Chicago Close
17/12/10 -- Soybeans
Jan 11 soybeans closed at USD12.98 3/4, up 9 3/4 cents; Jan 11 soybean meal closed at USD347.80, up USD4.00; Jan 11 soybean oil closed at 54.13, up 6 points. Beans finished around 25c higher on the week. This week's approval of the Bush era tax bill included a retroactive renewal of the blend credit for biodiesel which should increase demand for soyoil and therefor beans. Informa raised their US soybean area forecast for 2011 to 77.6 million acres from 75.8 million.
Corn
Mar 11 corn closed at USD5.96 1/2, up 9 cents; May 11 corn closed at USD6.04 1/4, up 8 3/4 cents. Corn gained around 22c on the week. Informa cut their forecast for US corn plantings next spring from 93.1 million acres to 90.76 million. The extension of the ethanol blenders credit was also supportive. Half of Argentina's corn crop is under threat from drought with wear over year crop conditions showing extreme deterioration across much of the country, say QT Weather.
Wheat
Mar 11 CBOT wheat closed at USD7.56 3/4, up 7 cents; Mar 11 KCBT wheat closed at USD8.11 3/4, up 8 1/2 cents; Mar 11 MGEX wheat closed at USD8.42, up 6 3/4 cents. On the week CBOT wheat was around 18c lower, KCBT wheat lost around 10c and MGEX fell in the region of 20c. Talk is of an improved outlook for the Australian harvest and that quality in some areas may not ultimately be as bad as feared. It's a big old place though, and other images in circulation paint a completely different picture.
EU Wheat Close
17/12/10 -- EU wheat closed mixed but mostly higher Friday with Jan London wheat up GBP0.50 to GBP190.50/tonne, and new crop Nov GBP0.75 higher at GBP159.50/tonne. Jan Paris wheat rose EUR0.25 to EUR236.25/tonne and Nov fell EUR0.50 to EUR212.75/tonne.
On the week as a whole Jan London wheat rose just GBP0.50/tonne, with Jan Paris wheat falling by EUR5.75/tonne.
The market appears to be slipping into holiday mode, after months of big money moves we seem to have reverted to the "good old days" of prices moving by just fractions of a pound or euro each day.
That's maybe no bad thing. It looks likely at the moment, barring unforseen huge upsets, that prices will probably close the year fairly close to where we are now.
US analytical company Informa did their best to throw a spanner in the works today by dropping their prediction for US corn plantings next spring from 93.1 million acres to 90.76 million.
They also reduced their US winter wheat area to 39.5 million acres from 39.7 million last month.
Talk is now surfacing that US wheat in the major producing areaas of the High Plains may see significant abandonment this season. "The La Nina effect may be to blame for intense drying now under way," say Martell Crop Projections.
"Wheat producers are often cattlemen as well, exercising the option of turning beef cows onto wheat that has deteriorated from drought. A crop not worth harvesting may still have value as a feed grain. Moreover, in spring, wheat producers would have the option of tearing up badly damaged wheat and planting to another crop, like like sorghum," they say.
Sherbet Lemon Crisis Looms
17/12/10 -- Labour backbenchers have warned concerned shoppers that supplies of the nation's favourite sweet, the sherbet lemon, are running at "critically low" levels after the failure of almost the entire Russian sherbet crop.
"This useless government just seem willing to stand by and do nothing, thousands of children, and adults too, will be distraught this year when they find that their Christmas stocking favourite has been replaced with a packet of bloody liquorice allsorts," said one.
Another MP, who refused to be named for legal reasons, said that government-owned stocks of sherbet had virtually "run out" after "deranged" sweet shop owners had been exporting the boiled sweet to "all manner of fancy Johnny Foreigners" at knock-down prices.
Hugh Jarse, an East Anglian sherbet farmer, says that he doesn't stand to make a penny from the boom. He and his mates sold all their sherbet to a faceless US-owned multi-national conglomerate back in the summer when they told him that sherbet prices could only go one way - down.
"What a chump I am," laughed Mr Jarse "I've lost almost everything. I've only got the six bedroom Jacobean farmhouse, five thousand acres of prime sherbet growing land, the Jag, the Range Rover, the Porsche for Sundays and my 25-year old Ukrainian nymphomaniac girlfriend left," he sobbed.
French analysts Sherbetie Sweeties forecast yesterday that EU supplies of sherbet may last until the middle of next week, but after that it's every man for himself.
The US Department of Sherbet estimate that the Russians may have "up to" 10 million tonnes of Sherbet Lemons in store. However they've been there for a couple of years and are probably all stuck together and to the side of the bag, so they're probably about as much use as a one-legged man in an arse kicking contest, they add.
The US Sherbet Council & Little Round Tin Sweetie Company meanwhile estimate the China's "insatiable" demand for boiled sweets may see them import "up to" twenty five million tonnes of those travel sweets that come in the little round tins that we keep in the glove box by 2015. That's an increase of two billion percent on the one tin of those travel sweets that come in the little round tins that we keep in the glove box that China imported last year.
Chinese peasants are adopting a more Westernised diet, so sales of those travel sweets that come in the little round tins that they will keep in the glove box of their car when they one are set to boom, they added with authority.
Fuel Crisis Looming?
17/12/10 -- There's a fuel crisis coming, or indeed one may already be here, according to the Telegraph (clicky clicky big boy).
Normally I'd dismiss that as media scaremongering. They like to creep up behind unsuspecting mongers and go BOOOO! the papers don't they? The article points out that "rural schools and hospitals, also depend on oil for heat". Well as the schools are all closing today anyway, maybe the hospitals can pop round and syphon some off you might think.
More than one person mentioned sees the astonishing recent price spike as blatant profiteering. It certainly isn't backed up by the price of crude oil which has been relatively stable between USD80-90/barrel since September. If we have a look at a chart for heating oil in the UK however, we see a meteoric rise since the start of the month:
So what is going on? One or two local petrol stations round by me DO seem to have had the "petrol pump says no" stickers out on a lot of their pumps for two or three weeks now.
I've got an uneasy feeling that this isn't scaremongering somehow. MrsN#3 does like her smellies at Christmastime, I wonder how this year's very expensive 500 ml Diesel atomiser spray is going to go down?
Bah, Humbugs To The Morning Vibe
17/12/10 -- I think I must going all retro, this is the first year in as long as I can remember that I haven't done almost all my Christmas shopping online. What's wrong with me? I'll be buying a shopping trolley on wheels and a nice warm hat next. Uncle Joe's Mintball anybody? Here's a picture of my next door neighbour Mr Knopfler last Christmas, mad a shoe he is, reckons he used to be in a band years ago the soft sod. I use him to practice my after-dinner speeches on. I must be good as he always pisses himself when I do that, bless. Anyway, where was I? Oh, it's cold isn't it, you want to wrap up warm this time of year, and have you seen the price of coal these days, scandalous it is. Now, where did I put my teeth, MrsN#3 must have them in again. More tea?
Brussels accepted bids for 330,000 MT of it's intervention barley and 16,000 MT of it's wheat yesterday, according to reports. They also issued export licences for 353,000 MT of soft wheat bringing the marketing year to date total to 10.6 MMT versus 7.8 MMT this time last year. If we were to maintain that pace then we'd finish up exporting 23 MMT in 2010/11.
The Buenos Aires Grain Exchange upped it's Argy wheat production estimate for this season to 13.5 MMT yesterday, a monster 80% increase on last year. Despite supposedly clearing 5.5 MMT of wheat for export though the government are said to still be very sluggish on issuing the necessary paperwork.
The BAGE estimate soybean plantings at 70% done and corn at 84% complete.
China's second soybean auction in a week attracted about as much interest as the first with no bids whatsoever today. That could be because the beans on offer are about as good a quality as the losing quarter-finalists in the X Factor, that's one theory doing the rounds. On the other hand demand has slackened right off due to government caps on soybean oil prices. This appeared to be confirmed by yesterday's moribund US weekly export sales report.
A year-long EU investigation into biofuels has amusingly and unsurprisingly concluded that a year isn't long enough to reach a decision on whether they're a good thing or not. So they're going to get back to us in six months or so.
Ratings agency Moody's have cut Ireland's credit rating five notches to Baa1, saying that further downgrades are possible, according to a report on Reuters this morning.
The pound has fallen below 1.17 against the euro, despite Ireland being as creditworthy as Bernie Madoff, as consumer confidence here slips lower than Kerry Katona's IQ.
The bad vibes for 2011 are there for all to see. Not that you can probably see a vibe, but you know what I mean. Unemployment is rising, VAT is about to rise, food and fuel costs are also on the up. Meanwhile wages are frozen, ergo consumer spending is set to decline as we all find a larger chunk of our hard-earned is simply going on essentials like utility bills, alcohol and humbugs. Looks like this Rigsby-style cardie I'm wearing will have to do another year then. Darn it.
CBOT Close
16/12/10 -- Soybeans
Jan soybeans ended 7 1/2c lower at USD12.89; Jan soymeal fell USD2.30 to USD343.80; Jan soyoil ended 13 points lower at 54.07. USDA weekly export sales for the period Dec 3rd-9th 2010 were very poor for soybeans at a combined 173,600 MT split 84,600 MT old crop and 89,000 MT new crop. Cancellations, made this the worst sales in 6 1/2 months. Forecasts for Argentina have improved slightly for the weekend, although in Brazil Mato Grosso is suddenly turning dry.
Corn
Mar 11 corn closed at USD5.87 1/2, up 3 1/4 cents; May 11 sorn closed at USD5.95 1/2, up 3 1/4 cents. Weekly corn export sales were in line with expectations at a combined 880,100 MT. CNGOIC raised their estimate for 2010 Chinese corn production to 172,5 MMT, which would be a record. The trade is winding down into holiday mode. China may import five times as much corn in 2011 as it did in 2010, according to an article on Bloomberg.
Wheat
Mar 11 CBOT wheat closed at USD7.49 3/4, down 15 cents; Mar 11 KCBT wheat closed at $8.03 1/4, down 8 cents; Mar 11 MGEX wheat closed at USD8.35 1/4, down 7 1/2 cents. Weekly export sales were strong at 973,344 MT. Algeria bought 350,000 MT of South American and European origin wheat for shipment in February. US wheat features in sales to Jordana dn Egypt yesterday.
EU Wheat Closing Comments
16/12/10 -- London wheat closed mixed with Jan unchanged at GBP190.00/tonne and new crop Nov down GBP0.45 at GBP158.75/tonne. Paris wheat closed lower with Jan down EUR2.00 at EUR236.00/tonne and Nov down EUR0.25 at EUR213.25/tonne.
Once again the market is struggling to balance very tight old crop stocks against slack demand from the feed sector. Interest in high protein wheat is still robust, with Egypt, Algeria and Jordan all in the market this week, although the US picked up a significant portion of that business.
China say that their corn crop will amount to a record 172.5 MMT this year, which may curtail ideas of large scale imports in 2011.
Strategie Grains released their first impressions on EU grain output for next season today. They peg the wheat crop at 144.8 MMT, which would be an increase of around 8 MMT, or 6% on this season.
German output is seen climbing by around 2 MMT as yields return to normal, with the French also seeing production increase by a similar amount and UK output up by around 1 MMT on increased plantings.
EU-27 barley production is forecast up at 55.5 MMT, from 52.8 MMT this year, whilst corn output is seen at 58 MMT, from 54.7 MMT in 2010/11.
Ukraine says that winter wheat plantings there are only down marginally, but winter rapeseed sowings have declined by almost a quarter.
The US took a step closer to renewing the ethanol blenders tax credit (due to expire on Dec 31st) by getting the vote past the Senate, the House of Representatives is next. That might be tougher to push through but victory is expected nonetheless. That should keep US corn pouring into the ethanol sector in 2011.
Early Call On Chicago
16/12/10 -- The overnight grains were mixed, with beans around 3-4c higher, corn up 2-3c and wheat down 1c to up 2c.
Crude oil is slightly lower and the dollar a bit weaker too.
Weekly export sales were robust for wheat, pretty decent for corn and very poor for soybeans. The economic situation in China seems to have them taking their foot off the import accelerator somewhat.
The Chinese government's cap on vegoil prices appears to be leading to planned old crop bean imports being rescheduled as processors trim back production.
The Senate passed the tax bill, but it still needs to pass the House. Assuming that it does then that's friendly for corn demand throughout 2011.
The USDA have confirmed a sale of 150,000 MT of US wheat to Jordan. Having also sold 110,000 MT yesterday to Egypt, US wheat is clearly competitively priced into the Middle East despite a freight disadvantage.
South American weather remains a concern, with Mato Grosso suddenly turning dry and the Argentina forecast turning hotter for next week, according to Martell Crop Projections.
Things are improving for Australia, except in the cricket ;-)
Early calls for this afternoon's CBOT session: corn up 2-3c, wheat fkat to up 2c, soybeans up 1-3c.
USDA Weekly Export Sales
16/12/10 -- USDA weekly export sales for the period Dec 3rd-9th 2010 were very poor for soybeans at a combined 173,600 MT split 84,600 MT old crop and 89,000 MT new crop.
It looks like there was some substance in those rumoured reports of Chinese old crop cancellations/deferrals. In addition there was only one cargo of new crop beans for China this week.
Corn sales were in line with expectations at a combined 880,100 MT whilst wheat sale beat trade ideas coming in at 973,300 MT.
| Product | Actual | Forecast |
| Soybeans | 173,600 MT | 600-850,000 MT |
| Wheat | 973,300 MT | 400-700,000 MT |
| Corn | 880,100 MT | 600,000 MT -1.1 MMT |
EU Rapemeal Prices
16/12/10 -- Latest guide prices for EU rapemeal.
Basis FOB Lower Rhine in euros/metric tonne, with change from previous trading day:
| Dec10 | 218.00 | unch |
| Jan11 | 218.00 | unch |
| Feb/Apr11 | 218.00 | unch |
| May/FH Jul11 | 217.00 | unch |
| Aug/Oct11 | 185.00 | -1.00 |
| Nov11/Jan12 | 190.00 | +1.00 |
| Nov11/Apr12 | 190.00 | unch |
China May Up Corn Imports Fivefold In 2011
16/12/10 -- An article on Bloomberg today here quotes the US Grains Council saying that China may import five times as much corn in 2011 as it did in 2010. Talk about talking your own book? Let me say right here and now that I may get reconciled with MrsN#1 in 2011 also. And Elvis may work in the local chip shop.
China were of course supposed to be buying corn like it was Boxing Day morning on Oxford Street a month or two ago, currently however the USDA only have them down to import the princely sum of just 1 MMT of the grain in 2010/11. To put that into perspective that is actually less than they imported in 2009/10 and accounts for only 1% of world trade. Peru import more corn than that.
Gotta go, there's a knock at the door. It may be Kylie in those little gold hotpants.
EU Grain Production In 2011
16/12/10 -- French analysts Strategie Grains have issued their first stab at forecasting EU-27 grain production for 2011/12. They peg the wheat crop at 144.8 MMT, which would be an increase of around 8 MMT, or 6% on this season's crop.
They're probably in the ballpark at that. German output is seen climbing by around 2 MMT as yields return to normal, with the French also seeing production increase by a similar amount and UK output up by around 1 MMT on increased plantings.
EU-27 barley production is forecast at 55.5 MMT, from 52.8 MMT this year, whilst corn output is seen at 58 MMT, from 54.7 MMT in 2010/11.
Ukraine Rapeseed Plantings Down Sharply
16/12/10 -- Winter rapeseed plantings in Ukraine are down by almost a quarter to 1.08 million hectares, according to the state statistics committee. The reduction was doubtless largely caused by the hangover from this season's summer drought when rapeseed should have got planted in the autumn.
Rapeseed production has fallen sharply in the last few years from a peak of 2.9 MMT in 2008/09, just 1.5 MMT was harvested this year. In 2011 that could dip below 1.2 MMT by the looks of things.
So Europe will have to look elsewhere to cover it's anticipated rapeseed deficit in 2011/12 it seems. That's OK, as they were most unlikely to be able to conform to the new sustainability criteria rules anyway. The problem is virtually nobody else can either. Yikes!
Further reading: Achtung Baby!
CBOT Close
15/12/10 -- Soybeans
Jan soybeans ended 1/2c higher at USD12.96 1/2; Jan soymeal traded up USD3.90 at USD346.10; Jan soyoil ended 89 points lower at 54.20. China was in the market today for 110,000 MT of soybeans for 2011/12 delivery. Funds were estimated to have been net buyers of 2,000 soybean contracts on the day. Weekly export sales for tomorrow are expected to be around 600-850,000 MT. The Senate passed a motion to extend tax credits for biodiesel and ethanol, but it still needs to get through the House of Representatives.
Corn
Mar 11 corn closed at USD5.84 1/4, down 3 cents; May 11 corn closed at USD5.92 1/4, down 2 3/4 cents. Estimates for tomorrow's weekly export sales report range from 600 to 1100 thousand MT. The Senate passed legislation to continue with the Bush era tax credits on biofuels, which should bolster demand for corn from the ethanol sector if it now gets passed by the House. Funds sold an estimated 5,000 contracts on the day.
Wheat
Mar 11 CBOT wheat closed at USD7.64 3/4, up 1 1/2 cents; Mar 11 KCBT wheat closed at USD8.11 1/4, down 3 3/4 cents; Mar 11 MGEX wheat closed at USD8.42 3/4, down 3/4 cent. Egypt and Jordan bought US wheat today, although the former also bought French grain. Weekly export sales estimates for tomorrow range from 400 to 700 thousand MT. The Australian weather outlook is improving.
EU Wheat Close
15/12/10 -- Jan London wheat closed GBP0.75 higher at GBP190.00/tonne and new crop Nov was up GBP1.20 at GBP159.20/tonne. Jan Paris wheat closed up EUR2.00 at EUR238.00/tonne, whilst new crop Nov climbed EUR1.75 to EUR213.75/tonne.
Egypt bought 230,000 MT of wheat in it's tender today, with just over half of that being French grain at USD323.85/tonne. That adds to the 180,000 MT of French wheat they bought last week. Clearly EU wheat hasn't priced itself entirely out of the market just yet.
The rest of the Egyptian tender went the way of US origin wheat. Elsewhere Jordan also bought 150,000 MT of US wheat today.
With global prices riding very high, potential sellers the world over are rooting down the back of the settee to see if there's any wheat left down there.
Turkey have apparently just found 610,000 MT of milling wheat hiding down the back of their settee, no wonder they were looking uncomfortable. Their state-owned grain board intend to sell that off in the near future, they say.
The cash-hungry Argentine government meanwhile have already authorised 5.5 MMT of their currently being harvested wheat to be exported in 2010/11, and anticipate allowing a further 1.7 MMT to leave it's shores on top of that before the season ends.
Australia's prospects seem to have improved as the weather there finally dries up in the east. The jury is still out on quality, but they seem pretty confident that yields will be bumper. After all, rain does make grain they say. NSW will have the largest grain crop in the history of the state, or indeed any other Australian state, according to ABARE.
Morning Muse
15/12/10 -- We've had turnaround Tuesday, today is shaping up like apathetic Wednesday so far, with very little fresh news to get excited about.
The overnight grains aren't doing much, and already the market has a kind of half knocked off for Christmas feel. Which sounds like a good excuse to go Christmas shopping to me, which is exactly what I'm going to do shortly.
Before that a quick look around tells me that beans are 3-4c higher on the overnight Globex market, with corn flat to down 1c and wheat up one/down one. Front month on corn and wheat is now March as December expired yesterday.
There doesn't seem to be a lot of change on the currency front either with the pound hovering around 1.18 against the euro and 1.5730 against the dollar.
Iraq is tendering to buy at least 100,000 MT of any origin wheat. Egypt are also back in the market for assorted origin wheat.
China only sold 21% of the wheat on offer at it's regular weekly auction, but at least that was better subscribed than this week's corn and soybean tenders. They now plan to attempt to auction off the same soybeans that nobody wanted on Tuesday on Friday.
China says that the north of the country, where a significant portion of the nation's winter wheat is grown, is suffering from "moderate" drought.
As the harvest in Western Australia winds down, things are speeding up in the east as the heaviest showers die away and things warm up.
The Australian Oilseeds Federation pegs this season's rapeseed crop at 2.1 MMT, up 10.5% from 1.9 MMT last year, but says that up to 14% of that may not be suitable for crushing due to rain damage, according to a report on Bloomberg.
Ratings agency Moody's say that they may cut Spain's Aa1 credit rating later today. Haven't they made their mind up yet? Do they just call a meeting with a few sarnies and take a show of hands on it?
Other stories of interest that you might have missed from yesterday:
South Korea bought four cargoes of Indian/South American soymeal, US origin was too expensive.
Pirates attack an Italian-owned grain vessel off the Gulf of Oman Link
German biodiesel producer EOP declares insolvency Link
Chicago Close
14/12/10 -- Soybeans
Jan 11 soybeans closed at USD12.96, down 6 1/2 cents; Dec 10 soybean meal closed at USD344.50, down USD0.30; Dec 10 soybean oil closed at 54.80, down 30 points. Dec contracts expired today. Argentine weather is seen improving, but is far from out of the woods yet. In the US, yesterday's November NOPA soybean crush was disappointing at 148.9 million bushels.
Corn
Dec 10 corn closed at USD5.74 1/2, down 3/4 cent; Mar 11 corn closed at USD5.87 1/4, down 1 1/4 cents. Fresh news was limited, profit-taking was probably the order of the day. Mexico said that it would have a crop of 24.2 MMT this year, some 20% up on last season, curtailing import requirements from the US. Some production concerns remain for Argentina however.
Wheat
Dec 10 CBOT wheat closed at USD7.21, down 19 1/4 cents; Dec 10 KCBT wheat closed at USD7.98 1/2, down 27 1/4 cents; Dec 10 MGEX wheat closed at USD8.31 1/4, down 27 1/2 cents. Drier weather forecasts for eastern Australia clawed back some of the differential between CBOT and higher grade MGEX wheat. Egypt is tendering for 55-60.000 MT of HRW and SRW wheat for last half February shipment.
EU Wheat Close
14/12/10 -- Jan London wheat closed GBP1.00 lower at GBP189.25/tonne, with new crop Nov also GBP1.00 easier at GBP158.00/tonne. Jan Paris wheat ended EUR5.50 lower at EUR236.00/tonne, with Nov down EUR4.00 at EUR212.00/tonne.
The market continues to attempt to reconcile the strong pace of EU and UK exports against sluggish demand from the feed sector at these levels. Also we have the issue of year-end profit-taking and book-squaring ahead of the holiday season.
Customs data released today pegs UK wheat exports for the first four months of the marketing year at almost 1.2 MMT. Virtually Defra's entire target for the whole of 2010/11 and more than double last year's pace. EU exports meanwhile are running 37% ahead of year ago levels.
Inflation figures coming out of the UK today, and the outlook for further to come on rising unemployment and imminent fuel and VAT price increases in 2011 as the government's austerity measures start to bite, paints a bleaker picture.
Cheap meat and dairy product imports into the UK, as producers elsewhere up slaughterings on the back of soaring feed prices may be temporarily insulating UK consumers from the reality of the situation.
In Europe, a short-term abundance of these products as producers exit the industry is also depressing prices, for now.
How much longer this can continue for remains to be seen. From a supply point of view there is unlikely to be any respite on the cards for another six or seven months yet. Be sure though, the longer these prices continue the more acute the downwards correction will feel when it does come.
UK Wheat Exports Full Steam Ahead
14/12/10 -- Customs data out today reveals that the UK exported almost 325,000 MT of wheat in October. Despite frantic tugging on the emergency cord, that's only 70,000 MT less than in September, and now brings the marketing year to date total to almost 1.2 MMT.
That's just 100,000 MT shy of Defra's anticipated exportable surplus for the whole of the 2010/11 period just a third of the way through the MY.
How much further down the track this runaway train is going to career is anybodies guess. If it was to continue at this pace we'd be looking at a shocking 3.5-3.6 MMT by the end of June.
Now nobody is suggesting that that will happen, but the more realistic figure of 2 MMT that many in the trade have been talking about for the past month or so is perhaps now starting to also look too low.
From what I have been hearing November wasn't exactly a quiet month on the export front either. We could easily be looking at 1.6-1.7 MMT having been shipped out by the end of the calendar year, with fully six months of the season still remaining.
Could this prompt some sort of US-style regulation on UK (and/or EU) grain exports? After all, right now nobody actually knows the size of the existing commitments for the rest of the season do they? At least not collectively.
Nah, that sounds like far too sensible an idea to me, lets carry on muddling along in the dark with out of date information. It's always worked up until now.
Early Call On Chicago
14/12/10 -- The overnight grains were mixed, with wheat mostly 5-7c lower, corn down 1-3c and beans up 1-2c.
Crude oil is around half a dollar weaker and the USD is a touch easier too.
It looks like another turnaround Tuesday is in store with profit-taking from last night and ahead of the year end on the cards.
China's weekly government auctions weren't very well supported at all with beans attracting no bids whatsoever and only minimal interest in corn.
With Chinese food price inflation now running at 11.7% and grain and oilseed prices at their highest since the "food crisis" of 2008 you have to start wondering if China's so-called insatiable appetite for grains can continue for much longer.
Argentine weather prospects seem to have improved a little, although it's early days yet with more than a third of the soybean crop still to be planted. Corn plantings are well advanced.
In the US, yesterday's November NOPA soybean crush was disappointing at 148.9 million bushels. The export inspections were also pretty insipid.
Is it just me or is the market looking rather tired as we approach the last fortnight of 2010?
Early calls for this afternoon's CBOT session: corn down 1-3c, wheat down 5-7c, beans up 1-3c.
Sprouts, Sprouts, There's Still A Few About
14/12/10 -- As Tears For Fears would add "these are the things I could do without" - every cloud has a silver lining doesn't it? And this year's one is the shortage of the wretched fart-inducing sprout.
Wracked by the cold, hopefully what didn't get killed off last week will be duly finished off by Mother Nature when this week's Arctic blast arrives from the north.
Please Santa insulate me just once from the words "I'll just put you a few on, and if you don't want them you can just leave them on the side of the plate" this year.
I'm truly sorry for all you sprout farmers out there, can't you claim on Sprout Claims Direct or something?
"Have you fallen off a chair, tripped over a loose paving stone, been hit by a falling filing cabinet or suffered involuntary sprout-induced projectile vomiting round at your Grans on Christmas Day? Then ring 0800 145145 without delay. Where there's blame, there's a claim."
If you really must, then there are still a few left in the shops apparently, although prices are rising faster than a bride's nightie. Or I could always just post you mine.
The Rumour Mill
14/12/10 -- Chinese crushers are deferring scheduled soybean imports as rising raw material costs coupled with the government-imposed cap on domestic vegoil prices turns crush margins negative.
To possibly back that up, there were no bids at all in today's weekly government soybean auction where 296,000 MT of soybeans were on offer. In addition, less than 8% of the corn on offer at auction got sold today.
Reports of new, but as yet unspecified, Chinese government-backed measures to combat speculation in the commodity markets are also just starting to filter through.
Chinese demand, or the lack of it, holds the key to the market.
EU Rapemeal Prices
14/12/10 -- Latest guide prices for EU rapemeal.
Basis FOB Lower Rhine in euros/metric tonne, with change from previous trading day:
| Dec10 | 218.00 | +2.00 |
| Jan11 | 218.00 | +2.00 |
| Feb/Apr11 | 218.00 | +2.00 |
| May/FH Jul11 | 217.00 | +2.00 |
| Aug/Oct11 | 186.00 | +2.00 |
| Nov11/Jan12 | 189.00 | unch |
| Nov11/Apr12 | 190.00 | unch |
Inflation Rising, Stormy Waters Lie Ahead
14/12/10 -- The UK rate of inflation continues to rise, led by spiralling food prices*, with data from the Office for National Statistics today saying that CPI stood at 3.3% last month.
It remains well above the BoE's target rate of 2%, where it has now been for all of 2010.
The impact of recent energy prices rises, and those already in the pipeline for early 2011, make it look extremely unlikely that we will get anywhere near the target rate anytime soon. Even the BoE themselves now admit that.
The VAT increase pencilled in for next month is only likely to make matters worse too.
Meanwhile the price of petrol continues to rise. Diesel locally is now around 125.9 ppl, within 7/8ppl of where it was when crude oil hit USD147/barrel in July 2008. And that obviously has a direct impact on just about the price of everything.
The television last night was full of news reporters from around the country informing us on just how many council jobs were going to be lost in their area in 2011. The GMB union say that almost 74,000 are at risk of being axed next year on the back of the recently announced austerity measures.
With prices rising, particularly for food and fuel, unemployment looming for some and benefits being reduced for others there's some pretty severe belt tightening in store for many people next year by the looks of it.
That doesn't augur too well for the long-term sustainability of GBP200/tonne wheat or GBP400/tonne rapeseed in my humble opinion.
*UK food price inflation was 5.5% last month, and it's now more than double that in China according to figures out from there over the weekend.
Early Thoughts
14/12/10 -- UkrAgroConsult say that winter grain plantings in Ukraine total 8.2 million hectares, down almost 5% on last season, following a sharp reduction in barley sowings.
The wheat area is down by less than one percent at 6.65 million hectares, whilst the winter barley area has fallen by almost a quarter to 1.22 million hectares, they say.
Crop conditions are better than last season with 54% of the winter grain crop rated good and 38% satisfactory.
Ukraine's export restrictions are now starting to bite with only 476,200 MT of grains exported during November, down by two thirds from October's 1.38 MMT. For the marketing year to date they have exported 2.2 MMT of wheat, down 62% from the 2009/10 season.
The harvest outlook is improving Down Under, with temperatures warming up and some of the heaviest rains fading away. Adelaide is set to get 33C highs today, with temperatures in Melbourne topping out at around 29C.
Quality wheat premiums are rising rapidly whilst lower grades have reportedly seen prices fall by A$25/tonne in a week.
The market remains somewhat nervous over Chinese demand, despite the government there not raising interest rates over the weekend. Doing that would probably accelerate further capital inflows, something that the government there clearly see as even worse than spiralling inflation.
Crop conditions in Argentina seem to have bucked up a little over the past few days, although earlier maturing corn could do with more rain.
"The generous December rainfall is beneficial, to be sure, but the subsoil drought means showers must continue. Corn planted in mid October would be pollinating right after Christmas. This is a period when corn development is peaking, requiring very heavy rainfall and nutrients for a productive yield. The 3 weeks leading up to pollination also is a period of very rapid corn growth and high moisture needs, during which time ears are enlarging. Thus corn needs abundant rainfall throughout December for the best chances at a profitable yield," say Martell Crop Projections.
London and Paris wheat have opened with little change this morning, mostly a tad lower.
Chicago Close
13/12/10 -- Soybeans
Jan soybeans ended 29 1/2c higher at USD13.02 1/2 a bushel; Jan soymeal rose USD5.20 to USD342.80; Jan soyoil climbed 129 points to 55.45. A weak dollar and firmer crude oil helped matters today, as too did a Chinese weekend decision not to raise interest rates. Ongoing dryness in Argentina was also supportive, although northern areas got some better than forecast rains over the weekend. It's still too dry however in the south and the east.
Corn
Dec 10 corn closed up 15c at USD5.75 1/4; Mar 11 corn closed 14 1/4c higher at USD5.788 1/2. This was corn's highest close in just over a month with funds estimated to have bought around 8,000 to 9,000 contacts on the day. Exactly why is hard to explain with little fresh news to go on. Eastern Argentina remains too dry as corn enters the sensitive pollination stage. Export inspections at just over 32.0 million bushels were also considered supportive.
Wheat
CBOT March wheat rose 4 3/4 cents to USD7.80 1/4 per bushel; KCBT March wheat closed up 3 1/4 cents at USD8.35 1/4; MGEX March wheat ended up 1 1/2 cents to USD8.71. Funds were estimated to have been net buyers of a modest 1,000 to 1,500 contracts in Chicago. A "big freeze" in the upper US is seen disrupting grain movements from the interior to the Gulf. In addition shipping on the Columbia-Snake River System, a major gateway to the Pacific, is seen being majorly disrupted until the spring due to pressing lock repairs.
EU Wheat Close
13/12/10 -- Jan London wheat closed GBP0.25 higher at GBP190.25/tonne and new crop Nov was up GBP0.50 at GBP159.00/tonne. Paris wheat closed mostly a tad lower with Jan down EUR0.50 at EUR241.50/tonne and Nov unchanged at EUR216.00/tonne.
It was another highest close since March 2008 for London wheat, albeit a modest one. French wheat traded both sides but ultimately closed mostly a fraction lower as the euro strengthened a little.
The market is trying to weigh up the undoubted tightness in EU stocks against falling demand from the feed sector at these prices.
Friday's report from the USDA raised EU carry-in from 2009/10 and dropped consumption from the feed sector this season, upping 2010/11 ending stocks by a million tonnes despite the phenomenal current pace of exports.
World stocks of quality wheat continue to erode, with the latest estimates on the eastern Australian crop now pegging feed grade there at "at least" 50% of the crop.
Quality is also in short supply in the barley market, with Russia now expected to import the best part of half a million tonnes of malting barley before next harvest on the back of their drought earlier in the year.
Meanwhile rapeseed prices continue their almost inexorable rise to all time highs, with the Feb Paris future up EUR6.75 at the close to EUR480.50/tonne. Old crop UK ex-farm values are now fast approaching GBP400/tonne.
Argie Spoilsports
13/12/10 -- The Argentine authorities appear to have made taxation on grain exports so punitive that tax evasion has become a national pastime.
According to this report, the county's national tax agency says that four of Argentina's top ten grain exporters didn't pay a peso in income tax last year. Link here: Taxi!
Consequently the slippery Argies have signed a deal with China to attempt to clamp down on the issue via the backdoor.
Early Call On Chicago
13/12/10 -- The overnight grains were higher, it seems largely on the news that the Chinese didn't raise interest rates over the weekend. The did up lenders' reserve requirements again however, and also reported food price inflation running at 11.7% in November.
Beans finished the overnight Globex session up 10-12c, with corn up 4-5c and wheat 5-6c higher.
Argentina got some better than forecast rains over the weekend, with northern and central areas getting 1-2 inches over the past 72 hours, according to QT Weather. It's still too dry however in the south and the east.
There is talk of eastern Australia finally getting some dryness to help speed up harvesting and dry some of that soaked wheat.
Snow and freezing temperatures continue to hamper grain movement in the upper US. "A ferocious winter storm hit the Upper Midwest on the weekend causing high winds and heavy snow," say Martell Crop Projections.
Crude oil is back up above USD89/barrel as the cold snap in the US and Europe looks set to continue/resume later in the week. The dollar is also a bit weaker.
Early calls for this afternoon's CBOT session: Beans up 10-12 cents, corn up 3-5 cents, wheat up 4-6 cents.
Pakistan To Export 3.5 MMT Of Wheat
13/12/10 -- Clearly finding soaring global wheat prices too difficult to resist and never one to miss the opportunity to make a bit of extra cash on the side, the Pakistan government have said that they will permit 3.5 MMT of their domestic wheat reserves to be exported.
When asked "what about the people left starving and homeless by the floods?" a Pakistani minister said "who?"
Red Light Spells Danger
13/12/10 -- In the words of Billy Ocean (and I quote):
"Ooooaahhhhaaah mmmm
eh eh mmmm
(Red light) Red Light
(Spells Danger)"
So there we have it, Mr Ocean was ahead of his time in 1977 when he correctly predicted that Prince William would marry Kate Middleton, Alan Pardew would manage Newcastle United and wheat would go to GBP200/tonne twice in the space of a couple of years.
And as Billy went on to point out at great length:
"(Cos red light) Oh Feel the red light
(Means warning) Oh it's a danger warning
(Can't hold out) Oh I can't hold out
(I'm burning) No no no no no!!!"
That final chorus is a clear reference to the fact that none of the above events will last forever. The only question we need to ask now is which one will be the first to get shot down in flames.
I was dismayed, but not entirely surprised, on a weekend trip to Morrisons to again have to search high and low to find British ham on sale. There were oodles of cheap and sizable Danish hams on offer, but very little British meat.
The Danes, and the Dutch too, it would seem are continuing to offload their stuff onto us at prices that the supermarkets are finding harder to resist than a suspender-clad Julia Bradbury carrying a tray of hot (British) pork pies.
How much longer can our livestock industry survive against a background of soaring feed and fuel prices (with a VAT increase around the corner too) and at best static meat prices?
As Billy reiterates:
"Can't hold out (Can't hold out) Much longer"
Of course, it's not just us that's in trouble. The very reason that all this foreign ham is flooding into the UK in the first place is that the livestock industry on the continent is hurting badly too. Slaughterings are up in the EU and the UK as the cost of production outstrips the price of the end product.
The average cost of pig meat production in the UK is currently 18p per kg higher than the DAPP, according to the BPEX.
Meanwhile pigmeat production in the EU could fall by almost 3 million tonnes over the next three years as producers exit the industry, according to the National Pig Association. Producers on the continent must convert away from stalls to loose-housing in the next two years before an EU-wide ban on stalls is introduced in January 2013.
Take it away Billy:
"Wheat, back to GBP100/tonne before the end of 2012, Ooooaahhhhaaah"
EU Rapemeal Prices
13/12/10 -- Latest guide prices for EU rapemeal.
Basis FOB Lower Rhine in euros/metric tonne, with change from previous trading day:
| Dec10 | 216.00 | unch |
| Jan11 | 216.00 | unch |
| Feb/Apr11 | 216.00 | unch |
| May/FH Jul11 | 215.00 | -1.00 |
| Aug/Oct11 | 184.00 | -2.00 |
| Nov11/Jan12 | 189.00 | -2.00 |
The Early Vibe And A Card Trick
13/12/10 -- Fresh news is a bit thin on the ground this morning. Chinese data out over the weekend reports strong economic growth is continuing, but inflation also remains rising - up to 5.1% in November. For now they seem content to attempt to tackle inflation by continuing to tighten lending, rather than raising interest rates again.
The market seems to quite like that approach with beans up 12/14c on the overnights.
The Australian wheat harvest is back up and running, with GrainCorp reporting that they took delivery of just over 5 MMT during the course of the past week spread over the eastern states of Queensland, NSW and Victoria following "the return of drying conditions". Grades received continue to me "mixed" they cagily say.
Reports appear to be treating last week's ABARE wheat crop production estimate of 26.8 MMT with varying degrees of bemusement to downright old fashioned Aussie profanity. Only time will tell who's right. It now seems to be becoming accepted that "at least" half of the region's wheat crop will only be feed grade.
There is also widespread talk of some wheat being abandoned as not even fit for harvesting, with one report suggesting that this might even amount to 2-3 MMT.
Blimey, it's too dry in the west and too wet in the east and it's just too wet and dry at the same time in the south. And they call us whinging Poms. Get on with it, get your harvest done, stop moaning and fax us the results will you? We don't even get this amount of trouble off the Argies.
Talking of whom, things seem to have improved a bit there last week. Although "while topsoil moisture has increased, the subsoil is still very dry," according to Martell Crop Projections. More moisture is needed, particularly for corn which is about to enter the sensitive pollination stage sometime around Christmas, they add. The Argie bargies are the world's second largest exporter of corn, as you probably already know.
A bit closer to home (Argentina is pretty close to home, we own the Falkland Islands remember - Ed. Ooops sorry Ed so we do, well pointed out). OK even closer to home than Argentina, the USDA inexplicably raised EU-27 wheat ending stocks by a million tonnes on Friday, despite the fact that exports are currently running 37% up on a year ago. It seems that once again they think of the bottom line they want, then work backwards from that.
Talking of home AND the inexplicable, July London wheat closed at GBP199/tonne on Friday, GBP4 up despite not actually trading. It's now a five pound premium to two months earlier May. Do they let kids work out these settlement prices?
Talking of the simply inexplicable. I'm going to do you a little card trick. Look at the image below and pick a card, any card, hold it in your mind (if you can find it) but don't tell me what it is right? OK, keep that card in your mind. DON'T CLICK IT! DID I SAY CLICK IT? DON'T EVEN HOVER YOUR MOUSE OVER IT. Stop mucking about just concentrate for once will you? Right hold that card in you head, then click anywhere on the image below and I will, via my telepathetic powers, remove your card.
There you go. An in depth view of the market AND a card tick and it's not even ten o'clock. Be honest you didn't think I could do that did you? Tomorrow I will attempt to chop MrsN#1 in half using a rusty hacksaw blade and a copy of the Daily Mirror.
Chicago Close - Friday
10/12/10 -- Soybeans
Jan 11 soybeans closed at USD12.73, down 8 1/2 cents; Dec 10 soybean meal closed at USD339.10, down USD0.80; Dec 10 soybean oil closed unchanged at 53.79. Overall beans were down 27 cents for the week. The USDA lowered US soybean ending stocks by 20 million bushels to 165 million, that was in line with trade ideas. Production in Brazil and Argentina was left unchanged, as too were Chinese imports. World ending stocks fell by 1.3 MMT.
Corn
Dec 10 corn closed unchanged at USD5.60 1/4; Mar 11 corn also closed unchanged at USD5.74 1/4. Prices were up a fraction on the week. The USDA increased US corn ending stocks by 5 million bushels to 832 million bushels, contrary to expectations of a small decrease. Despite widespread expectations, the ethanol grind wasn’t increased. World corn ending stocks were also a little higher than last month at 130 MMT. Argentina remains dry in the east as corn there starts to enter the pollination stage.
Wheat
Dec 10 CBOT wheat closed at USD7.35 1/2, down 12 3/4 cents; Dec 10 KCBT wheat closed at USD8.22 1/4, down 12 cents; Dec 10 MGEX wheat closed at USD8.54 1/4, up 1/4 cent. The gap between Chicago and the high protein MGEX contracts continues to widen, reflecting the global tightness in availability of quality wheat. On the week overall CBOT wheat was down 2 cents, but Kansas wheat rose 11 cents and MGEX was up 37 cents. The USDA increased US ending stocks by 10 million bushels, a bit more than expected.
EU Wheat Close
10/12/10 -- EU wheat closed higher Friday with Jan London wheat up GBP2.00 to GBP190.00/tonne, and new crop Nov GBP1.00 higher at GBP158.50/tonne. Jan Paris wheat rose EUR1.75 to EUR242.00/tonne and Nov climbed EUR2.50 to EUR216.00/tonne.
On the week as a whole Jan London wheat rose GBP2.55/tonne, with Jan Paris wheat up by EUR6.75/tonne.
In London July wheat - despite not trading all day - was cited at closing GBP4.00 higher at GBP199.00/tonne, just a pound short of the magical GBP200.00/tonne mark. Meanwhile this was the highest close for a front month contract since 14th March 2008, and within GBP2.50 of the all time high close for a front month.
The gains were all the more impressive considering that the USDA once again appeared to feel duty bound to throw us a curve ball or two. They surprisingly raised world wheat ending stocks by more than 4 MMT to 176.7 MMT, including an extra 1 MMT here in Europe. World corn ending stocks were also increased by a more modest 800,000 MT.
Maybe European exports are slowing, Brussels only issued licences for 127,000 MT of wheat this week, although that still brings the cumulative marketing year to date total to 10.3 MMT, 37% up compared to a year ago.
The USDA also raised Australian and Canadian wheat production, but dropped exports for both - reflecting sharp decreases in quality. Pakistan got it's output raised by 1.3 MMT.
