% from good to excellent.
Wheat
Spring wheat for the 6 main growing states, was 57% headed compared to the five average of 83%. This is a function of the late planting. Spring wheat condition rating was 5% poor to very poor, a 3% improvement from last week and 71% good to excellent, a 1% drop from last week. Winter wheat is 66% harvested compared to the five year average of 69%.
CBOT Closing Comments
Soybeans
July soybeans closed at $10.91 ½, down 36 ¾ cents, November soybeans at $9.11 ½, down 5 ½ cents further narrowing the old crop/new crop spread. Beans are vulnerable to funds unwinding heavy long positions, and bean/corn bean/wheat spreads. The old crop situation remains fundamentally tight, but new crop is bearish IMHO. US weather is non-threatening, and should produce a record crop in the autumn barring a huge catastrophe. South America will likely follow up with record, or near record, crops of their own in the spring.
Corn
July Corn ended at $3.59, up 13 ½ cents, and December at $3.39 ½, up 1 ½ cents. Corn benefited from the unravelling of long beans/short corn spreads. Corn also got a shot in the arm from ideas that it is undervalued viz-a-viz wheat, firmer equities and stronger crude oil. US weather continues to be kind to corn, and should promote some decent yields come harvest-time.
Wheat
July wheat finished at $5.15 ¾, up 24 cents, and clearly the strongest leg of the complex for once. Wheat prices were higher despite export sales inspections that were below the trade estimates. Wheat has become heavily oversold and was vulnerable to a corrective bounce today. The large specs have been adding to short positions all the way down, and decided to exit some of their exposure today.
EU Wheat Begins Week On Higher Note
EU wheat futures started the week edging higher with Paris November milling wheat up EUR1.50 at EUR144.50/tonne, and London November feed wheat closing up GBP1 at GBP113/tonne.
It was a quiet low-volume session, with buyers still convinced that harvest pressure will bring prices lower yet. Farmer sellers on the other hand, are far from convinced to sell at current levels, especially given that UK ex-farm bids offer a premium of some GBP8-10/tonne for November over harvest movement.
Harvesting of wheat is now underway in many parts of Europe, with things very much looking like a "mixed bag" according to most reports.
Wheat yields in Ukraine are averaging only 2.61 MT/hectare at the moment, sharply down on the 3.5 MT/hectare seen last year. Early reports out of Russia also suggest slightly disappointing yields.
Whilst the harvest is ongoing, farmers will likely content themselves cracking on with that and avoid getting sucked into selling at current levels if they can avoid it.
Egypt To Issue Grain Import Blacklist
In the latest twist to the ongoing dispute over the quality of Russian wheat imports, Egypt's Chamber of Grain Industries is to issue a blacklist of wheat importers that it says have been known to violate import regulations.
Any guesses as to who might be on it?
Someone who's missed more dinners than Bobby Sands?
How Accurate Are The USDA Wheat Numbers?
Friday's USDA wheat production estimates threw up some interesting questions, like exactly how accurate are they for a kick off.
The IGC has global 2009/10 ending stocks almost thirteen and a half million tonnes lower than the USDA's Friday estimate.
That's a pretty big difference is it not? AgResource said Friday that the USDA estimate is 12-16 MMT overstated.
In Russia, the USDA increased their production estimate to 60 MMT, yet SovEcon reduced theirs to 55-60 MMT, meaning that our chums (or is it chumps?) are now going in right at the top end of other analyst's estimates.
For Canada the USDA said 23.5 MMT, yet Agri-Food Canada also released their estimate Friday, coming out with a figure of only 22.1 MMT.
The Buenos Aries Grain Exchange say Argentina will produce only 6 MMT of wheat in 2009, yet the USDA say 9.5 MMT, over 50% more than the local exchange.
That potentially leaves the USDA overstating global production by up to 11 MMT this year, in just those three countries alone. Do they know what they are doing? That's another interesting question. How much wheat will Argentina export in 2009/10? Also another interesting question, it depends on what you mean by 2009/10.
Table A from the USDA says 2.5 MMT World Wheat, Flour, and Products Trade
Table B from the USDA says 4.0 MMT Wheat Supply and Disappearance: Selected Exporters
Table A clearly refers to the marketing year running from July 1st 2009 to June 30th 2010. Table B is a bit more vague, when to when in 2009/10 exactly it doesn't say. But it clearly says 9.5 MMT in the production column, so we are clearly talking the coming season. And how are they going to export what they aren't going to produce?
There's more questions than answers here.
eCBOT Close, Early Call
The overnight markets closed mostly lower with beans down around 7-11 cents, corn around 2-5 cents lower and wheat mixed either side of unchanged.
In a relatively quiet start to the week, European stocks are marginally higher and crude oil is steady around $60/barrel.
Various US banks are set to report on earnings this week, with a raft of other US data due including housing statistics, retail sales, inflation and the regular weekly crude oil stocks. These will likely decide which direction the market takes this week, based on clues as to whether there are any signs of a recovery peeking through.
The weekend weather in the US was largely warm and wet, ideal for corn and soybeans, although less so for winter wheat harvesting.
Tonight we see the USDA's crop progress report, with improvements likely from corn and beans, although spring wheat crop conditions may deteriorate again.
South Korea bought 110,000 MT of US/optional origin corn overnight, Zambia is in the market for a similar amount.
Monsoon rains in northern India continue to be less than ideal, prompting some concern over oilseeds grown in the region.
Speculative funds added nearly 12,000 contracts to their corn shorts last week, according to the CFTC.
Early calls for this afternoon's CBOT session: corn called 2 to 3 lower; soybeans called 7 to 10 lower; wheat called 1 to 3 lower.
Illinois Wheat Yields Disappoint
Too much rain at the wrong times seems to be the story for Illinois wheat this year, with farms in many of the state's counties reporting lower than anticipated yields and quality.
“It’s been a tough spring,” said one elevator manager. “I don’t remember a year in recent memory that’s been this bad.”
Test weights were especially low on grain brought into Mt. Vernon. Millers prefer wheat at close to 60 pounds per bushel, but much of it here was nowhere near that figure, according to him.
“There was quite a lot of it at 51-52 pounds,” he said. “Most of it was around 53 to 54 pounds. There were a couple loads at 58, but there weren’t too many that didn’t get docked.”
Elsewhere yields were a bit better than expected, but quality was still a problem, with more than half the wheat unlikely to meet miller's exacting standards.
“We got too much rain at the wrong times. Scab was a problem. Coming in at flowering time, we had a lot of rain.”
“A small number of producers who used fungicides had decent test weights,” he said. “A couple who came in here had 70 to 80 bushels. But 50 to 60 was more common. Fungicides definitely helped, but it didn’t make it perfect.”
Pass Me Another Chicken This One's Full
Apparently "attractive" male chickens (note avoidance of use of the word cock) produce less sperm per "intense moment of Divine beauty" than his less attractive counterpart.
The theory being that a Brad Pitt look-alike chicken will get so many more copping off opportunities than the unfortunate Carlos Tevez version, that he deliberately spreads his load as it were.
Meanwhile your Abi Titmuss of the chicken world has so much sperm from so many different males swilling around inside her that a 'sperm competition' goes on. That's probably a bit like the preliminary rounds of the FA Cup I'd guess. Derbyshire Redcaps 2, Buff Orpington 1.
Fascinating stuff. A bit like Middlesbrough on a Saturday night. Adds a whole new dimension to the expressions "spit roast" or "spatchcock" doesn't it?
The Poultry Site
Ukraine Harvest Progress Latest
Ukrainian farmers had harvested 7.1 MMT of grain as of July 10th off 22% of the total planted area, according to the Agriculture Ministry.
Eighteen percent of the nation's wheat area had been harvested, producing 3 MMT with an average yield of 2.61 MT/hectare, they say.
Yields will need to pick up significantly from these levels to meet the Ministry's projected grain harvest of 42-43 MMT.
Wheat yields last season averaged a bumper 3.5 MT/hectare when production came in at 25.9 MMT. A drop to 2.61 MT/hectare would give us a crop below 17 MMT this year.
Cranswick Sales Up
Cranswick, the Hull-based food manufacturer, reported that sales increased by 11% in the first quarter today.
The firm, which recently had its £17.2m acquisition of rival Norfolk-based sausage manufacturer Bowes given the go ahead, said that significant increases in sales had been seen in sausages and bacon. (I'm doing my best to help them on that front, with Mrs Nogger a slave to the frying pan most mornings. She's no stranger to the odd sausage herself, but I digress).
The group said takings hit £167m for the April-to-June period. Shares leapt above 630p in early trade, but have settled back to 611p, up 7.5p.
Argentina's Loss Is Uruguay's Gain
Uruguay could be heading for another record area of farmland dedicated to wheat this season. Although it is too early to have the exact data, estimates are above 500,000 hectares. Good climate and lower input costs, mainly from fertilizers, could be a precursor for a record harvest next December overtaking the 480,000 hectares and 1.2 MMT of the 2008 crop, according to reports in the Montevideo press based on official and private estimates.
If this is the case Uruguay will have an even greater surplus to export in 2010. Equally interesting is that Argentina will be out of the market since the neighbouring country’s coming harvest is estimated to be half last year’s crop barely enough for domestic consumption with virtually no volume for exporting. The administration of Argentine President Cristina Fernandez de Kirchner farm policies can be singled out for what promises to be an excellent wheat year for Uruguay.
“If what has been happening for the last four years continues, with yields of 3,000 kilos per hectare, we could be harvesting 1.5 MMT, a historic crop”, said Roberto Symonds Uruguay’s Rural Association delegate to the country’s Wheat Board.
A larger wheat crop can also be linked to increased soybean area. “Wheat runs behind soy, if land dedicated to soy keeps expanding so will the wheat farmland”, added Symonds.
“Most companies renting land are planting crop after crop, the year round, and wheat fits very well. In some cases the alternatives are barley or oats. But barley much depends from the breweries and oats is a minor crop”, said Symonds.
Finally Symonds admitted that neighbouring Argentina’s Kirchner administration farm policies have benefited Uruguay. The fact Argentina will be out of the global wheat trading as an exporter next year, means easier access to the Brazilian market he said.
