EU/US Grains Weekly Change
Commodity Month Change % Change
---------------------------------------------
London wheat Nov -3.75 -2.3
Paris wheat Nov -9.75 -4.2
Paris corn Nov -1.25 -0.6
Paris rapeseed Nov unch n/a
Paris malting barley Nov -3.50 -1.5
CBOT wheat Dec -19.25 -2.6
KCBT wheat Dec -10.75 -1.4
MGEX wheat Dec -10.75 -1.4
CBOT soybeans Nov +57.00 +5.3
CBOT soymeal Oct +8.50 +2.8
CBOT soyoil Oct +257 +6.1
CBOT corn Dec +8.50 +1.7
---------------------------------------------
GBP/USD Spot +1.91 +1.2
EUR/USD Spot +4.45 +3.4
GBP/EUR Spot -2.52 -2.1
---------------------------------------------
CBOT Close
Soybeans
November soybeans closed at USD11.26, up 32 1/2 cents; October soybean meal closed at USD313.20, up USD7.70; October soybean oil closed at 44.48, up 97 points. A weak dollar and the Dow Jones up around 200 points fueled spec buying and short covering as beans surged past USD11/bu for the first time in a year. One report circulating suggests that a Californian pension fund is to sink USD2.5 billion into commodities, with a heavy bias on grains. Nov beans closed 57c higher on the week.
Corn
December corn closed at USD5.21 3/4, up 22 1/2 cents; March corn closed at USD5.34 1/4, up 22 cents. The dollar hit a six month low, improving the export attractiveness of all the grains. Dec corn got within a quarter of a cent of it's recent contract high but couldn't break through it, closing 8 1/2c higher on the week. Ethanol was 8.6 cents higher and crude oil settled USD1.37 higher at USD76.55/barrel. On the day the funds were estimated to have bought in excess of 15,000 contracts.
Wheat
December CBOT wheat closed at USD7.20, up 22 3/4 cents; December KCBT wheat closed at USD7.57 1/2, up 20 1/4 cents; December MGEX wheat closed at USD7.62 1/2, up 19 cents. Prior to today Dec CBOT wheat was down 41 3/4c on the week, so was maybe overdue a correction in the face of strong beans and corn. Commodity funds were estimated to have purchased 5,000 CBOT contracts. Russia and eastern Ukraine are starting to get some rain. Western Australia remains too dry, but conditions in the east are near ideal and bumper production is expected there.
EU Wheat Close
November London wheat ended GBP1.00 easier at GBP162.00/tonne, with November Paris wheat up EUR0.75 at EUR224.00/tonne.
It's been another difficult and volatile week.
A strong euro and weak dollar have set the tone for the second half of the week, with EU prices closing well below earlier highs.
November London wheat closed GBP9.50/tonne below the contract highs set on Monday. November Paris wheat ended EUR14.00/tonne below it's early week highs.
EU exports are well ahead of last season, but may now start to tail off as a falling dollar makes US grain more competitive. Unlike this side of the pond, there is plenty of spare tonnage available in the US.
Russia and Ukraine are starting to get some rain, although "planting wheat this late is a risky venture, not affording the crop enough time to become properly established before it goes dormant," say Martell Crop Projections.
Attention is also turning to EU and US wheat plantings. UK and French wheat sowings are expected to be modestly higher for 2011, whilst German sowing could be up more significantly as rains may have prevented some OSR getting into the ground. In the US wheat plantings are expected to rebound to 57 million acres, compared to 54.3 million for the 2010/11 crop.
Copa Cogenca EU Crop Estimates
(MMT) 2010/11 % Change
------------------------------------------------
Soft wheat 126.4 -1.5
Durum wheat 8.3 -4.4
Barley 53.8 -10.1
Corn 54.2 -4.5
Rapeseed 19.8 -4.0
------------------------------------------------
Of which..
Soft wheat
France 35.7 -1.4
Germany 23.8 -5.2
UK 14.4 +2.1
Poland 9.1 -2.2
------------------------------------------------
Rapeseed
France 4.7 -16.1
Germany 5.7 -9.5
UK 2.1 +10.5
Poland 2.1 -12.5
------------------------------------------------
CBOT Early Call
The overnights closed higher, in the case of corn and wheat at least partially reversing last night's losses. Beans forged on to close above USD11/bu. Wheat and corn ended around 6c firmer with beans up 7-8c.
Crude oil is around half a dollar firmer.
The dollar is at or close to it's worst against the euro since April.
Despite including the overnight gains Dec CBOT wheat is still down 36c on the week, with Dec corn 7 1/2c lower. Nov beans are the leader for the week, currently 32c higher.
Rain is starting to slowly appear in the Brazilian forecasts, but it isn't a drought buster yet.
Russia and Ukraine are also starting to get some rain, but again they aren't exactly out of the woods yet as far as winter plantings are concerned.
Next Thursday sees the release of the US quarterly stocks report.
Early calls for this afternoon's CBOT session see firmness from the overnights dominating early trade: corn up 5-7c, beans up 7-9c, wheat up 5-7c.
EU Rapemeal Prices
Basis FOB Lower Rhine in euros/tonne:
Oct 218,00
Nov/Jan 11 213,00
Feb/Apr 210,00
May/1st h.July 207,00
Aug/Oct 11 190,00
Early Thoughts On EU Plantings
With the EU harvest winding down, and prices running close to their highest since to "food crisis" that wasn't really a food crisis of 2007/08, EU growers are spoilt for choice what to plant this winter.
Here's a few random Nogger thoughts on what might go into the ground:
UK
More wheat, but possibly not that much more, maybe 5% or so. Growers will also be looking at what type of wheat to sow, having planted marginally more feed wheat than milling wheat last season. With Vivergo likely to be in production by next harvest, competition for feed wheat in the north could become pretty fierce.
That could potentially see the "north/south divide" open up even further, with more feed wheat getting sown in the north/east midlands.
Having absorbed two years of indigestion there will be some growers scratching their heads as to whether to give barley another chance too. Maltsters might have to sharpen their pencils and offer some tempting contracts if they want to stem the tide away from barley.
OSR prices aren't exactly unattractive either, and we could see a further modest increase in acreage here giving the additional rotational benefits of doing so.
Peas, beans and other marginal crops could all see a reversal in their planting fortunes.
FRANCE
I don't expect any significant changes. The combination of a decent harvest and high prices might buy a few more wheat acres this year, possibly raising the planted area around 5 million hectares. Barley area might lose a little and OSR gain slightly.
GERMANY
The wet end to the season endured by German farmers may have a more significant impact on winter plantings than in the UK or France. Reduced OSR sowings (maybe 10%) look the most likely scenario, with some areas too wet for planting during the optimum time frame. Much of this enforced reduction in area might end up going into wheat.
POLAND
Similar problems to those in Germany meant a late finish to the harvest could have a negative impact on winter OSR plantings. Again wheat is the most likely beneficiary.
SPAIN
A much wetter than normal year potentially means that winter wheat area could increase. Durum wheat sowings should recover from a slump last season, due to a high carry-in from the previous year.
ITALY
High prices might encourage wheat plantings back to the levels of two seasons ago - circa 2 million hectares.
Saying Of The Day
"Alan Sugar, he's got a finger in more pies than a leper on Masterchef" - Anon
Australia: NSW Wheat Crop Up 75 Percent
NSW Industry and Investment say that "prospects for all winter crops are excellent following average to above average rainfall in the July-August period."
They estimate wheat production in the state at 8.95 MMT, up 75% on last season's 5.1 MMT, and more than a million tonnes above their previous estimate.
Barley production this year will come in at 2.3 MMT, with canola output at just under 650,000 MT, where they say yield potential is "the highest in at least a decade."
Dreyfus In Merger Talks
Louis Dreyfus are apparently in talks with Singapore-based rival Olam International "in relation to a possible business collaboration which may take the form of, among others, a merger," according to Olam.
The Morning Vibe
It looks like it's turnaround Friday, after wheat and corn both crashed below psychological support at USD7/bu and USD5/bu last night, they both trade back above those levels this morning. Soybeans have also managed to break through resistance at USD11/bu.
Despite looming record US production, soybeans look to be the one with the most limited downside as things stand. Strong demand from China, dryness in Brazil and Informa last night pegging 2011 US acreage 1.5 million down at 77.4 million acres all look like underpinning beans.
The market is already trading US corn yields of around 160bpa, 2.5bpa lower than the USDA's current estimate, although there are now plenty of forecasts 2-3bpa lower than that. Export sales yesterday though were poor, suggesting that maybe USD5/bu is rationing demand. The IGC yesterday trimmed 5 MMT from last month world production estimate to 824 MMT, whilst ending stocks fell 4 MMT to 131 MMT. However five dollar corn means Informa see US farmers planting 2.5 million acres more in 2011 at 90.4 million acres.
Wheat is still the poor relation in my eyes, although if corn can manage to hold above five bucks then that will help provide support. World stocks are not as acutely tight as market prices reflect. Simply put, there's plenty of stock, but it's mostly in America. High wheat prices also mean increased 2011 plantings. Informa estimate plantings for next season at 57 million acres, compared to 54.3 million for the 2010/11 crop.
Of course, as I said earlier, this is all based on as things stand at the moment. Politics can potentially move the goalposts at any time. US lawmakers are expected to vote next week on legislation aimed at penalising China for keeping its currency artificially low. China took 75% of yesterdays US soybean export sales in what is becoming a pretty regular occurrence. Maybe the US should give Egypt a call for a quick chat about the wisdom of putting all your soybeans in one basket?
Meanwhile the ethanol blenders credit is due to expire on December 31st this year. The biodiesel blenders credit expired on December 31st 2009, and politicians are still deliberating on whether that should be reinstated despite several attempts to push it through.
CBOT Close
Soybeans
November soybeans closed at USD10.93 1/2, up 5 cents; October soybean meal ended at USD305.50, down USD0.70; October soybean oil finished at 43.51, up 64 points. Export sales for beans came in at a better than expected 1,083,700 MT, including 810,500 MT to China. The USDA also confirmed further sales of 120,000 MT of beans unknown, 120,000 MT of beans to China today. Census Crush reported the August soybean crush at 128.11 million bushels above trade expectations. Informa Economics pegged the US 2010 soybean crop at 3.412 billion bushels, down slightly on their 3.437 billion previously estimated. They forecast 2011 soybean plantings at 77.4 million acres, down from 78.9 million in 2010.
Corn
December corn ended 5 3/4 cents lower at USD4.99 1/4 a bushel; March corn ended 6 cents at USD5.12 1/4 a bushel. Weekly export sales were disappointing at 561,800 MT - the lowest in three months. Are prices rationing demand? Front month December closed back below the important USD5/bu mark. The IGC reduced the world corn crop by 5 MMT to 824 MMT, trimming the US crop by 4 MMT to 334 MMT, whilst world ending stocks fell 4 MMT to 131 MMT. Informa Economics cut it's 2010 US production estimate to 12.88 billion bu, from 13 billion previously. They also however pegged 2011 plantings at 90.4 million acres, up sharply from 87.9 million acres in 2010.
Wheat
CBOT Dec wheat closed down 22 1/2 cents at USD6.97 1/4 a bushel; KCBT Dec wheat fell 19 cents to USD7.37 1/4; MGEX Dec wheat lost 20 1/2 cents to close at USD7.43 1/2. Weekly export sales were 950,315 MT for 2010/11 delivery but there were net cancellations of 490,500 MT for 2011/12 delivery. That included 275,000 MT to unknown and 220,000 MT to Egypt. The IGC left their world wheat production estimate unchanged from last month at 644 MMT, carryover stocks were reduced 1 MMT to a still more than ample 183 MMT. Informa Economics pegged the 2010/11 US wheat crop at 2.224 billion bushels, and estimate plantings for next season at 57 million acres, compared to 54.3 million for the 2010/11 crop.
EU Wheat Closing Comments
Nov London wheat closed GBP3.25 lower at GBP163.00/tonne, with Nov Paris wheat down EUR4.50 at EUR223.25/tonne.
Wheat both sides of the Channel declined on ideas that dollar weakness will boost exports of US material.
Brussels issued soft wheat export licences for 527,000 MT this week, bringing the year to date total to 5.3 MMT, more than a million tonnes ahead of the same time last year.
Wheat imports to date are less than half of last season at 410,000 MT.
The IGC left their world wheat production estimate unchanged from last month at 644 MMT, carryover stocks were reduced 1 MMT to a still more than ample 183 MMT.
"Given the generally adequate supply situation for wheat and other grains, despite recent crop concerns, many have expressed surprise at the ferocity of recent market responses," they noted.
Meanwhile rain has started to arrive in the Volga region of Russia which may boost winter plantings a little, although they will likely fall well short of the government's 18 million hectare target.
Canadian Update
My old chum Brad Eggum in Saskatchewan tells me that things might be looking up a little. "After yet another 1" soaking yesterday, our weather services agree we may be set for our big break. Not a cloud in the sky for a two week stretch they say, with some warm temps to start us off," he says.
That may help get a large chunk of the outstanding harvest in, but serious damage to quality has already been done. "bombarded by several weeks of moisture while ripe, the frost will have ruined much of the late seeded crop which would have come through the rain unharmed" he sighs.
It's a good job that the US has plenty of quality wheat it would seem.
Three Cheers For Dalmark!
My chums at Dalmark Grain rather rashly offered to buy me a beer for every hit that the blog directed to their excellent Grain Portal website.
Well, it's bound to be excellent seeing as it's powered by Noggerpower isn't it? The thing is I've never ever got around to having a look at how my beer fund is progressing. I kind of thought I'd save it up for a rainy day so to speak.
Well lads, it looks like it's tipping it down, only it's not rain that appears to be falling. Lets have a closer look, we appear to be having not so much as a golden shower (oh err missus) as a golden torrent.
Think Boscastle, but with lager.
A verbal contract is enforceable by law isn't it?
The hidden power of advertising on Nogger's Blog. I might have to start putting my rates up. I may also start having to get up before I go to bed in order to sup sixty five pints a day. Yes, A DAY. And that's only counting up to three o'clock this afternoon!
Early Call
The overnight grains closed mostly lower, with nearby months on beans ending negative after trading to the upside for most of the session, but ultimately unable to swim against declining what and corn.
Nearby beans closed 3-4c lower, corn was down 6-8c and wheat around 10-12c weaker.
Front month December corn slipped back below the pivotal USD5/bu mark, and wheat settled within sight of USD7/bu, whilst beans tried but failed to break through USD11/bu.
Export sales came in at 459,800 MT for wheat, 561,800 MT for corn and 1,083,700 MT for beans. Expectations for wheat were 450,000 to 650,000 MT; 650,000 to 750,000 MT for corn and 550,000 to 750,000 MT for beans.
Net wheat sales were negative to the tune of 490,500 MT for the marketing year 2011/12. That included 275,000 MT to unknown and 220,000 MT to Egypt.
Hence, corn sales were a bit disappointing, wheat was in line and beans beat expectations.
Also supportive for beans was the August Census soybean crush at 128.1 million bu, meaning that the crush for '09-'10 marketing year exceeds the USDA's estimate by 2.7 million bu.
Add to that planting concerns in central Brazil, and the continued heavy buying by China, who took 810,500 MT of this week's soybean sales, beans undoubtedly the strongest leg of the complex at the moment to my mind.
The IGC left their world wheat production estimate unchanged from last month at 644 MMT, carryover stocks were reduced 1 MMT to a still more than ample 183 MMT. World corn production was trimmed 5 MMT from last month to 824 MMT, whilst ending stocks fell 4 MMT to 131 MMT.
"Given the generally adequate supply situation for wheat and other grains, despite recent crop concerns, many have expressed surprise at the ferocity of recent market responses," they noted.
Informa Economics are expected to release their first look at US new crop acreage estimates later today. Depending on what they have to say, anything could happen this afternoon.
US lawmakers are expected to vote next week on legislation aimed at penalising China for keeping its currency artificially low. That may encourage some nervous profit-taking.
Private exporters today confirmed sales of 120,000 MT of beans unknown, 120,000 MT of beans to China and 120,000 MT of wheat to Egypt, according to the USDA.
In what could be a volatile session, early calls are: corn down 6-8c, beans down 2-4c, wheat down 10-12c.
Slip Sliding Away
EU wheat is on the slide, with London futures down around GBP3.00-4.00/tonne this morning and Paris wheat around EUR4.00-5.00/tonne lower.
The November Paris future currently trades at EUR222.50/tonne, well outside of the recent EUR230-236/tonne trading range. Although there is still an inverse in this market, the size of it is starting to narrow. That looks set to continue as the volume of open interest declines.
That open interest is still very sizable, even if it is more than 20,000 lots less than it was a few weeks ago. Not exactly a stampede for the exit door, but there certainly seems to be an orderly queue starting to form.
There isn't too much support coming from the overnight eCBOT market today, with corn slumping back under USD5.00/bu, and wheat 13 3/4c lower within sight of USD7.00/bu. Despite looming record production, soybeans remain the strongest leg although they too are slipping dragged down by wheat and corn.
Rain has started to arrive in the Volga region of Russia which may boost winter plantings a little, although they are still expected to fall short of the 18 million hectares that the government had hoped for.
Ideas that they can still bring in a grain crop of 60-65 MMT once the harvest in Siberia and the Urals winds up, combined with carryover stocks of 20-26 MMT (depending on who's figures you believe), potentially means that they can still sneak through to next season without imports. Domestic usage is pegged at around 75-78 MMT.
The question that the bulls need to ask themselves is "are we really that short of wheat?" The resounding answer seems to be no from where I am standing.
Next up are Argentina, where production could come in anywhere between 10-13 MMT, again depending on who's numbers you want to run with. Even the bottom end 10 MMT represents a increase of a third on last season. Anything above 13 MMT represents an increase of 75% or more.
Hot on their heels is Australia where 22-25 MMT is the range of popular estimates, that's potentially as much as 15% more than 2009/10.
US winter wheat plantings are expected to rebound 3-5 million acres this year, and the combines will be in amongst that by the spring.
Yet, there are some news reports around that big prices are here to stay. Hang on a minute, I've got Elvis at the door....
Early Vibe
The overnight market sees wheat around 7-10c lower, with corn down 3-5c and beans up 4-5c.
Beans are currently the strongest looking of the three on continued steady demand from China and planting delays in Brazil. If soaking rains don't arrive in Mato Grosso soon some farmers may have to rethink their cropping plans.
Planting fast maturing beans early in this part of the world means they can be ready for harvest by Christmas, allowing second crop corn or cotton to go into the ground right behind.
If rains don't arrive until second half October, as some are predicting, then some growers may elect to bypass soybeans and plant full season cotton instead.
The dollar is weaker and the euro firmer this morning, with the pound sinking below 1.17 against the latter.
Paris wheat may open lower on the back of the firmer euro and weak overnight eCBOT wheat market. The fact that it closed below recent support at EUR230 and outside the EUR230-236 trading range could also be bearish.
Open interest in November Paris wheat fell below 120,000 lots for the first time in a good while last night.
There's no official final word on German wheat yet, but trade chatter suggests that 50% won't cut the milling wheat mustard. There's lots of talk of high grade French and lower grade German flitting across their respective borders.
London wheat is garnering support from the differential between it and French wheat and also the weaker pound/euro. The HGCA saying that quality is better than average is also friendly for UK wheat. At the end of the day however feed wheat is feed wheat, and feed wheat at GBP170-175 into the mill isn't turning too many compounders on at the moment.
Corn gluten can come into the mill at a good GBP10-15 less than that for example, as the weak dollar opens the door a bit wider for imports of these kind of raw materials.
CBOT Close
Soybeans
November soybeans closed at USD10.88 1/2, up 8 1/2 cents; October soybean meal closed at USD306.20, up USD2.70; October soybean oil closed at 42.87, up 45 points. Private exporters announced the sale of another 226,000 MT of soybeans to China bringing China’s total purchases this week to 621,000 MT. Estimates for tomorrow’s export sales range from 550,000 to 750,000 MT. Central Brazil remains too dry for planting to begin in Mato Grosso.
Corn
December corn closed at USD5.05, down 1/4 cent; March corn closed at USD5.18 1/4, up 1/4 cent. Corn yield reports continue to be mixed with some now suggesting well under 160bpa, significantly lower than the USDA's 162.5bpa. Private exporters announced the sale of 120,000 MT of corn to Egypt for 2010/11 delivery. Estimates for tomorrow’s weekly export sales range from 650,000 to 750,000 MT.
Wheat
December CBOT wheat closed at USD7.19 3/4, up 1 3/4 cents; December KCBT wheat closed at USD7.56 1/4, up 6 1/4 cents; December MGEX wheat closed at USD7.64, up 6 1/4 cents. Egypt was in back the market for 220,000 MT of US wheat (French origin was excluded) and Jordan is tendering for 200,000 MT of optional origin and German wheat. Estimates for tomorrow’s weekly export sales range from 450,000 to 650,000 MT.
EU Wheat Close
Nov London wheat ended down GBP1.25 at GBP166.25/tonne, with Nov Paris wheat EUR3.50 lower at EUR227.75/tonne.
A very firm euro hampered Paris wheat, and news that Egypt was tendering for non-French hard wheat was also negative.
Nov Paris wheat closed well below the recent support level of EUR230/tonne.
At home, the HGCA confirmed what we already knew, average specific weights and protein levels are up on last year and above average at 77.3kh/hl and 12.2% protein.
Russian and Ukraine winter grain plantings are well behind schedule. Sowings in the former at currently running at 8 million ha, versus expectations of 18 million normally.
Every Cloud
Once again I am indebted to my old mate "potatofarmermike" for emailing me to point out that the pound couldn't have picked a better time to drop it's trousers to the euro. The date for fixing the exchange rate for the Single Farm Payment is looming at the end of the month. Which for some reason reminds me of this.
Found: The World's Oldest Joke
Strange but true. The University of Wolverhampton have been doing a spot of research into the world's oldest joke, and they've come up with a top ten would you believe. Who says the government's education budget is being squandered on the great unwashed of Wolverhampton?
They could have simply googled "when is Lenny Henry next on in Wolverhampton" and bought a ticket, but (quite literally) where's the fun in that eh?
They've found one that dates back to 1900 BC apparently. Don't worry about the danger of spraying your computer screen with coffee though:
Laugh, I nearly started
Pound Falls On BOE Minutes
Minutes from the Bank of England's last MPC meeting released at 9.30am this morning reveal that the lumbering economy might make it necessary to increase QE further.
The committee voted 8-1 to keep interest rates on hold, with Andrew Sentance wanting a 0.25% increase to 0.75%. He's concerned that inflation is consistently running too high.
The rest of the MPC however seem to quite fancy getting the old Thomas Caxton out and rattling off a few more twenties.
It they go down that route, possibly with the US too - in what one newswire is wittily referring to as "jumping on board the good ship QE2" - that's going to make inflation worse not better.
The US are better placed to withstand a bit of inflation than we are, potentially putting sterling at the head of the firing line to become the latest currency market whipping boy.
Overnight Developments
The dollar is sharply lower this morning after the Fed hinted last night that it may be prepared to print more money "to support the economic recovery" if necessary.
Gold pushed to fresh all-time highs on the back of the news, and crude oil rose above USD76/barrel as the dollar declined.
By the close of play though crude had fallen back, and currently stands at USD75/barrel after a report by the American Petroleum Institute showed inventories rising. The US Energy Dept are due to release their stocks figures later this afternoon.
The sharply weaker dollar is supportive for the overnight grains, which have largely reversed most of, if not all, of last night's losses.
Egypt are tendering today for hard wheat, which rules out France, so the US stands a good chance of getting a foot in the door, especially in the light of a falling currency.
London and Paris wheat may open a little lower following last night's CBOT losses and a firmer sterling and euro.
Russia's Ag Minister says that the country has harvested 54.3 MMT of grains so far, off 80% of the planted area. Even allowing for some abandonment (and the fact that this is a bunker weight figure) that would suggest a total clean grain harvest somewhat better than the 60 MMT figure in the market.
That may suppress some of the raging bulls enthusiasm, given the Russian PM's statement yesterday that exports may be back on the cards once the final harvest totals are in. Although that still seems unlikely, current price levels will be looking pretty tempting.
Another thing for the bulls to consider is increased talk of regulation on spec activity in the EU futures markets. We're still a little in the dark about what form that may take, and when it may be introduced. It is worth noting, as Agrimoney.com point out, that the French are particularly vocal (as usual) on this issue and they take the G20 chair in 2011.
CBOT Close
Soybeans
November soybeans closed at USD10.80, down 4 1/2 cents; October soybean meal closed at USD303.50, down USD2.60; October soybean oil closed at 42.42, down 23 points. China bought 170,000 MT of US soybeans overnight, according to the USDA. The market's concerns over potential frost damage in China over the weekend seem to have been largely allayed.
Corn
December corn closed at USD5.05 1/4, down 3 cents; March corn closed at USD5.18, down 3 1/4 cents. Corn and soybean futures were down on the Dalian Exchange overnight on ideas that frost talk had been overdone. The USDA left crop condition ratings unchanged after the close last night with corn 68% good/excellent.
Wheat
December CBOT wheat closed at USD7.18, down 13 3/4 cents; December KCBT wheat closed at USD7.50, down 7 1/2 cents; December MGEX wheat closed at USD7.57 3/4, down 9 1/2 cents. Winter wheat planting in the US is down from last year and the five year average so far at 18% done. The USDA crop progress report showed spring wheat harvested at 87%, up 4 points from last week abut still well behind average.
EU Wheat Close
November London wheat ended down GBP1.75 at GBP167.50tonne, with November Paris wheat EUR2.50 lower at EUR231.25/tonne.
The HGCA reported today that the UK's wheat crop is likely to be above average quality, with specific weights at the highest since 2003 at 77.3kg/hl, up 0.4 kg from last season and 1.3 kg above the three-year average.
That is lending weight to the argument that UK wheat is cheap relative to French material.
Open interest in Nov Paris wheat continues to decline, although it is still very large at 120,000 lots.
CBOT Early Call
The overnight grains were mixed with wheat 4-6c easier, soybeans 1-2c firmer and corn narrowly either side.
Crude oil is almost a dollar lower at USD73.92/barrel.
The market's concerns over potential frost damage in China over the weekend seem to have been largely allayed.
The soybean harvest is already a third completed, and what isn't harvested is mature so sub-zero temperatures will have caused little damage, according to CNGOIC.
Corn and soybean futures were down on the Dalian Exchange overnight on ideas that frost talk had been overdone.
China bought 170,000 MT of US soybeans overnight, according to the USDA.
The USDA left crop condition ratings unchanged after the close last night with corn 68% good/excellent and beans at 63%.
Russia's President Dmitry Medvedev has apparently re-iterated his earlier statement that the grain export embargo could in fact be lifted this year. That seems extremely unlikely to me, but there we have it.
Early calls for this afternoon's CBOT session: corn steady to down 1c, beans up 1-2c, wheat dn 3-5c.
EU Rapemeal Prices
Basis FOB Lower Rhine in euros/tonne:
Nov 219,00 -5,00
Nov/Jan 11 216,00 -4,00
Feb/Apr 214,00 -3,00
May/1st h.July 214,00 -2,00
Aug/Oct 11 196,00 +1,00
What's This, A Bullish Grain Merchant?
Grain merchants are a dour doom and gloom lot normally aren't they? Nobody wants it, we can't give it away etc, etc.
Which makes it all the more surprising when they finally do turn bullish. They weren't bullish at GBP100/tonne, but they are at GBP170/tonne, what's going on?
A farmer I know emailed me yesterday to say that he's got his new crop wheat and OSR safely in the barn. He's luckily not sold it all at the bottom of the market, so he puts a call into his regular two merchants to see what price they'll offer. He hasn't told me who the two are, and I haven't asked.
He's surprised to hear both effectively say "don't sell it, it's going up."
He's only been growing wheat for forty odd years, he's waited all this time for a bullish grain merchant then two come along at once.
Why would they do this? Could it be:
a) they think that the market is going higher, and are trying to do the guy a favour.
b) they think that the market is coming down, and are trying to stitch the cocky little rascal up. Tee, hee.
c) they haven't got a clue which way the market is going, and frankly don't really care. I mean who can call this one, they aren't Paul McKenna are they? What they do know though is unless they can find a physical buyer at these levels and don't want to lift a leg, buying it means hedging it with a sale on the futures market, where every ounce of cash they've got is already on deposit to cover margin calls on losing sales waiting to be unwound.
Discuss.
Ukraine Latest
Harvesting of corn is ongoing in Ukraine, with private firms estimating the final grain crop at 40-40.5 MMT, a little better than the Ag Ministry's most recent figure of 38.6 MMT.
The grain harvest is seen at 86% complete as of Sept 20th, with final yields around 9% down on last year. Wheat production is seen at around 18 MMT, with barley production in the region of 9.25 MMT.
Rain has moved into central areas and is finally pushing east, which will aid winter plantings.
Although there is no official export embargo, vessels loaded with grain are still reportedly held up at the ports awaiting customs clearance.
Exactly what game the government are playing is unclear. It may be that this ruse is designed to prevent further domestic price rises, and encourage local selling.
Kiev-based agronomist Mike Lee reports on his blog that "the block on wheat exports has done a fair job at keeping the local price at 1,500UAH (121GBP) for the last month and as far as I know customs still hold 24 ships in port on drummed up technical charges."
Getting My Goat This Morning
Bus drivers. Specifically school bus drivers who sail past MrsN#3's daughter at the bus stop meaning that yours truly has to make an impromptu trip across town at 8.30 in the morning.
I mean, she's in her school uniform, stood at the school bus stop, she's got her weekly prepaid school bus ticket in her hand. It's a pretty safe bet she wants the school bus isn't it I'd have thought.
But no, he's fifteen minutes late arriving so he just sails past in an attempt to make up vital nano-seconds.
And what about the fact that we've already paid for a service that hasn't been provided? And my out of pocket expenses, wear and tear on the motor, emotional trauma and the dent that I now have in the middle of my bonnet (don't worry about the old lady - she knew the risks when she set foot on the zebra crossing).
I think we should bring back the birch, conscription and public hangings. You can say what you like about Pol Pot, but at least he made the buses run on time.
CBOT Close
Soybeans
November soybeans closed at USD10.84 1/2, up 15 1/2 cents; October soybean meal closed at USD306.10, up USD1.40; October soybean oil closed at 42.65, up 74 points. Soybean inspections for export were 12.078 million bushels compared to 7.283 million bushels the previous week. The USDA said that China bought 225,000 MT of US soybeans overnight. The USDA crop progress report showed 60% dropping leaves, 22 points higher than last week and 24 points up from last year. Harvested acres were at 8%, up 6 points from last year. Good/excellent was unchanged from last week.
Corn
December corn closed at USD5.08 1/4, down 5 cents; March corn closed at USD5.21 1/4, down 4 1/2 cents. The USDA say that South Korea bought 165,000 MT of US corn overnight and unknown booked 110,000 MT. Weekly grain inspections were 28.460 million bushels compared to last week’s inspections of 42.996 million bushels. The USDA crop progress report showed 69% mature, up 17 points, 49 points from last year and 11 ahead of average. Harvested was up 7 points, at 18%. Good/Excellent condition was unchanged from last weeks 68%.
Wheat
December CBOT wheat closed at USD7.31 3/4, down 7 1/2 cents; December KCBT wheat closed at USD7.57 1/2, down 10 3/4 cents; December MGEX wheat closed at USD7.67 1/4, down 6 cents. Wheat inspections for export were 29.934 million bushels compared to the previous weeks 32.258 million bushels. The USDA crop progress report showed spring wheat harvested at 87%, up 4 points from last week and still well behind average. Winter wheat planted was at 18% done, down 4 points from last year. Frost in Canada and North Dakota over the weekend looks likely to have caused some crop damage.
EU Wheat Close
November London wheat ended up GBP3.50 at GBP169.25/tonne, with November Paris wheat unchanged at EUR233.75/tonne.
Whilst Paris wheat is back stuck in the EUR230/236 rut, London wheat pressed on to new life of contract highs, seemingly on ideas that UK wheat is too cheap.
Defra announced that they'd overestimated last season's UK crop by 295,000 MT, and also said that July exports were the highest on record. That could mean that our entire exportable surplus will be gone before Christmas. So much for the "awash" and "burdensome" stocks then.
The pound was weaker across the board, especially against the euro, which also helped UK wheat today.
Canada had a heavy frost over the weekend, with temperatures falling as low as 18-24F in Alberta, 23-28F in Saskatchewan and 25-32F in Manitoba. That will have done some damage to late planted crops.
Russian winter wheat plantings continue to lag, which looks like continuing the uncertainty until at least the spring.
EU Rapemeal Prices
Basis FOB Lower Rhine in euros/tonne:
Nov 224,00 +8,00
Nov/Jan 11 220,00 +6,00
Feb/Apr 217,00 +6,00
May/1st h.July 216,00 +7,00
Aug/Oct 11 195,00 +6,00
Early Call On Chicago
The overnights added to Friday's strong closes, with beans ending 22-24c firmer, wheat up 8-10c and corn up 6-8c.
Crude oil has stopped the rot, currently up 11c at USD73.77/barrel.
Frost in Canada and North Dakota over the weekend looks likely to have caused some crop damage, although it may be quality that is mainly affected.
There are concerns too that similar conditions will be causing crop losses in China's corn areas to the north.
These are not new developments, although the market is trading them as if they were. Fund inflows are what is really behind current price rises, and it's difficult if not impossible to predict how long that will continue.
It remains too dry to start soybean plantings in Mato Grosso. That may see some acres that were expected to be planted with early soybeans rapidly followed by corn or cotton early in 2011, miss out on beans completely this year.
The USDA say that China bought 225,000 MT of US soybeans overnight, with South Korea (165,000 MT) and unknown (110,000 MT) booking US corn.
Early calls on this afternoon's CBOT session: soybeans up 20-25c, corn and wheat up 8-10c.
Defra Loses More Stuff
Laptops, mobile phones, desks, plasma tellies. These people are the kings and queens of misplacement. This time they've gone and lost 295,000 MT of wheat from the 2009/10 crop, which they now say was just under 14.1 MMT, not the 14.4 MMT that they'd previously told us.
They're only a year late with that bit of information, thanks. Wheat exports in July meanwhile were more than 250,000 MT, the highest for the month since current records began, they say.
Attn Defra
Your website is about as much use as mudflaps on a tortoise. End of message.
Just Suppose
You switch on the telly right now to see a news report on the BBC (hypothetically) that says a surge in demand means that petrol is going get a bit tight. What would you do? Nothing probably.
But just suppose you were Huw Edwards (I know he's Welsh and therefore it's an unlikely scenario, but go with me). Suppose you were, and you decided to sex things up a little. Throw a few of your own words in there, like "good evening, petrol prices are set to sky-rocket as the pumps run dry. Analysts say that the country could run out of fuel within days," for example.
That would cause an surge in demand alright wouldn't it? And a strong rise in the price of oil too no doubt. There'd be nobody left to hear the rest of the report, because we'd all be scrambling for our car keys and rushing out of the door.
It would all become a self-fulfilling prophecy wouldn't it? You wouldn't exactly be lying would you?
Just suppose you were a high-rolling fund manager instead and the newsreader was your best mate, brother-in-law, had some "peculiar tastes" or you knew he'd just lost half a million quid on the horses.
Or you're a high-rolling fund manager, who is well connected with people in other avenues of the media. Some of those people may also have money "invested" in the self-same commodities as you might they not?
Just a thought...
We're So Happy We Can Hardly Count - Fund Manager
We've not had a good old fashioned panic since when was it now, early August? That seems like ages ago now doesn't it? Front month London wheat trading at GBP169/tonne as I recall. Well even whichever muppet bought that is finally back in profit today, with Nov hitting the dizzy heights of GBP171.50 this morning.
Even Nov11 is getting in on the act today posting a fresh life of contract high of GBP140.00/tonne, up GBP4.50/tonne on the day.
The battle for acres is on you see, that's what the newswires are telling us. We need corn to go to USD6, or maybe even USD7, to ration demand, says another. You could of course stop using it to make ethanol with, that would ration as much demand as you want, over 100 million tonnes of it in the US alone in fact. But that's not going to happen is it.
You could stop fund money buying it, they've dabbled with that idea but the exchanges aren't keen. All the funds are doing is providing liquidity you see, that's what they say. They're doing us all a favour.
So remember that when you pop down the shops for a loaf of bread, two pints of milk and a half pound of bacon only to find you need your credit card with you because the twenty pound note you carelessly only brought with you isn't enough.
The futures market is clearly broken, but it's all we've got, and we're stuck with it.
UK ex farm prices for wheat have widened from a "normal" GBP7 under London wheat to more like GBP10-12 under now. In Minneapolis the gap has gone from being 20c/bu under to 90c/bu in a week, Agrimoney.com reported last week.
Meanwhile EU pig numbers are in decline as farmers liquidate herds due to rising feed prices and tighter animal welfare red tape. Analysts predict the EU-27 pig herd to fall to 150.7 million head by the end of 2010, a drop of 11 million in five years.
The Farmers' Weekly reported last week that UK deadweight pigs prices have fallen for ten weeks in succession, declining 3% since the end of June, coincidentally (or not as the case may be) exactly when the price of wheat started to go up.
Meanwhile deadweight cattle prices have reached their lowest level since August 2008, they report, as slaughterings are up and the usual seasonal decrease in throughput in July and August failed to materialise this year.
The powers that be probably think that this is a good thing, the fewer of those nasty methane farting beasts that are about the better. Indeed, we can use the fields upon which they normally stand around stinking all day in, to grow crops that nobody but the fund managers and ethanol/biodiesel refineries want instead.
MrsN#3 has just brought be a ham sandwich, I'd better go, this might be the last one I ever get.
Buy The Rumour, Buy The Fact?
It used to be sell the fact, but that's another old trade adage out of the window this morning, with corn pushing onwards two year highs in overnight trade and beans, wheat and soyoil posting fresh 2010 highs.
The forecast big freeze (the rumour) over the weekend arrived as expected (the fact), with Saturday temperatures falling as low as 18-24F in Alberta, 23-28F in Saskatchewan and 25-32F in Manitoba, according to QT Weather.
The market chose to go up on both. Managed funds are adding to their already record corn options and futures long of 346,007 contracts as I type.
Temperatures in North Dakota fell as low as 23F, although the deep freeze failed to make it as far as South Dakota, as some had been predicting. "No additional crop killing frosts are anticipated over the next 7 days," say QT Weather.
In Canada, most pundits seem to be of the opinion that quality rather than quantity will take a hit, with many crops late reaching maturity due to delayed spring planting.
