Price Review Of The Week
Front month EU/US grain futures showed the following price movements during the week ended March 5th:
Close Change
London Wheat 92.30 - 2.70
Paris Wheat 119.25 - 3.00
CBOT Soybeans 934.25 - 16.25
CBOT Soymeal 257.90 - 15.30
CBOT Soyoil 39.72 + 0.43
CBOT Corn 364.75 - 13.25
CBOT Wheat 482.25 - 24.25
CBOT Closing Comments
Soybeans
March soybean futures closed at USD9.34 ¾, up 2 ¼ cents; November soybean futures were at USD9.25, unchanged; March soymeal futures at USD257.90, unchanged; March soy oil futures at 39.72, up 9 points. Bored, bored, bored, bored. Nothing much looks likely to happen before next Wednesday when the USDA release their monthly supply/demand report. Trade estimates for the soybean crop average 3.349 billion bushels with an average carryout of 193.1 million bushels.
Corn
March corn futures closed at USD3.64 ¾, down 7 ¼ cents, and May corn futures at USD3.75 ½, down 7 ½ cents. Trade production estimates for next week's monthly USDA supply demand report ranges from 12.838 to 13.200 billion bushels with an average guess of 13.081 billion bushels. Ending stocks are projected at virtually unchanged from last month, with yields at 164.5 bu/acre.
Wheat
March CBOT wheat futures closed at USD4.82 ¼, down 8 ¼ cents; March KCBT wheat futures at USD4.93, down 7 cents; March MGEX wheat futures at USD5.03 ¾, down 7 ¾ cents. Analysts on average are predicting that USDA will put wheat ending stocks at 976.6 million bushels, slightly lower than last months report. Yesterdays export sales were disappointing, and still weigh.
EU Wheat Closing Comments
London May wheat closed down GBP0.25 Friday at GBP94.90/tonne, May Paris wheat ended EUR0.25 easier at EUR123.25/tonne. No changes there then.
Wheat can't seem to buy a rally at the moment with doom and gloom around every corner, or at least so it seems.
The EU issued soft wheat export licenses for 292,000 MT in the week ending 2nd March, that brings the total volume of exports granted so far this marketing year to 11.9 MMT, 17% down on the 14.4 MMT granted this time in 2009.
With wheat prices tumbling on a seemingly daily basis consumers aren't exactly falling over themselves to buy at the moment.
Corn production estimates in Argentina keep growing, with private US analytical firm Informa yesterday pegging output there at 21 MMT, fully 2.8 MMT up on it's last estimate.
Next week all eyes will be on world production data and US stocks numbers from the USDA due to be released at lunchtime on Wednesday. 2009/10 wheat and corn ending stocks are expected to be trimmed slightly.
The pound appears to have recovered from its pasting at the beginning of the week, at least for now. More thrashings lie ahead I'm sure, as BOE governor King seems positively delighted with sterling's demise.
It's never easy is it?
CBOT Early Call
The overnight grains closed slightly firmer in a modest correction from last night's losses. May corn was up 3 1/4 cents at USD3.86 1/4 per bushel, May wheat was up 2 1/4 cents at USD5.04 1/2, and May soybeans were up 3 cents at USD9.45.
Breaking news just out says that US non-farm payroll employment fell by 36,000 jobs in February, substantially less than the 68,000 job losses that had been expected. The unemployment rate remained unchanged from the previous month at 9.7 percent, against expectations of a slight increase to 9.8 percent.
Increased production estimates from Informa for Argie soybean and corn output yesterday, plus them leaving their Brazilian soybean estimate unchanged when others are predicting slightly lower yields are all still bearish.
News that the US agricultural attache says that Chinese wheat production was overstated by 8.5 MMT last year does not yet seem to have caused too many ripples in the market.
Maybe traders are waiting to see what the USDA themselves say next Wednesday?
As well as tweaks to world crop production numbers, US corn and wheat ending stocks are also expected to be reduced a little.
The jobs data should add further support to the dollar, which looks set to cap any significant attempts to rally, although there may be some position squaring ahead of the weekend. Bearing in mind the size of spec shorts on wheat in the market we can't rule out some sort of short-covering rally between now and Tuesday.
For now early calls for this afternoon's CBOT session are: corn and wheat called 1 to 2 higher, soybeans called 2 to 4 higher.
Wow, They Don't Muck About In North Korea
A North Korean man has apparently been executed for using an illegal mobile phone to inform a defector chum in South Korea what the price of rice was locally.
These lads clearly take things more than a little seriously.
Full story here: Wing Wing
US Winter Wheat Latest
There are three classes of winter wheat grown in the US:
Hard Red Winter wheat, grown mainly in southern and central states like Kansas, Oklahoma and Texas.
Soft Red Winter wheat, grown mainly in the heart of the Midwest in states like Illinois.
Soft White wheat, grown mainly in the Pacific Northwest in states like Washington.
Winter wheat is starting to emerge from dormancy in mixed conditions after the EL Nino effect typically diverts Pacific storms northwards up the coast of British Columbia, avoiding Washington, the 3rd biggest US winter wheat state. The subtropical jet stream however frequently delivers storms to southerly states like Texas and Oklahoma, says Gail Martell of Martell Crop Projections.
This year Texas has received plenty of rain with the state wheat rating improving on March 1 to 46% good-excellent, 36% fair and 18% poor-very poor. That represents a strong increase from a month earlier when just 31% of wheat was good-excellent and 29% was poor-very poor. West Texas has a semi-arid climate, and above-normal winter precipitation almost always leads to a favorable wheat yield, says Gail.
Further north things aren't looking as good. The top US wheat producing state is Kansas, which alone grows nearly one-quarter of the US crop. Here, a dry winter played a significant role, and so did cold temperatures that remained below freezing in February when wheat here hardly grew at all, adds Gail.
The Kansas wheat rating dropped to 53% good-excellent March 1, down from 75% in November, based on USDA reports. Oklahoma wheat also deteriorated, falling to 60% good-excellent from 80% last fall, notes Gail.
However, both these states are expecting heavy soaking rains on the weekend that would replenish dry fields and improve growth potential in hard red winter wheat, Gail forecasts. Waves of showers are predicted Sunday-Tuesday in western Kansas with a developing storm in the Central Rockies. This could be a big rain maker for the top US wheat state as the storm tracks slowly eastward, she adds.
In the Midwest soft wheat prospects are dismal, where the production outlook is constrained by a 29% cut in the planted area, says Gail. Wheat was planted late and was under-developed when winter dormancy set in. Illinois wheat has deteriorated in a stormy and cold winter, dropping to 28% good-excellent, 49% fair and 23% poor-very poor on March 1.
In the white wheat areas of the Pacific northwest, below-normal rainfall with El Nino is damaging for wheat potential, Gail observes. Available soil moisture for spring growth is reduced, because of sub-par winter precipitation, 25-35% below normal in Washington. Producers indicate yields will be down, unless spring showers are unusually heavy. Most of the annual precipitation occurs from November through March, so a winter drought is especially damaging for wheat, she says.
Overall it seems like a pretty mixed bag of outlooks for winter wheat. Whist Texas looks like it could be in for a bumper crop, the state only produces around 6% of the national crop.
The combination of cold temperatures and wet fields may well be delaying fieldwork in many other states.
CBOT Closing Comments
Soybeans
March soybean futures closed at USD9.32 ½, down 22 cents; November soybean futures were USD9.25, down 17 ½ cents; March soymeal futures at USD257.90, down USD8.60; March soy oil futures are at 39.63, down 0.39 points. Meal was again the weakest leg, hitting 11-month lows on increased competition from DDGS. Informa upped their Argentine production estimate to 55 MMT, 2 MMT above the USDA and 3 MMT higher than the Buenos Aires Grain Exchange. Weekly export sales were in line with expectations, although slanted in favour of new crop. Sales of 182,400 MT for old crop were a marketing-year low. China didn't book any old crop.
Corn
March corn futures closed at USD3.72, down 3 ¾ cents, with May corn futures at USD3.83, also down 3 ¾ cents. Weakness from beans and wheat weighed on corn, although concerns over delayed spring plantings helped compared to the other pits. Informa are obviously getting good vibes out of Argentina at the moment, raising their production estimate to 21 MMT, compared with just 17.2 MMT from the USDA and a more realistic 20.2 MMT from the Buenos Aires Grain Exchange. Weekly export sales were above expectations at 761,400 MT for delivery in 2009/10, plus 72,000 MT for delivery in 2010/11.
Wheat
March CBOT wheat futures closed at USD4.90 ½, down 13 cents; March KCBT wheat futures are at USD5.00, down 9 ½ cents; March MGEX wheat futures were at USD5.11 ½, down 9 ½ cents. It's one step forward and two steps back for wheat at the moment. Weekly export sales were very poor at 104,100 MT, highlighting exactly how uncompetitive US wheat has become. Informa upped their Indian crop estimate by 2 MMT to 82 MMT. Spillover weakness from the soy pit also helped weigh on wheat futures, which maybe gained more then they should have done, given the fundamentals, in Wednesday's session.
EU Wheat Closing Comments
EU wheat futures extended their recent declines Thursday, with March London wheat ending GBP1.40 lower at GBP94.65/tonne, and March Paris wheat down EUR0.75 at EUR119.50/tonne.
For March Paris wheat that set a new bearish milestone as it was a first ever close below EUR120/tonne during the life of the contract.
Both the ECB and BOE left interest rates unchanged today, which was widely expected and consequently caused only minor ripples in the currency markets.
US wheat futures came in sharply lower in the afternoon, which added to the bearish pressure already surrounding EU wheat. Weekly US export sales announced by the USDA were a very poor 104,100 MT, down 73 percent from the previous week and 77 percent from the prior 4-week average.
It's the same old story I'm afraid, large stocks and lack of buyers. Throw in winter wheat emerging from dormancy, spring planting and harvesting in warmer climbs not too far away either and it's hard to get enthusiastic for prices. Certainly not for the next six months or so anyway.
A further weakening of the pound seems likely in the run up to the election, that might help underpin UK prices from falling too much further. Ensus are finally up and running (or is it limping?) which can't do too much harm either.
There may be some glimmers of hope on the distant horizon, but there's likely to some more pain before we get any gain.
Chinese Lying About Crop Production Shocker
Just like jeans, bacon butties and hairy gay men with huge moustaches, some things never go out of fashion. Cue China and it's crop estimates, I use the word 'estimates' in it's loosest form obviously.
A report from the US agricultural attaché in China says that the 2009/10 wheat crop there was in fact 106 MMT, substantially less than the 114.5 MMT that official Chinese figures currently suggest. That's a 7.5% overestimate.
The widely reported early season drought took it's toll last season, as too did disease, hot and dry winds and rain damage at harvest time, he says.
The corn crop too was also badly affected by drought, coming in at 150 MMT which is some 13 MMT below official Chinese estimates, he adds.
The problem stems from the state subsidy program that rewards provincial government authorities based on the volume of grain that they produce.
Assuming that the figures are correct, and there have been plenty doubting the official numbers for many months, that immediately knocks 4.3% off global wheat ending stocks for 2009/10. And that assumes that previous year's 'estimates' weren't also falsified.
It's no huge surprise let's face it, but it does put things into perspective when you consider that China are supposed to account for almost a third of the world's wheat stocks this year. Or are you going to tell me that this is the first time they've done it? If they've overestimated production by 7.5% for the last eight years then China's 60 MMT of 2009/10 ending stocks simply doesn't exist.
Now that's food for thought, or not as the case may be.
Terra Yara Gonna Have A Ding Dong?
The high profile celebrity wedding of Terra Industries and Yara International might have hit a hitch after rival suitor, US firm CF Industries, launched a counter bid for Terra.
CF spent most of last year chasing Terra around the back of the bike sheds, culminating in a USD4 billion bid for the US nitrogen manufacturer. Shy and retiring Terra steadfastly refused CF's advances, before ultimately agreeing to a slightly better offer of USD4.1 billion for a no holes barred marriage of convenience with aging Norwegian Lothario Yara.
Since then however CF has lost a few pounds, had a few sunbed sessions, and emptied the piggy bank to stump up a knee-trembling offer of USD4.7 billion to fertilise with Terra.
Terra, winner of the inaugural 2002 X Factor and a part-time model, is said to be so confused that her little head is spinning.
Overweight and balding Yara is said to be demanding that Terra continues to wear his ring and threatened CF with a "good old fashioned Norwegian flagellation" if he can get hold of the lithe and handsome American.
More as we get it.
eCBOT Close, Early Call
In overnight trade March corn was down 3 cents, March soybeans ended 6 1/4 cents lower and March CBOT wheat was down 7 1/2 cents.
Crude oil is showing little change, yesterday's stocks data showing a rise of 4.1 million barrels last week is undeniably bearish. However news of yet another Nigerian facility attack is keeping the market nervous.
The dollar is firmer once again which will add some downwards pressure.
Weekly export sales for last week were much larger than the trade expected for corn, at 833,400 MT, compared to the 300-700,000 MT anticipated.
For soybeans sales were 370,400 MT of combined old and new crop business. That was a little above expectations of 200-350,000 MT. Again sales for old crop were a marketing year low, China bought most of the new crop (188,000 MT).
Wheat export sales were very poor at only 104,100 MT against expectations of 250-500,000 MT. Physical exports of 472,700 MT just about keep the USDA's full marketing year target on track.
More talk of Brazilian yields coming in lower than anticipated seems to indicate that some estimates of 68 MMT were indeed "pie in the sky". Still a crop of around 64-65 MMT is certainly not to be sneezed at.
Asian rust problems are also emerging in Argentina I hear.
Japan bought 132,000 MT of wheat in its usual weekly tender, some 65,000 MT of that was US origin.
We can probably look for some pre-weekend and pre-USDA positioning over the next couple of sessions.
Early calls for this afternoon's CBOT session: corn called 1 to 3 lower; soybeans called 4 to 6 lower; wheat called 6 to 8 lower.
US Soymeal Prices Hit 5-Month Low
US soymeal prices fell to their lowest levels since last October in overnight eCBOT trade Thursday. Front month March CBOT soymeal closed on the session low of USD264/tonne, just eclipsing the low of the year so far set on Feb 4th of USD265.60/tonne.
The March future is now within spitting distance of the previous harvest low of USD262/tonne set in early October 2009. The lifetime contract low was USD235/tonne set in the traditional "spring break" or "John Deere low" in March 2009.
Despite meal eclipsing the previous 2010 low of Feb 4th, March soybean prices are still almost 50 cents higher than their lowest levels of the year, set on the same day.
There are a couple of reasons for the disparity.
The ever increasing use of corn by the US ethanol industry has led to record production of DDGS looking for a home. Soymeal is now have to price itself into feed rations in the US more aggressively than it has in the past faced with this new competition.
Additionally, talk that an extension of the USD1 a gallon blenders credit getting passed as early as this week, is seen as bullish for beans and oil but bearish meal. Without the credit crush margins for producing soyoil for inclusion in biodiesel are poor, but with it we could see increased crushing and therefore extra production of meal.
For more background info on the blenders credit element of this story see here.
Of course the pound was some 9 cents or so higher against the dollar back in early February, which explains why UK soymeal prices aren't also currently at their lowest levels of the year.
ECB and BOE Leave Rates On Hold
The ECB and BOE left interest rates in the eurozone and UK on hold, as was widely expected Thursday.
In the UK rates have now been left at 0.5 percent for the last twelve consecutive months.
The BOE also resisted the temptation to announce any further QE measures, presumably content with the recent demise of the pound over the past few weeks. They will be hoping that will go some way towards stimulating the economy in itself.
The flip side of a weak currency is of course rising import costs. Inflation reached a 14-month high of 3.5 percent in January because of the drop in sterling and increases in VAT and fuel costs.
BOE governor Mervyn King will be looking for inflation to slip back towards his 2 percent target, and probably get the election out of the way, before considering more QE in the second half of 2010.
The MPC decision will also have been aided by positive manufacturing and consumer confidence data from earlier in the week.
Both the pound and euro were little changed as the news broke, as both decisions were widely anticipated.
EU Soymeal Prices
Guide prices basis CIF Rotterdam/Amsterdam in USD/tonne unless stated:
Brazil pellets 48%
Spot Fob 384.00
Afloat 381.00
March 359.00
Apr 331.00
May/Sep 317.00
Oct/Dec 318.00
Argentine pellets 44/45%
May/Sep 317.00
Dutch Hipro 49% profat FOB
Apr 381.00
May 359.00
Jun/Jul 330.00
Aug/Oct 335.00
Nov/Jan 336.00
Argentine Hipro 49% profat
Afloat 388.00-383.00
Feb 379.00
March 356.00
Apr 339.00
May/Sep 321.00
Oct/Dec 324.00
The Rain In Spain
The heavy rains that caused such terrible problems in the holiday island of Madeira recently have also been hitting southern Spain. Spanish Farmers group Asaja say that a fifth of the Andalucian wheat crop (where around a quarter of the nation's wheat is grown) could have been lost to flooding.
CBOT Closing Comments
Soybeans
March soybean futures closed at USD9.54 ½, up ¼ cents; November soybean futures ended at USD9.42 ½, up 3 ¾ cents; March soymeal futures at USD266.50, down USD4.00/tonne; March soy oil futures at 40.02, up 0.21 points. A weaker dollar and higher crude oil helped prices today, although the market largely appears to be in a state of limbo ahead of the USDA Supply & Demand report on the 10th March. Estimates for tomorrow's weekly export sales report range from 200-350,000 MT.
Corn
March corn futures closed at USD3.75 ¾, up 5 ¼ cents; May corn futures at USD3.86 ¾, also up 5 ¼ cents. Warmer Midwest weather next week potentially means heavy snowmelt and potentially more flooding to already sodden areas hoping to plant corn this spring. As with soybeans a weaker dollar and firmer crude oil was helpful. The trade is already looking to next week's S&D report from the USDA where a reduction in corn ending stocks for 2009/10 is being anticipated.
Wheat
March CBOT wheat futures closed at USD5.03 ½, up 11 ½ cents; March KCBT wheat futures at USD5.09 ½, up 10 ½ cents; March MGEX wheat futures were at USD5.21, up 14 ¼ cents. With a large open spec short position it seemingly doesn't take too much to get wheat to close sharply higher. Analysts are looking for tomorrow's weekly export sales to range from 250-500,000 MT. A weaker dollar was supportive, as too is news that US winter wheat conditions are deteriorating in Kansas, Oklahoma and the Pacific Northwest.
EU Wheat Closing Comments
EU wheat futures closed mixed with London wheat ending with March GBP0.35 lower and Jul GBP1.00 higher; Paris wheat closed with March unchanged and May up EUR0.75.
March Paris futures managed to avoid breaking through the EUR120/tonne level despite a firmer euro and weaker dollar.
Ideas that austerity measures from Greece might avoid the need for an EU bailout buoyed the single currency. The pound was stronger too after better than expected consumer confidence data, although downwards pressure still remains on both currencies.
Although there are signs that the fortunes of wheat might improve somewhere down the line, we are a long way from there yet - particularly in Europe. We still have to get over the burden of high stocks and slack demand first.
The trade already seems to be waiting for some direction from next Wednesdays USDA reports, although for once personally I feel that they are unlikely to throw up too many surprises.
After that the next really big date in the calendar is March 31st, when they release their prospective plantings report. By then also we may have a better idea how EU, US and FSU wheat crops are emerging from winter dormancy.
Between now and then it would seem that market fluctuations will mainly be down to currency.
Vireol Latest And A Glimpse Into The Future
Reuters are carrying a story today saying that construction of the UK's third major wheat bioethanol refinery, the Vireol plant at Grimsby, will comence this summer.
The plant will use over half a million tonnes of feed wheat per year, bringing the total volume of fresh wheat demand in the UK from Ensus, Vivergo and Vireol to well in excess of 2.5 MMT.
The Vireol plant should begin production in 2013 the article says, conveniently the same year that we are set to up the inclusion rate for fuel from renewable sources to 5%.
Full story: here.
Ten years from now we will need to be producing 10% of all our petrol fuel from renewable sources like wheat. Many will be rubbing their hands with glee saying "bring it on" I'm sure.
Things will undoubtedly be very different in 2020. There might be no livestock industry at all as every square metre of land is used for producing wheat so we can light the streets at night.
We might need to keep the streets well lit, with all the looting that will be going on.
Jan 2020: UK farmer shoots dead four children who broke through his 16 feet high perimeter fence to steal potatoes.
Feb 2020: KFC bargain bucket fetches £2,000 on eBay.
Mar 2020: Wheat hits all time record £480/tonne - We're holding on for £500 say growers.
Apr 2020: Cow spotted on Exmoor.
May 2020: Ram raiders escape with £5 million pounds worth of cauliflowers in daring High Street heist.
Jun 2020: Youths kick man to death in row over marmite sandwich.
Jul 2020: Old Trafford wheat crop "looking good" - Ferguson.
Aug 2020: London cucumber futures now more expensive than gold.
Sep 2020: £50 million lottery winner says "I'm going to eat, eat, eat."
Oct 2020: Ben Nevis wheat production hit by early snow.
Nov 2020: Wheat hits £950/tonne - Give us £1000 and we might sell a bit say UK farmers.
Dec 2020: UK's last remaining pensioner found frozen and starving to death clutching crust from loaf with 2012 sell-by date.
eCBOT Close, Early Call
The overnights closed firmer with beans around 5-6 cents higher, and with corn and wheat each up around a couple of cents.
The dollar is down a little and crude up a tad, but again thus far it is shaping up to be another relatively non-event. Already the trade appears to be content to wait and see what next week's USDA numbers have to say.
Before that we have tomorrow's weekly export sales report to maybe provide some much needed guidance.
Wheat export sales have picked up somewhat of late, which might see ending stocks reduced slightly from we have been expecting. Corn stocks are also pretty much universally expected to be lowered.
The USDA are now towards the upper end of the range of South American soybean production numbers at 66 MMT for Brazil and 53 MMT for Argentina, so there may be a possibility that we will see those get trimmed a little to - especially Brazil.
US wheat production prospects are mixed, with heavy El Nino rains in Texas likely to yield bumper output there, but conditions elsewhere are less than ideal.
Extreme wetness looks like being an issue again this spring in in Iowa, Illinois, Minnesota, South Dakota, Missouri and Arkansas. That could have a negative impact on corn and spring wheat plantings.
Crude oil inventory data from the Energy Information Administration later today may show crude and distillates stocks increasing by around 1.5 and 1 million barrels each, respectively.
Early calls for this afternoon's CBOT session: corn called 1 to 2 higher; soybeans called 2 to 5 higher; wheat called 1 to 2 higher.
Indian Wheat Latest
With rice production this year expected to fall to more than 7 MMT below the level of production, India is keeping its fingers crossed that late season heat doesn't cause too much damage for the impending wheat crop.
Indian wheat potential was damaged by a very warm and dry February in the normally high-yielding states Punjab and Haryana pushing wheat development rapidly towards maturity, says Gail Martell of Martell Crop Projections:
Hot temperatures are forecast continue this week, with highs in the 90-97 degrees Fahrenheit (32-36 degrees Celsius) range in the northern wheat states. An 82.3 MMT harvest will not be achieved as the Indian government had hoped for, as heat late in the growing season is very damaging reducing kernel-fill, says Gail.
Despite constantly insisting that domestic wheat stocks are plentiful, bordering on burdensome, the Indian government yesterday announced that they were considering extending the period in which wheat can be imported duty free until the end of 2010. The current duty free regime expires at the end of this month.
Today they have dropped their wheat production estimate for the coming harvest to 80.28 MMT.
Who knows what the real stock situation is in India? The government recently forecast that they would have nearly 15 MMT of old crop wheat left in storage when the new marketing year begins on April 1.
Due to their constant prevarications and hesitation across the winter as to whether to allow any of their 'burdensome stocks' go for export, I strongly suspect that much that has either already been eaten by rats, exported via the back door, or wouldn't pass as fit for canine consumption let alone anything else.
The government plan to buy a further 24 MMT from farmers in the new MY, according to the Press Trust of India. Annual consumption is pegged at around 76 MMT. If production this year comes in nearer to that sort of number, the reality of the Indian stock situation could be a whole lot tighter than the paperwork suggests.
Is Ukraine Running Out Of Wheat?
Cash-strapped Ukraine continues to export any grain it's got left, with total 2009/10 marketing year grain exports to the end of February running at 16.3 MMT, 2% up on the 16.0 MMT exported at the same time last year, despite production being 13% lower.
If you scratch a little deeper, you find that there are a few more signs of a significant change going on with exports from the Black Sea nation.
In January, Ukraine exported 1.78 MMT of grain, of which 38% (680,000 MT) was wheat. By last month wheat exports fell sharply to just 200,000 MT - less than a third of what was exported in January - and accounting for only 18% of the 1.1 MMT of grain that was shipped out of the country.
Jan 1st wheat stocks were pegged at 7.6 MMT, down or 25% on Jan 1st 2009, according to the State Statistics Committee. The latest figures now show that 880,000 MT of that has subsequently been exported, plus the USDA currently have them consuming 1 MMT/month domestically.
CBOT Closing Comments
Soybeans
March soybean futures closed at USD9.54 ¼, up 1 ¾ cents, November soybean futures were at USD9.38 ¾, down 3 ¾ cents, March soymeal futures at USD270.50, down USD0.50/tonne and March soy oil futures at 39.81, up 31 points. It was a dull session with little movement in any of the three main grains pits. The dollar and crude oil were barely changed for most of the day too. Talk that the US are likely to extend the biodiesel tax incentive in the HIRE (Hiring Incentive to Restore Employment Act) for one year could be supportive. The Brazilian harvest is said to be 26% complete compared with 18% a year ago.
Corn
March corn futures closed at USD3.70 ½, down ¼ cent, and May corn futures at USD3.81 ½, also down ¼ cent. As with the other pits it wasn't a turnaround Tuesday, merely a day of treading water for corn. The water that corn might be treading in could come as the 5 day forecast looks much warmer than previously indicated in the Northern United States, according to Martell Crop Projections. That will lead to a rapid snow melt and potential flooding. A deep snow pack exists in the Dakotas, Minnesota, Iowa and Wisconsin that contains 4-5 inches of water, when melted. Massive run-off may occur with rapid melting. Frozen fields would not be able to absorb a massive snow melt, they warn.
Wheat
March CBOT wheat futures closed at USD4.92, down ¾ cent, March KCBT wheat futures at USD4.99, down ½ cent, and March MGEX wheat futures at USD5.06 ¾, up 1 ½ cents. The USDA said yesterday that winter wheat conditions improved in Texas to 46% good-excellent, 36% fair and 18% poor-very poor. That represents a strong increase from a month earlier when just 31% of wheat was good-excellent and 29% was poor-very poor, say Martell Crop Projections. US wheat growers haven't got it all their own way however with below-normal rainfall from El Nino damaging for wheat potential in the Pacific Northwest. Meanwhile in the Eastern Midwest, Illinois wheat has deteriorated in a stormy and cold winter, dropping to 28% good-excellent, 49% fair and 23% poor-very poor, they add.
EU Wheat Closing Comments
EU wheat futures closed lower Tuesday with London March feed wheat ending GBP0.45 easier at GBP96.40/tonne and Paris March milling wheat down EUR1.25 at EUR120.25/tonne.
Having broken through resistance at EUR125/tonne a few weeks ago, Paris bears are now targeting EUR120/tonne. They did manage to breach that next important support level today, with futures dipping to EUR119/tonne at one point in early trade, a lifetime contract low, before eventually managing to claw marginally back above EUR120/tonne at the close.
Defra peg winter wheat plantings in England 10.9% higher than last year at 1.81 million hectares, they haven't issued an estimate for the UK as a whole yet. Strategie Grains though say production in the UK could come in at 16.2 MMT in 2010, 1.8 MMT higher than last year.
Soft wheat plantings in Spain are also higher, up 7.3%, and abundant winter rains could see output sharply higher in this notoriously 'feast or famine' producer. That said, very heavy rain is forecast again this week in Spain, Portugal, Italy, Greece and southeast Europe, according to Martell Crop Projections. Could they be getting too much of a good thing? I doubt it somehow.
eCBOT Close, Early Call
The overnight grains closed flat, consolidating from last nights losses, but kept in check by a firm US dollar.
Crude oil isn't doing a great deal thus far either today, in what is shaping up to be a bit of a yawn type afternoon. But then again it is Tuesday, so don't rule out another turnaround reversal of yesterday.
Japan are tendering for 132,000 MT of wheat this week, of which 65,000 MT is US origin. Vietnamese buyers may also be in the market this week for 460,000 MT of soymeal for May/Jul delivery.
Brazilian soybean production estimates seem to have peaked at 68 MMT and are now being trimmed back a little to the 64-65 MMT mark, still a record mind. As too will be Argentine output by the looks of it, albeit again maybe not quite so high as some of the 53 MMT+ estimates that we've seen.
US weekly export inspections came in above expectations for beans, corn and wheat last night. Wheat exports look like they are now actually in line to reach the USDA's 2009/10 marketing year target of 22.5 MMT despite the firm dollar. Even so US ending stocks will be 320% higher than they were two years ago.
Concern over cold and wet conditions, with snowmelt and flooding when temperatures finally do warm up, is already bringing back memories of twelve months ago for US growers. That seems to be keeping a bit of a floor in corn values, at least until we get a bit further into spring.
A further significant strengthening of the US dollar is perhaps the most likely factor that could see further price erosion this week. The potential size of the South American harvests should already be priced in. Logistical problems there might cause some extra export business to go the way of the US in the near-term.
We have the USDA out on Friday with their regular weekly export sales report, followed by world crop production numbers next Wednesday, and the quarterly stocks and prospective plantings report due out at the end of the month.
Early calls for this afternoon's CBOT session are flat to mixed for beans, corn and wheat.
Pound Looking As Sick As A PIG
We might not be one of the PIIGS quite yet, but the pound is certainly behaving as if we are one of them, possibly worse off than one of them. They at least have the likes of France and Germany to help protect them when the Big Bad Wolf comes a calling. What do we have? One eyed Jock, the King of Smarm and all their non-dom peer purchasing buddies. Hardly inspires confidence does it?
Sterling fell to its lowest trade-weighted index since last March yesterday and still languishes below 1.50 against the dollar, fell to a 25 year low against the Ozzie dollar (after they raised interest rates to the dizzy heights of 4%), and is struggling to try and hold its head above 1.10 against the euro.
I feel quite sorry for David Cameron actually, what must it be like knowing that your are only marginally more popular than Gordon Frown for Christ's sake?
Yesterdays run on the pound deflected some of the attention away from Greece, at least for the time being. Whilst Germany and to a lesser degree France, might have a vested interest in coming to Greece's rescue, some reports suggest that Britain owns a fifth of Greek bonds.
If a German-led bailout fails to materialise, as German Chancellor Angela Merkel herself keeps insisting it will, then I guess that the IMF will become the new reluctant favourites to pick up the Greek hot potato.
We might know the answer to the first bit quite soon, the Greek PM is in Berlin on Friday.
What then for the pound? Whilst it's immediate fortunes against the euro, a similarly afflicted currency, are a difficult call (the single currency itself fell to a 10-month low against the dollar today), it should be noted that the Times are reporting today that we've fallen by more than 7% against the Zimbabwe Dollar since the end of January!
Certainly the potential that the next election could be a much closer run thing than the polls had been indicating, and the spectre of a hung parliament, points to further significant depreciation against the US dollar.
EU Soymeal Prices
Basis CIF Roterdam/Amsterdam in USD/tonne unless stated:
Brazil pellets 48%
Spot Fob 385.00
Afloat 380.00
March 361.00
Apr 334.00
May/Sep 318.00
Oct/Dec 321.00
Argentine pellets 44/45%
May/Sep 320.00
Dutch Hipro 49% profat FOB
Apr 384.00
May 359.00
Jun/Jul 334.00
Aug/Oct 340.00
Nov/Jan 342.00
Argentine Hipro 49% profat
Afloat 390.00-385.00
Feb 383.00
March 360.00
Apr 341.00
May/Sep 324.00
Oct/Dec 325.00
EU Rapemeal Prices
Basis FOB Lower Rhine in euros/tonne:
Mch 170,00
Apr 153,00
May 136,00
May/1st h Jly 128,00
Aug/Oct 10 115,00
Nov/Jan 11 125,00
Nov/Apr 11 126,00
Ukraine Crop Conditions
As of February 25 the Ukraine Ag Ministry report winter grains were rated 90% in good or satisfactory condition (unchanged from the previous week), with 10.0% (also unchanged) in poor condition.
Ice cover remains over 7.2% of planted area, up from 6.7% a week ago, they said.
The winter grains area was 8.6 million hectares confirmed the Ministry, up 3.7% from the previous year. The area given over to winter wheat is 6.7 million ha, up 2.6%, with barley sowings at 1.6 million ha (up 25.4%) and rapeseed planted on 1.4 million ha, down 1.4%.
CBOT Closing Comments
Soybeans
March soybean futures closed at USD9.52 ½, up 1 ½ cents, March soymeal futures finished at USD271.00, down USD2.20/tonne, and March soy oil futures at 39.50, down 21 points. Weekly export inspections were higher than anticipated at 40.126 million bushels. Harvesting delays in Brazil, coupled with logistical difficulties in getting their record crop to the ports may be providing some unexpected front-end support.
Corn
March corn futures closed at USD3.70 ¾, down 7 ¼ cents, and May corn futures also down 7 ¼ cents at USD3.81 ¾. Anticipated first of month fund buying for corn failed to materialise, which pressured prices later in the session. Crude oil also turned weaker, which along with a firm dollar also weighed on values. Corn inspections for export were down from last week but up from year ago levels.
Wheat
March CBOT wheat futures closed at USD4.92 ¾, down 13 ¾ cents, March KCBT wheat futures at USD4.99 ½, down 11 ½ cents, and March MGEX wheat futures at USD5.05 ¼, down 11 ½ cents. Wheat inspections for export were down from last week but ahead of last year. Iraq snubbed US wheat in favour of Russian, Canadian and Australian grain over the weekend. A resurgent dollar will do little to help US wheat make inroads into the Middle East.
EU Wheat Closing Comments
EU wheat futures closed mixed with March London feed wheat ending GBP1.85 higher at GBP96.85/tonne, and Paris March milling wheat finishing EUR0.75 lower at EUR121.50/tonne.
London wheat was firmer after the pound crashed to fresh 2010 lows against the euro and its lowest since early May 2009 against the dollar.
Speculation that the UK might be in for a hung parliament at the next election sparked a run on sterling.
Who knows what inept squabbling that would cause, it would certainly be highly unlikely to be conducive to any attempt at sorting out the spiraling budget deficit.
In the UK the HGCA say that "crops have survived the unusually cold winter conditions well, and although growth has slowed, there are more crops at the expected crop development stage than last year, when crops were planted late and into poor conditions."
Iraq bought 380,000 MT of Russian, Canadian and Australian wheat over the weekend, with both EU and US wheat failing to get a look in.
eCBOT Close, Early Call
The overnight session closed mixed, with beans 5-6 cents lower, wheat down 2-3 cents and corn a cent or so higher.
Crude oil is a little higher at USD80.26/barrel and the dollar is also firmer.
Iraq bought 380,000 MT of mostly Russian wheat over the weekend, with the remainder being of Australian/Canadian origin.
Cold and wet conditions are already seen potentially delaying spring corn planting. Midwest precipitation has averaged 11.2 inches October through February. This was the highest accumulated precipitation in 60 years, and 3.75 inches above normal, says Gail Martell of Martell Crop Projections.
Hard red winter wheat is coming out of dormancy in the Southern Great Plains. Nights will remain below freezing in Oklahoma and Texas this week but daytime highs are climbing into the 50s F, adds Gail. Topsoil moisture is favourable for growth after a stormy and wet winter. The Pacific Northwest is the area to watch. Sub-par precipitation this winter with El Nino has reduced field moisture for spring growth in the white wheat growing area that comprises 17-18% of US winter wheat, she warns.
Abiove say that Brazilian soybean production will total 65.5 MMT and say that harvesting is 20-22 percent complete.
The size of speculative and fund shorts on CBOT wheat leaves the market vulnerable to a sudden wave of buying for seemingly little fundamental reason.
China's Ministry of Commerce say that the country will import 3.32 MMT of soybeans in both February and March, that's down from imports of over 4 MMT per month recently.
Early calls for this afternoon's CBOT session: corn called mixed; soybeans called 4-6cents lower; wheat called 2-4 cents lower.
Quote Of The Day
"Campaigners think cows should be like in the Anchor butter advert, with 50 to 100 cows dancing in a field," from the man behind a planned 8,100 head dairy farm in Lincolnshire (see: here). I'd have loved it even more if he's have given his cows names like AAA and Duracell.
EU Soymeal Prices
Basis CIF Rotterdam/Amsterdam in USD/tonne unless stated:
Brazil pellets 48%
Spot Fob 390.00
Afloat 382.00
March 363.00
Apr 334.00
May/Sep 319.00
Oct/Dec 322.00
Argentine pellets 44/45%
May/Sep 315.00
Dutch Hipro 49% profat FOB
March
Apr 387.00
May 362.00
Jun/Jul 339.00
Aug/Oct 342.00
Nov/Jan 342.00
Argentine Hipro 49% profat
Afloat 397.00-390.00
Feb 385.00
March 362.00
Apr 342.00
May/Sep 323.00
Oct/Dec 327.00
EU Rapemeal Prices
Basis FOB Lower Rhine in euros/tonne:
Mch 172,00
Apr 154,00
May 136,00
May/1st h Jly 129,00
Aug/Oct 10 115,00
Nov/Jan 11 127,00
Nov/Apr 11 128,00
Pound Dives On Hung Parliament Fears
Just got back from a nice long weekend away with no TV to find the pound on the receiving end of another thrashing this morning.
What the hell went on over the weekend to sink the pound below 1.50 against the dollar then, I wonder? We haven't been that low since last May, and we are now also down to our lowest levels of 2010 against the euro.
It seems that a Sunday Times poll pegging the Tories lead over Labour at just two points is to blame, increasing the likelihood of a hung parliament at the next election.
Concerns that forex traders are switching from the euro to sterling as the new whipping boy in their search for a fast buck appear to be coming to fruition.
The Wall Street Journal says that a French and German-backed deal to bailout Greece with EUR30 billion is close to being agreed.
That leaves the pound languishing at around 1.10 against the euro, despite all the pressure that the single currency has been under since the turn of the year, and around 1.4890 against the dollar.
At least that's revived the fortunes of London wheat, with March currently up GBP2.75 at GBP97.75/tonne.
