Weekly Grains Performance
French milling wheat was the biggest gainer in the market this week on ideas that there aren't too many quality sellers around at the moment. With the northern European harvest stalled on wet weather, full spec milling wheat premiums in the UK have risen to GBP25-30/tonne over feed wheat. Malting barley values also rose on ideas that much of what is left standing in the rain won't make the grade.
France have been picking up the lions share of Egypt's recent tenders, and are kicking off the 2010/11 export season at a rapid rate. US wheat declined sharply Tuesday/Wednesday after missing out on the latest Egyptian tender, but recovered some of those losses by the end of the week.
Soya was up on strong demand, especially from China and talk of SDS and other US yield related losses due to heat/dryness.
Commodity Month Fri Cls Weekly Change
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CBOT wheat Sep10 662.50 -16.50 (- 2.4%)
KCBT wheat Sep10 700.25 - 5.25 (- 0.7%)
MGEX wheat Sep10 707.00 + 7.00 (+ 1.0%)
Paris wheat Nov10 220.50 +10.75 (+ 5.1%)
London wheat Nov10 152.00 + 2.40 (+ 1.6%)
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Paris corn Nov10 192.25 + 4.00 (+ 2.1%)
Paris rapeseed Nov10 373.00 +12.00 (+ 3.3%)
Paris barley Nov10 233.00 + 9.00 (+ 4.0%)
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CBOT soybeans Sep10 1022.00 +12.75 (+ 1.2%)
CBOT soymeal Sep10 307.80 + 7.00 (+ 2.3%)
CBOT soyoil Sep10 40.20 + 0.68 (+ 1.7%)
CBOT corn Sep10 421.00 - 0.25 ( n/a )
CBOT Closing Comments
Soybeans
September soybeans closed at USD10.22, up 9 cents; September soybean meal closed at USD307.80, up USD1.50; September soybean oil closed at USD40.20, up 71 points. Beans closed up 13 cents on the week. Private exporters announced the sale of 120,000 MT of soybeans to Russia for new crop delivery. Strong export demand continues to underpin the market. Yield concerns associated with heat and dryness continue to come out of the south and east.
Corn
September corn closed at USD4.21, up 4 1/2 cents; December corn closed at USD4.36, up 4 cents. The USDA announced the sale of 180,000 MT to unknown destinations for 2010-11. Early yield reports out of Illinois, Indiana and Ohio are a little disappointing, fuelling talk that the USDA's yields estimate of 165 bu/acre is likely to shrink from here. The the Bueno Aires Grain Exchange are talking of a possible 9% increase in Argentine corn production this year.
Wheat
Sept CBOT wheat closed at USD6.62 1/2, up 6 cents; Sept KCBT wheat closed at USD7.00 1/4, up 9 1/4 cents; Sept MGEX wheat closed at USD7.07, up 6 3/4 cents. Russia continue to deny that they will need to import grains 6this season, but the market doesn't believe them and seems to be pricing in Russia becoming a buyer in 2010/11. Rain is predicted for the western portion of the country over the next 10 days, which might help lagging winter plantings catch up a little.
EU Wheat Close
November London wheat closed GBP4.00/tonne higher at GBP152.00/tonne, with November Paris wheat ending up EUR4.25 at EUR220.50/tonne.
Brussels granted export licences for 856,000 MT of soft wheat this week, the highest weekly total so far this marketing year. Cumulative 2010/11 export licences now total 2.68 MMT, ahead of last season's 2.59 MMT.
Early Russian winter grains planting progress is already well behind normal. Certainly some of last season's 18.5 million hectares isn't going to get planted, the question is how much? Around a third of it, or 6 million hectares won't get sown until the spring, that's the figure that the trade seems to be working on at the moment.
What rains have arrived have been largely confined to northern areas thus far.
At home the HGCA say that the domestic wheat harvest has advanced to 45% complete with yields averaging 7.6-7.8 MT/ha. That's somewhat better than the 10% fall from last season's 7.9 MT/ha average that many had been forecasting.
The wet August hasn't yet done too much damage as far as hagbergs or specific weights are concerned, they say.
The winter barley harvest is wrapped up with an average yield of 6.2-6.4 MT/ha and the spring barley harvest 35% done with yields below average. The OSR harvest is almost complete with yields averaging 3.7 MT/ha, a 12% increase on the five year average of 3.3 Mt/ha, they add.
Go Ape!
That's today's fun-filled activity d'jour, which seems to basically consists of swinging through the trees in nearby Whinlatter Forest for what the kids are telling me is four hours. I hope and assume that they are deliberately winding me up.
Heights aren't my favourite thing, but they assure me that "you'll love it once you're up there".
It's a pity that they don't adopt the same devil-may-care let's give it a go philosophy when MrsN#3 & I try to persuade them to do something exotic like "go for a walk".
"Walking is boring," comes the heathen response. "Can't we just go back to the cottage and watch telly?" I despair of the youth of today. Nothing can seemingly get their arses into gear if it involves walking. Mysterious "sore legs/knees" suddenly develop that weren't there ten minutes ago.
Talking of which the IGC finally seem to have dragged their sorry arse into gear with a 6 MMT downgrade to Russia's wheat crop to 44 MMT, only to be immediately usurped by the USDA attaché (himself normally a useless laggard) with an estimate of only 41 MMT.
Winter plantings aren't going too well as yet either, with less than half a million hectares in the ground compared with almost a million this time last year.
The BBC are giving heavy rain for Saturday and Sunday in Moscow, although again these rains are forecast to be confined to northern areas of the wheat belt.
You probably don't need me to explain the potential implications of a late planted crop, or indeed one that doesn't get sown until the spring. Spring wheat normally yields 20% less than winter wheat in this part of the world.
At home the HGCA say that the domestic wheat harvest has advanced to 45% complete with yields averaging 7.6-7.8 MT/ha. That's somewhat better than the 10% fall from last season's 7.9 MT/ha average that many had been forecasting.
The wet August hasn't yet done too much damage as far as hagbergs or specific weights are concerned, they say.
The winter barley harvest is wrapped up with an average yield of 6.2-6.4 MT/ha and the spring barley harvest 35% done with yields below average. The OSR harvest is almost complete with yields averaging 3.7 MT/ha, a 12% increase on the five year average of 3.3 Mt/ha, they add.
Yes, kids I'm coming...oh no, I seem to have developed a sudden and unexplainable limp...can't we just watch telly instead...
CBOT Close
Soybeans
September soybeans closed at USD10.13, up 13 cents; September soybean meal finished at USD306.30, up USD6.60; September soybean oil closed at 39.49, up 35 points. A July crush of 129.073 million bushels was higher than trade expectations. Weekly export sales of 167,700 MT for delivery in 2009/10 and 824,100 MT for delivery in 2010/11 were in line with expectations. China took 114,800 MT of old crop and 175,000 MT of new crop.
Corn
September corn closed at USD4.16 1/2, up 11 3/4 cents; December corn closed at USD4.32, up 12 cents. Private exporters announced the sale of 156,527 MT of corn to Japan today. Weekly export sales were 42,265 MT for 2009/10 delivery and 1,693,601 MT for 2010/11 delivery. That was above expectations for sales of 1.0-1.2 MMT. Japan and Egypt were the main buyers of the new crop
Wheat
Sept CBOT wheat closed at USD6.56 1/2, up 8 3/4 cents; Sept KCBT wheat closed at USD6.91, up 14 3/4 cents; Sept MGEX wheat closed at USD7.00 1/4, up 10 cents. Weekly export sales were better than trade estimates at 1,077,600 MT. The USDA attaché said the Russian wheat crop will drop to 41 MMT, that's the lowest trade estimate yet. The IGC dropped their estimate to 44 MMT today.
EU Wheat Close
November London wheat closed GBP0.70/tonne higher at GBP148.00/tonne, with November Paris wheat ending up EUR2.25 at EUR216.25/tonne.
The International Grains Council finally fell into line with other trade estimates today, cutting their global wheat production estimate by 7 MMT to 644 MMT. That marks a 20 MMT reduction in the past two months.
Most of that is down to last month's wildly optimistic Russian production estimate of 50 MMT being revised down to 44 MMT.
They now peg world consumption 13 MMT higher than production at 657 MMT.
That still leaves 2010/11 world wheat ending stocks at 184 MMT, hardly a perilously tight situation.
The USDA reported weekly export sales of just over 1 MMT, with "unknown" accounting for 246,000 MT and Egypt a further 135,900 MT. Egypt also featured taking one cargo in the weekly shipments.
Even so, that pales into relative insignificance alongside the 720,000 MT of export business that the French have manged to secure to Egypt since the Russia export ban was announced.
That highlights the competitiveness of French wheat on the world export stage, which is likely to underpin the Paris market.
August rains in the UK, Germany and Poland are casting a doubt over the quality of this season's Northern European harvest. It may well be that there is more feed grade wheat around than had been expected during the June heatwave. If so we may continue to see the gap between London and Paris wheat widen even further.
Everybody Hurts
In the words of REM. I think Michael Stipe must have written that one after a day riding "Taffy" in the Lakeland fells. Not so much pony trekking as shire horse trekking in my case as one helpful walker pointed out.
You possibly haven't spent an entire morning legs akimbo with only a fully girthed shire horse for company I don't suppose? (Jordan probably has, but I don't suppose she frequents here).
Today I'm walking around like John Wayne with a fully laden colostomy bag. Hardly ideal preparation for today's fun-filled activity of kayaking then.
Still at least the rain has stopped, although I strongly suspect that I'm going to be getting wet anyway.
Talking of which much of the standing UK, German and Polish wheat crops have been getting a thorough soaking I read.
Egypt's GASC have bought the thick end of a million tonnes of wheat since the Russian export ban came in, with around three quarters of it from France by my calculations. Most of the remainder coming from Germany and Canada, with only a token 55,000 MT being of US origin.
Although private Egyptian buyers have bought US wheat, GASC still seem to think it's too dear.
Hence last night's sharp decline in Chicago, although I see that things have partially recovered overnight. Wheat still remains potentially the weakest leg of the "big three" in my book, followed by corn and soybeans in that order.
Now then, where did I put those lycra shorts....
CBOT Close
Soybeans
September Soybeans closed at USD10.00, up 1/2 cent; September soybean meal closed at USD299.70, up USD3.30; September soybean oil closed at 39.14, down 34 points. Lower wheat and outside markets weighed. Weekly export sales estimates range from 900 TMT to 1 MMT. Monthly census crush estimates range from 127.5 to 129 million bushels for tomorrow’s report.
Corn
September corn closed at USD4.04 3/4, down 1/2 cent; December corn closed at USD4.20, down 1/2 cent. Weekly export sales for tomorrow's USDA report range from 1 MMT to 1.2 MMT. Weak wheat markets helped weigh on corn despite bullish rhetoric. "Trade below today's lows will transform elevated nervousness into more aggressive liquidation activity," say Farm Assist.
Wheat
Sept CBOT wheat closed at USD6.47 3/4, down 27 cents; Sept KCBT wheat closed at USD6.76 1/4, down 24 1/2 cents; Sept MGEX wheat closed at USD6.90 1/4, down 15 cents. Egypt passing on a US. wheat tender and buying instead wheat from Canada and France weighed. Weekly export sales estimates for tomorrow range from 750 TMT to 900 TMT.
EU Wheat Close
November London wheat closed GBP0.55/tonne higher at GBP147.30/tonne, with November Paris wheat ending up EUR0.25 at EUR214.00/tonne.
The German Farmers' Union Deutscher Bauernverband (DBV) said that this season's grain harvest there will fall to 43.9 MMT, much lower than the previous year's harvest of 49.7 MMT.
Heat and drought in June and July gave way to heavy rains in August, all of which have conspired to produce premature ripening resulting in yield and quality losses, they said.
Although large areas of winter wheat remain uncut, they expect that final output this year will only be 22.7 MMT, down 9% from last season. A reduced planted area and lower yield mean that this season's winter barley crop will amount to 8.6 MMT, with spring barley accounting for a further 1.7 MMT. That gives a total German barley crop of 10.3 MMT, 15.6% down on last season.
This season's rapeseed crop is expected at 5.6 MMT, as yields fell by almost 10% on last season, oil content is around 40-44%, they added.
DBV's wheat number is towards the low end of other trade estimates, whilst the barley and OSR estimates are pretty much bang on what is being touted around elsewhere.
The Ukraine government today deferred a decision on the introduction of grain export quotas for the second week in a row. Early ideas that a quota of only 2.5MMT may be introduced for the remainder of 2010 are fading, with some analysts now forecasting 15-16 MMT could still be exported during the 2010/11 marketing year.
Egypt passed on US grain again today, buying 240,000 MT of French and Canadian wheat instead.
Morning Thought
Despite being away on holiday I am keeping my hand in by still updating the evening reports, it's a good excuse to slope away for an hour or two to be honest!
CBOT soybeans closed below USD10/bushel last night I see, and the overnights are a tad lower again, as indeed they are for wheat and corn too.
Having moved up the furthest on the rally that came almost from nowhere in July, then I guess it's logical that wheat looks the most vulnerable to further downside.
The situation in Russia/Kazakhstan/Ukraine seems to have at the very lest stabilised, and quite likely improved somewhat. Temperatures have certainly cooled a lot and rain has arrived in varying amounts in most areas.
Not a drought buster yet, but definitely a step in the right direction.
Now that the Russian news has been consigned to the history folder the bulls need something new to hang their hats on. Remember that they must be fed every day.
The looming US harvest is the next thing for them to "bull up" and indeed many are already furiously doing just that. There's isn't really to much bulling up they can do with regards to wheat, the winter crop is just about all in and the spring crop is well advanced and looking good.
The best they can do for wheat is point to a potentially smaller US corn crop than the USDA currently project. Yet, frustratingly for the bulls, the USDA upped their crop condition ratings this week.
After that we have a much-hoped for increase in the percentage of ethanol used in gasoline. Although that particular carrot has been in front of the donkey for some time now, and we've seen deadlines come and go on that one before.
For soybeans, the bulls have SDS and continued strong Chinese demand. We also had crop conditions declining a little this week.
Historically however we have a strong seasonal tendency for both the soybean and corn markets to put in it's yearly lows in October. I don't really see any huge reason for that not to be the case this year either.
Right, today I have an appointment with a horse at 10am, I trust that they've selected a suitably robust animal. I somehow suspect that my hopes of winning the Grand National one day are about to be cruelly dashed on the rocks of fate....
CBOT Close
Soybeans
Chicago soybeans closed lower with September soybeans at USD9.99 1/2, down 7 1/2 cents; November soybeans were at USD9.99, down 6 1/2 cents; September soybean meal closed at USD296.40, down USD5.00; September soybean oil closed at 39.48, down 23 points. Spillover weakness from wheat and crude oil and a firmer US dollar set the tone. Yesterdays crop progress report indicated a significant advance in pod setting for Illinois and Indiana from last week.
Corn
September Corn closed at USD4.05 1/4, down 12 cents; December corn closed at USD4.20 1/2, down 12 1/4 cents. Yesterdays crop progress report showed an unexpected improvement in crop condition ratings of one point to 70 percent good to excellent. Despite market rhetoric that this months corn yield estimate from the USDA will be the highest of this crop, potentially record production seems to be capping upside potential for the time being.
Wheat
Sept CBOT wheat closed at USD6.74 3/4, down 17 1/2 cents; Sept KCBT wheat closed at USD7.00 3/4, down 16 1/4 cents; Sept MGEX wheat closed at USD7.05 1/4, down 11 cents. Russia got some much needed rain over the weekend, improving winter wheat sowing prospects for some areas, more is in the forecast this week. The USDA last night said that the spring wheat harvest was 53 percent complete as of Sunday. Yields and protein levels are reported being better than a year ago.
EU Wheat Closing Comments
November London wheat closed GBP3.20/tonne lower at GBP146.75/tonne, with November Paris wheat ending down EUR0.50 at EUR213.75/tonne. A weak euro and concerns over milling wheat prospects relative to those of feed wheat helped Paris futures fare better than their London counterparts.
Despite widespread scare mongering and speculation, Russia continues to deny that it will need to import grain in 2010/11. Russia's Vice Minister of Agriculture is now on record as saying that these rumours are being circulated by the activity of "unscrupulous" grain traders.
That appears to have taken some of the heat out of the market, at least for now.
The market is now concentrating on weather developments in Russia as regards winter wheat planting prospects. Recent much cooler and wetter conditions in northern wheat areas may soon spread southwards, according to some forecasts. That would certainly help winter grain plantings get closer to the recent norm of around 18 million hectares from the 12 million currently being predicted.
If they can be believed, then this season's grain harvest in Kazakhstan won't be as bad as many had feared after all, according to the Ag Ministry there. They now say that they'll harvest 14 MMT of grains this year to add to last season's hefty carryover stocks.
Rain continues to hamper the wheat harvest at home and on the continent, it's also now causing quality issues and we may see much of what looked like a promising milling wheat crop consigned to the feed bin.
The US agricultural attaché cut his EU-27 all wheat production estimate to 135.5 MMT from 138.2 MMT last season due to lower than anticipated yields. Ending stocks for 2010/11 are seen falling 4 MMT from last season to 11.9 MMT.
This season's barley crop is pegged at 54.5 MMT, down 11% from last season's 61.3 MMT, with ending stocks declining from14.4 MMT to 8.0 MMT.
Morning!
The overnight market is mostly lower, with corn leading the way after the USDA last night upped their good/excellent crop ratings by one point to 70%. The market had been expecting a 1-2 point decline.
The dollar is firmer, adding further pressure.
Canadian canoeing in the rain on Derwent Water is not an entirely unpleasant experience, although getting the thing to go where you want it to go is a wee bit tricky.
Under these circumstances the two girls in the boat decided that it was probably better to let Nogger take control and paddle them around whilst they relaxed and took in the view.
Today it's down a mine. Not sure if it will be raining down there, but strongly suspect that it will. Tomorrow it's "I think you're gonna need a bigger horse love" as we go trekking in the rain.
Bliss.
Interesting to note that Thirlmere, just down the road from here, still looks several feet below normal despite all this rain.
Gotta go, the smell of bacon is wafting up the stairs...
CBOT Close
Soybeans
September soybeans closed at USD10.07, down 2 1/4 cents; September soybean meal closed at USD301.40, up USD0.60; September soybean oil closed at 39.25, down 27 points. The USDA crop progress report showed the portion of the crop setting pods at 91%, up 7 points from last week and 8 from last week. The soybean condition rating was 64% good or excellent, down 2 points from last week and 5 points below last year.
Corn
September corn closed at USD4.17 1/4, down 4 cents; December corn closed at USD4.32 3/4, down 3 1/2 cents. The USDA crop progress report after the close showed corn dough at 88% of the crop, up 14 points from last week and 33 points ahead of last year. Corn dented was at 54%, up 22 points from last week and 37 points ahead of last year. Mature corn, first reported this week, was at 8%, up 5 points from last year. Corn condition rating was 70% good or excellent, up 1 point from last week.
Wheat
Sept CBOT wheat closed at USD6.92 1/4, up 13 1/4 cents; Sept KCBT wheat closed at USD7.17, up 11 1/2 cents; Sept MGEX wheat closed at USD7.16 1/4, up 16 1/4 cents. The USDA crop progress report tonight showed winter wheat harvested at 95%, up 4 points from last week and lagging a point from last year. Spring wheat harvested was at 53%, up 19 points from last week and 32% behind the 5 year average. Spring wheat good/excellent condition was the same as last week.
EU Wheat Close
November London wheat closed GBP0.35/tonne higher at GBP149.95/tonne, with November Paris wheat ending up EUR4.50 at EUR214.25/tonne. Russia didn't get as much rain as had been hoped over the weekend, although showers, some heavy, are in the forecast again all week.
Although temperatures have eased and rainfall has returned to much of Ukraine some irreparable damage has been done to the corn crop, said the Ag Ministry there pegging production now around 15% lower than expected.
Kazakhstan says it had over 6 MMT of grain stocks as at August 1st, 5.5 MMT of which was wheat. If that's correct, and the Ag Ministry's estimate for a grain harvest of around 13.5 MMT this season holds true, then in they could still be a major exporter in 2010/11.
Tunisia bought 50,000 MT each of what was probably French wheat and barley over the weekend, and Jordan booked 100,000 MT of German wheat for the second week in a row.
The fact that buyers keep coming back, even at these levels, is underpinning the market. Heavy rains across the south of England have spread northwards disrupting what remains of the wheat and spring barley harvest. Quality is now becoming a serious issue. The same can also be said for the tail-end of the harvest on the continent.
