CBOT Closing Comments


July soybeans closed at USD9.41, down 3 cents; July soymeal ended USD0.60 lower at USD275.60; July soyoil settled 0.43 cents lower at 36.96. Private exporters announced the sale of 120,000 MT of U.S. soybeans to China for 2010/11 delivery. An expected vote on the USD1/gallon biodiesel tax credit has been pushed by to Tuesday. If voted back in it should boost soybean demand, as the industry has struggled to survive without it. US soybean plantings are well advanced, and the harvest in South America is winding down yet we haven't seen too much pressure on spor prices as yet.


July corn closed at USD3.69, up 7 cents; Dec corn was at USD3.85 1/4, up 6 3/4 cents. The USDA announced that China had bought another 118,000 MT of US corn for 2009/10 delivery. China's new found interest in importing corn is supporting the market. The Chinese government will auction off more of it's state reserves next Tuesday. The Argentine harvest is estimated at 65% completed compared with 85% for last years drought stricken crop. The USDA say that production this year will come in at 21 MMT, up 40% from 15 MMT a year ago.


July CBOT wheat closed at USD4.72, up 1 1/4 cents; July KCBT wheat closed at USD4.95, up 2 1/2 cents; July MGEX wheat closed at USD5.14 1/2, down 1/4 cents. Pre-weekend short covering led to some modest gains, but US wheat is still largely overpriced due in no small part to the strength of the dollar. Argentine wheat planting is underway, with an increased area of 10-12% being forecast by the ministry. That isn't as big a switch back into wheat as many private forecasters have been predicting.

EU Wheat Closing Comments

November London wheat closed GBP1.65 higher at GBP109.90/tonne and November Paris wheat ended EUR2.50 higher at EUR145.00/tonne.

Weakness in the euro and sterling continue to support EU wheat. There are also some concerns now coming into focus that recent dry weather may be causing some crop damage. Or at least the potential for some crop damage.

The IGC yesterday dropped their projections for 2010/11 EU-27 wheat output this season to 142.4 MMT, down 1.2 MMT from their previous estimate.

Farmers continue to be reluctant sellers, and prices have suddenly started to move in their favour, is this a blip or the start of a trend?

With the harvest in some parts of Europe only weeks away, I'd have to say that it seems pretty unlikely that we will see prices continue to move significantly higher from here.

Once places like Ukraine have the combines rolling they will undoubtedly come out as aggressive spot sellers no matter what. That will undermine spot levels, and most likely depress EU prices and demand, at least until Black Sea volumes have been diminished once again.

Early Call On CBOT

The overnights closed mostly a little lower with beans flat to down 2 1/2 cents, corn and wheat were both around 1 1/2 to 3 cents easier.

The dollar is up and crude oil is down, both of which should bring some downside pressure.

Planting is now well advanced in the US, with things forecast to warm up considerably.

"With strong warming over the next week, soggy fields will dry out rapidly, allowing planting to progress. On the other hand, areas that are marginally dry will grow much worse with highs in the mid and upper 80s F and brisk winds. The rainfall forecast is very important in Minnesota, western Iowa, eastern Nebraska and South Dakota. These are the areas that have become progressively drier over in the past 2 months and do not have a good soil moisture reserve," says Gail Martell of Martell Crop Projections.

The USDA have today confirmed China buying more old crop US corn (118,000 MT), in addition they also booked 120,000 MT of new crop soybeans. This sudden new interest in corn, and their continued support and appetite for US soybeans would have set the market on fire a couple of years ago, but thus far the trade seems positively relaxed about the whole thing.

It seems pretty clear to me that we are not just talking a case of allowing the state-owned Cofco to ship in the odd half a million tonnes, quell rising corn prices and disappear never to be seen again. It looks like we are in for a prolonged summer of Chinese corn purchasing.

The Chinese government have announced that they will increase next weeks auction offering from 1.38 MMT of corn to 1.58 MMT. Big deal. The vast majority of what is on offer, including this extra 200,000 MT will all be in the northeast of the country. The new demand that we are seeing is far away in the south of the country, and it makes better economic sense to ship it in from the US.

The IGC yesterday raised their estimate for world wheat production by 2 MMT to 660 MMT, that's still 12 MMT below the USDA's figure though. Wheat consumption will grow to a record 654 MMT, they said, a few production hiccups here and there and we may actually start eating into those burdensome stocks before too long.

The Argy soybean harvest is 90% complete say the Buenos Aires Grains Exchange, yet farmers are reluctant sellers, hoping for better prices. The world and his wife knew that there was monster record soybean production coming from South America this spring. I think that the world and his wife subsequently structured their trading books to take advantage of some guaranteed bargains just dying to be snatched up about now. There is now a mood of incredulity amongst consumers that bargains are few and far between.

Early calls for this afternoon's CBOT session: soybeans called flat, wheat and corn are called 1-3 cents easier.

Some Interesting Figures For You

Chinese Jan/Apr 2010 imports (MT) and change on year:

Soybeans 15,230,578 +10%
Wheat 504,190 +223%
Corn 18,791 +1123%
Barley 674,155 +10%
Rice 117,471 +33%
Rapemeal 297,384 +355%
Rapeseed Oil 200,758 +37%
Palm Oil 2,021,445 +14%

And that corn number is about to get a whole lot bigger too.

Laila, You Got Me On My Knees

Cyclone Laila made landfall in south east India yesterday bringing high winds and heavy rain to the region, and heralding the arrival of the summer monsoon season.

Hope that they chuck an extra bit of tarpaulin over those nice pristine new wheat stocks that they have lying around.

Mind you with winds reaching speeds of over 115 km expected , maybe they'll be using the wheat to stop the tarpaulin blowing away?

Russian Winterkill Much Higher Than Normal

The hard winter seems to have taken it's toll on Russian grains with the Ministry now reporting that 13.6% of the crop has been lost.

"In a typical year, between 5 and 10 percent of the area planted to winter crops are destroyed by winterkill," according to the USDA. However, losses have "been relatively low for the past three years -- substantially less than 10 percent," they say.

There also remain quite a few question marks over yield potential this season for wheat that has survived the winter.

"Fall crop establishment holds the key to wheat potential, especially in the northern climates where dormancy comes on early, and winters are too cold for wheat to grow. Insufficient growth in the fall leads to smaller roots and a reduced yield. By contrast, a well established crop in the fall has a head-start on spring growth. This promotes a higher yield," explains Gail Martell from Martell Crop Projections.

"Russia wheat potential is reduced by fall dryness in key growing areas. By the time drought-relieving rains arrived in mid November, it was too late for wheat to grow. Ideally, wheat should be tillering before dormancy sets in, but with dry conditions fall growth was stifled," she adds.

"No doubt, wheat was lost in the Volga District, where January snow cover was scanty, less than 5 centimeters deep, when very cold temperatures were observed. To obtain maximum hardiness, wheat needs time to adapt in the fall to steadily cooling temperatures and shortening daylight hours, a process called vernalization. Wheat hardiness may have been compromised last fall due to inadequate development time with drought," Gail concludes.

"Winter grains comprise between 25 and 35 percent of total grain area in Russia, and 40 to 50 percent of production. Wheat is the major winter grain and accounts for about 80 percent of total winter grain area," according to the USDA.

The USDA pegged Russian wheat output at 58 MMT earlier this month - down 6% from 61.7 MMT in 2009. It's starting to look like that might be too optimistic and 53-55 MMT may be nearer the mark, a reduction of around 11-14%.

With Russian carryover wheat stocks at the end of this season estimated at 12.8 MMT by the USDA it's hardly a crisis, more of a step in the right direction. They currently have 2010/11 Russian carryout at 8.3 MMT, knock off another 3-5 MMT for lower 2010 production and we have ending stocks for next season at a less burdensome level of around 4 MMT.

Nogger's Bottom Ten

Nogger's bottom ten nationalities, in no particular order:

1. The French, rubbish at wars, smell funny, always on strike and they have a stupid language - why do inanimate objects like a chair have to be either male or female?

2. The Germans, quite good at wars, but got absolutely no sense of humour whatsoever.

3. The Indians, corrupt liars and that chicken starter I had in the Dil restaurant that time was almost raw.

4. The Chinese, better cooks than the Indians, but also as bent as a nine bob note.

5. The Argies, see the French above.

6. Americans, no explanation required. Who DO they think they are?

7. The Welsh, always moaning and pretending to talk Welsh. I went into a shop in Wales to buy a paper once and I swear they all started talking Welsh only after I went into the place. The woman behind the counter looked at me in a "who is this strange man talking his foreign language, this is a local shop for local people" sort of a way. Then they all started talking in English again the minute I left. And I once put an offer in on a house in Wales at the full asking price, only to be told by the estate agent that she couldn't accept my offer as she'd promised to hold the house for the daughter of a woman who lived in the village who was coming to look at it next Friday.

8. Australians, arrogant, they seem to have forgotten that they are all descended from jailbirds.

9. Austrians, not to be confused with 8 above, never get involved in wars if they can help it, apart from Hitler of course. Wear stupid little daggers down their socks.

10. The British, always acutely embarrassing on holiday with their irrational dislike of foreigners.

That's it, no room even for the Jocks and their deep fried Mars bars, wearing Honduras replica footie shirts just because they're playing England.

Nogger's Top Ten

Stayed up until 1am last night just because I stumbled across a Radiohead top ten on one of the music channels whilst channel hopping and wanted to see the "No Surprises" video.

Which put me in mind of a Nogger Top Ten songs. Here they are in no particular order and subject to change:

1. No Surprises, Radiohead - no surprises there then
2. Chasing Cars, Snow Patrol
3. Dream Catch Me, Newton Faulkner
4, Handbags & Gladrags, Stereophonics
5. Poker, ELO
6. Say Hello, Wave Goodbye, David Gray
7. The Scientist, Coldplay
8. Shine On You Crazy Diamond, Pink Floyd
9. Supper's Ready, Genesis
10. The Friends of Mr Cairo, Jon & Vangelis

Complaints to the usual address.

CBOT Closing Comments


July Soybeans closed at USD9.44, up 5 1/2 cents; July soymeal ended USD2.80 higher at USD276.20; July soyoil settled 11 points lower at 37.39. Soybean export sales were 478,500 MT for delivery in 2009/10 and 86,000 MT for delivery in 2010/11, in line with expectations. China took 60,000 MT each of both old and new crop. Old crop supplies remain tight, and despite record production in South America sellers are less than ken there too.


July Corn closed at USD3.62, up 2 3/4 cents; Dec Corn closed at USD3.78 1/2, up 1/2 cent. The USDA's weekly export sales report for the period May 7-13 featured corn sales of 1,354,100 MT for delivery in 2009/10 and a further 239,000 MT for delivery in 2010/11. That was comfortably above expectations. China was confirmed as buying 239,000 MT of old crop and a further 130,000 MT of new crop. The only thing that seems to be holding back a flood of further buying is the delay in obtaining import permits.


July CBOT Wheat closed at USD4.69 3/4, up 1/2 cent; July KCBT Wheat closed at USD4.92 1/2, up 1 cent; July MGEX Wheat closed at USD5.14 3/4, up 3 cents. Weekly wheat export sales were 455,710 MT, right at the average trade guess. "Strong thunderstorms in the Southern Plains improved field moisture for heading wheat in Kansas and Oklahoma. Severe damage has occurred with golf ball sized hail and damaging winds, however," say Martell Crop Projections.

EU Wheat Closing Comments

EU wheat continues to nudge just a little bit higher every day, aided by ailing currencies and a growing uncertainty over production prospects in many parts of Europe and beyond.

November London feed wheat ended GBP1 higher at GBP108.25/tonne, with November Paris wheat up EUR1 at EUR142.50/tonne.

The euro continues to hover just above four year dollar lows set earlier in the week, whilst the pound remains close to it's lowest against the US unit since March 2009.

All that of course means that EU export prices are amongst the cheapest and most competitive in the world at the moment. UK wheat exports for March were 319,406 MT, leaving us highly likely to exceed Defra's projected 2.2 MMT target for the current marketing year.

Dryness continues to place a sizable question mark over production prospects in the UK, France and Germany.

Things are maybe not looking too rosy in Russia either, according to some reports. Even the US looks like it may have lower yields than had been widely anticipated.

Before you go getting too carried away and lock the silo doors however, it should be borne in mind that eastern Europe will be harvesting before too long and that they will be so hungry for cash they will sell whatever the price.

We're Not As Awash As We Was

The UK set to beat Defra's wheat export target of 2.2 MMT by the looks of things (see report lower down). Undoubtedly the demise of sterling has helped to contribute to that.

France has managed to enjoy similar success thanks to a even sicker than a sick thing the euro going down the tubes.

Wheat crops, sorry I nearly typed craps then by mistake, are not looking great either in many parts of Europe.

Now today we have SovEcon cutting their Russian grain production estimate to 84-89 MMT as a result of more extensive winterkill than had at first been thought. The Russian Ministry seem to be setting a new trend this year by coming in with a huge overestimate, rather than their traditional massive underestimate, saying that a crop of 97 MMT is expected.

These lads don't have a good track record on the accuracy front, so I think that I'd rather stick with what SovEcon have got to say myself.

My corrupt old mates India meanwhile have got more wheat stocks than you can shake a sh*tty stick at apparently. And by that I mean a formerly clean stick that has been inserted into a pile of half covered by a bit of tarpaulin whilst lying out in the rain getting eaten (and Lord know what else done on) by rats for a couple of years pile of Indian wheat.

Thirty million tonnes of that smelly stuff in a field over there that nobody wants (including Bangladesh) is NOT really 30 MMT of wheat stocks is it?

Fast forward a bit to those other truth economists the Chinese. They are now starting to buy US corn with the same enthusiasm that they have for US soybeans (OK I'm exaggerating a little there before the "caught short club" start emailing me). Considering that the USDA only had them down to import 300,000 MT of the stuff in the whole of 2009/10 it is a pretty significant development.

Also the fact that they were confirmed as buying 2010/11 crop US corn as well today speaks volumes about whether this is a quick flash in the pan or not. In my humble opinion, of course.

Of even greater import surely is that they are doing all this with 50 MMT of their own stocks put aside for a rainy day. Allegedly.

Years of either bad or "creative" accounting, I will leave you to decide which, would appear to suggest to me that maybe more than half of China's grain stocks don't actually exist. Apart from on bits of paper. And some of those bits of paper have the USDA's name at the top of them too.

As I put on here the other day, just three years of 10% overstates wipes out China's corn reserves almost completely. It's not that hard to imagine that has been going on is it, really?

Half on India's state-owned wheat reserves meanwhile are so old that they should be getting a telegram delivered to their old peoples home from the Queen any day now, and they probably aren't looking or smelling too pretty either.

Falling short of a global grain audit though how are we ever going to know? We won't, not until it's too late anyway.

Early Call On CBOT

The overnight markets closed narrowly mixed with wheat and corn mostly 1-2 cents lower and soybeans 1/4 lower to 1 3/4 higher.

Crude oil is down again, with expiring front month June USD2.13 lower at USD67.34/barrel. The dollar continues to show strength as European debt worries prompt a flight to safety.

Weekly export sales from the USDA were bullish for corn and neutral for beans and wheat. China was confirmed as buying both old and new crop corn, and total sales cam in in excess of 1.5 MMT.

It seems highly unlikely to me that this week's Chinese sales will be the last of their kind, and it also seems hugely significant that they are now buying new crop as well as old crop.

The only thing that seems to be holding back a flood of further buying is the delay in obtaining import permits. If the Chinese government's concern is food price inflation, then allowing further imports of corn in significant volumes seems like a sensible measure to allow.

China also bought old and new crop soybeans.

The US weather forecast looks largely conducive for further progress with corn and soybean plantings.

"Increasing heat and sunshine will rapidly dry out soggy fields. Maximum temperatures are expected rise into the mid and upper 80s F on Sunday and Monday. Accompanying winds will encourage very rapid drying. Abundant sunshine with warm temperatures will spur rapid germination in soybeans," says Gail Martell of Martell Crop Projections.

"Strong thunderstorms in the Southern Plains improved field moisture for heading wheat in Kansas and Oklahoma. Severe damage has occurred with golf ball sized hail and damaging winds, however," warns Gail.

Crop conditions fell in Kansas and Oklahoma this week, quite sharply in the latter state, and there is plenty of talk of disease problems affecting Kansas wheat in particular. It seems that yields may potentially disappoint here.

The strong dollar will of course hamper US export ambitions, particularly for wheat, and the Black Sea countries will be eager to exchange their wheat for cash as soon as they can once the harvest starts. Lack of adequate storage will also force a few hands amongst the usual suspects.

South Korea bought 67,100 MT of US wheat overnight. Japan bought 147,000 MT in its normal weekly tender with 85,000 MT being US origin.

Early calls for this afternoon's CBOT session: beans mixed, corn flat to 2 higher, wheat 1 to 2 lower.

USDA Weekly Export Sales

The USDA's weekly export sales report for the period May 7-13 featured corn sales of 1,354,100 MT for delivery in 2009/10 and a further 239,000 MT for delivery in 2010/11. That brings combined sales to 1,593,100 MT, well ahead of expectations of 950,000 – 1,250,000 MT. China was confirmed as buying 239,000 MT, with a further 162,000 MT going to unknown destinations. They also bought 130,000 MT of the new crop, with unknown destinations taking a further 58,000 MT. Who said this is just a short-term blip? Hmmmmm.

Soybean sales were 478,500 MT for delivery in 2009/10 and 86,000 MT for delivery in 2010/11. China took 60,000 MT each of old and new crop, confirming that they haven't quite switched totally to South America just yet. Combined sales of old and new crop were therefore 564,000 MT, in line with trade estimates.

Wheat sales were 250,500 MT for delivery in 2009/10 and 205,200 MT for delivery in 2010/11, giving combined sales of 455,700 MT, again this was in line with trade estimates.

If Rain Makes Grain, Does Drought Make Nowt?

If the old saying rain makes grain is true, then presumably drought makes nowt? Now I wouldn't exactly go as far as saying we are in a drought situation but it is very dry though. Really dry for May. Poor Mrs N #3 is run ragged with her pot watering. It's a good job "wheat is a weed" to use another old adage, because if it was anything else it would be dead by now.

The weather here has turned around dramatically this week. We were scraping frost off the car just a week ago, yet this morning the overnight low locally was 9.5C and temps are currently around 20C with highs of 25C forecast for the weekend. No rain though, Sunday is our next shot at any according to Metcheck.

Just checked on the official Met Office website (some very useful maps here) to see what "normal" rainfall is for May. Where I am, and across most of the main wheat producing areas of the country, they are saying 40-60mm - but so far this month we've only had 6.3mm in my part of North Yorkshire. The last serious downpour was on April 3rd when 13.2mm of rain fell.

Wheat around here is looking really short & has hardly seen any growth at all during the past month under these conditions.

UK Set To Beat Defra Wheat Export Target

Figures released from Defra show that the UK exported 319,406 MT in March, a two thirds increase on February. That brings total wheat exports for the year to date to over 1.7 MMT.

With three months left to account for in the current July/June marketing year, we now only need to average just over 160,000 MT per month to hit Defra's target of 2.2 MMT for the entire marketing year.

With April also looking like it was a decent volume month, that should be more than comfortably achievable if the pound remains weaker than Bob Cratchit's offspring.

CBOT Closing Comments


July Soybeans closed at USD9.38 ½, down 1 cent; July soymeal ended USD0.20 lower at USD273.40; July soyoil settled 0.31 cents higher at 37.50. Soybean planting in the US is expected to reach around the halfway point by the end of the weekend. Estimates for Thursday's export sales report range from 400,000 to 700,000 MT. A reversal in the fortunes of crude oil also lent some support.


July Corn closed at USD3.59 ¼, down ½ cent; December Corn finished at USD3.78, down ½ cent. Corn posted only nominal losses despite the ferocious planting pace in the US on continued Chinese buying. State-owned agency Cofco was said to have bought more US corn overnight, fulfilling it's 500,000 MT import quota. Other private Chinese buyers are also said to be in the market and actively applying for import licences. Private exporters announced to the USDA the sale of 124,000 MT of corn to unknown for 2010 delivery.


July CBOT Wheat closed at USD4.69 ¼, up 1 ½ cents; July KCBT Wheat was at USD4.91 ½, up 3 ½ cents; July MGEX Wheat at USD5.11 ¾, down ½ cent. Early winter wheat harvesting is being stalled by rains in the Southern Plains. Warmer and drier weather is needed to combat disease due to the wet weather. Condition ratings fell in both Oklahoma and Kansas for the winter wheat last week, with Oklahoma conditions dropping sharply from 74% good/excellent to 67% good/excellent.

EU Wheat Ends Mostly Higher

EU wheat futures closed mostly higher again Wednesday, with May London feed wheat up GBP0.75 at GBP105.75 and November Paris Milling wheat up EUR0.50 at EUR141.50/tonne.

Once again it was largely all about currency. The euro fell below 1.22 against the dollar for the first time in over four years as the German authorities introduced a ban on naked short selling of bonds and shares in major financial institutions. Sterling was also weaker on a "flight to safety" against the dollar.

The acute weakness of the euro continues to help France in particular continue to pick up significant wheat export orders.

Dryness is causing some concern for developing new crop wheat in some parts of Europe, whilst in the east it's been flooding that's the problem.

Dryness over France may be stressing jointing winter wheat, whilst cooler than normal temperatures over central Spain may have caused a few problems for flowering wheat, according to media reports.

Wheat planting is underway in Australia, but dryness in the top-producing state of WA is also a concern.

Greece Begins Repayment Of EUR9 Billion Bond

Greece is understood to have begun the repayments on a EUR9 billion loan that expires today:

How Do You Confuse A Chinaman?

Tell him the truth of course!

China's 2010 rapeseed harvest (which is grown mainly in the south of the country, parts of which have been badly hit by drought this year) may fall below 10 MMT according to Shanghai JC Intelligence Co. That would represent a drop of around 25% on last year's crop of 13.2 MMT.

Not so say the official China National Grain & Oils Information Centre, rapeseed production will "only" fall by between 800,000 MT to 1 MMT, according to them.

They also optimistically add that wheat production this year will be “basically flat” at around 110 MMT.

Have you spotted the trend yet?

"Basically flat at around 110 MMT" means "basically down around 5 MMT". See how easy it is just to lose the odd five million here and there without anybody noticing? And that is if we "basically accept" that what they are saying is true of course and not "basically a pack of lies".

How Do You Confuse A German?

That's an easy one for the German authorities, ban short selling of certain shares and bonds completely out of the blue. Not only that but time your actions to coincide with a period of acute euro weakness.

Not surprisingly the stock market has got the skids under it this morning after these new measures were hastily introduced last night.

Let's face it, who wants to play a game where the rules keep changing halfway through? The safest thing to do is take your money off the table surely?

That appears to be what is happening this morning with the DAX, CAC and FTSE all around 3% lower in early trade.

Meanwhile the euro has fallen below 1.22 against the dollar for the first time in over four years.

The ban also applies to naked short selling in shares of Germany's top 10 banks and insurers, and will last until March 31, 2011. Why these certain shares and why now?

What a very strange way to go about bolstering the markets?

This Chinese Corn Thing

The state-owned agency Cofco has bought more corn overnight, according to media reports. That means it has already booked it's half a million tonne import quota in the space of a week.

It seems highly likely that there have been other under the counter sales too, but the market seems nervous of getting too carried away by this news. Cofoco's announcement that they have already obtained customs clearance for the corn they have bought certainly seems to push the door open a little bit wider for other private imports.

There is some talk now of Cofco using the import quotas of other companies to "safely" purchase further cargoes ie. if the government agency bring it in then it is unlikely to fall foul of customs.

Meanwhile I am indebted to Derek Newman for emailing me to point out that the guy from the State Administration of Grain who has been busy assuring the media this week that the Chinese government are awash with corn stocks is called Zeng Liying.

CBOT Closing Comments


July Soybeans closed at USD9.39 ½, down 1 ½ cents; July soymeal ended USD0.30 lower at USD273.60; July soyoil settled 6 points higher at 37.19. Record soybean production from Brazil and Argentina, plus US planting progress well above the five year average along with European economic woes paints a pretty bearish picture for bean prices. China however keep lurking in the background to lend some degree of support.


July Corn closed at USD3.59 ¾, up 3 ¾ cents; Dec Corn was at USD3.78 ½, up 4 ¾ cents. Rumours are that China maybe bought more US (and possibly Argy) corn over the weekend. With today's Chinese government auctions almost fully taken up at prices around USD6.50-7.00 it is hardly surprising that US corn may struggle to decline further from here.


July CBOT Wheat closed at USD4.67 ¾, down 1 ¼ cents; July KCBT Wheat at USD4.88, down 2 cents; July MGEX Wheat at USD5.11 ¼, down ½ cent. The weakness of the euro continues to keep US wheat under pressure. Talk is starting to circulate that US wheat may not be in such a healthy condition as the USDA reports might suggest. The recent Kansas wheat crop tour appeared to confirm this.

London Wheat Rises On Production Jitters

November London wheat closed the day GBP1.15 higher at GBP107.40/tonne, with November Paris milling wheat EUR0.25 easier at EUR141.00/tonne.

After the long hard winter, a cool and dry spring isn't really what the doctor ordered. Temperatures have moved up the past day or two, and are forecast to bump up into the low to mid 20's by the end of the week, but there isn't much rain around.

What rain will fall in the UK is likely to be in the west, not where the bulk of the country's wheat producing areas are (or rapeseed for that matter).

France is also dry, yet strangely further east too much rain seems to be the problem (see here).

EU wheat was also underpinned by the weakness of the pound and euro on the forex markets. Inflation here is rising, contrary to BoE and ECB forecasts, that might prompt some to think that food commodities are a good anti-inflationary investment.

Certainly it looks like a decent bet that the pound and euro will continue to move lower against the dollar for the remainder of 2010. That shouldn't do EU export prospects too much harm.

The Black Sea will however inevitably be very aggressive marketeers once again, as soon as their new crop harvest kicks in just a few months away.

China: Show Me The Corn

The Chinese government's weekly corn auction managed to find buyers for just about all the corn on offer in the northeast of the country earlier today.

Of the 799,400 MT of corn on offer 796,700 MT found buyers at higher prices than last week's auction despite newly introduced restrictions on who can buy, and a ban on reselling.

It seems that all that this new buying criteria has done is, for those not allowed to buy at auction, to up their bids in an attempt to persuade farmers still sitting on stocks from 2009 to sell.

Hardly an effective way of reigning in inflation.

Government officials meanwhile insist that they have plenty of corn to sell and that there is no shortage.

If that was true, and quashing rising food prices was their main concern, then surely there is a very simple solution to all of this. It's not rocket science is it?

Super secretive China are supposed to have state reserves of around 50 MMT of corn, and have reputedly produced a crop of around 150-165 MMT in recent years. The problem with a crop of that magnitude is that a 10% overstate on just one season's production slashes 30% off their ending stocks. Just three years of 10% overstates virtually wipes out their "on paper" ending stocks entirely.

Or are you going to tell me that they wouldn't do a thing like that?

CBOT Ends Lower On Dollar Strength


July Soybeans closed at USD9.41, down 12 ½ cents; July soymeal ended USD2.90 lower at USD273.90; July soyoil settled 38 points lower at 37.13. A firm dollar and sharply lower crude oil pressured prices from the off. A benign weather situation saw the USDA reporting that soybeans were 38% planted this afternoon, that's well ahead of the five year average of just 5% and the fastest pace since 2005. Long range weather forecasts are warming up.


July Corn closed at USD3.56, down 7 cents; Dec Corn ended at USD3.73 ¾, down 6 ¼ cents. The USDA reported corn at 87% planted and 55% emerged, that's the fastest emergence since 2000. Today was also the first day that the USDA reported on crop conditions, saying that 67% of the crop was rated good to excellent. European economic fears, coupled with a strong dollar and weak crude oil weighed on prices throughout the session.


July CBOT Wheat closed at USD4.69, down 2 ½ cents; July KCBT Wheat at USD4.90, down 1 cent; July MGEX Wheat ended at USD5.11 ¾, down 1 cent. US wheat continues to decline pressured by the strong dollar making exports uncompetitive. Spring wheat planting is 79% done, said the USDA. That's one point behind the five year average. Emergence is 55% versus 47% for the five year average. Winter wheat heading is behind the five year average at 52% compared to 56%. Winter wheat condition ratings were unchanged from a week ago at 8% poor/very poor and 66% good/excellent.

EU Wheat Closes Mostly Higher On Currencies

November London wheat ended up GBP1.15 at GBP106.25/tonne, November Paris wheat was EUR1 higher at EUR141.25/tonne.

A chronically weak euro (and to a lesser degree pound also) helped support EU wheat futures.

The pound slid to a fresh yearly low of 1.4255 against the dollar, whilst the euro broke below the 2008 low of 1.2328, falling to 1.2235 in early trade to set a four year low.

With little change to other wheat market fundamentals it's currency that is primarily driving the market at the moment.

Although there doesn't seem to be too much trade talk about it at the moment, there are possibly some concerns creeping in that many of the most productive parts of Europe might be in for at best only average yields this summer.

France, Germany and the UK have all suffered with a hard winter followed by a cold and largely dry spring. Conditions are said to be much better in Eastern Europe however, and as usual they will be first to aggressively market their new crop grain not too many weeks from now.

This will undoubtedly bring the usual harvest price pressure led by this contingent, so if you are hoping for significantly better prices you may have to wait until 2011.

Early Call On CBOT

The overnight grains closed with beans down around 5-6 cents, corn down a penny or so and wheat fractions either side of unchanged.

The dollar is up, although well off the overnight highs, and crude oil is weaker touching 8-month lows overnight.

European debt is the subject on everyone's lips, and what that might do for demand. Personally I don't see it making too much difference, but the market's perception of what it might do is more important right now.

China may have bought more US corn over the weekend, according to some reports. Their state-owned agency Cofco have already obtained customs clearance for the US corn that they bought last week, other reports suggest.

They seem to be setting themselves up to take more. Some reports also suggest that they may have bought Argy corn as well.

The USDA are out tonight with their latest planting progress report, corn is expected 90% complete. They will also report on corn crop conditions for the first time this season.

With corn almost all in, US farmers will now turn their attention to soybean planting. So far weather conditions have been largely ideal.

Early calls for this afternoon CBOT session: corn called 1 to 3 lower; soybeans called 5 to 7 lower; wheat called mixed.

I Like Driving In My Car

Mrs N#3 dragged me away from the computer for a few hours yesterday to go to a bloody garden centre the other side of Ripon. Flowers and stuff relating to flowers was all they sold, no plasma tellies or beer, nothing of interest to me. Apart from the lovely #3 I was the youngest person in there by about 20 years. So I had to amuse myself in the only way I know how.

"Lobelia, that sounds a bit like something else doesn't it?"

"Yes dear"

"Look at that enormous bushy Clematis. Clematis is a funny word isn't it, it sounds a bit like something else doesn't it?"

"Yes dear"

"Osteospermum! What does that remind you of?"

It kept me amused for half an hour anyway.

What did strike me on the way up there though was once again just how short most of the wheat crops were en-route. There wasn't as much rape in evidence as I thought there would be either. Almost all the rape was in full flower, but it frequently looked a little patchy.

Although it's forecast to warm up considerably this week (after three mornings of frost last week that will be surely welcome), it is set to remain largely dry. That won't help wheat catch up any, and the general shortness of it may mean it will have few stem reserves for filling the grain.

I can't see final wheat yields being any better than average at the very best this year. Indeed, as things stand at the moment, I'd say they will be pretty poor here in the north.

It could be worse though, a mate down in Devon tells me that one of his neighbours had his entire vineyard wiped out by frost last week.

Wiseman Milking It

Thrifty Scots-based Robert Wiseman Dairies have just released what they describe as a "very satisfactory" set of results for their financial year ending Apr 3rd 2010.

They're a bit more than satisfactory. Some of the highlights include sales volume of a record 1.77 billion litres and operating profit up by 43.1% to GBP50.3 million.

Operating margin per litre improved significantly to 2.84ppl from 2.17ppl in 2009, they say. That's right they're making almost 3 pence on every litre they handle.

A GBP6 million fine imposed by the OFT in 2007 (over unproven allegations of price-fixing) has now been reduced to just GBP4.2 million, they also gush.

There's no mention in their press release of passing any of these bumper earnings onto their suppliers in the form of a price increase however. You lot should just be thankful for having a milk buyer at all.