CBOT Closing Comments


July soybeans finished down 14 cents at USD9.37 3/4; July soymeal closed down USD2.50 at USD273.50; July soyoil fell 57 points to 37.61. US weather forecasts look conducive for good planting progress this weekend. Crude oil drifted weaker into the long holiday weekend and the DJIA fell sharply in final 15 minutes of trade, ending down 122 points.


July corn closed at USD3.59, down 14 1/4 cents; Dec Corn was at USD3.80, down 13 1/2 cents. The market fell lower around mid-day amid outside pressure from concerns about Europe. US weather conditions look largely ideal for developing corn. "Ideal corn growing weather has dominated the Midwest this week, sunny, warm and humid. Temperatures in the 80s F were well above normal, stimulating rapid growth," say Martell Crop Projections.


July CBOT wheat ended at USD4.57 3/4, down 10 cents; July KCBT Wheat was at USD4.81 1/2, down 11 1/4 cents; July MGEX Wheat closed at USD5.06, down 7 3/4 cents. Egypt confirmed the purchase of 180,000 MT of Russian wheat, proving once again the US wheat is largely too expensive to Mediterranean destinations. A downgrade in Spain's debt rating rekindled investors' worries about European credit.

EU Wheat Closing Comments

EU wheat futures closed mixed with November London wheat up GBP0.50 at GBP108.50/tonne, and Paris November wheat EUR2 lower at EUR142.25/tonne.

It was another volatile day on the currency front, with the euro gaining strength on news that the Spanish government had got approval for a EUR15 billion austerity budget, albeit by just one vote.

Rains across northern France are thought to have brought come relief to ailing winter wheat crops, although opinions are divided as to exactly how much benefit has been derived.

In the UK rains have so far been pretty scattered, although weekend forecasts hold the promise of more to come.

Brussels issued export licences for 483,420 MT of wheat last week, helping the EU on its way to exceed the USDA's target of 20 MMT for the current MY.

Egypt booked 180,000 MT of Russian wheat in its tender today, that was a setback for French wheat which seemed to have a great chance of making a sale given the weakness of the euro.

Early Call On CBOT

The overnight grains were mixed, mostly lower, with beans down around 3-4 cents. corn down 1-2 cents and wheat a cent or so firmer.

The dollar is a tad weaker and crude oil a bit firmer.

It could be a low volume session ahead of a long three day weekend.

Light rains are forecast for the weekend, with heavier rains and warmer conditions moving in from the middle of next week. Ideal growing conditions you might say.

Corn planting should now be more or less done, with soybean plantings advancing to maybe 70-75% or so by the end of the weekend.

The first cargo of US corn recently bought by China will depart from the Pacific Northwest this weekend.

Egypt are tendering for wheat of various origins today, it seems unlikely that they will buy any US wheat given the strength of the dollar and the freight advantages that Europe and Black Sea wheat has.

China are expected to import maybe as much as a record 5.5 MMT of soybeans in June. As long as they keep taking something from the US, as they did again yesterday, that should underpin prices.

There are already some serious question marks hanging over Chinese corn, wheat and rapeseed production this season. That could underwrite the entire market.

Early calls for this afternoon's CBOT session: corn called 1 to 2 lower; soybeans called 2 to 4 lower; wheat called flat to 2 higher.

Wynnstay Continue On The Acquisition Trail

Wynnstay Group are expanding their operations into Yorkshire it would seem with the acquisition of Woodheads Seeds Limited, a seed processing and supply business based in Selby.

The deal is for initial cash consideration of just under GBP2.6 million, with a further GBP0.75 million possibly payable "depending upon historic and future profits."

The move will more than double Wynnstay's existing seed processing capacity, it says.

EU Wheat Exports

As the current marketing year draws to a close, EU exporters are busy trying to snap up any nearby orders to help free up some silo space.

It seems that they had a fair degree of success last week, with Brussels issuing export licences for 483,420 MT of wheat, comfortably beating the 380,000 MT needed to reach the USDA's projected target of 20 MMT for the current campaign.

Having seemingly missed out on a 100,000 MT tender by Tunisia earlier in the week, EU exporters will be hoping to grab a slice of Egypt's tender for at least two cargoes of wheat later today.

Certainly the current weakness of the euro shouldn't harm prospects of French wheat getting a look in.

New Palm Oil Facility Opens In Liverpool

New Britain Palm Oil Limited, who describe themselves as "one of the world's largest producers of sustainable palm oil" say that commissioning on their new plant in Liverpool is now complete.

The plant has a dedicated supply source from sustainable plantations and the palm oil is fully segregated and traceable from seed to finished product, they say.

The facility currently has a capacity of 150,000-170,000 MT of refined sustainable palm oil per annum, which they say could easily be doubled to meet demand.

Ukraine Wheat Production Estimate Lowered

Ukraine Vice Premier for agriculture Viktor Slauta told reporters in Kiev this week that wheat production in the country will fall by "about 15%" on last season.

Slauta said that the weather conditions in March and April had considerably affected the crops, especially in the country's central and northern areas.

Overall grain production this season may not fall as much as 15% however as farmers were planting more corn this season, he said.

Damage to winter crops because of an ice crust caused by the harsh winter conditions, and the lack of humidity in the soil had some farmers switching into corn planting, he remarked.

A 15% fall in wheat output this season would be consistent with the kind of production losses now also being anticipated in neighbouring Russia. That would imply a Ukraine wheat crop of around 17.77 MMT and Russian output of around 54 MMT, a combined (nice pun!) reduction of almost 13 MMT on last season.

It is worth bearing in mind that we have had a change of leadership in Ukraine recently, and it is entirely possible that they are deliberately talking production down. Then they come back at harvest-time with a "hey, look things aren't as bad as we thought" spin.

First hand reports I am hearing do not suggest losses of this kind of magnitude in wheat. If anything conditions in Ukraine seem to be the opposite of those in western Europe from what I am hearing, and it is rapeseed output that is likely to take a sharp knock this year.

CBOT Closing Comments


July soybeans closed at USD9.51 3/4, up 13 3/4 cents; July soymeal ended USD4.70 higher at USD276.00; July soyoil settled 33 points higher at 38.18. Sharply higher crude oil helped, as too did a weaker dollar. April's crush came in lower than the 138.2 million expected at 136.5 million bushels. Even so they only need to average just 125.7 million for the next 4 months to hit the USDA's target. US export sales for beans were 175,400 MT old crop and 120,000 MT new crop, with China taking most of that.


July corn ended at USD3.73 1/4, up 1 3/4 cents; Dec corn closed at USD3.93 1/2, up 2 3/4 cents. Old crop corn export sales were 1,030,800 MT, with China accounting for 241,000 MT. "Corn development was retarded with very cool May temperatures the first 3 weeks. Heat units are starting to add up in late May, however," say Martell Crop Projections. Overall Midwest corn and soybean growers do not have much to complain about with recurring showers every few days, interspersed with warm sunny weather, they add.


July CBOT wheat closed at USD4.67 3/4, up 6 cents; July KCBT Wheat at USD4.92 3/4, up 4 cents; July MGEX Wheat at USD5.13 3/4, up 5 cents. Japan bought 131,000 MT of wheat overnight, with 90,000 MT being US origin. Wheat export sales were 148,800 MT old crop and 336,700 MT new crop, a bit better than total expectations of the 400,000 MT mark. Short covering was also a feature with commodity funds buying an estimated 3,000 CBOT contracts.

EU Wheat Closing Comments

EU wheat futures closed Thursday mixed with November London wheat ending GBP0.75 easier at GBP108/tonne, and November Paris wheat up EUR0.50 at EUR144.25/tonne.

London wheat was under pressure after sterling broke through the 1.18 mark against the euro, threatening to breach 1.19, a level last seen on 22 Jun 2009.

The euro remains under pressure with Italy, Portugal and Spain all announcing acute austerity measures in an attempt to avoid following Greece into the poor house.

China did it's best to help by denying that it is considering cutting its holdings of eurozone sovereign debt. Saying anything else would have caused a further stampede towards European exit doors.

All this furore seems to be deflecting attention away from the "unlikely lads" of David Cameron and Nick Clegg running things in the UK. At least for now they seem to have made a promising start to their shotgun wedding, and the pound is up accordingly.

Comments from the OECD that UK interest rates will need to rise by as much as 3.5% over the next 18 months, starting by Q4 this year, have also helped the pound. If they're right then that could be to the detriment of new crop wheat prices holding where they are now.

Wetter and cooler weather seems to have moved back into northern France, allaying some concerns over production losses there. Some reports continue to suggest however that some of the damage is irreversible.

Things are looking a bit better here too, with scattered showers rather than widespread downpours at least alleviating some concerns.

Egypt are back in the market, tendering for 120,000 MT of wheat for June 20-30 shipment, with the weakness of the euro French wheat might stand a good chance of winning some of that business.

CBOT Early Call

The overnights closed steady with beans and wheat up around 4-5 cents and corn up a cent or so.

Crude oil is up almost a dollar and a half, nudging USD73/barrel, and the dollar is weaker for once.

First-time US unemployment claims dipped by 14,000 to 460,000, a bit less than the 16,000 reduction the market was expecting.

China has said that it won't cut it's Eurozone holdings as some media reports had suggested. But then again what else would you expect them to say?

US Census Bureau pegs April's crush at 136.5 million bushels, lower than the 138.2 million expected. Even so they only need to average just 125.7 million for the next 4 months to hit the USDA's target.

Japan bought 131,000 MT of wheat overnight, with 90,000 MT being US origin.

US export sales for beans were 175,400 MT old crop and 120,000 MT new crop. Expectations were for sales of around 500,000 MT. China took one 60,000 MT cargo of old and both cargoes of new crop.

Old crop corn sales were 1,030,800 MT, with China accounting for 241,000 MT of that. New crop sales showed net reductions of 174,000 MT (China -130,000 MT).

Wheat sales were 148,800 MT old crop and 336,700 MT new crop. Expectations were around the 400,000 MT mark.

Early calls for this afternoon's CBOT session: corn up 1-2c, soybeans and wheat up 3-5c.

Western European Rains Last 24 Hours

An animated map showing the UK, France and Germany from the French Met Office is here, with timings in GMT not BST:

Clearing from the west

Freight Rates Jump

The Baltic Dry Index closed at 4209 yesterday, marking a 25% rise since the beginning of May and setting it's highest levels since November. The BDI has now risen 11% in the past four days alone.

Analysts say that the rise is fed by emerging economies, who are responsible for the majority of dry bulk cargo demand. These haven't been hit as badly by the recession as other regions, they say.

Even European commodities demand has remained stable despite the economic crisis, whilst steel demand from the US and Japan remains robust.

The BDI fell as low as 663 early December 2008, a fall of almost 95% from it's pre-crash high of 11,793 set in May that year.

CBOT Closing Comments


July soybeans closed at USD9.38, up 7 1/2 cents; July soymeal ended 20 cents higher at USD271.30; July soyoil settled up 68 points at 37.85. A weaker US dollar, slow farmer selling and higher crude oil prices supported, as too did firmer equities. Whilst new crop planting might be off to a good start soybean processors continue to firm their bids with the old crop pipeline tight. South American growers are also reluctant sellers, hoping that weak local currencies will lead to price advances in the coming weeks. Tomorrow's USDA weekly export sales are estimated at 250,000 to 750,000 MT.


July corn closed at USD3.71 1/2, up 7 cents; Dec Corn was up 8 cents at USD3.90 3/4. China sold almost all of the corn offered in their weekly auction yesterday, and are rumoured to be increasing import quota substantially for 2010. Talk is that Chinese corn production was in reality significantly lower in 2009 than official estimates. Maybe 15-20 MMT below current usage projections. Traders are estimating weekly export sales to be between 850,000 to 1,350,000 MT in tomorrow's USDA report.


July CBOT wheat closed at USD4.61 3/4, up 1 1/4 cents,; July KCBT Wheat was at USD4.88 3/4, up 4 cents; July MGEX Wheat ended at USD5.08 3/4, up 5 1/2 cents. Trade estimates for tomorrow's weekly export sales report range from 300,000 to 450,000 MT. the US winter wheat harvest has begun in southern and central Texas and will gradually move north as the crop matures. It's early days to report on yields yet, but some reports suggest that they may disappoint.

EU Wheat Ends Lower On Forecast Rains

EU wheat futures closed a little lower Wednesday as the weather in western areas turned cooler and wetter.

November London feed wheat closed GBP0.50 lower at GBP108.75/tonne, with November Paris wheat ending down EUR0.75 at EUr143.75/tonne.

Parisian losses were tempered by the continued weakness of the euro. The market remains extremely nervous over the possibilities of an escalation of fiscal problems in the eurozone.

Already this week Spain's Central Bank has had to come to the rescue of one lender, and hastily brokered the merger of four regional savings banks into one.

Now we have Germany looking at extending their already badly received plan on short selling to cover trading in all shares.

This continual moving of the goalposts looks like undermining the euro for some time yet. The pound pushed through 1.18 against the single currency, close to its best levels since last June. the euro meanwhile fell to its lowest against the dollar since April 2006.

The weather in Europe has turned cooler and wetter, scattered showers across northern France may have brought some drought relief in the past 24 hours. Rainfall in the UK thus far has been pretty light.

Ukraine today warned that winterkill losses may have been quite severe, whilst reports out of Russia also suggest much heavier losses than in recent seasons.

How Do You Know When A Chinese Govt Official Is Lying?

His lips move. Shanghai JC Intelligence Co are apparently now saying that last season's Chinese corn crop was only 140 MMT, fully 23 MMT than the government went to great lengths last season to assure us had been harvested. And well under the current USDA figure of 155 MMT too as it happens.

It must have been a pretty big lorry to have 23 MMT fall off the back of it that's all I can say.

The fact that they are suddenly importing US corn like bill-o, and appear to have completely forgotten all about their concerns over a silly little thing like GM issues, would seem to suggest that the government may have made a slight miscalculation.

Meanwhile there are already rumblings that the 2010 crop might turn out to be substantially less that the government and USDA are currently forecasting, with drought delaying plantings and having a negative impact on yields.

There's always the "lets make it rain" option of course. There's probably enough silver in last season's corn crop that they could simply start firing that into the atmosphere to make it rain if it wasn't so bloody expensive.

Overnight Grains Close/Early Call

The overnight grains were firmer across the board, with beans ending around 7c higher, with corn up 4-5c and wheat around 5-6c firmer.

The dollar is a tad weaker for once, and crude oil up around a couple of dollars, back above USD70/barrel. Global stock markets are also firmer, with the DJIA likely to follow suit this afternoon.

China look like they are sharpening up their pencils to book more corn, which should underpin that market.

Although US corn and soybean plantings are largely off to a great and early start, it is early days yet. South American farmers seem content to hold onto their bumper crops this year as their local currencies decline against the dollar, prompting hopes of better prices to come.

Second crop corn in Brazil isn't off to a great start, with Mato Grosso seeing some of the driest conditions in the last ten years. Some parts of the region have reported had just 5% of normal rainfall during April and the first half of May.

Not that corn is exactly in short supply in Brazil, they still have plenty of last season's crop left in store let alone the recently harvested one.

The wheat market is quiet, European prices are off their recent highs as cooler and wetter weather moves into the west. Even so much needed rains this past few days have been light in the UK and spotty in northern France.

Aggressive exporting, aided by a weak euro, mean that old crop carryover stocks aren't as burdensome as many had anticipated.

Much higher levels of winterkill in Russia and Ukraine than in the past few seasons are being reported now amongst wheat and rapeseed crops.

Whilst few would suggest that we are running into a supply problem, you could say that stocks are more manageable, and demand is continuing to edge higher. For wheat that demand is helped by industrial usage and for soybeans and now corn it is coming from China.

US House Majority Leader Steny Hoyer has told reporters that he's confident that a USD190 billion package to extend unemployment benefits will get passed. The package includes the reinstatement of the USD1/gallon tax credit on biodiesel. The vote on the bill was originally supposed to be last week, then yesterday and now it's today. If it does get through then it could be reintroduced almost immediately, and support soyoil prices and bean demand.

Early calls for this afternoon's CBOT session: corn called 3 to 5 higher; soybeans called 6 to 8 higher; wheat called 4 to 6 higher.

Is China Set To Become A Long-Term Corn Importer?

The Chinese government's weekly corn auction, being held in an attempt to cool rising domestic prices, was almost fully subscribed again Tuesday.

Almost all of the corn of offer was sold, with 979,600 MT of the 993,300 MT on offer in the north of the country finding buyers. Of the 583,400 MT on offer in the south 541,400 MT was sold. That represents an uptake of 98.6% and 92.8% respectively.

The Chinese appetite for corn clearly continues unabated.

The country has a meat consumption per capita of only half that of the US, yet still slaughters more than 700 million pigs a year. Pork consumption has doubled in the past ten years, whilst chicken and beef consumption is also rising rapidly.

Beef consumption in China is up 300% from 10 years ago, yet currently it is only one-tenth of that in developed countries.

A government-led so-called "safe meat" Westernised drive away from the widespread feeding swill and leftovers is also underway. Whilst the global feed market is rising by around 2% annually, that means that the market in China increased by 24% alone last year.

China simply can't increase it's own domestic grain and oilseed production to cope with these kind of levels of expansion. In a country prone to weather problems and climatic extremes, where the soil has been plundered for maximum output from minimal input for years, crop production looks (at best) set to become increasingly erratic. At worst it will start to decline, some would argue it already has.

There is already talk of this season's corn crop being lower again than last season, with drought delaying plantings, shortening the growing cycle and cutting yields. Wheat production also looks to be tailing off, and this season's rapeseed crop could be down as much as 25% according to Shanghai JC Intelligence Co.

As the population continues to grow, as it surely will, AND this trend towards increased per capita meat consumption also expands along with the pursuit of "safe meat" we are potentially looking at a dramatic surge in demand for feed.

For China then there are three options/stages:

1) Increase production
2) Utilise existing reserves
3) Import

With home-grown grains production seemingly having reached a plateau, once domestic reserves are used up all of this extra feed requirement will need to be imported.

It seems to me that we have reached stage two already and are currently starting to implement stage three. Breaking news being reported on Reuters today suggests that the Chinese government are all set to issue import licences for an additional 4-5 MMT of corn in 2010, on top of the 3.4 MMT that has already been approved.

That completely re-writes the USDA's current global corn balance sheet (only released a fortnight ago) which has China down to import just 300,000 MT of corn in 2009/10 and a mere 100,000 MT in 2010/11.

CBOT Closing Comments


July soybeans closed at $9.30 1/2, down 10 cents; July soymeal ended USD2.60 lower at USD271.10; July soyoil settled 35 points lower at 37.17. A sharply higher dollar and lower crude oil and stocks set the scene from the opening, although grains did try to buck the trend at one stage overall the task proved too much. The House is now set to attempt to bring the biodiesel tax extension to the floor on Wednesday. If it goes through then that should be supportive for soybean demand.


July corn closed at USD3.64 1/4, down 6 3/4 cents; Dec corn was at USD3.82 3/4, down 6 1/4 cents. Under the circumstances it wasn't too bad a performance from corn. The dollar was up, crude and stocks sharply lower and crop condition ratings jumped 4 points to 71% good/excellent last night. US corn plantings are almost done. In addition funds were said to have liquidated around 10,000 of their net longs during the session. China though seem to be waiting in the wings....


July CBOT wheat ended at USD4.60 1/2, down 7 cents; July KCBT Wheat closed at USD4.84 3/4, down 5 3/4 cents; July MGEX Wheat was at USD5.03 1/4, down 6 3/4 cents. Spring wheat planting moved ahead 12 points from the previous week, according to the USDA last night. Winter wheat heading is behind the five year average by 5 points at 63% with the recent cooler weather pattern. "Showers fired up last night in a band from the Texas panhandle to southern Kansas and including northwest Oklahoma. Wheat producers should expect more beneficial rain in the next couple of days, with recurring strong thunderstorms in the Great Plains," say Martell Crop Projections.

EU Wheat Closing Comments

EU wheat futures closed lower Tuesday, although only partially giving up some of recent gains. A bit of rain and cooler temperatures are back in the forecasts, which maybe encouraged a bit of selling.

November London feed wheat closed GBP1.15 lower at GBP109.245/tonne, with November Paris milling wheat ending down EUR2.25 at EUR144.50/tonne.

Not everyone is convinced. The executive director of Paris-based Agritel, said that rain expected to douse France in the second half of the week looked likely to prove patchy, and would fail to provide relief to all areas where dry weather has damaged crop prospects, according to Agrimoney.com.

The weak euro and sterling have enabled EU exporters to crank up sales, and that has tightened old crop stocks more than was anticipated. Although carryout is still significant whilst production concerns remain over new crop, long holders of old crop seem to feel comfortable about carrying stocks up to the wire.

A lot of consumers maybe got a bit complacent about continually falling prices. Basically, we have been in an almost unbroken downtrend for twelve months now. Almost everybody expected that to continue, and most end-users seem to have structured their books in anticipation of prices falling further as new crop approached. That seems to have caught many on the hop.

Things could get pretty volatile for old crop wheat between now and next harvest. New crop price prospects depend on the weather and the currency markets, and both of those are in the lap of the Gods.

Given current pricing structures however, I'd have to say that it would be pretty reckless not to get some new crop sales away at these levels if you haven't done so already.

Australia: NSW Plantings Latest

Industry & Investment NSW report mixed planting conditions in the state where "some districts have been able to capitalise on the good seedbed and full subsoil moisture profiles to almost complete winter crop plantings" yet other districts have almost no crops planted at all.

"Most areas are now in need of good rainfall to consolidate crops that have been sown, and enable the remaining crop to be sown," they say.

They forecast wheat plantings of of 2.91 M ha, 6% below the 3.10 M ha forecast at the same time last year. An estimated 1.63 M ha, or 56%, has been planted so far they say.

Current estimates have 36% of the north sown, 69% of the potential area sown in the centre and 54% in the south. Widespread rains (25-50 mm) are needed in the north east and south west to allow planting to recommence, they add.

Barley sowing predictions of 755,200 ha are similar to earlier forecasts, with around 47% planted so far. In the north only around 19% is sown, reflecting the dry conditions, 63% in the centre and 45% in the south, they estimate.

"The area estimated to be sown to canola is 304,050 ha, up 12,200 ha on the April forecast. About 91% of the crop has been sown, with the remaining area to be sown in the next two weeks," they conclude.

Early Call On CBOT

The overnights closed lower with beans down around 10-12 cents, wheat off around 5 cents and corn 5-6 cents easier.

Crude oil is sharply weaker, currently down the best part of USD2.50 at USD67.90/barrel. The API report on US crude oil stocks today and the US Energy Dept are out tomorrow, further inventory increases look like being on the cards. OPEC countries are said to be pumping oil at 2 million barrels per day over target.

The dollar is up again as it continues to benefit from the flight to safety with concerns over the size of European debt still hanging over the market.

US weather continues to look relatively benign. Corn crop conditions leapt 4 points to 71% good/excellent last night.

Meanwhile, North Dakota wheat planting is virtually finished aided by almost ideal sowing conditions last week.

Japan is shopping for 131,000 MT of wheat this week in it's usual tender.

Cooler and wetter conditions look like returning to European wheat areas this week, which should ease some crop production fears.

Early calls for this afternoon's CBOT session: corn and wheat called 4 to 6 lower; soybeans called 8 to 10 lower.

CBOT Closing Comments


July soybeans closed at USD9.40 1/2, down 1/2 cent; July soymeal ended USD1.90 lower at USD273.70; July soyoil was 0.56 cents higher at 37.52. The USDA pegged plantings behind the five year average at 53% versus 57% and towards the lower end of trade guesses. The dollar was higher again, limiting upside potential, whilst Euro debt concerns also weighed.


July corn ended at USD3.71, up 2 cents; Dec corn was at USD3.89, up 3 3/4 cents. The USDA's crop progress report showed corn planting at 93% complete versus the five year average of 89%. Emergence is at 71% compared to the five year average of 62%. The crop is rated 71% good/excellent, a four point improvement over last week.


July CBOT wheat ended at USD4.67 1/2, down 4 1/2 cents; July KCBT Wheat was at USD4.90 1/2, down 4 1/2 cents; July MGEX Wheat ended at USD5.10, down 4 1/2 cents. Spring wheat plantings in the US are on par with the five year average at 91% with emergence at 70%. Winter wheat conditions were unchanged from last week at 66% good/excellent.

EU Wheat Closing Comments

EU wheat futures closed higher again, extending recent gains as dry weather continues to raise production concerns.

November London feed wheat closed GBP0.50 higher at GBP110.40/tonne and November Paris milling wheat ended up EUR1.75 at EUR146.75/tonne.

"Yield potential in wheat and barley crops is under threat after a cold dry spring. Winter cereals are very short this year and drought stress symptoms are apparent in many crops with reports of leaves curling in the heat of the day," say Farming Online.

The mercury hit 28C in various parts of the UK over the weekend, but things are set to cool down markedly this week, as winds shift to northerlies, with even a possibility of light frosts again in the north of Scotland.

It's still early days, as everybody keeps pointing out, but the trade seems suddenly nervous with few participants willing to swim against the tide and discount prices in order to obtain consumer orders.

Currency concerns also continue to play a part, with Spain needing to bailout a small provincial bank over the weekend the euro remains especially weak. That gives French and German wheat a competitive edge. Exports have been running ahead of anticipated levels this past few months, and ending stocks look like subsequently being a little less heavy than was projected a month or two back.

Defra Gets Budget Cut From Chancellor

New Chancellor George Osborne has announced that Defra will cop for a mere GBP162 million in cuts to it's budget, out of the proposed GBP6.2 billion the coalition government is attempting to save.

That's the gold monogrammed propelling pencils order cancelled then. But at least they're free to press ahead with the "Hilary Benn Is Not A Real Woman" promotional t shirts.

What To Keep An Eye On This Week

Tonight we have the USDA's planting progress reports and crop condition ratings (not for soybeans yet as it's too early for them). Further good progress is expected to have been made this past week. Corn was 87% planted and beans 38% done as of a week ago. I'd expect corn to be in the 95-98% region tonight and beans past halfway, maybe around 55% planted. The USDA had 67% of the corn crop rated good to excellent a week ago.

On Tuesday the US Senate vote on whether to extend the USD1/gallon biodiesel tax credit (which expired on Dec 31st 2009) until the end of the year. Biodiesel producers say that the industry isn't currently viable without the tax break, and have mothballed several plants since it disappeared. Tomorrows vote is part of a wider legislation to extend US unemployment benefits. If it gets the green light then that would be supportive for soybeans and oil.

The Chinese government's corn auction also takes place on Tuesday, they are offering up more corn than they did last week, but the vast majority of it remains in the northeast. Far away from the buyers in the south who have been booking US corn lately.

Will the Chinese be back for more US corn this week? Probably yes, if they are able to obtain the necessary import permits. Chinese corn prices on the Dalian exchange closed a little easier this morning, but shipping corn in from the US still offers significant savings for feedmills in the south of the country.

The USDA will report on export sales on Thursday, all eyes will be on the corn numbers for further confirmation of sales to the Far East.

Barley intervention in Europe comes to an end this week. It doesn't look like there will be a last minute rush, certainly not here where no offers at all were made last week at GBP90.97/MT less adjustments. So it looks like we will end this season with "just" 150,000 MT of intervention barley to dispose of sometime here in the UK.

The weather in the UK is set to cool down as the week progresses, so much so that there may even be light frosts on the cards again in the far north. Before that we have one last hot day, according to the forecasters, with a possibility of 30C in the capital today. The cool down has already started up here in Yorkshire that's for sure. Rain will be what everyone is hoping for, but so far only a few showers seem to be on the cards rather than the widespread soaking most farmers would appreciate.

That gets us through another week then, with a nice long weekend to look forward to. For the record the US is also closed next Monday for Memorial Day.

Russian Winterkill

The Russian State Statistics Service, or Rosstat, say that 10.8% of winter grains perished due to the harsh winter there. That's somewhat lower than the Ag Ministry estimate of 13.8%, but certainly towards the upper end of what would be considered normal.

Additionally, Russian losses have been quite light in the past few years. Rosstat say that only 1.5% of winter grains were lost to winterkill last season.

Winter wheat typically accounts for around 80% of all winter sown grains, and accounts for something like 70% of the national wheat crop.

Meanwhile, spring grain planting progress (excluding corn) is behind last years pace at 15.9% done as of May 1st at 6.6 million ha, according to Rosstat.