EU Wheat Closing Comments
31/12/10 -- EU wheat closed 2010 on another bright note with Jan London wheat up GBP1.15 to GBP199.00/tonne, and new crop Nov GBP1.00 higher at GBP170.50/tonne. Jan Paris wheat rose EUR4.50 to EUR252.50/tonne and Nov was up EUR3.25 to EUR223.75/tonne.
Not to be outdone, Paris corn closed with Jan EUR6.00 higher at EUR235.00/tonne, whilst Feb Paris rapeseed rose EUR1.00 to EUR497.25/tonne. In a nutshell, just about everything closed at or very close to lifetime contract highs, with all front months at or very close to historic spot month highs.
Overall front month London wheat rose a stunning 87% on the year, with Paris wheat even bettering that slightly with a 92% gain. For the record, the spot low for London wheat was on March 12th at GBP92.25/tonne, we've risen 116% since then when barley all over Europe was pouring into intervention.
Safe to say that it's been a truly astonishing year. Traders will be glad of the break to attempt to take stock and attempt to decide where do we go from here when they regroup next week.
Tight European old crop stocks will dominate their thoughts, in the wake of continued strong demand with fully half a marketing year still remaining before those reserves can be replenished.
Output prospects for 2011 look set to remain uncertain for some time yet amongst many of the major producing nations such as the US, China and Russia.
The latter has said today that it will begin selling off it's near 10 MMT of intervention grain stocks at the rate of 400,000-500,000 MT/month starting in January.
That should help see them through until next summer, but leaves them extremely vulnerable should they have another harvest disaster next year.
Best wishes for a happy, healthy and prosperous 2011. Nogger.
Morning Muse, And Another Peek Into 2011
31/12/10 -- We seem set for a quiet subdued shortened trading day, unsurprisingly. Whatever book-squaring needed doing will largely already have been done, offices will be short staffed and everyone will be looking to knock off early.
The overnight grains see soybeans 4-6c higher, corn 1-2c firmer and wheat around unchanged.
If things were to stay like that then we'd close 2010 with the following front month changes compared with 31/12/09: CBOT wheat +45%; CBOT corn +49%; CBOT soybeans +32%.
For what it's worth an unchanged close today on EU futures would show the following front month year-on-year gains: London wheat +86%; Paris wheat +89%; Paris corn +69%; Paris rapeseed +73%.
Some very respectable gains there, if you're an arable farmer, or a greedy parasitical fund manager called Tarquin.
Dryness remains a concern for winter wheat in China and the US, plus for soybeans and corn in Argentina. There are also question marks over the well-being of what wheat did get planted in Russia, and over how much of the shortfall in winter plantings will get sown in the spring.
So there's quite a few things there to keep us guessing until at least Easter.
The next raft of information to come onto the market comes in the form the USDA's WASDE and quarterly stocks reports on Jan 12th. February will bring us the conclusions of the USDA's Outlook Forum, when the first ballpark ideas on spring soybean and corn plantings in the US are released ahead of the more official March 31st prospective plantings report.
By then the Brazilian soybean harvest will already be winding down and the Argie one be just about to get going. We will also be in the thick of the Indian wheat harvest, a report on Dow Jones Newswires today quotes one top official there as saying that the government's estimate of 82 MMT - itself a record - is "very conservative."
He doesn't give what, in his opinion, is a more realistic figure - but even say a crop of 85 MMT wouldn't make very much difference at all to global wheat trade.
After that we're into the wheat harvest in North Africa and the Middle East come April/May, before moving into Turkey/Ukraine. The US wheat harvest will now have started in Texas before moving gradually north and east followed by early harvesting in Russia/Kazakhstan and Europe.
It will be this kind of early summer timeframe before we get a shot at any serious stock replenishment from the major exporters in the northern hemisphere. Personally I don't rate Russia's chances of allowing the export embargo to expire this summer as being very high. I see it being extended for at the very least another three months, and quite likely to the end of the year and maybe even beyond that into 2012.
Of course if prices are still relatively high by then, as many currently seem to think that they will be, then "the usual suspects" such as Ukraine/Kazakhstan and the Eastern European nations will be eager to cash their chips in early.
Indeed, I'd go so far as to suggest that these boys will be aggressive sellers of whatever they've got no matter what prices are doing by then.
However, we've still got six months of dwindling European supplies to get through before we reach this point, and the Eastern European shops are already largely shut.
I'll still stick with my prediction of London wheat peaking around May at GBP225-230/tonne.
CBOT Close
30/12/10 -- Soybeans
Jan 11 soybeans closed unchanged at USD13.66; Jan 11 soybean meal closed at USD365.40, down USD0.30; Jan 11 soybean oil closed at 56.61, up 23 points. The market was balanced by strong demand, and a higher outlook for 2011 against the desire to book profits ahead of year end. Weekly export sales were good at 948,200 MT, against expectations of 900 TMT -1.3 MMT. Respected South American analyst Michael Cordonnier is said to have cut his forecast for Argy soybean production by 1 MMT to 48 MMT today.
Corn
Mar 11 corn closed at USD6.16, down 8 cents; May 11 corn closed at USD6.24, down 8 cents; Jul 11 corn closed at USD6.28, down 7 3/4 cents. Profit taking was understandable following a nine day rise in values. Year-end profit-taking and pressure from wheat also led corn lower. Weekly export sales were OK at 756,600 MT. The market closes at noon tomorrow and volume is expected to be light. Argentine drought remains a concern.
Wheat
Mar 11 CBOT wheat closed at USD7.84 3/4, down 14 1/2 cents; Mar 11 KCBT wheat closed at USD8.43 1/2, down 14 1/4 cents; Mar 11 MGEX wheat closed at USD8.72, down 11 1/4 cents. Wheat managed to finish well off earlier session lows although profit-taking apparently caused most of today's declines. Export sales fell below the low end of trade estimates at 438,500 MT. Bangladesh is in the market for 50,000 MT of wheat, and Iraq for 100,000 MT & Turkey for 300,000 MT.
EU Wheat Close
30/12/10 -- EU wheat closed unchanged to mostly lower Thursday with Jan London wheat down GBP1.50 to GBP197.85/tonne, and new crop Nov GBP0.50 lower at GBP169.50/tonne. Jan Paris wheat fell EUR4.50 to EUR248.00/tonne and Nov declined EUR3.75 to EUR220.50/tonne.
Profit-taking ahead of the year end probably had a lot to do with it as fundamentally nothing that much has changed.
The pound slipped below 1.16 against the euro, underpinning UK wheat on the export stage. Not that we need any more export business. In the North East "Ensus Corridor" ex farm feed wheat prices are now running close to parity with London futures levels I hear.
It is probably only a matter of time before start importing.
Chicago wheat opened lower and continued to decline towards the end of the European session, pressuring prices lower this side of the pond.
The Buenos Aires Grain Exchange upped it's estimate for wheat production there by 1 MMT to 14.5 MMT, with harvesting around three quarters done. That would be getting on for almost double last year's output of 7.5 MMT.
On the US High Plains "a 1,500 mile stretch of most of the nation’s HRW crop has seen less than 0.50 inch of precipitation this month and a lack of protective snow cover too," according to QT Weather.
December has been abnormally dry and there is little relief ahead as continuing dryness is maintained in this strong La Nina pattern, they add.
EU Rapemeal Prices
30/12/10 -- Latest guide prices for EU rapemeal.
Basis FOB Lower Rhine in euros/metric tonne, with change from previous trading day:
| Jan11 | 230.00 | unch |
| Feb/Apr11 | 229.00 | unch |
| May/FH Jul11 | 229.00 | unch |
| Aug/Oct11 | 188.00 | unch |
| Nov11/Jan12 | 192.00 | unch |
| Nov11/Apr12 | 193.00 | unch |
Early Call On Chicago
30/12/10 -- The overnight grains were mixed to mostly lower with wheat leading the way down 8-10c. Corn was down 2-3c and beans flat to up 1c.
Crude oil is weaker at USD90.60/barrel and the US dollar is also down a tad.
Nobody seems to be expecting too many fireworks today/tomorrow although there may be some modest booking of profits just in case weather forecasts change over the weekend.
There's uncertainty surrounding precipitation chances on the US Plains and some forecasters are also citing a better chance of rains in Argentina than they were calling for yesterday.
The USDA's weekly export sales didn't provide any major surprises, and the trade seems to be slipping into the weekend semi-comatosed already and looking forward to everything being back to normal next week.
Respected South American analyst Michael Cordonnier is said to have cut his forecast for Argy soybean production by 1 MMT to 48 MMT today, citing "irregular" rains. The revised estimate is fully 4 MMT lower than the USDA's latest forecast.
Bangladesh is in the market for 50,000 MT of wheat.
Early calls for this afternoon's CBOT session: beans up 1-2c, corn down 2-4c, wheat down 7-9c.
USDA Weekly Export Sales
30/12/10 -- USDA weekly export sales for the period Dec 17-23 were broadly in line with trade expectations, although wheat was slightly under and corn towards the low end of trade estimates.
Soybean sales were bang in line at 948,200 MT, including 285,000 MT of new crop sales all of which were to China.
| Product | Actual | Forecast |
| Soybeans | 948,200 MT | 900 TMT -1.3 MMT |
| Wheat | 438,500 MT | 450 - 650 TMT |
| Corn | 756,600 MT | 750 TMT - 1.05 MMT |
Early Vibe
30/12/10 -- There's very little in the way of fresh news this morning. Some are suggesting a bit of much needed moisture for the US Great Plains, which explains a bit of weakness in wheat overnight.
There may be a better chance of some moisture relief on the cards for parts of Argentina too, according to some reports. Even so soybeans are around 6c higher overnight.
Profit-taking may be a feature today/tomorrow, although the vibe is a generally relaxed one that long holders feel comfortable enough to run their positions across the weekend. Indeed, although Friday is a shortened session for all the grains most of the markets are open again on Monday anyway, so apart from us here in the UK it's really not that much different to any other weekend.
One of the big unanswered questions is what will the funds fancy doing when they return in the new year?
In the UK, those that have taken the full festive period off will return to see many feed prices GBP10-15/tonne higher than the ones they didn't fancy paying just before Christmas.
There doesn't seem like there will be too much in the way of price relief in January either, especially if the pound goes for a bit of a burton* as I expect. Still there's always the cricket....
* Gone for a Burton definition from Wikipedia here
Chicago Close
29/12/10 -- Soybeans
Jan soybeans closed down 9 3/4 cents at USD13.66/bushel; Jan soymeal ended down USD2.90 at USD365.70; soyoil closed 44 points lower at 56.38. Beans have had a very good run and some profit-taking ahead of the year end was more than understandable. The outlook for 2011 still remains undeniably bullish, as the market now starts to focus on Argentine production problems. Private exporters announced the sale of 120,000 MT of soybeans to China. Estimates for tomorrow's weekly export sales range from 900 TMT to 1.3 MMT.
Corn
March corn closed up 3/4 cent at USD6.24 per bushel; May corn was also up 3/4 cent at USD6.32 per bushel. As with soybeans the corn market took a bit of a breather today, although the uptrend is firmly intact. Private exporters announced the sale of 120,000 MT of corn to Mexico. Estimates for tomorrow's weekly export sales report range from 750 TMT to 1.05 MMT. There's some talk of irreparable damage already having been done to corn acres in Argentina. Warmer than normal temperatures there are expected to continue for at least the next fortnight.
Wheat
CBOT March wheat closed up 1 cent at USD7.99 1/4 a bushel; KCBT March wheat slipped 2 3/4 cents to USD8.57 3/4; MGEX March wheat fell 1 cent to USD8.83 1/4. The Australian harvest is said to be approximately 75% done, yet production forecasts still vary widely. Local firm Australian Crop Forecasters today dropped their estimate from 25.5 MMT to 24.4 MMT. Government backed ABARE still say a record 26.8 MMT, yet other forecasts are in the 22-23 MMT region. Quality is undoubtedly substantially down, although again estimates on how much of the crop will be downgraded to feed wheat.
EU Wheat Closing Comments
29/12/10 -- EU wheat closed almost universally higher with Jan11 London wheat up GBP1.85 at GBP199.35/tonne and new crop Nov11 GBP3.75 higher at GBP170.00/tonne. Paris wheat closed with Jan11 unchanged at EUR252.50/tonne and Nov11 climbing EUR0.50 to EUR224.25/tonne.
London wheat gained the most as the Paris market was able to post significant gains of it's own yesterday when the London market was closed.
It was a highest ever contract lifetime close for every wheat contract both sides of the Channel for both old and new crop months, with the sole exception of unchanged Jan11 Paris wheat which still managed to at least match yesterday's all time high.
Jan11 London wheat had earlier posted an intraday high of GBP200/tonne for the first time in history for any front month.
The strong pace of UK and French wheat exports continues to underpin the entire market with fully six months left remaining in the 2010/11 marketing year.
Although Egypt passed on French origin wheat in yesterday's tender it was still priced competitively. The fact that they are still back buying on a weekly basis even at these levels surely has to be seen as supportive for global wheat in general.
EU Rapemeal Prices
29/12/10 -- Latest guide prices for EU rapemeal.
Basis FOB Lower Rhine in euros/metric tonne, with change from previous trading day:
| Jan11 | 230.00 | n/a |
| Feb/Apr11 | 229.00 | n/a |
| May/FH Jul11 | 229.00 | n/a |
| Aug/Oct11 | 188.00 | n/a |
| Nov11/Jan12 | 192.00 | n/a |
| Nov11/Apr12 | 193.00 | n/a |
Early Call On Chicago
29/12/10 -- The overnights closed with beans down 6-7c, wheat generally 2-4c lower and corn mixed, and that is where the opening calls now are for this afternoon.
Fresh news is limited, all three markets have posted impressive gains this month so a bit of year-end profit taking is probably more than overdue. Don't go expecting any wholesale exodus this week however, there seems to be a feeling that things can only move higher again come the new year.
There's already talk of the Argie corn crop having suffered damage due to heat and lack of moisture, soybeans too also now seem to be under threat before the crop is even fully planted. Some forecasts today appear to be factoring in a bit more rain than yesterday however.
"Significant precipitation of greater than one inch will reach La Pampa and Buenos Aires 6 days from today (Jan 5-6). The best chance for rain farther north in the remainder of the humid Pampas is one day later (day 7), with 0.15-0.50 inches expected at 60% coverage. Another six days of dry weather is then seen," say QT Weather.
The USDA have today reported 120,000 MT of soybeans sold to China despite prices now pushing USD14/bushel. Mexico also bought a similar quantity of US corn.
European grain futures hitting contract highs is adding support.
The dollar and crude oil are both a little lower, although the latter is close to the highs of the year at over USD91/barrel.
Is There Any Way Out For The Pound?
29/12/10 -- The outlook for commodity prices here in the new year will be heavily influenced by the fortunes, or lack of them, of the pound. From where I am standing the immediate prospects don't look too bright.
Whilst the dollar and euro themselves are hardly shining beacons of strength, the prospects for sterling as we enter the new year look even bleaker.
Currently standing at around 1.5375 against the dollar, the pound is at three and a half month low against the greenback and stands perilously close to slipping below 1.53 to levels not seen since July.
We have unemployment now rising rapidly, with the Chartered Institute of Personnel and Development saying that 2.7 million people will be out of work before the end 2011, the highest jobless total in 17 years. That's almost one in ten of the working population on the dole as the government's enforced austerity measures start to bite.
Hefty job losses in the public sector will lead the way, combined with strikes and other social discontent as demonstrated by the nation's great unwashed recently, 2011 looks set to be a year of unrest.
Meanwhile house prices are forecast to fall as much as 10 percent next year as spending cuts and unemployment bites, along with continued tightness in the lending market.
Food prices are rising too, as we all know in this industry, and that rate of growth is only likely to accelerate given the current outlook for feed and fuel prices. Then, on top of that little lot, we have the impending VAT increase now just days away.
All of this points to significantly reduced consumer spending. The TV people can always manage to find video footage of shoppers breaking down the doors of Harvey Nicks desperate to flash the plastic on Boxing Day, but the evidence of my own eyes tells me that High Street spending has been depressed this Christmas. And I don't believe that it's all down to the weather.
Even if most of it is, retail sales figures are likely to disappoint when all the till receipts are added up in January. As the VAT increase kicks in and people become more concerned about their jobs and find a larger slice of their salaries going on food and utility bills, consumers are going to be tightening their belts in 2011.
That paints a pretty bleak picture for the UK economy, and maybe sets the tone for an enforced continuation of the existing loose fiscal policy, low interest rates and perhaps even more QE.
All of that points to further sterling depreciation ahead, especially against the likes of the Aussie Dollar, Asian currencies in general, the Swiss Franc etc where their economies are positively booming relative to our own.
A more modest decrease, but a decrease nevertheless, seems likely against the euro and US dollar too I'd say.
The Early Vibe
29/12/10 -- Records have been tumbling whilst the UK has had a four day holiday to digest the Christmas turkey.
Paris was open for business as usual yesterday, seeing Jan milling wheat break through the EUR250/tonne barrier to hit the highest levels for a front month since March 2008. Front month Feb rapeseed also broke through EUR500/tonne yesterday, although it finally closed just below that important psychological mark.
Meanwhile in Chicago last night nearby March wheat went through USD8/bushel for the first time since news of exactly how bad things were in Russia hit back in August.
The ongoing drought in Argentina has also seen CBOT corn establish itself well above USD6/bushel, with soybeans now seemingly setting their sights on a shot at USD14/bushel. Corn set a 29 month high yesterday and beans a 28 month high.
A glance at the front month continuous weekly charts on Grainportal.com shows just about every commodity barring Paris malting barley looking set to close 2010 at the highest levels of the year (and for what it's worth malting barley was only EUR1.50 off the weekly high close last night).
London wheat has come in sharply higher at the opening this morning, with all four old crop months now GBP200/tonne or higher as the market plays catch up after two days of closures. New crop Nov11 is up GBP3.75 to a contract high GBP170/tonne this morning, and even Nov12 is up GBP3.00 to GBP150/tonne.
What will happen in the new year if a further wave of fresh investment money comes flooding into these markets is a truly scary thought.
EU Wheat Close - Tuesday
28/12/10 -- London wheat was closed Tuesday, although the French market was open ending with Jan Paris wheat up EUR3.50 at EUR252.50/tonne, whilst new crop Nov climbed EUR3.75 to EUR223.75/tonne.
French wheat dipped out on the latest Egyptian tender, with the order going the way of US and Argentine wheat. That didn't seem to perturb the market too much however given the rapid pace of existing export activity.
French wheat hit contract highs despite the Egyptian disappointment, some would say it would have been an inconvenience to have won it in fact.
The market has to be particularly robust when a failed export tender is almost seen as a blessing in disguise.
Weather conditions in Australia seem to have improved, aiding harvest progress there, although quality remains an issue.
CBOT Close - Tuesday
28/12/10 -- Soybeans
Jan soybeans closed at USD13.75 3/4, up 2 3/4 cents; Jan soybean meal closed at USD368.60, up USD2.20; Jan soybean oil closed at 56.82, down 33 points. Beans managed to post fresh highs despite poor export inspections and Argentine weather worries. China revised Dec soybean imports down from 5.8 MMT to 5.4 MMT and raised interest rates over the weekend, but the market just seems to want to go higher. The Buenos Aires Grains Exchange report soybean plantings at 75% complete, 11% behind last year.
Corn
Mar 11 corn closed at USD6.23 1/4, up 8 cents; May 11 corn closed at USD6.31 1/4, up 8 1/4 cents. Drought in Argentina is probably more damaging to corn than soybeans at the moment as 50% of the corn crop is estimated to be at the the critical pollinating stage. "Argentina has begun a very hot and dry period where temperatures will reach 95-105F on a daily basis for at least the next ten days. Precipitation will be limited or nonexistent in all but the far SW and in S Brazil," say QT Weather.
Wheat
Mar 11 CBOT wheat closed at USD7.98 1/4, up 18 cents; Mar 11 KCBT wheat closed at USD8.60 1/2, up 16 3/4 cents; Mar 11 MGEX wheat closed at USD8.84 1/4, up 18 cents. Egypt bought one cargo of US wheat in today's tender, although they also booked two cargoes of Argentine wheat. Iraq is also said to be in the market for at least 100,000 MT of wheat this week. Ukraine has officially extended their grain export quota system until the end of the first quarter of 2011, increasing the limit to 4.2 MMT.
Is It All Over Yet?
28/12/10 -- Hurrah! Christmas passed without even a sniff of a sprout, no sign of a fight and no gin-sozzled Aunty Doris sobbing uncontrollably into her hankie over Uncle Eric's thirty two year dalliance with "that slapper two doors down".
MrsN#3's kids seemed more than happy with their pressies, both of my grown up ones rang me specifically on the day too - which is a bit of a first - and we didn't run out of beer thanks to my contingency planning. All in all a bit of a result.
To add to my festive joy the kids - MrsN#3's two - have been consigned to their "my Dad's six foot seven you know" fathers for two days, presumably to learn some new circus tricks and the lovely MrsN#3 has gone to work leaving just me and the dog Chummy to enjoy a morning of total quiet and relaxation.
For Chummy that involves sitting in front of the fire, and for me of course it means catching up on what's happened in the grain markets over the long weekend, even though technically today is still a holiday here in the UK.
The garlic-munchers are in today and the Septics - who got a sneaky day off on Christmas Eve - are pretty much back to normal already. For your convenience I've put up a list of who is open when on the righthand side of the blog to guide you through the rest of the Christmas period.
So, besides England dishing out a bit of a cricketing masterclass to the Aussies, what has happened of any significance over the past few days?
China only sold 14% of the corn on offer at today's government auction. That was a better uptake rate than for soybeans, where there we no bids again for the third auction in a row. There is some talk that the lack of interest in soybeans may at least partly reflect the quality of what is held in the government's coffers rather than lack of demand.
China also upped their interest rates by a quarter on Christmas Day, the people themselves were expecting the Strictly Come Dancing DVD boxed set this year as they strive to absorb all things Western, so they may be a tad disappointed with that.
The market seemed to have only a very brief wobble at that news before continuing to march higher. Beans and corn are both posting multi-year highs on the back of the ongoing drought in Argentina, which got little in the way of rainfall over the holiday period.
Furthermore, there isn't anything helpful in the forecast either.
"Argentina has begun a very hot and dry period where temperatures will reach 95-105F on a daily basis for at least the next ten days. Precipitation will be limited or nonexistent in all but the far SW and in S Brazil," say QT Weather.
Argie corn is now in the critical pollinating period, and they are the world's largest exporter of the grain after the US. There's still a bit of time for soybeans yet, but the writing is already on the wall for corn.
Just when some Aussies might have wished for even more rain - did I mention that we're beating them at the cricket? - it's been and gone and dried up on them, a bit like their runs.
That seems to be getting viewed as a bit bearish for wheat as the harvest advances. Indeed there are some reports now filtering through of some silo facilities in SA and NSW already being filled to capacity as this season's bumper crop finally gets cut.
The NSW State government however have downsized their production estimates this month for wheat, barley and rapeseed from what they were predicting in October. That said, output of all three is still up massively on 2009. Is the cup half full or half empty?
For wheat they now predict a crop of 8.75 MMT (from 9.21 MMT in October and compared to 6.45 MMT in 2009). For barley they say 2.29 MMT (2.33 MMT: 1.24 MMT) and for rapeseed 605 TMT (651 TMT; 235 TMT).
Wheat quality has been "badly affected" by the rain, whilst barley quality is variable, "the barley yet to be harvested is expected now to be largely feed grade," they say. For rapeseed "up to 23,000 ha has been lost to waterlogging, flooding and shot and sprung grain and is unharvestable," they add. Shame that they're losing at the cricket too then isn't it?
Egypt are tendering for wheat today, it could be that the recent dollar strength just edges out US wheat in that one. We shall know later this afternoon.
The USDA yesterday said that pig numbers there are down by much more than expected. A situation being replicated right here in Europe too. The cure for high prices will ultimately once again be high prices it seems. The questions are when, and how much higher do we go first?
Chicago Close - Monday
27/12/10 -- Soybeans
Jan 11 soybeans closed at USD13.73, up 23 1/2 cents; Jan 11 soybean meal closed at USD366.40, up USD6.40; Jan 11 soybean oil closed at 57.15, up 56 points. China raised their interest rates over the weekend, which may curb imports, but that news was eclipsed by dryness in Argentina. By the close of play soybeans were at their highest in more than two years, with funds buying an estimated 4,000 to 5,000 contracts. Export inspections were poor at 23.331 million bushels, but that information was largely ignored by a market seemingly determined to press higher.
Corn
Mar 11 corn closed at USD6.15 1/4, up 1 1/4 cents; May 11 corn closed at USD6.23, up 1 cent. Corn was supported by spillover strength from beans, advancing to its highest levels since July 2008. Export inspections of 32.561 million bushels were in line with trade estimates. Dryness in Argentina is probably more of an issue for corn right now than it is for soybeans, with around half the crop in the middle-ending of the critical pollinating period. The forecast for the next ten days is hot and dry, with temperatures set to hit the top 90's to low 100's.
Wheat
Mar 11 CBOT wheat closed at USD7.80 1/4, down 2 3/4 cents; Mar 11 KCBT wheat closed at USD8.43 3/4, down 1 1/4 cents; Mar 11 MGEX wheat closed at USD8.66 1/4, down 2 cents. For wheat it was a quiet low volume day. Export inspections of 17.499 million bushels were in line with expectations, that brings the total year-to-date inspections total to 636,429 million, well ahead of 481,909 million this time last year. Egypt announced another weekly tender after the close with the results expected tomorrow, it remains to be seen if the recent strength of the dollar allows US wheat to feature.
EU Wheat: Christmas Eve Close
24/12/10 -- Twas the night before Christmas, when all through the house, every man and his dog was bullish, and so was their mouse - Clement Clarke Moore (1779 - 1863).
London wheat finished a predictably quiet pre-holiday shortened session with Jan GBP0.25 higher at GBP197.50/tonne and new crop Nov up GBP1.00 to GBP166.25/tonne. Apart from January, the other three old crop contract months all closed at GBP200/tonne or higher for the first time ever.
Jan Paris wheat closed the session EUR1.75 higher at EUR249.75/tonne, whilst new crop Nov gained EUR0.50 to EUR220.00/tonne. Paris rapeseed, corn and malting barley were all flat to higher too.
Nobody wants to sell this market short, even at these levels. It's perhaps extremely telling that the bulls are fully prepared to sit on their longs across the holiday period, rather than cash in profits ahead of a four day shutdown in the case of London wheat.
Volume was light as you might expect. With US markets closed a day earlier than Europe for the festive break, there was little fresh impetus apart from carryover sentiment from yesterday.
Drought worries in southern Russia still haven't been resolved in the Stavropol, Krasnodar and North Caucasus regions.
Meanwhile there's an ongoing drought in the North China Plain, which has received no important rain for 90 days, according to Martell Crop Projections. Henan, which accounts for around a third of China's substantial winter wheat output, is expected to begin cloud seeding before long in an effort to break the drought, according to media sources.
The likelihood of further yuan appreciation in the New Year may spur further Chinese buying of grains, as they seek to rebuild stocks depleted by substantial government auctions during 2010 in a desperate bid to keep spiraling food price inflation under control.
The probability of increased money flows into the agri commodities-sector once we get into January looks set to see further price appreciation ahead.
Best wishes for a healthy, happy and peaceful Christmas. Nogger.
CBOT Close
23/12/10 -- Soybeans
Jan soybeans set a new 27-month high, up 20 3/4 cents at USD13.49 1/2; Jan soymeal was up USD7.30 to USD360.00; Jan soyoil closed up 62 point to 56.59. Export sales were much better than last week at 827,810 MT. The primary destination was China (637,300 MT). Argentina looks set for another difficult couple of weeks as temperatures sizzle at 98-105 degrees for thirteen of the next sixteen days, according to QT Weather.
Corn
March corn closed up 5 cents to USD6.14; May corn closed up 5 cents ar USD6.22. Corn was up for the seventh session in a row. Export sales were robust at 906,077 MT. Argentina corn yield potential is being limited by dry field conditions, deep-layer drought reflects a very dry spring. November was particularly dry in the Argentina grain belt with less than 20% of normal monthly rainfall, says Martell Crop Projections.
Wheat
March CBOT wheat was down 1/2 cent to USD7.83; March MGEX wheat was down 1 1/2 cents to USD8.68; March KCBT wheat was up 1/2 cent to USD8.45. The USDA confirmed that private US exporters sold 100,000 MT of wheat to Iraq. Algeria also purchased 200,000 MT of optional origin durum wheat. The USDA also reported weekly export sales of 590,500 MT of old crop wheat plus a further 6,500 MT for delivery in 2011/12.
EU Wheat: Two Little Ducks
23/12/10 -- EU wheat closed higher Thursday with Jan London wheat up GBP1.00 to GBP197.25/tonne, and new crop Nov GBP0.25 higher at GBP165.25/tonne. Jan Paris wheat rose EUR0.75 to EUR248.00/tonne and Nov climbed EUR0.25 to EUR219.50/tonne.
You wait all this time for one little duck, then two come along at once. July London wheat closed at GBP204/tonne and May also managed a close above the magical GBP200/tonne mark also today finishing at GBP201.00.
March wheat traded at GBP200/tonne, closing just GBP0.25/tonne below that level otherwise we'd have been looking at three little ducks. Meanwhile front month January set another couple of records, trading up to GBP198.40/tonne, the highest for a front month ever. It also set another new all time high close for a front month.
The USDA confirmed that private US exporters sold 100,000 MT of wheat to Iraq yesterday, with them also apparently booking 150,000 MT of Australian wheat.
Despite being a reported seller of wheat last week, Turkey are said to now be in the market for 1 MMT of protein wheat on an import levy free basis.
Algeria has also been a wheat buyer this week, booking "at least" 200,000 MT, meanwhile the USDA today reported weekly export sales of 590,500 MT of old crop wheat plus a further 6,500 MT for delivery in 2011/12.
Current prices certainly don't seem to be putting too many buyers off.
A Glimpse Into 2011 (Part One - The First Six Months)
23/12/10 -- Can we safely throw the record books in the bin now? With London wheat slipping into uncharted territory with front month January having closed at a hitherto unseen GBP196.25/tonne last night and July closing above GBP200/tonne for the first time for any contract ever.
The six million dollar question now must be where do we go from here of course. Perhaps amazingly there is a notion that UK wheat is still cheap, even at these levels, relative to French grain.
So before I do put those record books into the bin, a quick check back tells me that at the end of August Paris wheat was running at a premium over London of around GBP45/tonne. Last night that differential had narrowed to a little over GBP14/tonne. Even so that is still a larger gap than the one we had at the end of 2009 - GBP10.70/tonne.
For what it's worth the pound has been in a range of 1.10 to 1.20 against the euro for most of the year. By the way the exchange rates used in my little calculations above were 1.12 at the end of 2009, 1.20 at the end of August and 1.1750 last night.
Despite the widely publicised problems within some eurozone countries, the one advantage that they have over us here in the UK is that they aren't a one man band. Strength in the economies of some of the larger and more robust nations, can help offset weakness elsewhere.
In the case if the UK of course, we are very much more in charge of sailing - or sinking - our own ship.
A morning's Christmas Shopping on Tuesday told me that the High Street isn't doing very well at all. I was shocked to see how quiet everywhere was just a few days before the big day. Whether we can blame it all on the weather or not I'm not sure, but the point is that the retail sales figures that will start to filter through in the new year aren't likely to make good reading.
Will we make it all back in the January sales? Somehow I don't think so, not with the impending VAT increase and rising utility bills against a background of increased job uncertainty.
I envisage a raft of poor economic data for the UK in the first half of 2011, coupled with increased unrest from students and council workers just for starters. The impact of the recent harsh wintry weather will also filter through presenting a "double whammy" to the economy of reduced consumer spending and further budget cuts down the line as the cost of trying to keep the country running through the snow bites local authority spending even more.
That paints a bearish picture for the pound, and the possibility of the spectre of the dreaded "double dip" recession.
Meanwhile UK wheat (and rapeseed too) exports are tearing away and consumer demand seems to have been relatively unaffected by the price increases that we've seen in the second half of the year.
Scraping last night's Chicken Piri Piri off the record books, I can see that wheat usage in the UK from the animal feed sector has been relatively stable at around 6.5 MMT per annum during the past ten years. Even in 2007/08, the only previous occasion that we've seen prices at these levels, wheat usage in this sector only fell by 10% to around 6 MMT.
In contrast, demand for Human & Industrial use has been creeping up steadily, and that rise is set to become more precipitous as more demand from our new bioethanol chums kicks in.
There has clearly been some resistance from the livestock sector to the steep rise in feed costs, in many cases this has meant feeding their own forage at an accelerated rate. The harsh wintry conditions have exacerbated the problem, meaning that there could be an unexpected spike in feed demand at the tail end of the winter. Whether they can afford to pay for it is another matter. Maybe the supermarkets will have a whip round?
Meanwhile the traditional turnout time of Easter falls quite late in 2011, with Good Friday not until April 22nd. There will be plenty of cattlemen looking to break that tradition and turf them out earlier than that - if conditions allow it.
A weak pound, strong exports and a hard winter, combined with enough uncertainty over wheat prospects from Russia, Ukraine and the US paint a scenario for higher prices during the first half of 2011.
If you put a gun to my head right now I'd go for London wheat peaking around May time at somewhere in the region of GBP225/230.
Chicago Close
22/12/10 -- Soybeans
Jan 11 soybeans closed at USD13.28 3/4, up 2 1/2 cents; Jan 11 soybean meal closed at USD352.70, up USD0.10; Jan 11 soybean oil closed at 55.97, up 41 points. Strikes and weather concerns in Argentina supported prices, as too did crude oil rising above USD90/barrel. Private exporters announced the sale of 110,000 MT of soybeans to China for 2011/12 delivery. Celeres estimate Brazilian soybean planting at 97% complete. Weekly export sales for tomorrow are expected to be 700,000 – 900,000 MT.
Corn
Mar 11 corn closed at USD6.09, up 6 3/4 cents; May 11 corn closed at USD6.17, up 6 3/4 cents. Corn closed at more than two year highs on weather concerns in Argentina. Private exporters announced the sale of 116,000 MT of corn for 2010/11 delivery to an unknown destination, along with 110,000 MT of soybeans to China. Weekly export sales for tomorrow are expected to be 850,000 – 1,050,000 MT.
Wheat
Mar 11 CBOT wheat closed at USD7.83 1/2, up 18 1/2 cents; Mar 11 KCBT wheat closed at USD8.44 1/2, up 18 cents; Mar 11 MGEX wheat closed at USD8.69 3/4, up 12 cents. Iraq bought 100,000 MT of HRW wheat from the US. Turkey are said to be shopping for 1.0 MMT of what could likely be US or Australian wheat for shipment in the spring. Weekly export sales for tomorrow are expected to be 500,000 - 700,000 MT.
EU Wheat Ends Higher Again As Records Tumble
22/12/10 -- Jan London wheat closed GBP2.25 higher at GBP196.25/tonne and new crop Nov was up GBP1.2 to GBP165.00/tonne. Jan Paris wheat closed up EUR2.50 at EUR247.25/tonne, whilst new crop Nov climbed EUR1.00 to EUR219.25/tonne.
It was a new highest ever front month close for London wheat, whilst July too set an all time high for any contract of GBP202.00/tonne. Paris wheat also closed at contract highs, whilst Paris rapeseed is closing in on the magical EUR500.00/tonne mark, with Feb finishing at a contract lifetime high of EUR491.50/tonne.
Iraq bought 250,000 MT of wheat from the US and Australia in its latest tender, despite soaring prices, meanwhile the world's largest importer Egypt continues to buy on a weekly basis.
China may need to import more wheat in 2011 than normal after the North China Plain received no important rain for 90 days, due to a strengthening La Nina. In addition the government's recent decision to cap flour prices by selling wheat to local millers at heavily discounted prices will leave a hole in state-owned stocks.
Brussels reported that they had issued soft wheat export licences for 316,000 MT this week. That brings the year to date total to 10.9 MMT, well ahead of year ago levels.
The German Statistical Office report winter wheat plantings there virtually identical to last year at 3.26 million hectares. Winter barley sowings are down 6% to 1.23 million ha and winter rapeseed plantings have declined by just 1% to 1.45 million ha, they say. The latter figure is better than earlier reports had suggested.
Chinese Rapeseed Plantings Cut?
22/12/10 -- An interesting report on Reuters this morning says that Chinese farmers have cut rapeseed plantings this year by 20% in the country's top four growing regions of Hubei, Anhui, Hunan and Jiangxi.
A survey commissioned by "several futures companies" found that government subsidies and minimum set prices for other grains may have encouraged local farmers to shy away from rapeseed in favour of winter wheat or left land idle for rice or cotton planting in the spring.
You probably won't be surprised to hear that the results of the survey contrast sharply with official data, which shows the Chinese Ministry of Lying par for the course modest 1% increase on last year.
Chicago Close
21/12/10 -- Soybeans
CBOT March futures, settled up 10 1/2 cents at USD13.37 1/2; Jan soymeal traded ISD1.10 higher at USD352.60; Jan soyoil ended 58c points higher at 55.56. Oil World say that a range of 43-48 MMT for Argentine soybean production may be more accurate than the current USDA estimate of 52 MMT. Argentine workers at crushing plants near Rosario are reported to have have gone on strike. Brazilian weather has been generally favourable for crop development.
Corn
Mar 11 corn closed at USD6.02 1/4, up 2 3/4 cents; May 11 corn closed at USD6.10 1/4, up 3 1/4 cents. Funds were reported to have bought somewhere in excess of 2,000 to 3,000 contracts today. Argentina remains too dry, with a potential negative impact on corn output there. China only sold 190,000 MT of the 1.8 MMT reserve corn offered at today's auction.
Wheat
Mar 11 CBOT wheat closed at USD7.65, down 4 1/2 cents; Mar 11 KCBT wheat closed at USD8.26 1/2, up 1/2 cent; Mar 11 MGEX wheat closed at USD8.57 3/4, down 1 3/4 cents. The Australian wheat crop still has huge question marks over it regarding quality. Japan bought 65,000 MT of Australian wheat today. Dryness in the US Plains is still a concern.
London Wheat Sets Historic High
21/12/10 -- London wheat closed almost universally higher with Jan up GBP2.00 at GBP194.00/tonne and new crop Nov GBP1.75 higher at GBP163.75/tonne. Paris wheat closed with Jan up EUR3.75 at EUR244.75/tonne and Nov climbing EUR2.25 to EUR218.25/tonne.
This was the highest close for a London wheat front month in history.
Defra revised this season's UK wheat production estimate up slightly to 14.9 MMT. We're going to need all of that at the rate that exports are going.
The head of the Russian Grain Union suggested yesterday that their export ban may extend beyond July 1st. The only surprise from that quarter would be if it was to end on July 1st if you ask me. He's already talking of fertiliser shortages in the spring and we know that winter wheat plantings are down sharply too.
The Chinese government have agreed to sell off 1.5 MMT of it's own wheat stocks to local millers in return for a cap on flour prices in the run up to the Lunar New Year in February. That's still quite a long way off yet, and more subsidised sales may be needed in a country that consumes around 9 MMT of wheat every month.
Drought is also a problem in northern wheat growing areas there, that may mean that they need to replenish stocks in 2011 via increased imports, according to trade gossip.
The Australian wheat harvest is ongoing, but there are all sorts of reports relating to quality issues there including vomitoxin.
Meanwhile, in North America drought from Mexico is expanding up into the US Great Plains. The last important rainfall in western Kansas was in September, according to Martel Crop Projections. Kansas accounts for around a quarter of all US wheat production.
EU Rapemeal Prices
21/12/10 -- Latest guide prices for EU rapemeal.
Basis FOB Lower Rhine in euros/metric tonne, with change from previous trading day:
| Dec10 | unq | n/a |
| Jan11 | 219.00 | unch |
| Feb/Apr11 | 219.00 | unch |
| May/FH Jul11 | 218.00 | unch |
| Aug/Oct11 | 182.00 | -4.00 |
| Nov11/Jan12 | 188.00 | unch |
| Nov11/Apr12 | 189.00 | unch |
Ukraine Crops
21/12/10 -- The Ukraine Ministry report that less than 7% of winter crops are in poor condition, significantly less than year ago levels. Winter wheat is rated an impressive 57% good and 37% satisfactory. Barley is rated 44% good and 46% satisfactory, with OSR pegged at 54% and 36% respectively.
CBOT Close
20/12/10 -- Soybeans
Jan 11 soybeans closed at USD13.15 1/4, up 16 1/2 cents' Jam soybean meal closed at USD351.50, up USD3.70; Jan 11 soybean pil closed at 54.98, up 85 points. Weekly export inspections of 44.6 million bushels were considered supportive this morning, more than 10 million larger than the same week a year ago. The outlook for Argentina is for the most part hot and dry.
Corn
Mar 11 corn closed at USD5.99 1/2, up 3 cents; May 11 corn closed at USD6.07, up 2 3/4 cents. Corn finished at its highest closing price since July 2008. Export inspections today of only 27.02 million bushels were disappointing fron a bullish perspective. The projected weekly average needs to be around 38.0 million bushels to meer current USDA projections,
Wheat
Mar 11 CBOT wheat closed at USD7.69 1/2, up 12 3/4 cents: Mar 11 KCBT wheat closed at USD8.26, up 14 1/4 cents: Mar 11 MGEX wheat closed at USD9 1/2, up 17 1/2 cents. Again better quality wheat gained relative to CBOT grain. China say that they have ordered local millers to cap flour prices, which may restrict local wheat levels.
EU Wheat Close
20/12/10 -- Jan London wheat closed GBP1.50 higher at GBP192.00/tonne and new crop Nov was up GBP2.50 at GBP162.00/tonne. Jan Paris wheat closed up EUR4.75 at EUR241.00/tonne, whilst new crop Nov climbed EUR3.25 to EUR216.00/tonne.
In the UK we are now within just GBP0.50 of the highest close for a front month contract of all time, GBP192.50/tonne set on 25th Feb 2008. Another milestone today was the July future closing at GBP200.00/tonne.
Continuing with the local theme, the RPA said today that 14,970 MT of barley was sold out of UK intervention last week, leaving 136,000 MT still available for purchase.
Snow and freezing temperatures continue to dog the UK with lows of around minus 14/15C forecast overnight. Late pre-Christmas demand for feed seems to have kicked in over the weekend after another widespread dusting of the white stuff.
Even those livestock farmers who thought that they'd have enough of their own forage to see them through until spring now seem to be worrying over how quickly their stocks are diminishing.
The Russian Grain Union's president said that their grain export ban may extend beyond the existing July 1st deadline. Surprise, surprise. He also forecast that it might be cold this winter. Winter grain plantings are down 14%, he added.
Conflicting reports are coming out of Australia, with some saying that recent wheat crop downgrades have been over estimated. Others suggest the opposite, only time will tell.
EU Rapemeal Prices
20/12/10 -- Latest guide prices for EU rapemeal.
Basis FOB Lower Rhine in euros/metric tonne, with change from previous trading day:
| Dec10 | 219.00 | +2.00 |
| Jan11 | 219.00 | +2.00 |
| Feb/Apr11 | 219.00 | +2.00 |
| May/FH Jul11 | 218.00 | +1.00 |
| Aug/Oct11 | 186.00 | +3.00 |
| Nov11/Jan12 | 188.00 | unch |
| Nov11/Apr12 | 189.00 | unch |
Early Call On Chicago
20/12/10 -- The overnight grains began the week in bullish mood, with beans and wheat ending around 10-12c higher and corn up 4-5c.
Crude oil is around half a dollar higher and the US dollar broadly unchanged.
The outlook for Argentina is for the most part hot and dry. Weekend rains totalled 1-3 inches in Santa Fe and Santiago del Estero, 0.50-1.25in. in Entre Rios, and 0.15-0.60 in Cordoba, Buenos Aires and La Pampa, say QT Weather.
The week ahead will see rains continue in the far north, with heat rebuilding and no rain until Thursday in the south. Temperatures will remain above normal reaching 95-
100 degrees most areas, they add.
Mixed reports continue to come out of Australia, with some suggesting that the 50-60% downgrades to wheat in the east might be overstated.
China has asked it's millers producers to cap flour prices until Chinese New Year in February. There are some ideas that this will lead to reduced demand for wheat, as we appear to be seeing with soybean demand after restrictions were introduce on soyoil prices.
Early calls for this afternoon's CBOT session: beans up 10-12c, wheat up 8-10c, corn up 3-5c.
Bearing in mind that a long holiday and month & year end is looming further profit-taking could be on the cards this week. Even if we do close higher tonight, then there's always turnaround Tuesday to look forward to tomorrow.
Sweet Crisis Worsens
20/12/10 -- Just days after the Russian Ministry confirmed that almost their entire sherbet crop had been wiped out by drought, the Australian Wine Gum Board have said that heavy rains in the east of the country would see supplies of the fruity chew drop to the lowest levels since the war.
"Farmers had been hoping for a bumper wine gum crop until the rains started," they said. However, non-stop rain since July has led to almost the entire crop being downgraded to "those black ones that nobody likes," they say.
It's just the latest in a series of devastating blows to have been dealt to the global confectionery market recently, said one analyst.
"Only last month the Ivory Coast's entire output of coffee cremes was wiped out after accidentally being left on the dashboard of a Ford Fiesta in full sunlight for three days," he added.
One UK sweet shop owner was recently dragged from his shop and almost beaten to death with a Curly Wurly after locals accused him of profiteering after he increased the price of a Milky Way from 27p to 29p "totally without warning".
The government have appealed for calm, and have assured elderly people that there are sufficient supplies of extra strong mints on hand to get them through the winter.
The sick will also be issued with one packet of Tunes each, which they will be asked to suck very slowly with the wrappers still on, in line with government guidelines until the situation improves, said a Whitehall official.
More as we get it...
Video Nasty
20/12/10 -- A bankrupt Russian poultry firm, responsible for producing more than half the chicken in the Kursk region of the country, ordered the wholesale slaughter of more than a million chickens over the weekend after they ran out of money to buy feed.
According to this report in the Moscow Times, they then posted video footage of the mass inhumane slaughter on YouTube in a bid to obtain state aid. I've a feeling that the state aid they are likely to get may come in a .45 calibre* format:
I think I'll just have the salad
* Which reminds me that I read that the Russian State Circus have just fired their human cannonball act. They'll find it hard to replace a man of his calibre methinks.
Australian Harvest Latest
20/12/10 -- I'm indebted to my friend Gail Martell at Martell Crop Projections for emailing me these images courtesy of the Western Australia Grains Group (WAGG) of the ongoing harvest situation Down Under. It doesn't exactly look what you would call plain sailing. Blimey!
Enterprise Or Sacrilege?
20/12/10 -- Wandering around a small nearby village greengrocers/general store at the weekend my eye was caught by several large clear polythene sacks containing some greenish "pellets". The largest "pellet" I've ever seen in fact at around 50mm across.
The very helpful young man was delighted to assist. "We sell these bottles of extra virgin rapeseed oil, and that's the waste by-product," he informed us thrusting a brochure into my hand.
It made pretty impressive reading too. The "briquettes" are made in Yorkshire, from rapeseed grown in Yorkshire and only release the same CO2 back into the Yorkshire atmosphere that it recently sucked out of it.
They also have twice the energy of logs and burn twice as hot and for three times as long, they say. They produce no soot and virtually no ash, and what they do produce can be spread onto the garden as fertiliser, they add.
A 12.5kg bag is retailing at GBP8, similar to smokeless coal, that's GBP640/tonne. Not bad for a "waste" product, and more than three times better than selling it as an expeller in meal form into the feed trade.
I bought a sack and tried a few out last night, just out of interest, and they burned quite well. Does that mean I'm turning into Drax?
Incidentally, the cold pressed oil comes in at GBP4.95 for a 250ml bottle, that's around GBP21,500/tonne by my calculations.
Obviously there are some substantial costs involved in terms of bottling/pelleting and distribution not to mention scale, nevertheless the figures make interesting reading.
Chicago Close
17/12/10 -- Soybeans
Jan 11 soybeans closed at USD12.98 3/4, up 9 3/4 cents; Jan 11 soybean meal closed at USD347.80, up USD4.00; Jan 11 soybean oil closed at 54.13, up 6 points. Beans finished around 25c higher on the week. This week's approval of the Bush era tax bill included a retroactive renewal of the blend credit for biodiesel which should increase demand for soyoil and therefor beans. Informa raised their US soybean area forecast for 2011 to 77.6 million acres from 75.8 million.
Corn
Mar 11 corn closed at USD5.96 1/2, up 9 cents; May 11 corn closed at USD6.04 1/4, up 8 3/4 cents. Corn gained around 22c on the week. Informa cut their forecast for US corn plantings next spring from 93.1 million acres to 90.76 million. The extension of the ethanol blenders credit was also supportive. Half of Argentina's corn crop is under threat from drought with wear over year crop conditions showing extreme deterioration across much of the country, say QT Weather.
Wheat
Mar 11 CBOT wheat closed at USD7.56 3/4, up 7 cents; Mar 11 KCBT wheat closed at USD8.11 3/4, up 8 1/2 cents; Mar 11 MGEX wheat closed at USD8.42, up 6 3/4 cents. On the week CBOT wheat was around 18c lower, KCBT wheat lost around 10c and MGEX fell in the region of 20c. Talk is of an improved outlook for the Australian harvest and that quality in some areas may not ultimately be as bad as feared. It's a big old place though, and other images in circulation paint a completely different picture.
EU Wheat Close
17/12/10 -- EU wheat closed mixed but mostly higher Friday with Jan London wheat up GBP0.50 to GBP190.50/tonne, and new crop Nov GBP0.75 higher at GBP159.50/tonne. Jan Paris wheat rose EUR0.25 to EUR236.25/tonne and Nov fell EUR0.50 to EUR212.75/tonne.
On the week as a whole Jan London wheat rose just GBP0.50/tonne, with Jan Paris wheat falling by EUR5.75/tonne.
The market appears to be slipping into holiday mode, after months of big money moves we seem to have reverted to the "good old days" of prices moving by just fractions of a pound or euro each day.
That's maybe no bad thing. It looks likely at the moment, barring unforseen huge upsets, that prices will probably close the year fairly close to where we are now.
US analytical company Informa did their best to throw a spanner in the works today by dropping their prediction for US corn plantings next spring from 93.1 million acres to 90.76 million.
They also reduced their US winter wheat area to 39.5 million acres from 39.7 million last month.
Talk is now surfacing that US wheat in the major producing areaas of the High Plains may see significant abandonment this season. "The La Nina effect may be to blame for intense drying now under way," say Martell Crop Projections.
"Wheat producers are often cattlemen as well, exercising the option of turning beef cows onto wheat that has deteriorated from drought. A crop not worth harvesting may still have value as a feed grain. Moreover, in spring, wheat producers would have the option of tearing up badly damaged wheat and planting to another crop, like like sorghum," they say.
Sherbet Lemon Crisis Looms
17/12/10 -- Labour backbenchers have warned concerned shoppers that supplies of the nation's favourite sweet, the sherbet lemon, are running at "critically low" levels after the failure of almost the entire Russian sherbet crop.
"This useless government just seem willing to stand by and do nothing, thousands of children, and adults too, will be distraught this year when they find that their Christmas stocking favourite has been replaced with a packet of bloody liquorice allsorts," said one.
Another MP, who refused to be named for legal reasons, said that government-owned stocks of sherbet had virtually "run out" after "deranged" sweet shop owners had been exporting the boiled sweet to "all manner of fancy Johnny Foreigners" at knock-down prices.
Hugh Jarse, an East Anglian sherbet farmer, says that he doesn't stand to make a penny from the boom. He and his mates sold all their sherbet to a faceless US-owned multi-national conglomerate back in the summer when they told him that sherbet prices could only go one way - down.
"What a chump I am," laughed Mr Jarse "I've lost almost everything. I've only got the six bedroom Jacobean farmhouse, five thousand acres of prime sherbet growing land, the Jag, the Range Rover, the Porsche for Sundays and my 25-year old Ukrainian nymphomaniac girlfriend left," he sobbed.
French analysts Sherbetie Sweeties forecast yesterday that EU supplies of sherbet may last until the middle of next week, but after that it's every man for himself.
The US Department of Sherbet estimate that the Russians may have "up to" 10 million tonnes of Sherbet Lemons in store. However they've been there for a couple of years and are probably all stuck together and to the side of the bag, so they're probably about as much use as a one-legged man in an arse kicking contest, they add.
The US Sherbet Council & Little Round Tin Sweetie Company meanwhile estimate the China's "insatiable" demand for boiled sweets may see them import "up to" twenty five million tonnes of those travel sweets that come in the little round tins that we keep in the glove box by 2015. That's an increase of two billion percent on the one tin of those travel sweets that come in the little round tins that we keep in the glove box that China imported last year.
Chinese peasants are adopting a more Westernised diet, so sales of those travel sweets that come in the little round tins that they will keep in the glove box of their car when they one are set to boom, they added with authority.
Fuel Crisis Looming?
17/12/10 -- There's a fuel crisis coming, or indeed one may already be here, according to the Telegraph (clicky clicky big boy).
Normally I'd dismiss that as media scaremongering. They like to creep up behind unsuspecting mongers and go BOOOO! the papers don't they? The article points out that "rural schools and hospitals, also depend on oil for heat". Well as the schools are all closing today anyway, maybe the hospitals can pop round and syphon some off you might think.
More than one person mentioned sees the astonishing recent price spike as blatant profiteering. It certainly isn't backed up by the price of crude oil which has been relatively stable between USD80-90/barrel since September. If we have a look at a chart for heating oil in the UK however, we see a meteoric rise since the start of the month:
So what is going on? One or two local petrol stations round by me DO seem to have had the "petrol pump says no" stickers out on a lot of their pumps for two or three weeks now.
I've got an uneasy feeling that this isn't scaremongering somehow. MrsN#3 does like her smellies at Christmastime, I wonder how this year's very expensive 500 ml Diesel atomiser spray is going to go down?
Bah, Humbugs To The Morning Vibe
17/12/10 -- I think I must going all retro, this is the first year in as long as I can remember that I haven't done almost all my Christmas shopping online. What's wrong with me? I'll be buying a shopping trolley on wheels and a nice warm hat next. Uncle Joe's Mintball anybody? Here's a picture of my next door neighbour Mr Knopfler last Christmas, mad a shoe he is, reckons he used to be in a band years ago the soft sod. I use him to practice my after-dinner speeches on. I must be good as he always pisses himself when I do that, bless. Anyway, where was I? Oh, it's cold isn't it, you want to wrap up warm this time of year, and have you seen the price of coal these days, scandalous it is. Now, where did I put my teeth, MrsN#3 must have them in again. More tea?
Brussels accepted bids for 330,000 MT of it's intervention barley and 16,000 MT of it's wheat yesterday, according to reports. They also issued export licences for 353,000 MT of soft wheat bringing the marketing year to date total to 10.6 MMT versus 7.8 MMT this time last year. If we were to maintain that pace then we'd finish up exporting 23 MMT in 2010/11.
The Buenos Aires Grain Exchange upped it's Argy wheat production estimate for this season to 13.5 MMT yesterday, a monster 80% increase on last year. Despite supposedly clearing 5.5 MMT of wheat for export though the government are said to still be very sluggish on issuing the necessary paperwork.
The BAGE estimate soybean plantings at 70% done and corn at 84% complete.
China's second soybean auction in a week attracted about as much interest as the first with no bids whatsoever today. That could be because the beans on offer are about as good a quality as the losing quarter-finalists in the X Factor, that's one theory doing the rounds. On the other hand demand has slackened right off due to government caps on soybean oil prices. This appeared to be confirmed by yesterday's moribund US weekly export sales report.
A year-long EU investigation into biofuels has amusingly and unsurprisingly concluded that a year isn't long enough to reach a decision on whether they're a good thing or not. So they're going to get back to us in six months or so.
Ratings agency Moody's have cut Ireland's credit rating five notches to Baa1, saying that further downgrades are possible, according to a report on Reuters this morning.
The pound has fallen below 1.17 against the euro, despite Ireland being as creditworthy as Bernie Madoff, as consumer confidence here slips lower than Kerry Katona's IQ.
The bad vibes for 2011 are there for all to see. Not that you can probably see a vibe, but you know what I mean. Unemployment is rising, VAT is about to rise, food and fuel costs are also on the up. Meanwhile wages are frozen, ergo consumer spending is set to decline as we all find a larger chunk of our hard-earned is simply going on essentials like utility bills, alcohol and humbugs. Looks like this Rigsby-style cardie I'm wearing will have to do another year then. Darn it.
CBOT Close
16/12/10 -- Soybeans
Jan soybeans ended 7 1/2c lower at USD12.89; Jan soymeal fell USD2.30 to USD343.80; Jan soyoil ended 13 points lower at 54.07. USDA weekly export sales for the period Dec 3rd-9th 2010 were very poor for soybeans at a combined 173,600 MT split 84,600 MT old crop and 89,000 MT new crop. Cancellations, made this the worst sales in 6 1/2 months. Forecasts for Argentina have improved slightly for the weekend, although in Brazil Mato Grosso is suddenly turning dry.
Corn
Mar 11 corn closed at USD5.87 1/2, up 3 1/4 cents; May 11 sorn closed at USD5.95 1/2, up 3 1/4 cents. Weekly corn export sales were in line with expectations at a combined 880,100 MT. CNGOIC raised their estimate for 2010 Chinese corn production to 172,5 MMT, which would be a record. The trade is winding down into holiday mode. China may import five times as much corn in 2011 as it did in 2010, according to an article on Bloomberg.
Wheat
Mar 11 CBOT wheat closed at USD7.49 3/4, down 15 cents; Mar 11 KCBT wheat closed at $8.03 1/4, down 8 cents; Mar 11 MGEX wheat closed at USD8.35 1/4, down 7 1/2 cents. Weekly export sales were strong at 973,344 MT. Algeria bought 350,000 MT of South American and European origin wheat for shipment in February. US wheat features in sales to Jordana dn Egypt yesterday.
EU Wheat Closing Comments
16/12/10 -- London wheat closed mixed with Jan unchanged at GBP190.00/tonne and new crop Nov down GBP0.45 at GBP158.75/tonne. Paris wheat closed lower with Jan down EUR2.00 at EUR236.00/tonne and Nov down EUR0.25 at EUR213.25/tonne.
Once again the market is struggling to balance very tight old crop stocks against slack demand from the feed sector. Interest in high protein wheat is still robust, with Egypt, Algeria and Jordan all in the market this week, although the US picked up a significant portion of that business.
China say that their corn crop will amount to a record 172.5 MMT this year, which may curtail ideas of large scale imports in 2011.
Strategie Grains released their first impressions on EU grain output for next season today. They peg the wheat crop at 144.8 MMT, which would be an increase of around 8 MMT, or 6% on this season.
German output is seen climbing by around 2 MMT as yields return to normal, with the French also seeing production increase by a similar amount and UK output up by around 1 MMT on increased plantings.
EU-27 barley production is forecast up at 55.5 MMT, from 52.8 MMT this year, whilst corn output is seen at 58 MMT, from 54.7 MMT in 2010/11.
Ukraine says that winter wheat plantings there are only down marginally, but winter rapeseed sowings have declined by almost a quarter.
The US took a step closer to renewing the ethanol blenders tax credit (due to expire on Dec 31st) by getting the vote past the Senate, the House of Representatives is next. That might be tougher to push through but victory is expected nonetheless. That should keep US corn pouring into the ethanol sector in 2011.
