Nogger On Tour
Yes folks it's holiday time, and even hard working bloggers deserve one week a year away on a tropical island paradise, with the Indian Ocean gently lapping at their toes.
I however have a week's activity holiday in the sub-tropical (ie it rains a lot) Lake District to look forwards to. Lord help me.
Consequently blog activity will be somewhat minimised this week, although I will at least be updating the nightly closes from Chicago and London/Paris.
Plus if it's coming down like stair-rods, and who would bet against it, I may do the odd bit now and again throughout the day. So keep checking back for updates.
TTFN
Nogger
CBOT Closing Comments
Soybeans
September soybeans closed at USD10.09 1/4, down 7 1/2 cents; September soybean meal closed at USD300.80, down USD1.70; September soybean oil closed at 39.52, down 37 points. It's been a torrid week for September soybean oil in particular which closed 300 points lower on the week. The Pro Farmer Midwest Crop Tour pegged the 2010 US harvest at 3.5 billion bushels after the close, above USDA's August estimate of 3.4 billion.
Corn
September corn closed at USD4.21 1/4, up 7 cents; December corn closed at USD4.36 1/4, up 7 cents. Corn futures finished 10 cents higher for the week. The Pro Farmer Midwest Crop Tour pegs corn yields at 164.1 BPA and a crop size of 13.29 billion bushels. The USDA’s projection for the 2010/11 crop is 13.365 billion bushels. The USDA announced the sale of 85,000 MT of old crop and 127,000 MT of new crop corn sold to "unknown" plus 120,000 MT of new crop sold to Egypt.
Wheat
Sept CBOT wheat closed at USD6.79, down 2 1/4 cents; Sept KCBT wheat closed at USD7.05 1/2, up 1/4 cents; Sept MGEX wheat closed at USD7.00, down 6 1/2 cents. Wheat was down 15 to 24 cents for the week. Rain is forecast for northern Russia over the next 10 days, along with a return to normal temperatures. Russia denied that they will need to import grain in 2010/11. Statistics Canada exceeded expectations by estimating the 2010-11 all-wheat crop at 22.7 MMT.
EU Wheat Close
November London wheat closed GBP1.65/tonne lower at GBP149.60/tonne, with November Paris wheat ending down EUR3.00 at EUR209.75/tonne.
Russia pooh-poohed some reports that they might need to import up to 5 MMT of grains in 2010/11, which was one of the main stories that drove wheat higher yesterday.
EU wheat exports, seven weeks into the marketing year currently stand at 1.82 MMT, down 21% from 2.3 MMT a year ago, according to customs data released today.
Stats Canada said that wheat production there this year will amount to 22.659 MMT. That's more than 2 MMT above the USDA's latest estimate.
It would seem that despite spring flooding, crop production there has fared reasonably well this year. They pegged the barley crop above trade estimates at 8.488 MMT, and the 2010 rapeseed crop at 10.867 MMT, also towards the upper end of trade expectations.
The HGCA say that the UK wheat harvest is "just over 25%" done, with winter barley 99% complete and spring barley almost 20% complete.
Wheat yields it says are "slightly below the UK 5 year average of 7.9 MT/ha" and winter barley yields are also below average. OSR yields however although "highly variable" are expected to be higher overall.
Rain Makes Grain In Canada
Wheat production in Canada this year will amount to 22.659 MMT, say Stats Canada. That's almost a million tonnes above the highest pre-report trade estimate and more than 2 MMT above the USDA.
Stats Canada peg the 2010 rapeseed crop at 10.867 MMT, also towards the upper end of trade expectations despite the disastrous start that the crop got off to.
That's still down almost a million tonnes from last season, but nowhere near as bad as some estimates earlier in the year which were below 10 MMT.
They also pegged the barley crop well above trade estimates at 8.488 MMT, again down on last season's crop of 9.5 MMT but nowhere near as bad as some had feared back in the early summer.
Can Grains Continue To Ignore Sliding Crude Oil?
Whilst the market has got itself all excited over the Russian situation, many participants seem to have taken their eye off crude oil.
The price of crude, relative to that of wheat, corn and soybeans became inextricably linked the minute we started using them as a feedstock for ethanol and biodiesel production.
In case you've been asleep you will note that around a third of all US corn goes into the ethanol industry these days.
Yet whilst corn and wheat prices have leapt since the beginning of June, the price of crude oil has stayed flat around USD75/barrel. Currently it's close to USD73/barrel in fact, it's lowest in six weeks.
Continued concerns over demand, or the lack of it, from slow economic growth in the US and Europe are weighing on crude, and those concerns don't look like they're going away any time soon.
Can the grains sector continue to ignore sliding crude oil prices?
Funds Have Blood On Their Hands
See we can all write emotive headlines can't we? This interesting report reveals that people (well one person actually) have already started dying in the bread queues in Egypt "after a two-hour wait in the line on a particularly hot day." Again. No lessons have been learnt from 2001/08 it would seem.
Still, at least the funds made a few bob out of it, so it's not all bad news eh is it Tarquin?
Russia's grain ban showcases Egypt's love of bread
UK Harvest Latest
The HGCA say that the UK wheat harvest is "just over 25%" done, with winter barley 99% complete and spring barley almost 20% complete.
Wheat yields it says are "slightly below the UK 5 year average of 7.9 MT/ha" without giving an exact figure for this season. That would appear to be better than the 10% down that many in the trade had been expecting. Yields range from 5.6 MT/ha in the north west to 8.1 M/ha in the east, they say.
Winter barley yields are "below the UK 5 year average of 6.5 MT/ha" they say. Spring barley yields are also down on the dry summer conditions, they add.
The winter OSR harvest is pegged at 90% done with yields "highly variable" but overall expected to be above the average of 3.3 MT/ha. The spring OSR harvest has yet to start.
Farming Online's survey into UK yields this year would tend to agree with the HGCA's findings on barley and OSR, but still has wheat yields around 10% down on last year. They currently peg wheat at 7.12 MT/ha, barley at 6.34 MT/ha and OSR at 3.6 MT/ha.
It's Raining In Moscow
According to the BBC, today brings heavy rain and much cooler temperatures to Moscow, where they give a daytime high of just 15C for today. There's more of the same in the forecast for early next week to. Link
Ulyanovsk, at the heart of the Volga region wheatbelt, is also in for thunderstorms and showers today and all next week. Link
There's also widespread rain and temperatures of just 14C in Ukraine today too.
How long do you reckon it will be before they're saying it's too wet?
Just like here then? The driers will be going like the clappers and there's going to be more wheat and barley going into the feed pile.
Open The Back Doors, The Gas Man's Coming
Interesting how wheat seems to have, partially at least, divorced itself from beans, and to a lesser degree corn. I guess it shouldn't be too surprising, Russian wheat defaults hardly make much difference to soybean demand do they? Egypt have been a featured buyer of US corn this past fortnight though, taking 240,000 MT in yesterday's weekly export sales report.
For wheat, speculation amongst the popular newswires that Russia will have to import anything up to 5 MMT of grains in 2010/11 got the market going yesterday. Even so, there is no hard evidence that they will. Certainly it's highly unlikely I'd suggest that they will enter the open market to buy anything.
Ukraine's harvest might be down, but with the official carryover stocks numbers that they have, there should be more than ample supplies there this year. I wonder if the government's "shall we shan't we" approach to an export embargo is really a smokescreen whilst they "wait for a call" from Russia?
It tends to get a tad chilly in Ukraine in the wintertime and Russia have a nasty habit of cutting off the gas if the bill isn't paid on time, as you may recall. Ukraine may have just hit on a way of ensuring that the gas man's finger isn't quite so twitchy this winter, if you get my drift.
Then there's always "Stan" next door to lean on too.
If there is any importing going on this season, and personally I still think it's a fairly sizable if, it is highly unlikely to be going on via the world stage I'd suggest, more likely via the back door.
CBOT Close
Soybeans
September soybeans closed at USD10.16 3/4, down 18 1/2 cents; September soybean meal closed at USD302.50, down USD4.90; September soybean oil closed at 39.89, down 97 points. Soybean oil has been under severe pressure of late as crude oil prices have declined sharply, already this week soybean oil prices are down by a whopping 325 points. Soybean export sales were substantial at 2,231,063 MT with China being the main buyer, but even that was insufficient to support the market today.
Corn
September corn closed at USD4.14 1/4, down 4 1/4 cents; December corn closed at USD4.29 1/4, down 4 cents. We knew that corn sales were going to be huge this week, but even so. Combined marketing year corn sales of 2,888,577 MT were over a 1 MT above the high end of trade estimates. The Pro Farmer Midwest Crop Tour was in Illinois yesterday pegging corn yields in the state at 166.53 bushels per acre. That's fractionally down on last season.
Wheat
Sept CBOT wheat closed at USD6.81 1/4, up 25 1/4 cents; Sept KCBT wheat closed at USD7.05 1/4, up 20 1/4 cents: Sept MGEX wheat closed at USD7.06 1/2, up 22 1/2 cents. Ideas that Russia will have to import foreign grains was the catalyst behind today's rally. Export sales were above trade estimates at 1,412,501 MT with Egypt, one of Russia’s best customers, being one of the main buyers.
EU Wheat Close
November London wheat closed GBP4.75/tonne higher at GBP151.25/tonne, with November Paris wheat ending up EUR7.50 at EUR212.75/tonne.
Panic talk that Russia will have to import grain this season set the market alight, a bit like the Edwina Currie salmonellae in eggs story.
Egypt bought 180,000 MT of French wheat and 60,000 MT of Canadian wheat today. That helps to keep alive the theory that there are buyers even at these high levels.
In reality, they are surely only buying in what they now know won't get supplied by Russia against existing contracts?
Even so the popular market newswires are full of reports using emotive words like "decimated", just as they were not too long ago with "awash" and "burdensome".
A somewhat detached level headed viewpoint is required at the moment, with the kind of daily price movements we are seeing.
Another Rant: Students
There they are on the news tonight, bleating about how they've been unfairly diddled out of University places. The lazy workshy buggers. Get a grip, you shouldn't have to simply turn up at an entrance exam and put your name at the top of the sheet of paper to get in.
"I've got four A stars" gushes Clarissa, hugging Naomi, Paris and India.
Four A stars in what I ask? And what are stars anyway, they didn't have stars in my day, and how much more than 25% correct do you have to score to get them?
I got an A star in eating Kellogg's corn flakes this morning, does that get me in?
Lets face it, kids are no cleverer now than they were in the good old days, indeed they're a pretty stupid bunch by and large (your kid excepted of course).
In fact a leftover Blairite society that encourages, or indeed expects, every spotty youth in the land to go to University is downright stupid. In my humble opinion of course.
It's just a way of avoiding getting a job isn't it at the end of the day? Hanging's too good for them. Let's bring back conscription. Or firing squads.
Hitler was a hard man, but fair. Say what you like about him, but he always made the trains run on time....
Deals Of The Day
Spot whole maize ex Humberside, Oct/Apr Liverpool corn gluten feed, spot 6mm lucerne pellets ex NW, Oct/Apr soya hulls East or West. All POA.
More Inane Ramblings
London and Paris wheat have rebounded this morning I see on talk that Russia may end up importing up to 5 MMT of grain in 2010/11. With a crop of the anticipated 60 MMT and consumption of around 75 MMT there's certainly a 15 MMT deficit looking to be found.
Official carryover stocks at the end of the 2009/10 marketing year were 24 MMT, although unofficial estimates suggest that it was probably nearer 20 MMT. In theory that should make imports unnecessary, although we've no idea what the quality of these carryover stocks is of course.
Buddies Kazakhstan appear to be waiting in the wings to assist after increasing their export estimate by 2 MMT today. Of course it probably hasn't escaped anybody's notice that Russia help provide the landlocked Kazakhs with a gateway to important export homes to the west. It won't therefore take too much persuasion to ensure Kazakhstan's assistance if Russian imports are required when you look at the bigger picture.
In short if Russia do need to import, then it's highly likely that much of their needs will probably be Kazakh grain which wasn't destined to come onto the market this year. Effectively Russia may be "borrowing" some of Kazakhstan's own grain reserve safety net. And Kazakhstan probably isn't in much of a position to say no.
London wheat in particular needs an up day, having already fallen GBP8.50/tonne this week prior to today's session. It is also faced with a suddenly stronger pound following much better than expected July retail sales figures.
I still expect further price weakness ahead for EU wheat once the harvest wraps up and the inevitable increased winter wheat plantings start. That will also coincide with fund money exiting their November long positions. After that I can see some price appreciation as winter demand kicks in, and the cheaper sellers run out. By late spring however, assuming normal crop development and barring any further weather scares the market will begin to focus on the impending arrival of another bumper crop, the third in the past four years:
Click chart to enlarge
Overnight News
Ministry of Agriculture of Kazakhstan have confounded the market by increasing their 2010/11 MY grain export estimate from 6MMT to 8 MMT.
Funds were active in Chicago last night buying an estimated 10,000 contracts of corn, and 5,000 wheat. They are also thought to have sold around 5,000 of beans.
The Pro Farmer Midwest Crop Tour was in Illinois yesterday pegging corn yields in the state at 166.53 bushels per acre. That's fractionally down on last season.
Despite fairly widespread instances of Sudden Death Syndrome in soybeans, pod counts in Illinois were estimated at 1,308.31 in a 3 foot by 3 foot square, an 18 percent increase from last year's tour estimate.
Wheat is up on the overnight market, apparently drawing support from news that Egypt, unperturbed by these high prices, is tendering again for 55,000 MT of US, French, Canadian, Australian or German wheat for last-half September shipment. That's their second tender this week.
The Canadian Wheat Board estimate output there this year at 21 MMT, better thsn some early season ideas of a crop sub-20 MMT. Rain it would seem does indeed make grain. Statistics Canada are out tomorrow with their estimate.
In Russia 54% of the planted grain area has been cut producing 40.1 MMT, including 28.5 MMT of wheat. Abandonment is expected be high this year.
We now appear to be trading the Russian weather forecast as far as the wheat market is concerned as the trade now starts to focus on winter planting prospects:
Click map to enlarge
More Things That Really Annoy Me
I'm sure I must have mentioned it before, but I'll reiterate as it still rankles. Door to door salesmen. If I want to buy something then I go out and buy it don't I, I don't sit and wait for someone to chance by the house who has exactly what I want to sell it to me. Thinking "I really need my drive repaving, I do hope a drive repaving specialist just happens chance by my area sometime soon."
When they knock at the door with the "are you the owner of the house Sir?" bit, I just love to reply "no I'm a burglar, grab hold of these hubcaps whilst I go back for the betamax video will yer pal."
Worse than that of course are the double glazing salesmen. If they were that good they'd be able to tell that we've already got it wouldn't they? That said I did buy some double glazing off one once. We only made six of the repayments and then I cancelled the standing order. When they took me to court I told the judge that the salesman said it would pay for itself after six months.
Telesales are also scum obviously: "Hello and how are you today Sir? Do you know that for just 52 pence a day your loved ones can claim up to forty five quid should you ever be involved in a fatal accident involving a cheese and tomato sandwich?"
Top of the Pops of things that that annoy me though is people who come to stay at your house. Who do they think they are? There's two sorts, the ones that go to bed at half past eight "Johnny and I do like to retire early, don't we dear." Early? Christ the kids haven't even got home from school yet, what's up with you, have another sherry. "No I really mustn't, I've already had one and I'm driving a week next Thursday."
Even worse than that though are the ones that simply won't go to bed. "Any chance of another bottle of Scotch before I retire?" When you're there sat there in your pyjamas as the milkman is coming down the drive.
And then when they do go to bed there's still no respite.
The half eight brigade have incontinence and creep to the bathroom like they're a stealth burglar or an SAS hit squad or something. So you simply can't sleep at all, waiting for the next creek of the floorboards and the coldness of steel at your throat, as the silently go about their dirty business. Meanwhile the "I'll just have one more bottle of Scotch" lot make more row than an epileptic in a bowling alley when they go for a leak.
Next week: bus drivers, ginger kids, nuns and squirrels.
CBOT Closing Comments
Soybeans
September soybeans closed at USD10.35 1/4, down 10 cents; September soybean meal ended at USD307.40, up USD0.90; September soybean oil closed at 40.86, down 73 points. Crude oil was weaker, dipping below USD75/barrel which pressured beans. The current Pro Farmer Crop Tour suggests that the soybean harvest could be two weeks ahead of last year, although Sudden Death Syndrome (SDS) is proving to be a problem in some areas. Estimates for tomorrow’s weekly export sales report range for 1.9 to 2.2 MMT.
Corn
September corn closed at USD4.18 1/2, up 3 3/4 cents; December corn closed at USD4.33 1/4, up 3 1/4 cents. The Pro Farmer Crop Tour continues to find potential yields above last season and higher that the USDA's 165 bu/acre. The crop is also seen to be well advanced compared with last year. China have announced that they will auction off more of their domestic corn reserves on Friday to cool rising prices. That's the first time they've held two auctions in a week for several years. Export sales for tomorrow are estimated at 1.3 to 1.7 MMT
Wheat
Sept CBOT Wheat closed at USD6.56, up 5 cents; Sept KCBT wheat closed at USD6.85, up 8 cents; Sept MGEX wheat closed at USD6.84, up 6 cents. Wheat traded higher on news that Russian rains might not be as widespread and heavy as some had anticipated. "Cool air is making a slow descent into the Volga wheat areas. Scattered showers would accompany the cool front. The Saratov forecast is dry for another 3 days with hot temperatures. There is a 20% chance for rain Sunday with highs near 70 F. The rain outlook improves next week with daily risk of showers Wednesday through Friday (a 60% chance)," say Martell Crop Projections. Export sales estimates range from 950 TMT to 1.25 MMT.
EU Wheat Closing Comments
November London wheat closed GBP1.50/tonne lower at GBP146.50/tonne, with November Paris wheat ending unchanged at EUR205.25/tonne.
Futures did at least manage to close well off the days lows after Chicago wheat opened higher on talk that Russian rains might not be as widespread as earlier anticipated.
London wheat was pressurised by a firmer pound after the release of the minutes of the BoE's meeting earlier this month revealed one dissenter in keeping interest rates on hold. Prominent MPC member Andrew Sentance was apparently in favour of raising rates to 0.75%.
November Paris wheat fell below EUR200/tonne at one stage, a close below that psychologically important support level would have looked very bearish. It remains to be seen how long it can continue to hold above that level.
It was a relatively quiet day in London with only 499 lots traded all day. Paris as usual saw a much higher volume, but open interest in November remains very high, leaving the market still vulnerable to further front-end selling pressure.
Ukraine's seemingly done deal on export quotas caught the market on the hop, as they announced today that they are deferring a final decision until next week.
Early Call On CBOT
The overnight grains were lower across the board with wheat down 1-2c, corn down 2-3c and beans 8-10c lower.
Crude oil is below USD75/barrel on continued concerns over demand stemming from the ill-health of the global economy.
On the bearish side we have impending record large corn and soybean crops to come in the US, but on the bullish side strong global demand.
It would seem that the extent of the Russian/Ukraine problems were more than factored into prices. The arrival of cooler temperatures and some spotty rains will not have cured the problem, but at least eased it.
QT Weather report that "a marked increase in soil moisture will be seen over the next 7 days but leave dry conditions in significant winter wheat planting areas across the drought stricken southern Volga, parts of the Southern region and eastern Ukraine."
Agronomist Mike Lee in Ukraine reports that "we had rain today and the temperature has dropped significantly, it's much appreciated believe me."
Some in denial wheat bulls are pointing to lower production in Western Australia, where wheat output is now seen a third lower this year due to drought. That might sound like a lot but in reality it's less than 3 MMT, or the equivalent of Mexico's production. In addition there's the potential for record yields in NSW and Victoria to contend with.
Egypt bought 240,000 MT of new crop US corn today.
Opinions are divided as to the potential for the US to deliver the record crops that the USDA is forecasting. The early results from the Pro Farmer Crop Tour would appear to suggest that it can. It will probably deliver them earlier than normal too in many areas, which at least minimises the threat of frost.
Early calls for this afternoon's CBOT session: Corn down 2-4c, soybeans down 8-10c, wheat down 1-3c.
It's All Kicking Off
London wheat was down GBP3 on Monday, GBP4 on Tuesday and is currently down a fiver so far today. The phones are melting as "fear" starts to kick in. Is that wheat chart on the right starting to look spookily familiar?
London wheat is the weakest of the bunch, as the pound rises following news that MPC member Andrew Sentance was in favour of raising interest rates at the BoE's last meeting earlier this month.
Front month November Paris wheat is now flirting either side of the psychologically important EUR200/tonne level. A close below that tonight could inflict some further pain for some of the long holders out there.
Ukraine's seemingly done deal on export quotas now appears to have a question mark hanging over it, as they've announced today that they are deferring a final decision until next week.
China have announced that they will auction off more of their domestic corn reserves on Friday to cool rising prices. That's the first time they've held two auctions in a week for several years.
Widespread talk that the USDA's yield estimates for corn and beans this year are far too high isn't being backed up by the results of the current Pro Farmer Crop Tour. They are finding yields better than last year and above current USDA projections.
Rain has arrived in some parched areas of Russia, and Ukraine too.
Whilst we are far from being out of the woods yet, prices it seems are returning to more realistic levels.
Egypt must be kicking themselves already, and it couldn't happen to a nicer bunch. I don't mind offering my kicking services if they require any help.
Spanish Soft Wheat Crop Up 42 Percent
Unusually plentiful winter and spring rains will see the 2010 Spanish soft wheat crop leap 42% from last year to 4.8 MMT, according to the Ag Ministry there. Barley output is also seen sharply higher at 5.6 MMT, an increase of more than 18% on 2009.
With the harvest now over, total winter cereal production is seen 17% higher at 15.5 MMT, with significant increases also coming from oat and rye production. Durum wheat output, the only grain of which Spain has a surplus, is down sharply on much reduced plantings following a large carryover from 2009.
Kazakhstan
The State Marketing Company say that Kazakhstan will produce 14.5-15 MMT of grains this year, of which 11.9 MMT will be wheat. Their wheat estimate is a little higher than the USDA's recently revised 11.5 MMT number.
Unfortunately we are unable to get confirmation from "Stan" our own man on the ground, who appears to have gone AWOL, enforced to marry a yak in a shotgun wedding by all accounts. "She told me she was sixteen guv, honest."
UK Beats Defra's Wheat Export Target In 2009/10
Figures out today reveal that the UK exported 2.43 MMT of wheat in 2009/10 (July/June), down by almost a third on 2008/09 but still some 230,000 MT above Defra's target for the marketing year.
Three cheers for the hapless Spanish, they were the main export home as usual. We managed to con them into taking 1.26 MMT of our "burdensome" stocks during the entire marketing year, that's up by a third on 2008/09. The muppets.
Pity we conned them at the bottom of the market though.
Still we did manage to stitch up the Philippines and Yanks too, erm that was also at the bottom of the market.
The Dutch then? Portuguese? We even kippered the Germans. What we sold to that lot at the bottom of the market as well?
Still at least we beat them in the football. Not the recent football obviously, I'm talking about the good old days when the refs could tell whether the ball was over the line or not.
Look, the bottom line is we managed to shift more tonnage than expected, at the bottom of the market I'll grant you, but we shifted it. It was getting burdensome. We were awash with the stinking stuff.
Get me the Spanish on line two..."No no senor, we sent you some wheat on holiday, we didn't sell it. No it was just going away for a couple of weeks and now we want it back. The line's gone dead..."
Australia Latest
It remains a game of two halves Down Under with conditions very dry in Western Australia state, where almost 40% of the nation's wheat is grown. In contrast if anything they've had too much rain in parts of the east, with some farmers reporting that they've had to take to the air to carry out top dressing.
WA's Grains Industry Association says that this year's wheat crop in the state will only manage to come in at 5.5 MMT, down from 8.25 MMT in 2009, and that is given "normal" rainfall for the next couple of month. The Australian Bureau of Meteorology unhelpfully stay firmly on the fence, saying that the chances of that are 50:50.
In NSW they have what one agronomist describes as "the best cropping outlook since 2003/04." March rainfall helped get winter crops into the ground in a timely manner and aided early germination, and although May was mostly dry late May and June rains have generally got the crops in much of the central and southern region looking "the best experienced for several decades," according to NSW Industry and Investment.
CBOT Close
Soybeans
September soybeans closed at USD10.45 1/4, up 11 1/4 cents; September soybean meal at USD306.50, up USD4.30; September soybean oil at 41.59, up 14 points. The USDA confirmed the sale of 110,000 MT of beans to unknown destinations. Strong export potential and reports of concerns over yields underpin losses for now. Soybean ratings held steady at 66% good/excellent last night. Yesterday’s crop progress report also showed pod setting ahead of the five year average by three points.
Corn
September corn closed at USD4.14 3/4, up 7 1/2 cents; December Corn closed at $4.30, up 7 1/4 cents. Corn held on to earlier gains to close higher on the day. The USDA today confirmed the sale of 121,920 MT of corn to Japan. Yesterday’s crop progress report showed 32% of the corn had dented which is 10 points ahead of the five year average indicating the crop is maturing ahead of the recent norm. Funds were estimated to have bought somewhere around 10,000 contracts on the day.
Wheat
Sept CBOT wheat closed at USD6.51, down 12 3/4 cents; Sept KCBT wheat closed at USD6.77, down 11 cents; Sept MGEX wheat closed at USD6.78, down 4 3/4 cents. Funds sold an estimated 7,000 contracts in Chicago. Ukraine announced, as anticipated, that it will limit the export of grains to 3.5 MMT between now and the end of the year. Egypt bought 55,000 MT of US hard wheat.
EU Wheat Closing Comments
Front month November London wheat closed GBP4/tonne lower at GBP148/tonne, with November Paris wheat ending down EUR6.75/tonne at EUR205.25/tonne.
The phrase "not for the faint-hearted" springs to mind, with November London wheat already GBP21/tonne below the high set less than a fortnight ago.
Ukraine introduced a grain export quota of 3.5 MMT for the remainder of current calendar year, that will apparently include the circa 1 MMT already lined up at the docks waiting to leave.
That hardly seemed to make a difference today however. It's a bit worrying when news that would have been seen as inherently bullish only a fortnight ago is now being almost completely ignored.
Egypt bought 55,000 MT of US hard wheat today at USD277.50/tonne plus USD44/tonne freight. That equates to USD321.50/tonne CIF, fully USD11.50/tonne cheaper than the price German wheat was offered at.
It would seem that the Egyptians are maybe not quite so much over a barrel as we thought in Europe. The recent flurry of buying activity surely owes more to replacing existing deferred/cancelled Russian shipments than anything else? What happens when this dries up?
America still have more than three times the volume of wheat to sell that they did back in 2007/08, and seem only to glad not to turn the gift horse away at these kind of levels.
US wheat acres have declined by more than 8 million during the past two seasons. Despite recent price declines, winter wheat planting still looks an attractive proposition and will doubtless be clawing at least some of that area back this autumn.
Meanwhile European farmers won't let a little thing like a GBP21/tonne decline put them off upping the winter acreage ante either, not with prices still massively above what they could only have dreamed of less than six weeks ago.
Early Call On Chicago
The overnights rebounded from last night's losses with wheat closing around 10-12 cents higher, beans up around 2-4 cents and corn up 1-2 cents.
Ukraine announced, as anticipated, that it will limit the export of grains to 3.5 MMT between now and the end of the year. The estimated 1 MMT already waiting for customs clearance at the docks will presumably now be allowed to leave, but will come off that total.
The USDA currently have Ukraine down to export 6 MMT of wheat and 4 MMT of barley in 2010/11. That now clearly looks unlikely.
Some reports suggest that Kazakhstan might also introduce some form of cap on exports as early as tomorrow.
That presents another opportunity for the US to offload some of it's weighty surplus. Patience is clearly a virtue, as they've been resolutely building these stocks for the past few years whilst steadfastly refusing to get drawn into a price war with the Black Sea five and dime store.
Egypt and the likes will be pretty glad that they did. Talking of whom, they are in the market again today for a cargo of US, German, Canadian or Australian wheat.
So it looks like we are in for another modest turnaround Tuesday with wheat called 8-10c higher, corn up 1-2c and beans up 2-3c.
Soybean ratings held steady at 66% good/excellent last night whilst corn fell two points to 69%, although still slightly ahead of last year. The spring wheat harvest was 10% behind the 5 year average at 34% complete as rain disrupts progress.
The Pro Farmer Crop Tour doing the rounds in the US found potentially better yields than last season in Ohio. They're into Indiana district 5 today, and so far report a potential corn yield 188.62 bu/acre with a pod count of 1233.5 on beans. Last year's numbers were 161 and 1218.5.
The USDA have today confirmed the sale of 121,920 MT of corn to Japan and 110,000 MT of beans to unknown destinations.
What's Fresh?
Egypt are back in the market tendering for wheat today. Our old mates GASC are looking for 55-60,000 MT of US, German, Canadian or Australian wheat now that the Black Sea shops are shut.
The harvest in Ukraine is 99% complete, producing 17.7 MMT of wheat (down 15% on last year), 9.2 MMT of barley (-22%) and 1.4 MMT of rapeseed (-22%). The Ministry there look set to introduce a grain export quota of 3.5 MMT from now until the end of the year. Of that an estimated 1 MMT is already loaded and waiting customs clearance I hear.
The harvest is underway in Canada with winter wheat yields in southern Manitoba coming in "above average". Early barley harvesting has also had "positive results to date," say the Canadian Wheat Board.
Farming Online report in their online survey that the average UK yield on wheat so far is coming in at 7.08 MT/ha, with barley producing 6.36 MT/ha and OSR 3.61 MT/ha. That wheat yield remains around 10% down on last season
Day one of the Pro Farmer Midwest Crop Tour in Ohio pegged corn yields in the state at 165.6 bu/acre, an increase of 3.7% on last year.
Jobs: Gas Mask And Galvanised Bucket Sales, Due To Expansion
Residents living local to the Ensus bioethanol plant in Wilton, Teesside are still up in arms, saying that the recently reworked higher chimney stack has made little or no difference to the environmental problems in the area.
One couple complain that despite having all doors and windows closed they still need "a fan blowing up chimney to stop the stench from coming down it."
I sense that there's more trouble brewing on this one. I wonder if those nice people at Vivergo/Vireol are taking note?
More here: Quick! Get me another bucket Ethel, this one's full
CBOT Closing Comments
Soybeans
September soybeans closed at USD10.34, down 9 1/2 cents; September soybean meal closed at USD302.20, down USD0.50; September soybean oil closed at 41.45, down 107 points. Beans succumbed to weakness in wheat despite the USDA announcing another sale of 220,000 MT of US soybeans to China. USDA crop progress report for this afternoon had soybean good/excellent condition at 66%, unchanged from last week and last year.
Corn
September corn closed at USD4.07 1/4, down 4 1/2 cents; December corn closed at USD4.22 3/4, down 4 1/2 cents. The USDA crop progress report for this afternoon had corn good/excellent condition at 69%, down 2 points from last week but a point ahead last year. Weakness from wheat did little to help corn's cause, despite news that China is scaling back it's weekly sales of it's corn stockpiles.
Wheat
CBOT December wheat settled down 38 cents at USD6.96 1/4 a bushel; KCBT December wheat fell 35 cents to USD7.03; MGE December wheat lost 31 1/2 cents to close at USD6.96 1/2. Weather conditions are changing for the better in drought-stressed wheat growing areas of Central Russia with rainfall and cooler weather in the forecast, according to Martell Crop Projections. That was enough to send the market reeling lower as prospects for 2011 would be improved considerably by such conditions. US ending stocks are still burdensome despite rhetoric to the contrary.
EU Wheat Closing Comments
Front month November London wheat closed GBP3/tonne lower at GBP152/tonne, with November Paris wheat ending down EUR2.50/tonne at EUR212/tonne.
It was a very subdued day after all the recent activity, with only 262 lots traded in London wheat all day. Paris wheat saw more action, but volumes were also low by recent standards. Open interest in November remains high.
Although Russian analysts SovEcon dropped their Russian grain production estimate to 59.5-63.5 MMT, rain in the forecast for the region later in the week took the bullish shine off prices today.
The arrival of decent rains on the scene might not do much for this season's crop, but it would certainly help plantings for 2011. The more promising things look for next season, the greater the chance of the Russian export ban being rescinded during the current marketing year.
Traders will be conscious that, with prices where they are, European and American farmers will be looking to increase winter wheat plantings for 2011. Low prices last season saw US farmers cut their winter wheat area by 6 million acres to the lowest since 1913. Already there is talk of most, if not all of those acres coming back into wheat production this time round.
Early Call On Chicago
The overnight session closed mixed, with beans around 4c lower, corn a cent or so higher and wheat trading narrowly either side of unchanged.
The bulls need feeding every day, a small downwards correction by SovEcon to their Russian grain production estimate to 59.5-63.5 MMT doesn't look like it was enough.
China did buy another slug of US soybeans though today, booking 220,000 MT of 2010/11 crop.
The USDA's weekly crop condition ratings are out after the close tonight. The trade is expecting those to be unchanged to maybe a slight decline of a point or so for both corn and beans.
Weather forecasters are calling for cooler conditions towards the second half of the week for Russia, and even some possible precipitation in the next couple of weeks.
That might help a bit more winter wheat get planted. Current ideas are than only around 12 million ha will get sown with winter grains, down from 18.5 million ha last year.
The US weather was better than forecast over the weekend too, with a wider coverage of rain and higher totals than expected in the Midwest and Delta region.
It would seem that, at least for now, much of the bullish news is already on the table. Whilst many participants seem to think that the USDA's corn yield projections are too high at 165 bu/acre, unless or until we get confirmation that they are indeed lower as we near harvest, upside looks limited.
As things stand record corn and soybean production is, at least officially, on the cards for the US this year.
For wheats prospects things can hardly get much worse, perhaps the most bullish feature that could yet come along for wheat would be much lower corn production that currently projected by the USDA. Meanwhile there is already talk of an increase of 5 million acres of winter wheat planting in the US this year. Russian acres might get deferred until the spring, but European plantings will also surely surge.
And so it is that even before the harvest is over, already the focus is starting to switch to plantings for next season.
Early calls for this afternoon's CBOT session: corn steady to up 1c, beans down 2-4c, wheat mixed. Yawn. We might see prices start to drift as the session wears on.
A Sign Of The Times?
A shortage of forage has seen an increase in the theft of hay, according to the BBC here. That's the price you pay for living in the country. Despite all the mickey-taking I've endured over the years due to my Scouse origins (what do you call a Scouser in a suit, the accused etc), I can honestly say that hay theft simply never happened round our way. Ha.
On a similar note, one guy I was talking to the other day said that he'd gone to the local "village hop" at the weekend. Where they all sit round on straw bales, drink cider and snog their sister, that sort of thing.
One member of the local Young Farmers group was sat idly on one of the bales, pulling it apart (presumably he needed something to do with his hands temporarily whilst his sister had popped out to "get herself ready").
Anyway, the farmer who had supplied the straw bales actually sent somebody over to have a word with said youth to tell him to stop what he was doing "as that stuff's worth a lot of money you know."
It's In The Bag
I've got one of those really exciting "it's in the bag" orders, which isn't quite yet signed and sealed. It's been approaching bagging stage since around April. It definitely is in the bag though, they've told me as much, it's simply a case of signing on the dotted line. They've probably just misplaced their pen or something. A few last minute hitches to iron out and it'll all get sorted by the weekend. Probably. It should have got sorted a few weeks ago but he unexpectedly went away on holiday you see. It wasn't his fault as he didn't know he was going on holiday until he actually went. Then when he should have been back from holiday he wasn't 'cos he'd picked up a virus whilst on holiday. Easily done, no need to worry. It'll all get sorted this week, so stop going on about it will you?
Which reminds me of the long convoluted story about me discussing what a pain MrsN#1 was in the pub one day, and my mate said why don't you just kill her, end of problem? Chop her up into little pieces and put her in black bags (extra strong obviously) and leave her out for the binmen. That's what he'd done apparently and it worked a treat, they'll obligingly take anything round here he thought, and hey presto they did! He went on to live a blissful nag-free life in front of Sky Sports (no, not HD they didn't have it in those days). He even bought one of those mini fridges full of beer that they sell when the World Cup is on. Wide screen plasma TV (very expensive back then), with all the channels mind, including the "male interest" ones (only the ones with ladies in, not them others that they have nowadays, I mean he wasn't a perv or anything). What bliss I thought, I'll have a slice of that. Except I'll save money by moving our existing fridge into the lounge, and that will hold more beer than those little things, smart see.
So that's what I did as soon as I got home, it's always handy when you keep a spade in the bedroom anyway. Chopped her up in the bath, which come to think of it was the one and only time that I cleaned the bath after using it, but why have a dog and bark yourself eh? She, also for the one and only time, was most helpful by conveniently fitting into a roll of ten extra strong from Do It All and away she went to the end of the drive.
However I was understandably a little nervous when the binmen came around the next day, I was even more nervous when instead of taking the bags away one of them came up and knocked on the door.
"Is there a problem?" I coolly enquired.
"Yes there is mate, he said, we can't take this one 'cos the arse is hanging out of it."
Honest, that really did happen.
New Biomass Plant For Southampton
Helius Energy PLC have announced that they've signed an option on a lease of a 20 acre site at Southampton Docks to build a proposed 100MWe biomass power plant.
The plant would require around 700,000 MT of sustainably sourced biomass per annum, some of which will be imported via the Port of Southampton, they say. More here
That's another home for some more wheatfeed that we haven't got then.
How long is it before the government start offering incentives for burning ginger kids? There's one lives opposite me, he looks like he'd be quite combustible and could potentially provide enough energy to boil a small kettle.
I might give it a go later and let you know how I get on.
Butchers, Bakers, Candlestick Makers....
"Hi Dave, I haven't seen you for ages. I bet you're busy, I read in the paper the other day that these fires in Russia have burnt all their wheat or something." Ruth, Kanaresborough market stall holder and maker of candles, Sunday morning.
"Bloody hell, the price of wheat, eh? I bet you're busy." Peter the butcher, Ripley, Saturday morning.
"We're going to have to put the prices up the boss said, I think it's something to do with these floods in Pakistan, it's wiped all their crops out." The nice blonde girl at the deli, Knaresborough Saturday morning.
"When everyone's a seller, take it off their hands. When everyone's a buyer, let them have it." Ypres, old school Bunge trader.
Snippets
The World Bank say that the Pakistani floods may have damaged up to USD1 billion worth of food in storage, including wheat, cotton and sugar.
SovEcon have today dropped their Russian grain production estimate to 59.5-63.5 MMT.
Russian flour prices have reputedly shot up from 6,000 rubles/tonne in early June to 10,500/tonne now. The government are cracking the whip over what they describe as "dishonest market participants" profiteering from rising bread prices.
Around 6 million hectares of previously anticipated Russian winter grain plantings are now expected to be sown in the spring instead.
Jordan has issued it's second 100,000 MT wheat tender in a week. It bought a similar quantity of German wheat last week.
China are only auctioning off around 400,000 MT of corn in their usual weekly sale this week, instead of the normal quantity of around 1 MMT. Some are saying that this is a sign of domestic reserves running short.
As the harvest winds down Ukraine have produced 17.65 MMT of wheat, 9.18 MMT of barley and 1.39 MMT of rapeseed. Up next are corn and sunflowers, and neither crop is looking too clever as the weather continues hot and dry.
Julia Bradbury's Baps
BBC love goddess Julia Bradbury, in an exclusive Nogger interview given in my sleep last night, reveals her obsession with baps and other food-related consumables.
"A lightly buttered bap has to be the choice at breakfast time," Julia huskily opined.
"They're an integral part of the ultimate bacon butty. Personally, if I have a choice, then the cut of bacon for me has to be back. Scuttling that, I'll frequently opt for the double sausage option, after first helping myself to a decent portion of organic yoghurt," she added.
"When I'm filming I frequently share a roll with fellow crew members at lunchtime," she continued. "Sometimes, if I'm really hungry, I can devour an entire baguette in just one gulp. Unless it's got cheese on it."
"By the time I get home from work all hot and sticky, I'll usually have a quick shower followed by something simple like a marmite sandwich before I collapse exhausted," she concluded.
Tomorrow, why I love chocolate fingers by Dale Winton.
Some Interesting Facts And Figures
During a heavy weekends research in preparation for various projects I currently have on the go I've done quite a lot of digging into the 2007/08 wheat price surge and stocks & usage back as far as the early 90's.
From a UK perspective the big rally of 2007/08 began in early June (spooky coincidence maybe?).
On 1st June 2007 front month London wheat was GBP99.50/tonne, by the end of September it was trading at GBP180/tonne. Prices then had a shake out falling to GBP145/tonne by mid-November before surging to fresh front month all-time highs in February 2008 of GBP192.50/tonne.
Then the bubble burst, we were down below GBP100/tonne by the end of September and sub-GBP90/tonne before the middle of October.
Another interesting fact for you is that despite the USDA raising their US export hopes last week by 6 MMT for 2010/11 to 33 MMT, projected wheat ending stocks in the US are still the second highest in the last ten years. And even with sharp reductions all round to production from the FSU, the world wheat ending stocks to use ratio for 2010/11 is still the second largest in the past eight years:
Another interesting statistic comes from analysing where these wheat stocks actually are. Back in the tight S&D year of 2007/08 the world's top exporters* accounted for 40 MMT of world wheat ending stocks, in 2010/11 that figure is set to be almost 35% higher at just under 54 MMT.
Where are those stocks? They're all in America, who now look well placed to reap the benefits of not competing aggressively with Black Sea discount sellers during the past couple of seasons, meaning that their stocks have risen more than threefold from 8 MMT to almost 26 MMT.
* Argentina, Australia, Canada, Europe, Kazakhstan, Russia, Ukraine and the US.
