Rice Market About To Boil Over?
The Indian's and the Philippines might be about to get embroiled in a bidding war over rice, this report on Barron's suggests: Turning Up the Heat on Rice.
The Philippines are already the world's largest importer of rice, but might soon have India, normally a leading exporter, vying with them for that top slot.
Just imagine where the price of rice would be already, if we weren't at the end of an eighteen month long recession with everybody licking their wounds.
"To a certain degree, India can substitute wheat, which is plentiful and unlikely to spike higher anytime soon," the article says.
I wouldn't like to bet on that. The only place in India where wheat is plentiful is in the government-owned stores (at least they are telling us it's in there), and they don't seem to be in a rush to release it.
CBOT Closing Comments
Soybeans
November soybean futures closed at USD9.48, down 19 cents, December soymeal futures ended at USD288.80, down USD2.50, and December soy oil futures at 36.77 cents, down 41 points. Bearish factors today were an improved weather outlook, a stronger dollar and weaker crude oil. The announcement by private exporters of 356,000 MT of soybeans sales for delivery to China in the 2009/10 marketing year was however somewhat supportive. Pre-weekend book squaring and positioning ahead of Tuesday's USDA production numbers was probably also a feature.
Corn
December corn futures closed at USD3.67, down 9 ½ cents. Crude oil and ethanol futures were weak, and the dollar was stronger despite poor jobs data. Harvest pressure is also a factor and next week's reports from the USDA may show increased corn production, despite the recent weather problems. The October USDA report estimated corn production at 13.018 billion bushels.
Wheat
December wheat futures closed at $4.97 ¼, down 15 cents. Once again wheat was a follower, dragged lower by corn and beans. The USDA will report on Monday night about US winter wheat planting progress. Export demand is slack, with Egypt booking French and Russian wheat this week. Weekly export sales were also poor, as were weekly shipments, at the lowest since June. Canadian grain production for 2009/10 is forecast to drop by over 15% from last year because of less than ideal weather conditions in 2009.
EU Wheat Ends Modestly Lower
EU wheat futures closed modestly lower Friday with January Paris milling wheat closing down EUR0.25 at EUR131.50/tonne, and London May feed wheat trading down GBP0.60 at GBP111.90/tonne.
It was a subdued end to a subdued week, with no November London futures trading hands once again all day long, and only 225 lots traded in all positions all week.
It's ultimately the same old story, sellers generally don't want or need to sell, and buyers generally don't want or need to buy. If one or the other breaks ranks then they get squeezed.
Next week we have the USDA reporting Monday on harvest progress for US corn and soybeans plus planting progress for US wheat. On Tuesday they release their latest US crop production numbers plus estimates for global output too.
That may provide some much-needed direction. Apart from that currency fluctuations will rule the roost.
This week we saw the BoE throw another GBP25 billion into the QE hat, and we saw US unemployment tick up above 10%. Amazingly neither piece of news seemed to make very much difference to exchange rates at all.
The outside influences of crude oil and the vagaries of the stock market will also continue to exert some influence, as too may any fund/investment monetary inflows into agri-commodities.
Gold reached another all-time record high this week as money continues to look for a safe option, particularly with global interest rates so low.
So there you have it. All you have to do is figure out what is going to happen next week with the USDA, gold, crude oil, the stock market, the pound and what the funds might do, and you might have a clue as to where the price of wheat is headed. Easy eh?
eCBOT Close, Early Call
The overnight market closed mixed with beans flat to 2 cents higher, corn 1-2 cents lower and wheat 1-2 cents firmer.
US jobs data has just come in worse than expected, with non farm payrolls up by 190,000 against expectations of 175,000 and unemployment rising from 9.8% last month to 10.2% now. Expectations had been that unemployment would manage to just about creep in under the 10% mark at 9.9%.
That doesn't seem to have had the bearish effect on the dollar that might have been expected. Indeed the greenback has risen since the news, in one of those "reverse psychology" moments. Bad news for the US makes the dollar go up as the market retreats to safe havens.
It could however also be a book-squaring kind of a day, with US weather forecasts improving slightly for next week. The USDA are out on Tuesday with their latest crop production numbers, further increases to US corn and soybeans are likely to be on the cards despite the recent weather problems.
Yesterday's export sales numbers were average at best, and wheat shipments were the lowest since June. US wheat losing out again yesterday to French and Russian wheat in the Egyptian tender might add a bit of pressure.
Crude oil is almost a dollar lower at USD78.67/barrel. Wall Street may open down on the US jobless news.
Early official calls for CBOT are: corn called 1 to 2 lower; soybeans called steady to 2 higher; wheat called 1 to 2 higher.
I'll be surprised if we aren't looking at a sea of red shortly after the opening myself.
Romanian Winter Plantings Seen Down 30 Pct
Romanian farmers are expected to plant 30% less winter grains this year, according to UkrAgroConsult.
Drought in 2009, delayed receipt of farm subsidy payments, an antiquated infrastructure and low grain prices are all partly to blame.
Agrimoney.com report that since the collapse of Communism, the amount of irrigated land has slumped by more than 90% to well below 300,000 hectares.
A recent USDA tour of the country reported a "large amount" of deserted farms - "not land just lying fallow or waiting for next season's crop but vacant land" they add.
Lack of on-farm storage, in a country where half of the tillable area is still ploughed by horse-drawn equipment, means that many farmers are forced to take whatever price is on offer for their crops at harvest time.
Many have clearly had enough, at least for now.
Indian Wheat Latest
Indian wheat futures continue to trade around contract highs at Rs 1,436/100kg, equivalent to around USD305/tonne, as the government prevaricate over releasing state-owned stocks onto the market.
The recently announced auction of 500,000 MT has met with a muted response as the minimum tender prices were well above the prevailing market levels. They are now said to be "considering" reducing the asking prices slightly at a meeting next week.
Tenders were invited at prices ranging from close to Rs 1,400/100kg in the north to almost Rs 1,800/110kg in the south. That's a hefty return on the Rs 1,080/100kg that the government paid for the wheat back in March/April, and appears to do little to help achieve their stated aim of reeling in food price inflation. To me it looks more like profiteering.
Today the government have announced an increase on the minimum support price it will pay the nation's impoverished farmers for new crop wheat for 2010. Their decision to increase the MSP by just 1.85% to Rs 1,100/100kg has also met with fierce criticism.
The chief minister of Punjab called the price "woefully inadequate and unjustified." I don't blame him, that is the smallest price increase in the last four years, at a time when the government are supposed to be encouraging increased winter wheat plantings, following sharp production losses in summer rice output after the worst monsoon season in 37 years.
The government's stance, and the archaic Indian infrastructure, leaves the nation now relying on Mother Nature not to deliver any further surprises this winter that could knock wheat output significantly.
After a year that's seen Indian lives and crops wiped out by drought and floods, who'd like to bet on that?
Tate And Lyle First Half 2009 Profits
Tate and Lyle have announced pre-tax profits of GBP112 million in its H1 2009 results.
"Tate & Lyle performed slightly ahead of our expectations in the first half of the year, before the impact of exchange translation, despite challenging conditions in a number of our markets," said new CEO Javed Ahmed.
Sales increased by 7% to £1.82 billion. Adjusted operating profit fell by 1% to £148million, with underlying profit before tax down by 13% to £112 million.
Pre-tax profit plunged 59% to £50 million, although most of that was reflected in exceptional costs of £55 million from the decision to mothball the sucralose plant in McIntosh, Alabama.
Ukraine Winter Rapeseed Crop In Trouble Already
Only 75% of winter rapeseed sown in Ukraine has germinated due to lack of autumn rains, according to the Deputy Minister of Agrarian Policy.
Conditions were so bad in some areas that growers didn't plant at all, some media reports say.
Ukrzernoprom, a large-scale commercial producer of rapeseed in Ukraine, said it had scaled back it's planting intentions for the 2010 harvest by 8.5%, mainly due to the dry conditions.
More and more reports filtering through, are also suggesting that cash-strapped Ukraine farmers plan to cut back on fertiliser and pesticide inputs in 2010 due to lack of finance.
These constraints may also influence their ability to replant failed winter crops in the spring.
Ukraine produced 1.9 MMT of rapeseed in 2009, down 24% on the 2.5 MMT of output in 2008. Almost everything they produce goes for export.
Australian Wheat Crop Latest
It's a mixed bag of fortunes for Australian wheat growers this season, according to various media reports.
Western Australia's Department of Agriculture and Food have downgraded their crop estimate for the country's largest wheat producing state to 8.0-9.0 MMT, down from 9.0-10.5 MMT a month ago.
The downgrade comes as a result of "a less than favourable finish to the season during October," they say.
Things look a whole lot different in South Australia though where their Department of Primary Industries and Resources raised wheat production expectations to 4.36 MMT, 27% higher than last month's prediction. The increase follows "good spring rains and mild temperatures during September and October," they say.
Further east though things aren't as good, a dry spring and on October frost have cut production estimates in New South Wales, according to the state's Department of Industry & Investment.
New crop wheat production there is now forecast at 4.48 MMT, down 30% on the year.
"Prospects for winter crops declined throughout September and October. Most regions failed to receive much-needed spring rains," they say.
The southern half of New South Wales received just 40-60% of normal rainfall August-October, based on data from the Australia Bureau of Meteorology, according to Martell Crop Projections.
To the north, crops in Queensland also suffered from lack of rainfall throughout the growing season, output here is expected to be little more than 1 MMT, according to Profarmer.
Fast forward to Victoria which by general consensus, similar to South Australia, has had a great growing year. Wheat production here could come in at 4 MMT this season, well above the current official ABARE estimate of 2.75 MMT, according to some analysts.
If we use a median figure of 8.5 MMT for WA, that gives up wheat production this year of around 22.34 MMT, 4% up on last season's 21.5 MMT.
CBOT Closing Comments
Soybeans
November soybean futures closed at $9.67 down 28 ½ cents, December soymeal ended at $291.30, down $10.30, and December soy oil at 37.18, down 37 points. An improved weather outlook was behind much of the fall, with the mud forecast to dry up over the next seven days in the Midwest and eastern Grain Belt. Export sales for soybeans were in line with pre-report estimates. Conab estimate Brazil's 2009-10 soybean crop at a record 62.5-63.6 MMT.
Corn
December corn futures finished the day at $3.76 ½, down 7 ½ cents. A stronger US Dollar and lower crude oil prices were negative for corn values. Export sales were a combined total of 571,213 MT, 54% higher than last week and slightly above trade expectations. Export shipments were 708,198 MT, mostly to Japan, Mexico and Columbia. Private analysts Informa and FCStone reckon that this season's corn crop will come in at 13.064 and 13.004 billion bushels respectively. The USDA are out with their latest estimate early next week.
Wheat
December wheat futures closed at $5.12 ¼, down 8 ¾ cents. Export sales were a combined total of 284,546 MT, considerably lower than trade expectations of 350,000 to 550,000 MT. Export shipments of 289,800 MT were also down sharply. Egypt passed on US wheat on a tender, buying Russian and French wheat instead. Conab forecast the Brazilian wheat crop at 5 MMT, one million down on estimates from earlier in the season. They will be big importers in 2010, and their regular supplier of Argentina will be struggling to supply their needs with their lowest plantings in 100 years.
EU Wheat Ends Mixed In Quiet Trade
EU wheat futures closed narrowly mixed, in a another quiet lacklustre session Thursday.
January Paris milling wheat futures closed flat at EUR131.75/tonne, whilst London May feed wheat ended up GBP0.75 at GBP112.50/tonne.
No November London wheat lots traded during the entire session for the second time in a week, and only 376 lots changed hands all day. Paris trade was also subdued.
Sellers don;t want to sell, and buyer don't want to buy, that seems to be the long and short of it.
Egypt did however dip their toe in the water, buying 60,000 MT of Russian wheat from Cargill and a similar quantity of French wheat from Bunge.
US wheat futures fell in afternoon trade, which extinguished any bullish fire that there might have been under the EU wheat market.
Sterling was quite strong, despite the BoE upping it's QE budget by another GBP25 billion.
Defra said that the UK will have a similar wheat exportable surplus to the recent five year average, that is 39% down on last year. Unfortunately the barley exportable surplus is up almost 150% on last season.
Latest US weather forecasts are looking a bit drier for next week than yesterday's calls. That may aid a bit more winter wheat planting.
eCBOT Close, Early Call
The overnights closed mostly a little lower, with beans down 6c, corn flat to 1c lower and wheat down 3c.
Crude oil is a little easier at a smidge over USD80/barrel, and the dollar is fractionally higher. The US Energy Dept confirmed what the API said Tuesday, that crude stocks fell last week despite analysts expectations for a 1.5 million barrel increase.
Conab estimate Brazil's 2009-10 soybean crop at a record 62.5-63.6 MMT. Wheat output will by 5 MMT, they say, 1 MMT lower than estimates from earlier in the season. That leaves Brazil with a lot of wheat to import next year, and the usual suspect of Argentina is likely to have little to sell.
Weekly export sales were 523,900 MT for beans, 571,200 MT for corn and 264,500 MT for wheat. Pre-report estimates were for bean sales of 500-650,000 MT, corn sales of 350-550,000 MT and wheat sales of 350-550,000 MT.
Latest US weather forecasts are looking a bit drier for next week than yesterday's calls.
Late calls on the CBOT open: corn dn 1-2, beans dn 4-6, wht dn 2-4.
Defra: UK Wheat/Barley Supply And Demand
Defra are out today with their latest UK cereal S&D numbers. They peg UK 2009/10 wheat production at 14.181 MMT and barley output at 6.747 MMT. For wheat that's a decrease of just over 3 MMT, or 18%. The barley harvest is up just over 600,000 MT, or 10%.
For wheat, domestic consumption levels are left relatively flat, and in line with the previous five year average at 13.678 MMT. That's the bit I don't get, their figures, as they state in their notes, take into no account whatsoever for bioethanol production increasing usage.
I know that the Ensus plant at Wilton has been a bit of a stop start affair, but surely they are going to run on something other than fresh air for the first half of 2010?
Even without any extra offtake from Ensus that leaves us with an exportable surplus of 2.161 MMT, 39% down on last season.
For barley, domestic consumption is also seen relatively flat and in line with the previous five year average, at just over 5 MMT. The big difference here however is that increased production, and a large carry-in, sees the exportable surplus rise almost 150% to just over 2 MMT.
I wonder if Ensus can run on barley?
BoE Increase QE By GBP25 Billion
The BoE's MPC have announced that the simply don't think that GBP175 billion is enough, and have decided to increase QE by a further GBP25 billion.
Interest rates, unsurprisingly, were left unchanged at 0.5%.
The currency market appears unmoved by the news, maybe even relieved that it's not GBP50 million?
The pound currently stands at 1.6580 against the dollar, having briefly popped it's head above 1.6600.
All Eyes On The BoE
All eyes are on the BoE today, the final day of the MPC's two day meeting to decide "what the hell do we do next".
Whilst nobody seems to be anticipating anything other than interest rates being left alone at 0.5%, there are plenty who think that an increase in QE could be announced.
If they do opt to extend QE from the GBP175 billion already spent, an increase of GBP25-50 billion seems to be most likely. Last month's poor GDP figures, leaving Briton as the only major economy still officially mired in recession, might just tip the scales in favour of an increase.
If that happens, then we can expect the pound to have another dose of the collywobbles later today.
Sit tight, the announcement is expected around 12.00 noon.
Meanwhile the US Federal Reserve announced last night that they are likely to be keeping interest rates close to zero for some time yet. That was widely expected, but what wasn't was the news that they are to scale back slightly on it's planned asset purchases by $25 billion.
To me this looks like the first tentative steps towards trying to let the US economy stand on it's own two feet. If we extend QE here today, whilst America are reigning it in slightly you could certainly make out a case for the pound to weaken quite sharply against the dollar.
The ECB are also due to announce a decision on interest rates later today. As with the others nobody is expecting a change on rates themselves, it's the fine tweaks here and there, and the language used in the announcement that everyone will be scrutinising.
EU Rapemeal Prices
Basis FOB Lower Rhine EUR/tonne
Nov 127,00
Dec 127,00
Jan 127,00
Dec/Jan 127,00
Feb/Apr 127,00
May/1st h Jly 120,00
Aug/Oct 10 118,00
Nov/Apr 11 128,00
CBOT Closing Comments
Soybeans
November soybean futures closed at $9.95 ½, down 11 ¼ cents, December soymeal futures at $301.60, down $4.80, and December soyoil futures at 37.55 cents, up 2 points. In a volatile session futures opened higher but quickly swung lower despite a weak dollar and firm crude oil. Trade estimates for tomorrow's weekly export sales report range from 500,000 to 650,000 MT. Informa Economics reduced their 2009 production estimate slightly to 3.333 billion bushels, from 3.383 last month.
Corn
December corn futures closed at $3.84, down 6 cents. As with beans corn opened higher but soon moved into negative territory. Nearby weather is finally allowing the harvest to move forward. Estimates for tomorrow's export sales range between 350,000 to 550,000 MT. Informa Economics pegged this season's crop at 13.064 billion bushels, with an average yield of 164.8 bushels per acres. That's a little bit lower on their estimate last month of 13.127 billion bushels and a yield of 164.7 bushels per acre.
Wheat
December wheat futures closed at $5.21, up 5 ¼ cents. Weekly export sales estimates for tomorrow's USDA report range from 350,000 to 550,000 MT. A sharply lower US dollar and crude oil back above $80/barrel helped things today. More than that maybe was the fact that the spec trader, despite having recently reduced his exposure, is still heavily short on CBOT wheat. There was most likely some spread trade taking place late in the session, involving the selling of corn and buying of wheat.
EU Wheat Nudges A Little Higher
EU wheat futures continued to nudge a little higher Wednesday, despite a lower US dollar, with January Paris milling wheat futures closing up EUR1.25 at EUR131.75/tonne, and London Jan feed wheat trading up GBP0.60 at GBP106.70/tonne.
The French 2009/10 all wheat crop is 38.66 MMT, according to FranceAgrimer, a modest decrease of 1.4% on last season's 39.21 MMT.
Ending stocks will rise slightly to 3.58 MMT, up from 3.1 MMT at the end of 2008/09, they said.
US weather forecasts aren't as friendly for next week as they were a few days ago. Rain is seen returning early next week before a second system arrives November 13 and a third November 16, according to QT Weather.
That will continue to cause problems, particularly for US SRW plantings which could be 20-25% lower this season, according to some reports.
Egypt's state-owned wheat buyer GASC is tendering to buy wheat of various origins this week. The Philippines are also in the market, following severe crop damage due to typhoons hitting the region late September and early October.
Crude oil rose back above USD80/barrel after US inventories surprisingly fell last week, according to data from the US Energy Dept.
eCBOT Close, Early Call
The overnights closed higher with wheat for once leading the way finishing around 10c up, with beans around 8c higher and corn 5-6c firmer.
The dollar is back under pressure today and crude oil has popped it's head back up above USD80/barrel.
Crude inventories fell a surprising 3.28 million barrels last week, the American Petroleum Institute said yesterday. If the US Energy Dept concur with those figures later today it could give crude a further boost this afternoon. The trade had been expecting a 1.5 million barrel increase.
The Federal Reserve’s announce their latest assessment of the US economy later today. Wall Street is expected to open moderately higher ahead of the news.
Gold has hit another all-time high of USD1,092.90/oz. Investment money looking for a hedge against inflation may be stealthily returning to agri commodities too.
US weather forecasts aren't as friendly for next week as they were a few days ago. Rain is seen returning early next week before a second system arrives November 13 and a third November 16, according to QT Weather.
Early calls for this afternoon's CBOT session: corn called 4 to 5 higher; soybeans & wheat called 8 to 10 higher.
French Wheat Crop 38.66 MMT - FranceAgrimer
The French 2009/10 all wheat crop is 38.66 MMT, according to FranceAgrimer, a decrease of 1.4% on last season's 39.21 MMT. Soft wheat production is 36.55 MMT and durum wheat output 2.11 MMT, they say.
Soft wheat exports this season will total 7.09 MMT (2008/09 6.76 MMT) to fellow EU-27 destinations, and 8.75 MMT (9.59 MMT) to homes outside the EU-27 they add.
That will leave ending stocks of 3.58 MMT, up from 3.1 MMT at the end of 2008/09
Corn production this season is now seen 5.5% lower at 14.81 MMT and barley output is said to be 5% higher at 12.91 MMT.
Barley ending stocks will rise dramatically from 1.58 MMT in 2008/09 to 3.36 MMT in 2009/10 they say. Corn ending stocks will fall from 2.34 MMT to 1.91 MMT, they add.
Fancy Going Long Or Short Of Snow?
The CME are about to start trading snow futures: Remember where you heard it first
Vivergo Plant Out Of Date Before It Even Opens?
A Reuters report says that the still under construction Vivergo bioethanol facility in Hull, which is fully twelve months away from starting production, will be "retrofitted" to convert it to produce biobutenol by 2012/13.
Here
Indian Summer Food Production Sharply Lower
Summer (kharif) foodgrain production in India has fallen alarmingly in the last two years following this year's disastrous monsoon season. This year's output of 96.63 MMT is the lowest since 2002/03, also a drought year, according to recent data from the government.
An article in today's Hindu Business Line outlines just how badly things have declined since 2007:
(in MMT) 2007 2008 2009
FOODGRAINS 120.95 117.70 96.63
of which..
1. Rice 82.66 84.58 69.45
COARSE GRAINS 31.89 28.34 22.76
of which..
1. Maize 15.11 13.90 12.61
2. Bajra 9.97 8.83 5.83
3. Jowar 4.11 3.10 2.55
PULSES 6.40 4.78 4.42
of which..
1. Tur 3.08 2.31 2.47
2. Urad 1.12 0.83 0.88
3. Moong 1.25 0.77 0.52
OILSEEDS 20.71 17.88 15.23
of which..
1. Soybeans 10.97 9.90 8.93
2. Groundnut 7.36 5.64 4.53
COTTON* 25.88 23.16 23.66
SUGARCANE 348.19 271.25 249.48
JUTE/MESTA** 11.21 10.41 10.24
* In million bales of 170kg each
**In million bales of 180kg each
This season's 15 MMT fall in summer rice production represents an 18% decline, lucky then that government buffer stocks are also said to be 15 MMT. But that leaves no carryover, and winter (rabi) rice production normally only accounts for around 15% of yearly output.
The sharp fall in rice production is expected to have the knock-on effect of increased wheat consumption.
This leaves India pinning all it's hopes on a good winter growing season, especially for wheat and rapeseed. The government are going to great lengths to reassure us that production of both will be up in spring 2010.
Output will however entirely depend on the vagaries of the Indian weather between now and next March. Is there a plan B I wonder?
Philippines Look To Buy Wheat And Rice
Following extensive damage to local corn and rice crops by a series of recent typhoons, the Philippines is expected to buy substantial quantities of rice and wheat over the next few months.
Having already bought around 200,000 MT of wheat since the first typhoon struck in late September, local feed millers are expected to buy a further 400,000 MT over the next fed months.
Ukraine origin wheat has picked up most of the recent orders and is likely to figure prominently again, whilst stocks last!
The country is also expected to buy 250,000 MT of rice from Thailand and Vietnam in the next few days.
Milk Powder Prices Surge On The Other Side Of The World
Leading global dairy exporter Fonterra report that prices for whole white milk powder rose 13.7% to USD3,437/tonne in it's latest online auction yesterday.
Prices peaked above USD5,000/tonne in October 2007, but subsequently crashed to five year lows close to USD1,800/tonne as recently as July this year.
Since then prices have rebounded sharply, appreciating by around 88% on strong demand from Asia and the Far East. Prices are now at a 13-month high as demand for dairy products returned to pre-crisis levels, Fonterra say.
In sharp contrast to the fortunes of dairy farmers in Europe and the US, Fonterra raised the price it pays New Zealand farmers for milk by 12% in September.
Analysts say that the recent sharp increase in prices is the result of strong demand and improved confidence in the global economic recovery.
Buying interest from China remains strong in the wake of the recent melamine scandal, with Chinese consumers still very reluctant to buy domestically sourced milk products, according to some reports.
Consumers clearly believe that further price rises are on the way. The average price paid in yesterday's auction for Jan 10 delivery was USD3,352/tonne (up 11%), but for Feb/Apr 10 delivery the average price was USD3,393/tonne (up 12.8%) and for delivery in May/Jul 10 the average price was USD3,684/tonne (up 20.7%).
CBOT Closing Comments
Soybeans
November soybean futures closed at USD10.06 ¾, up 9 ¼ cents, December soymeal ended at USD306.40, up USD3.70, and December soy oil futures are at 37.53 cents, up 74 points. Whilst harvest progress continues to lag, quality issues are also becoming more important. The US weather forecast for next week looks much wetter than had been anticipated last week too. Fund money appeared to be the catalyst for a late rally Monday night, with the onset of a new month, more new money seemed to be flowing into the ags today.
Corn
December corn futures closed at USD3.90, up 7 ¾ cents. Yesterday's crop progress report showed the corn harvest at just 25% complete, only five points up on a week ago and fully 46 points behind the five year average. Rain is back in the forecast for next week, and outside markets also lent some support. The dollar was sharply weaker following gold hitting a record all time high before closing over $30 dollars higher at 1,084.90 an ounce. Crude also saw significant gains today.
Wheat
Wheat closed around unchanged levels, not as strong as beans or corn, but well off session lows. Wet weather again back on the horizon for next week will further hamper US farmers to get the remainder of their winter wheat into the ground. Many will likely take any insurance money on offer, particularly in the east where SRW wheat gets planted. Here in states like Illinois seedings Illinois are just 35% done vs 92% normally as the severely delayed soybean and corn harvest hampers winter planting progress.
EU Wheat Ends Flat To Higher
EU wheat futures closed flat to a little higher Tuesday, supported by a sharply higher US market Monday night. Despite a weak dollar Paris wheat closed EUR0.25/1.00 higher and London wheat unchanged to GBP0.65 higher.
It was another generally quiet trading session, particularly in London with only 77 lots traded all day.
Once again the currency market was all over the place, with the US dollar taking a big hit in afternoon trade after it was announced that India's central bank had bought 200 MT of gold from the IMF.
The deal, worth USD6.7 billion, appears to indicate that other central banks might follow suit in ditching dollars for gold, even though gold prices hit record all-time highs today.
There is so little to talk about on the wheat front itself that the other main events of note this week are the results of the various meetings from the central banks of the US, UK and Europe.
Whilst neither the Fed, BoE of ECB are expected to change interest rates, there may be some new vibes as far as alterations to monetary policy are concerned. It seems a possibility that the BoE may vote to increase QE. That would almost certainly send the pound reeling, which would lead to further appreciations in the price of UK wheat futures.
Gold Hits All-Time High As India Buys From IMF
Gold has hit an all-time high of USD 1,079.20/oz this afternoon after it was revealed that India's central bank had bought 200 MT of the stuff from the IMF in deal worth USD6.7 billion.
The poor old cash-strapped IMF is running a bit short of readies, having had every man and his greyhound banging on the door lately. They recently announced that they'd like to sell some of the family silver, well 400 MT of gold actually, from it's holdings to distribute to the needy.
India was the first to step forward with the cash, although China and Russia had been favourites. The move is seen supporting gold prices further, as it appears to confirm that central banks are comfortable entering the market to hold gold at over USD 1,000/oz.
It may also indicate that they feel that gold is a better asset than the US dollar reserves that they will be using to pay for it.
ADM Q1 Earnings Down 53 Pct
Archer Daniels Midland Company today announced earnings of USD496 million on net sales of USD14.9 billion for the quarter ended September 30, 2009.
Net earnings were USD0.77 per share, down 53% from last year’s record first quarter. Net sales for the quarter were down 29 %.
Oilseeds processing profits decreased on lower margins and production, whilst corn processing profits improved on lower net corn and manufacturing costs, they said.
The company separately announced that it has appointed Brent Fenton, former VP of North American Oilseeds Processing, as the new managing director of it's European Oilseeds Division, replacing Joe Taets.
Taets was recently named as the new vice president of the ADM Grain Group, and is moving to the headquarters of ADM in Decatur, Illinois.
eCBOT Close, Early Call
The overnight grains closed lower, giving up some of last night's sharp late gains, largely on the back of a firm dollar this morning.
Beans and corn closed around 4-5 cents lower, with wheat around 8 cents easier on the eCBOT market.
The dollar was sharply higher as world stock markets fell abruptly, prompting a flight to safety and the greenback, with the US unit rising to a one month high against the euro.
The latest weather forecasts in the US aren't looking quite so friendly as they were yesterday.
"A moist southerly flow returns to the Plains and Mississippi Valley next week," according to QT Weather. The latest 6-10 outlook now shows “above normal” precipitation returning to the region next week, with heavy rains forecast for Nov 10-11, they say.
Soybean planting in Argentina is now underway, although reports suggest that seed quality is poor this year after last season's difficulties. Oil World has actually dropped it's estimate of Argy soybean production from 52 MMT to 50 MMT.
Reports emanating from Brazil suggest that the harvest will begin early this year, but at the expense of reduced yields, as farmers try to get a 2nd corn crop into the ground early in 2010.
Indian summer rice production is seen down 18% at just under 70 MMT, say officials there. That may lead to increased demand for wheat which hit contract highs for the fifth straight session today, closing at over USD300/tonne.
Early calls for this afternoon's CBOT: corn called 4 to 5 lower; soybeans called 4 to 5 lower; wheat called 6 to 8 lower.
EU Rapemeal Prices
FOB Lower Rhine (Euro/tonne)
Nov 128,00
Dec-Jan 128,00
Feb/Apr 128,00
May/1st h Jly 122,00
Aug/Oct 120,00
Nov/Apr 11 130,00
EU Soymeal Prices
Brazil pellets 48% CIF Rotterdam/Amsterdam
Afloat 431,00
Nov 427,00
Dec 427,00
Jan/March 401,00
May/Sep 338,00
Argentine pellets 44/45% CIF Rotterdam/Amsterdam
Afloat 414,00
Nov 413,00
Dec 413,00
Jan/March 400,00
May/Sep 329,00
Dutch Hipro 49% profat FOB Rotterdam/Amsterdam
Nov 447,00
Dec 444,00
Jan 433,00
Feb/Apr 424,00
May/Jul 360,00
May/Oct 362,00
Argentine Hipro 49% profat CIF Rotterdam/Amsterdam
Afloat 435,00-433,00
Oct 433,00
Nov/Dec 432,00
Jan/March 415,00
May/Sep 345,00
Wynnstay Completes Purchase Of Youngs Animal Feeds
Wynnstay Group plc have announced that they have completed the purchase of the remaining 50% share capital of Youngs Animal Feeds, not already owned by the group.
Youngs, who specialise in equine feeds and pet products, are based in Standon Staffs, with additional outlets in Congleton and that well known equine hotbed of Huyton in Liverpool.
The Earl of Derby lives nearby, although he is reputedly an infrequent visitor to the local hostelries such as the Blue Bell, where I incidentally spent many a happy hour 'holding hands' with Juggy Jan. Ah, but I digress...
The Wynnstay/YAF deal is worth GBP750,000, payable upon completion.
Wynnstay's financial year has just ended on 31st October, and they said that results will be in line with expectations.
Dollar Rises On Safe Haven Status
The dollar is up this morning as global stock markets fall, and demand for the greenback picks up from it's perceived safe-haven status.
The FTSE 100 is down below 5,000 with banks leading the way, with RBS the biggest loser of the day, hitting the headlines once again for all the wrong reasons.
The German DAX and Paris CAC are also around 2% lower, mirroring earlier losses in Hong Kong's Hang Seng Index.
The pound has fallen below UDS1.63 this morning, partly after data today revealed that construction activity in the UK continued to fall in October.
It would seem that the general belief in the market is that the dollar will weaken further, possibly significantly so, and that almost every man and his dog is short the US unit.
With the advent of the collapse in global trade, the need for the dollars to pay for your iron ore, or wheat or oil etc, also diminished. It may be worth considering that if a global economic recovery IS underway, then a renewed need for dollars to pay for such commodities - combined with an already heavily short market - could lead to a sharp dollar correction.
AB Foods Profits Up 8 Pct To GBP720 Million
AB Foods today reported an adjusted operating profit of GBP720 million, an increase of 8% on a year ago, with group revenue up 12% to GBP9.3 billion.
The sugar side saw revenue up 24.3% to GBP1.575 billion, with an adjusted operating profit of GBP189 million (an increase of 23.5%), aided by "a sharp recovery in profit at British Sugar UK."
I'll give it ten minutes before we hear the NFU using that one against them when it comes to the price being paid for beet for 2009/10.
They said that the "construction of Vivergo’s wheat bioethanol plant is progressing well at Hull in the UK, with commissioning now planned for autumn 2010. All major plant items have now been received and installation is well underway. Contracts have been signed with AB Agri to supply wheat from Frontier and for the sale of the distillers’ grain co-products."
A nice level playing field there then.
The agriculture side chipped in with revenue of GBP1.004 billion, up 16%, and an adjusted operating profit of GBP34 million, an increase of 3%. Saying that "AB Agri had another very strong year continuing to perform well above expectations." In addition Frontier "produced exceptional results having anticipated the correction in the value of the global grain markets." And that KW Trident had "significantly increased its presence in the UK blends market."
Bespoke ladies and gentleman's outfitter Primark reported revenue up 20% to GBP2.314 billion, with an adjusted operating profit of GBP252 million, up 8%.
In addition to that, grocery reported revenue of GBP3.188 billion (up 13%), but an adjusted operating profit down slightly to GBP191 million. Ingredients weighed in with sales of GBP989 million, up 20%, and an adjusted operating profit of GBP88 million, up 13%.
It's nice to see the little man doing well isn't it?
Mind you the news isn't everyone's cup of tea, despite the profits there are 400 jobs going at ABF-owned Twinning's. They obviously didn't anticipate the correction in the value of the global premium tea market: here
Australia Raises Interest Rates For Second Straight Month
Last month, the Australians became the first of the G20 countries to raise interest rates since the financial crisis began in 2008.
Today they've done it again, matching last month's 0.25% increase, now pegging rates there at the dizzy heights of 3.5%.
That certainly looks a lot better than rates in the UK, EU or US and is likely to see plenty of interest in the Australian dollar.
"With the risk of serious economic contraction in Australia now having passed, the Board's view is that it is prudent to lessen gradually the degree of monetary stimulus that was put in place when the outlook appeared to be much weaker", said the Reserve Bank of Australia.
They also hinted that more rate rises may be on the way. That might be bad news for Australian farmers in the midst of the wheat harvest, as it will dent the competitiveness of their product on the export market.
One Australian dollar gets you around 90 US cents today, twelve months ago it was worth only 60 cents.
USDA Crop Progress Report
Soybeans
After the close of CBOT trading, the USDA reported the US soybean harvest as of November 1 at 51% completed, which fell below trade estimates of 55 to 60 percent. That is only a six point increase on last week. The five year average is 87% harvested as of this time.
Corn
The USDA reported corn harvest by November 1 at 25% completed, which fell within trade estimates of 24 to 26 percent, and just five pips up on a week ago. Normally at this time of year we have the crop at 71% harvested.
Wheat
The USDA reported winter wheat plantings as of November 1 at 79% completed, only three points up on last week, and 11 points below normal for this time of year. Seedings in troubled Illinois are just 35% done vs 92% normally, in Indiana 55% complete vs 91% normally, and Montana 21% vs 70%.
CBOT Closing Comments
Soybeans
November soybeans finished at $9.97 ½, up 19 ½ cents, December soymeal ended at $302.70, up $5.70, December soy oil closed at 36.79 cents, up 39 points. A lower US dollar and higher crude oil futures lent support, although generally favourable US weather forecasts were a bit bearish. The last week in October is often a strange month for futures, with widespread hedge fund liquidation and book-squaring. Today there seems to have been some element of establishing new positions. The USDA reported that 63.675 million bushels of soybeans were inspected for export during the previous week, which fell well above trade estimates ranging 33 to 50 Mbu.
Corn
December corn futures closed at $3.82¼, up 16 ¼ cents. As with beans a lower US dollar and higher crude oil were supportive. Weather forecasts for warmer and drier conditions across large parts of the corn belt for the next fortnight are bearish, however. Again, as in the soybean pit, a late surge of first of the month fund money appeared to push corn sharply higher approaching the close. That was despite the USDA reporting corn export inspections during the previous week came of 23.367 million bushels, which fell below trade estimates ranging from 25 to 35 Mbu.
Wheat
December CBOT wheat futures settled at $5.16 ¾, up 22 ½ cents, December KCBT wheat futures closed at $5.20, up 21 cents and December MGEX wheat futures finished at $5.31, up 18 ¼ cents. As with the other pits a late round of fund buying seemed to be enough to send prices to the upper end of their daily trading range. The USDA reported that 11.933 million bushels of wheat were inspected for export during the previous week, which fell below trade estimates ranging from 14 to 19 Mbu. Weather forecasts for this week call for conditions favourable for winter wheat plantings.
EU Wheat Ends Higher In Quiet Trade
EU wheat futures began the week higher, although trade was again exceptionally light. Paris January milling wheat ended up EUR0.75 at EUR129.50/tonne, and London January feed wheat closed up GBP1.25 at GBP106/tonne.
It was half term in the UK last week, with some schools remaining shut Monday due to the dreaded teacher training day. Spain was also closed for a public holiday.
Only 164 London lots traded all day, in Paris it was 4,441.
The US market was higher, and in very light trade EU wheat seemed content to nudge higher following America's lead.
End-users in the UK report that farmers are generally reluctant sellers at current levels. Those that do need to buy nearby requirements are finding it tough to persuade growers to sell, said one UK compounder.
The newly planted Ukraine wheat crop is rated 22% poor, according to media reports. Early season drought and a potential decrease in farm inputs might cut 2010 production to around 13-14 MMT this year some are saying.
Russia kicked off it's intervention programme today, buying 55,300 MT of wheat. The amount of money allocated to grain buying by the government is, however, severely reduced for the season ahead. Funds to purchase only 3 MMT are currently available, around a third of what was in the kitty in 2008/09.
EU Soymeal Prices
Brazil pellets 48
Afloat 424,00 (USD/tonne)
Nov 422,00
Dec 422,00
Jan/March 395,00
May/Sep 333,00
Argentine pellets 44/45
Afloat 411,00-409,00
Nov 410,00
Dec 410,00
Jan/March 395,00
May/Sep 323,00
Dutch Hipro 49 profat
Nov 444.00
Dec 444,00
Jan 433,00
Feb/Apr 419,00
May/Jul 355,00
May/Oct 357,00
Argentine Hipro 49 profat
Afloat 433,00-428,00
Oct 428,00
Nov/Dec 426,00
Jan/March 407,00
May/Sep 339,00
eCBOT Close, Early Call
The overnights closed mixed Monday with beans around 7-8 cents higher, corn up around a cent or so and wheat down 1-3 cents.
The US weather forecast for the week ahead is unquestionably drier and warmer than anything we saw in October.
A few lingering showers will remain in northern areas; Minnesota, N Iowa, N Indiana and N Illinois. Elsewhere will be largely dry. It seems that the forecast for the second week in November is similarly beneficial at the moment.
The USDA will report tonight on the latest harvest progress for corn and beans as of Sunday. They will also report on winter wheat planting.
For Illinois, where the bean and corn harvest has been severely delayed, the cut-off date for claiming maximum benefits on winter wheat crop insurance has now passed.
It seems highly likely that US winter wheat acreage will fall short of original intentions.
Russia bought 55,300 MT of wheat on the opening day of it's intervention purchases today. Ukraine report 22% of it's newly planted winter wheat crop is in poor condition.
Early calls for this afternoon's CBOT session: soybeans called 5-7 cents higher, corn up 1-2 cents, wheat flat to 2 cents lower.
Russia Begins Grain Intervention
The newly formed United Grain Company bought 54,000 MT of grade 3 wheat on the opening day of Russia's intervention support programme at 3,300 roubles/tonne (USD113/tonne), according to media reports.
A small quantity of grade 4 wheat was also purchased, said Elena Skrynnik the Minister of Agriculture, bringing total purchases on day one to 55,300 MT.
The Russian grain harvest to date amounts to 101 MMT in bunker weight, the Minister added.
A total of 9.5 billion roubles has been allocated to grain intervention for the 2009/10 marketing year, which will purchase the equivalent of around 3 million tonnes of grain, said Sergey Levin, the head of United Grain Company.
That is significantly down on the funds allocated to intervention in 2008/09.
Lower Rhine Rapemeal Prices
Nov 126,00 (EUR/tonne0
Nov/Jan 126,00
Dec/Jan 126,00
Feb/Apr 126,00
May/1st h Jly 121,00
Aug/Oct 10 118,00
Nov/Apr 11 128,00
Chinese Wheat: I Don't Know Whether To Eat It Or Make A Charm Bracelet Out Of It
The Chinese have started firing rain-inducing silver iodide into the skies earlier than normal this year, in an attempt to stave off a lingering drought over the northern half of the country.
This is where most of the nation's winter wheat is grown, and where farmers have suffered from an off-on drought for the last ten years.
The seeding, plus temperatures falling as low 29 F, brought an early covering of 'fake' snow to Beijing on Sunday morning. The snow was the earliest to hit the capital in 10 years, according to the Beijing Evening News.
Snow also fell in the north-eastern provinces of Liaoning and Jilin and the northern province of Hebei, according to media reports.
The Chinese don't appear overly concerned about the potentially insidious and cumulatively harmful effects of repeatedly firing silver iodide into the skies around the same regions in the north year after year.
The Office of Environment, Health and Safety, UC Berkeley, rates silver iodide as a Class C, non-soluble, inorganic, hazardous chemical that pollutes water and soil. It has been found to be highly toxic to fish, livestock and humans. Nice.
Brazil: New Crop Soybeans By Christmas
The window of opportunity for US farmers to have the world soybean export market to themselves is getting ever-shorter.
Not only is harvesting in the US well behind schedule, the early arrival of rains in South America saw Brazilian farmers in Mato Grosso (which accounts for around a third of national production), get off to a flier mid-September.
Taking advantage of significant front-end premiums to be had at the time, many savvy growers in the region planted fast maturing soybean varieties.
Rains have continued to be beneficial since these early beans went into the ground, and reports suggest that some farmers will be harvesting beans before Christmas this year.
That may be a little bit of a two-edged sword, as it may trim a bit off yields. It will however enable them to make the most of the local front-end premiums and get a timely 2nd crop of corn into the ground for harvesting later in the summer.
Plenty of reports I am reading suggest that the usage of this strategy will be widespread this season. That may suggest that the current Brazilian soybean production estimates of around 64 MMT may be a tad optimistic. It would also suggest however that China might switch it's attention away from the US a little earlier than normal, and in addition lead to an increased corn crop in 2010.
CIT Group Files For Chapter 11
New York based CIT Group is to become one of the largest bankruptcies in US history.
The group, which specialises in loans to an estimated one million small to medium-sized US businesses, is filing for Chapter 11 bankruptcy protection.
The vast majority of a USD2.3 billion loan of US tax-payers money is expected to be lost. This make CIT the largest company to take a government bail-out and still end up filing for bankruptcy.
The news might send a wave of nervousness through the stock market, which had just got it into it's head that a corner had been turned.
Argentina Stifles At 117 F
Friday was one of the hottest days on record in Argentina on Friday, with Catamarca in the north soaring to 117 F, within three degrees of the hottest temperature ever recorded in the country back in 1907.
La Rioja recorded a high of 113 F, with Tucuman and Santiago Del Estero both topping out at 112 F, according to AccuWeather.
The latter two are situated in the heart of Santiago Del Estero state, which is a big soybean and corn growing region just north of Cordoba.
