Ask Nogger
26/03/11 -- Today's problem comes from Eddie from Liverpool, he writes:
Q: Dear Nogger, Although I'm only a fifteen year old schoolboy I'd like to get into the feed trade as it seems really cool and sexy, possibly working for one of the large American-owned multi-national shippers. Do you have any tips or advice to help me achieve my goal?
A: I get asked this one a lot Eddie, it's perfectly normal to find guys like me incredibly cool and sexy. There's lots of little things you can practice from the comfort of your own bedroom in preparation for a career working for a large American multi-national shipper. Firstly buy yourself the biggest, widest pair of braces you can find. Then, every time the telephone rings, talk VERY loudly in a phony American accent. The caller will soon believe that you are in fact American, and after about a fortnight so too will you.
Remember, this is VERY important, the more that the caller talks, the LOUDER and LOUDER you MUST talk over them, completely ignoring all that they are saying. You work for the big boys, NOBODY is going to push you around, you can do what the goddam hell you like soldier.
Stay up all night for three weeks watching Top Gun over and over again. If anyone asks you something you don't know the answer to, simply confuse them by saying something like "it's all due to the inverse basis at the stem and that, like." The person asking the question will then be too embarrassed to admit that, despite twenty years in the grain business, they haven't got a clue what you are talking about. They will simply accept that you are far more intelligent than they are and go away.
You can get yourself a little desk, a swivel chair and maybe a little USB-powered machine gun. Every time that goddam phone rings scream your little heart out, whilst swivelling round and round spraying imaginary bullets indiscriminately all around the room. People get killed every day boy, you just gotta make sure it's not you in the body bag. Then slam that phone down, and I mean SLAM, you're the guy calling the shots not these snivelling little worms ringing you up in the middle of the afternoon. WHO DO THEY THINK THEY ARE?
Play Call Of Duty on your xBox for a MINIMUM of six hours a night. You're the man, you're in the zone, you need lightening reactions soldier, you need eyes in the back of your head in this job. Them killer zombies are everywhere. If your Mum brings you a cup of tea that's a bit too strong pick up that stapler and WHAM! In one swift movement staple her hand to the desk. That may sound harsh, but she won't make the same mistake again will she? It's part of her training. YOU are the man keeping this entire ship afloat, and the buck stops at your bony butt baby, ain't no pretty lady with her painted nails and a wiggly ass gonna mess this one up. You're waging a one man war. You're the only guy on the planet that can do this job. You are the chosen one. You have special powers. Your Dad's not really your Dad, and you Mum's not really your Mum. You have become........STAPLER BOY!
Chicago Corn: Buy The Rumour, Sell The Fact
25/03/11 -- Soybeans: May 11 beans closed at USD13.58 1/4, up 3 3/4 cents; May 11 meal closed at USD357.20, down USD2.60; May 11 oil closed at 56.84, up 72 points. Initial early support came from stronger corn, but beans still managed to hold onto some gains even as the corn market fell away. Bean prices need to stay high enough to "buy" acres from corn, at least that's the theory ahead of next week's USDA planting intentions report. Trade estimates for US spring soybean plantings vary quite widely from 75.3 to 79 million acres.
Corn: May 11 corn closed at USD6.89 1/2, down 13 cents; Dec 11 corn closed at USD6.09 1/2, down 9 1/4 cents. The USDA announced the sale of 1.25 MMT of old crop US corn to "unknown" along with a further 250,000 MT of new crop. Having been rumoured to have been a heavy recent buyer all week, the trade immediately assumed that this was China, although some reports suggest that it may have been Japan. The market opened higher, with May hitting USD7.17/bu, up 14 1/2 cents, before a buy the rumour, sell the fact mentality kicked in and the market sold off ahead of the weekend and next week's USDA acreage report, where the trade is forecasting increased spring plantings of 91.2 to 93 million acres.
Wheat: May 11 CBOT wheat closed at USD7.33 1/4, down 6 1/4 cents; May 11 KCBT wheat closed at USD8.55, up 1 3/4 cents; May 11 MGEX wheat closed at USD8.81, down 2 1/4 cents. Wheat followed corn higher in early trade with the May CBOT future reaching USD7.52/bu, up 12 1/2 cents on the day at one stage, before selling off later in the session as corn capitulated. Legitimate weather concerns still remain for US wheat, with the Plains HRW wheat areas way too dry and SRW states too wet. In North Dakota, which typically accounts for 40-45% of the US spring wheat crop, the current snow depth is 16-20 inches.
EU Grains Close
25/03/11 -- May London wheat closed GBP1.00/tonne firmer at GBP197.25/tonne with new crop Nov up GBP3.75 to GBP161.75/tonne. May Paris wheat rose EUR7.00/tonne to EUR236.75/tonne and Nov was up EUR3.50/tonne to EUR207.00/tonne.
At first glance you could say that it's a little strange to see new crop gaining ground on old crop here in the UK, yet the opposite is happening across the Channel.
Quality wheat is however generally what hungry buyers in North Africa and the Middle East want, and France continues to pick up the lion's share of the weekly export business - getting 179,000 MT of the 364,000 MT of soft wheat export licences issued by Brussels in the past week.
Meanwhile Defra this week lowered their estimate for UK H&I wheat usage by 280,000 MT and forecast reduced demand from feed manufacturers.
If we convert UK wheat into euros we get May today valued at EUR224.50/tonne and Nov at EUR184.00/tonne. As you can see UK feed wheat is only a EUR12.25/tonne discount to Paris milling wheat for May, whereas the new crop differential is running at almost double that at EUR23.00/tonne.
On the weather front we've seen strong warming this week spurring stronger growth in wheat and rapeseed, with highs yesterday into the 70s F in central France and mid 60s F in the UK, Germany and Benelux.
Spring has sprung, with the warmth forecast to continue into next week. Scattered showers are in the forecast, here and there, although not enough to compensate for a very dry winter. Drought is most worrisome in central France, Germany, Hungary, Slovakia and the Balkans where only 40-60% of normal precipitation has been received in the past 90 days.
Topsoil moisture is sufficient for crops near term, but moisture stress could be coming if generous rain is not received in the next 2 weeks, according to Martell Crop Projections.
EU Weather
25/03/11 -- Here's a map of the rainfall forecast for the EU for the next seven days from the excellent Martell Crop Projections.
Looks like the band of rain that's been centred over southern Europe this week is moving gradually north with decent rainfall totals across southern France and 0.25 to 0.75 in amounts for dry areas of northern France. Similar conditions in store for the UK too after the warm and dry spell that we've had this week. Click on the map to enlarge.
Ask Nogger
25/03/11 -- Another new and innovative free service starts today: Ask Nogger. For free impartial advice about absolutely anything grains or non-grains related.
First up today is from Chip Shop, one of my American readers.
Q. Dear Nogger, I've heard that setting up an ethanol refinery is a licence to print money at the taxpayers expense that will see me laughing all the way to the bank. The thing is, I've also heard that it may be a tiny itsy bit detrimental to global food prices. What should I do?
A. Sod the poor, the hungry and the needy Chip and fill your boots my son. It's business, people are gonna get hurt, live with it and eat that corn boy.
House For Sale
25/03/11 -- We've decided to put Nogger Towers up for sale. The neighbourhood has totally gone to the dogs round here. Things have got so bad that even the ram raiders go round in pairs. It's yours for a very reasonable £1.5 million. Be quick as, strictly between you and me, there's been a lot of Chinese interest shown.
Quiet Day In Store?
25/03/11 -- It looks like we're in for another quiet one, with the overnight Globex market not up to much so far this morning.
Corn is a bit higher on old crop on rumours that China bought wheat by mistake yesterday. Do you know what the word wheat looks like in Chinese? It looks like this: 小麦 and corn looks like this: 玉米 (OK, it looks like they don't come out properly in the published version, so you are just going to have to trust me that they DO look pretty similar).
They're pretty similar so it was probably an easy mistake to make, especially if they didn't have their glasses on.
The pound has the friendless look of a ginger-haired stepson again at 1.6075 against the dollar and 1.1350 against the euro, we haven't been below 1.13 since late October, and then only briefly.
A poor set of retail sales numbers for February is the culprit. A stumbling "recovery" makes the chance of an interest rate rise less likely. The BoE now have the tricky job of keeping rising inflation under control whilst watching the retail sector cooling off at a rapid pace.
A weak pound should see London wheat open firmer, but that won't do anything to improve physical demand.
The Morning Muse
25/03/11 -- Brussels announced late yesterday that they'd issued soft wheat export licences for 364,000 MT last week, bringing the marketing year to date total to just under 15 MMT with 14 weeks left to go in 2010/11.
That puts us around 2 MMT, or 15%, ahead of this time last year.
Meanwhile the IGC yesterday raised its estimate for world wheat production last year by 1 MMT to 649 MMT, but also increased 2010/11 consumption by a similar amount to 662 MMT, leaving ending stocks unchanged at 185 MMT.
Looking ahead to the coming season they pegged world grains production at a record 1.805 billion MT, slightly above the previous 2008/09 record of 1.802 billion. Wheat production will account for 673 MMT of that, an increase of 3.7%, they said. That would be the second largest world wheat crop ever, only failing to beat the 2008/09 record by 13 MMT.
Can 13 MMT, or less than 2% of global output, really be the wafer thin gap
between "burdensome" and "tight" accounting for whether UK wheat is GBP90/tonne or GBP200/tonne?
The FAO pegged 2011/12 world wheat production at 676 MMT earlier in the week, making that gap even narrower.
Potter Wins Prestigious Dairy Award
25/03/11 -- Milk quota trader Ian Potter has won the prestigious Royal Association of British Dairy Farmers' Princess Royal Award for his outstanding services to the industry, according to this article in Farmers' Weekly.
Amusingly, FW call him a "milk quoter trader" - or they do until they read this and change it - what's one of those then? "My horse, my horse, my kingdom for a couple of pints of gold top and a tub of single cream" - fifty quid that, come on I'm practically giving it away. Do I hear forty five? I'll take forty then, and you're having my eyes out at that you tight buggers....sold.
Right, next up, lot 348, we've got telephone bids on this one: "You can lead a horse to water, but you cannot make it milk" - do I hear three thousand anywhere in the room?
I wish I'd have been there to interview him after the ceremony. I think that the conversation might have gone something like this:
N: "Well done, and congratulations, you must be thrilled"
P: "Indeed, I am most honoured"
N: "So how is this going to affect all your wizardry and that?"
P: "I'm sorry, I don't quite follow you"
N: "Follow me, follow me squire, that's good. You know, your M-A-G-I-C W-A-N-D, does that get to see a lot of action in the next film?"
P: "I'm still not with you, will you please stop beating about the bush?"
N: "Bush, he he, like it squire, like it. Come on, do you tup Hermione in the next one or what?"
P: "Can somebody call security please?"
Wheat And Corn Lead Chicago Higher
24/03/11 -- Soybeans: May 11 soybeans closed at USD13.54 1/2, up 3 1/4 cents; May 11 soybean meal closed at USD359.80, down USD0.20; May 11 soybean oil closed at 56.12, up 64 points. Beans traded lower for much of the session but were dragged higher towards the close by spillover support from wheat and corn. Weekly export sales were 264,516 MT for old crop and just a nominal amount for new crop, towards the low end of trade estimates of 250,000 to 450,000 MT. China only bought 20,800 MT, a worrying sign. Everything is now focused on the USDA's Mar 31st planting intentions and stocks report for further direction.
Corn: May 11 corn closed at USD7.02 1/2, up 21 1/2 cents; Dec 11 corn closed at USD6.18 3/4, up 9 cents. Corn weekly export sales were strong at 895,000 MT although there was no confirmation of any of that business being done with China. They did however figure as a surprise buyer of 116,000 MT of US wheat, which lent some support to corn today. Analyst estimates for the March 31st acreage report are around 91.2 to 93 million acres. The trade will also be looking at the quarterly stocks report next week with ethanol production rising last week to 913,000 barrels a day.
Wheat: May 11 CBOT wheat closed at USD7.39 1/2, up 25 1/4 cents; May 11 KCBT wheat closed at USD8.53 1/4, up 23 1/4 cents; May 11 MGEX wheat closed at $8.83 1/4, up 24 1/4 cents. Wheat led the complex higher following the unexpected news that China bought two cargoes of US wheat in the past week. Wheat sales were 659,700 MT old crop and 86,000 MT new crop, against expectations of 500 to 800 thousand MT. The weather forecast has turned drier and much colder for the US Plains, prompting more concern for a US wheat crop already in pretty poor shape.
EU Wheat Close
24/03/11 -- EU grains closed with May London wheat up GBP1.50/tonne to GBP196.25/tonne and with new crop Nov climbing GBP1.75 to GBP158.00/tonne. May Paris wheat was EUR5.25/tonne higher to EUR229.75/tonne and Nov rose EUR2.25/tonne to EUR203.50/tonne.
Wheat was narrowly mixed for most of the day until Chicago came in strongly higher late on after China surprisingly emerged as having bought two cargoes of US wheat during the past week, according to the USDA.
US weather forecasts that had been calling for beneficial rains/snow on the US Plains have also turned drier today.
That news sent US futures sharply higher, dragging EU wheat with it late in the day.
Yesterday the FAO pegged EU wheat production this year at 142 MMT, an increase of 4% on last season's 136.5 MMT.
UK merchants are still reporting a lack of cash old crop buyers at these levels. Indeed, one told me today that almost all of his existing sales to compound feed manufacturers were behind schedule, with many wanting to cash settle their overbought tonnage.
That would appear to contradict the notion that the trade is "short and caught" for the Apr/May/Jun position.
Early Call On Chicago
24/03/11 -- I'll probably think of a Brazilian connection as I type. The overnight grains closed narrowly mixed. What's going on? We've become used to massive swings and now it's just like the old days again. Beans finished mostly 2-3c higher, with corn up a cent or three and wheat 2c up to 2c down.
The USDA weekly export sales report was in line with expectations for beans, corn and wheat, but frustratingly for the bulls there were no corn sales to China. Bean sales to China were also the lowest weekly total that I can recall for some considerable time at 20,800 MT. Demand has clearly already switched to South America.
China did show up though as a surprise buyer of two cargoes of US wheat.
On the weather front "much colder temperatures are predicted in the US grain belt the next several days, at least 15 F below normal for this time of year. Sunday should be very cold in the heartland - 20 degrees F below normal in Missouri and Kansas. Dreary damp conditions will dominate the Upper Midwest while rain and snow develops along an unstable front in the more southern growing areas," say Martell Crop Projections.
Elsewhere we have more unwanted rain in Mato Grosso (there you go, I told you I'd justify another Brazilian bum picture) and not enough in Parana. The South Brazil forecast is turning hopeful for heavy rain, which would be beneficial.
As you can see news is limited as we await fresh impetus from next week's USDA reports.
Early calls for this afternoon's CBOT session: corn up 1-3c, beans up 2-4c, wheat flat to 2c higher.
USDA Export Sales - China Buys Wheat Not Corn
24/03/11 -- There was no sign of China buying corn in this afternoon's USDA weekly export sales report just out. Old crop corn sales were 895,000 MT with new crop sales of just a nominal 100 MT. The total was however in line with trade estimates for sales of 750 thousand to 1 million MT. South Korea (290,100 MT) and Japan (221,700 MT) were the top buyers.
Soybean sales were 264,500 MT old crop and a nominal 200 MT of new crop against trade predictions of 250 to 450 thousand MT. Mexico was the main buyer (144,900 MT), with China only showing up as taking 20,800 MT.
Wheat sales were 659,700 MT old crop and 86,000 MT new crop, against expectations of 500 to 800 thousand MT. The top buyer was Nigeria (150,100 MT) followed by Egypt (116,800 MT) but with China showing up in a surprise third slot booking two cargoes (116,000 MT).
Romania
24/03/11 -- Reports from Romania suggest that an acute lack of seed may lead to many acres going unplanted this year. My man on the ground over there says that they would normally expect a wheat acreage of around 2.1-2.2m ha, but that this season only 1.7m ha got planted in the autumn and that is before any winterkill. As far as rapeseed is concerned only around half of the "normal" overall 600,000 ha got planted in the autumn, and again there are potential wintekill issues here too.
"Farmers are apparently killing to get it (seed) to try and replace what was not seeded in the autumn - particularly rape in the south of Romania, but there is simply not the seed available," he says.
"So far on normal work progress, they are starting to top dress in the south of Romania and we should get going next week. Crops barely out of dormancy. Land very wet, but winterkill looks minimal in our area," he adds.
Hot Deal
24/03/11 -- It's a bit like Rio de Janeiro here in North Yorkshire today for the second day running, with the mercury already hitting 14.2C by half past ten this morning. Hot deal of the day: Spot Brazilian soya pellets ex Liverpool offered at a substantial saving to shipper's list price for prompt movement. And it's also a handy excuse to post another pic of MrsN#3 on our hols in Silloth last year.
Morning Ramblings
24/03/11 -- It seems that the boys from Brazil are lining up another massive, if somewhat soggy, record soybean crop with all the usual logistical problems that come with it.
The oft overlooked, despite being the world's fourth largest exporter, Paraguay also look like weighing in with record production this year, whilst Argentina look set to have their second highest crop on record.
Lucky then that China have an appetite for all these extra soybeans. In fact I read somewhere yesterday that in 1995 China was producing and consuming around 14 MMT of soybeans a year. Here we are in 2011 and they are still producing 14 MMT of soybeans and now importing a likely further 60 MMT on top of that this year.
They might be buying soybeans, but are they also buying corn? This afternoon's USDA weekly export sales report may offer some confirmation of this, although I personally doubt it. That doesn't necessarily mean that some business hasn't been done via the backdoor, but I think it is unlikely to show up this afternoon. This week's volume is expected in the region of 750 thousand to 1 million MT, a decrease on last week's 1.34 MMT.
The IGC are also out today with their latest S&D numbers and we will also find out tonight what volume of export licences Brussels have issued in the past week.
Chicago Closes Lower
23/03/11 -- Soybeans: May 11 Soybeans closed at USD13.51 1/4, down 14 1/4 cents; May 11 soybean meal closed at USD360.00, down USD6.40; May 11 soybean oil closed at 55.48, down 38 points. The USDA reported 105,000 MT of soybeans sold to "unknown" for 2011/12, but other than that there was very little to get excited about. Mixed reports coming out of Brazil are suggesting lower yields in some states like Mato Grosso, but higher ones in Rio Grande do Sul. The trade is focusing on the Mar 31st planting intentions report for direction, with 75.3 to 79 million acres of soybeans the range of trade guesses.
Corn: May 11 corn closed at USD6.81, down 5 3/4 cents; Dec 11 Corn closed at USD6.09 3/4, down 2 1/2 cents. Trade remains sideways ahead of next week's USDA acreage report where estimates for US corn acres this spring are 91.2 to 93 million. Despite widespread "insider" reports of recent US corn sales to China there has been no confirmation forthcoming from the USDA. Maybe we will get some tomorrow when the issue their weekly export sales report? Trade estimates for that range from 750 thousand to 1 million MT.
Wheat: May 11 CBOT wheat closed at USD7.14 1/4, down 8 cents; May 11 KCBT wheat closed at USD8.30, down 15 cents; May 11 MGEX wheat closed at USD8.59, down 7 cents. Increased chances for rain/snow in HRW wheat areas was enough to drag futures lower ahead of next week's acreage and quarterly stocks data from the USDA. That is expected to show US farmers giving over between 55.5 and 57.65 million acres to wheat for the 2011 harvest. Trade estimates for tomorrow's weekly export sales range from 500 to 800 thousand MT.
EU Wheat Close
23/03/11 -- EU wheat closed narrowly mixed with expiring Mar London wheat going out with a whimper, unchanged at GBP192.00/tonne and new crop Nov GBP0.25 easier at GBP156.25/tonne. May Paris wheat declined EUR0.50 to EUR224.50/tonne, with Nov down EUR0.25 at EUR201.25/tonne.
By comparison to what we've become used to recently this was just like the old days! London wheat opened around GBP3.00-3.50/tonne higher early doors but failed to hang onto those gains.
In the UK Defra pegged 2010/11 ending stocks at 1.6 MMT - "one of the lowest levels of recent times" - finally noticing that exports are running well ahead of previous projections. They did however also cut their predictions of H&I usage and that from the feed sector, noting lower livestock numbers and inclusion rates for wheat.
Spring is both officially, and in reality here, with temperatures in North Yorkshire hitting 17-18C this afternoon.
"Western Europe is warming up nicely with highs in the 60's F in the UK, France Germany and Poland yesterday. A rainy forecast for Central Europe would relieve drought, where we have 3-4 inch moisture deficits in central France, Germany, Benelux and Hungary in the recent 60 days. Warmth with showers is forecast to continue," say Martell Crop Projections.
The FAO peg world wheat output up 3.4% to 676 MMT this year, including Russian production up by a third to 55 MMT.
The IGC are out tomorrow with their March grain production and stocks numbers, and also tomorrow we will get the latest export figures from Brussels.
Our Man In Brazil
23/03/11 -- Despite widespread reports of Brazil's soybean crop having a little shine taken off the top courtesy of persistent rains, it's not like that all over the country according to my newest chum. Here's what he has to say from RGDS today:
"The crop in Rio Grande do Sul is big and biggering!! And that (is) despite relatively low rainfall this last month which has river levels so low that the police are yanking chopped-up cars out of some of them (thieves dump them there after stripping out the best bits). However (with) the rains we received last week with more expected today or tomorrow, the crop looks hot. What is causing the headaches (migraines, in fact) is the problem with sorting out freight. Prices have soared and are soaring more; lorry availability is a problem; drivers are in short supply; storage all across the state is getting very tight and tempers are flaring. In other words, the coming days and weeks look to be fun. Last night I was the last to leave the office but every time I stood up, the phone rang again with someone else requiring an answer ... none of which would/could wait. Think I’ll make an effort to get out of here a little earlier today!"
Early Call On Chicago
23/03/11 -- The overnight grains closed mostly a little higher with beans up 1-2c, corn 1-3c firmer and wheat flat to up 2c.
Crude is around half a dollar firmer and the USD is also a bit steadier.
Fresh news is severely lacking. The USDA report 105,000 MT of soybeans sold to "unknown" for 2011/12. There's been no confirmation of any corn sales to China though. Again.
Cofco have joined Sinograin in saying that they haven't bought any US corn, and nor do they intend to, at these levels.
It looks like we might be treading water ahead of the USDA acreage report at the end of the month.
Brazil's soybean crop may be shrinking a little, although it will still probably be a record ahead of last season's 68.5 MMT.
A hard freeze and snow is in the forecast for US winter wheat in Kansas, Oklahoma and NW Texas early next week, according to QT Weather. The freeze could be bad for Oklahoma wheat which is around 50% jointed, but the moisture could benefit Kansas wheat which is less advanced, they add.
The FAO peg the world wheat crop this year at 676 MMT, a 4.4% or 28.5 MMT increase on the USDA's estimate for 2010/11. That figure also exceeds this season's consumption figure from the USDA by 14 MMT.
China sold just over half the 679 TMT of wheat on offer at today's weekly auction.
Early calls for this afternoon's CBOT session: corn 1-2c firmer, beans up 2-3c, wheat flat to up 2c.
Morning Vibe
23/03/11 -- There's not a great deal of fresh news overnight boys and girls. Chicago recovered from a weak start to close with little change and the overnights aren't doing a lot so far, mostly a tad firmer.
It seems like we may have reached a bit of a hiatus whilst we wait for some new direction. That may take until the end of the month when the USDA come out with their acreage and stocks numbers. It could come sooner if the USDA were to confirm the heavily rumoured corn sales to China.
Tomorrow's export sales report will be scrutinised for evidence of these, but I somehow feel that traders are going to be disappointed. Again.
Who is it that starts these rumours I'd like to know. Someone told me that they'd heard it was you. You should be ashamed of yourself.
Ginger-haired March London wheat goes off the board today (hurrah), making May the front month from tomorrow. The IGC are also out tomorrow with their March grain production and stocks tweaks, and also tomorrow late afternoon will bring the latest export figures from Brussels.
At home today we have George Osborne's first Budget since last year's austerity measures were introduced. Elsewhere we now have black smoke billowing from reactor 3 in Fukushima and a typically belligerent Gaddafi urging "all Islamic armies" to join him in battle against the allied forces. What did you say your address was again?
The pound is close to yesterday's 1.64 fourteen month highs against the dollar, currently standing around 1.6350.
Chicago Close
22/03/11 -- Soybeans: May 11 soybeans closed at USD13.65 1/2, up 2 1/2 cents; May 11 soybean meal closed unchanged at USD366.40; May 11 soybean oil closed at 55.86, down 2 points. There wasn't a lot doing ahead of the USDA acreage report due out on March 31st along with the quarterly grains stocks report. Oil World reduced it's Brazilian soybean crop estimate to 69-70 MMT due to rains cutting yields in some areas. The market keeps talking of harvest delays in Brazil, although the current pace of 44% done is actually slightly ahead of the five year average.
Corn: May 11 corn closed at USD6.86 3/4, up 1/4 cent; Dec 11 corn closed at USD6.12 1/4, up 2 3/4 cents. Corn recovered from being 8 to 10 cents lower overnight on the USDA not announcing any corn sales specifically to China, or even any substantial tonnage to "unknown" destinations. Still, it seems unlikely that we will see a lot of downside ahead of the USDA acreage report at the end of the month. Crude oil lent support, trading higher on the back of supply disruptions due to the Libyan conflict.
Wheat: May 11 CBOT wheat closed at USD7.22 1/4, up 1 1/4 cents; May 11 KCBT Wheat closed at USD8.45, up 3 cents; May 11 MGEX Wheat closed at USD8.66, down 3 1/4 cents. As with beans and corn, wheat recovered from being 10-15 cents lower overnight to close little changed. The USDA peg Kansas winter wheat at 37% poor/very poor, whilst in Oklahoma 43% of the crop is rated in the bottom two categories and in Texas things are even worse at 56% poor/very poor. Nigeria bought 160,000 MT of US HRW wheat. Japan, Sudan, South Korea and Jordan are also in the market.
EU Wheat Close
22/03/11 -- EU grains closed with Mar London wheat down GBP1.15/tonne at GBP192.00/tonne and with new crop Nov falling GBP3.625 to GBP156.00/tonne. May Paris wheat was down EUR1.00/tonne to EUR225.00/tonne and Nov fell EUR2.00/tonne to EUR201.50/tonne.
The pound and euro both rose to, or close to, their highest levels against the dollar in 14 months, putting EU wheat under pressure.
The pound was up after UK inflation came in at 4.4% last month, up from 4.0% in January and trade estimates of 4.2%. That increases the chances of a UK base rate increase, thereby supporting the pound.
Rumours of China buying large volumes of US corn on the back of the recent price break so far remain unconfirmed.
Whilst old crop wheat availability in Europe stays tight, the futures market here keeps following that in the US. Over there stocks are plentiful, with wheat from the 2008 and 2009 crop still kicking around.
Many are now reporting that the "old rules" relating to standard differentials between London futures prices and the cash market have been thrown out of the window.
"The European drought continues in France, Germany, Denmark, Sweden and the Low Countries all of whom have had very low rainfall in the past 60 days. The UK is moderately dry but generous Central Europe rain has been helpful in the past week," say Martell Crop Projections.
Thought For The Day
22/03/11 -- Today's thought for the day is provided by the lovely MrsN#3:
If you would be happy for a week take a wife,
If you would be happy for a month, kill your pig,
But if you would be happy all your life, plant a garden - Chinese proverb
What do you think of that, she asked me. I said that the first thing that struck me was how you got four times the amount of enjoyment from killing a pig than you do from getting married.
If you are wondering what happens if you marry a pig and then kill it - I got a fortnights worth of pleasure and ten years imprisonment the last time I tried that one. I'm not saying she was ugly but the judge took one look at the wedding photos and gave me a suspended sentence, so every cloud...
Early Call On Chicago
22/03/11 -- The overnight grains were lower with beans ending around 16-20c easier, with corn down 8-10c and wheat 13-15c lower. Crude oil is a bit easier despite early reports of a US warplane "being shot down" over Libya. It seems that mechanical error was the real culprit. Those Libyans couldn't hit a barn door with a banjo.
The market seems somewhat deflated that it got itself all worked up again that China had swooped in for "massive" volumes of US corn on last week's dip, only to find little in the way of confirmation from the USDA. Two 116,000 MT sales to unknown is all we have to go on between last Thursday and now.
Indeed China’s state grain buyer Sinograin says it hasn't bought anything at all. In addition to that the government there only sold 10% of the corn on offer at this week's auction.
China will import 3.9 MMT of soybeans in March and 3.4 MMT in April, according to the Ag Ministry. That's a step up from last month, but below the customary 5 MMT+ that we've been getting used to, and much of that will be South American origin.
Celeres report Brazil's soybean harvest at 44% complete, up from 30% last week and slightly ahead of the five year average although below last year's pace.
"Kansas wheat improved in the week ending March 21 but conditions were still not favourable with 37% poor-very poor, 36% fair and 27% good-excellent. Five percent of wheat was jointing, a rapid growth period in wheat that demands generous moisture. The updated forecast calls for 0.25 - 0.50 inch of rainfall later in the week with much cooler temperatures. Both coolness and wetness would help wheat development," say Martell Crop Projections.
The USDA do today report 160,000 MT of HRW wheat sold to Nigeria, but there's no crumbs for the corn bulls.
Goldman Sachs is forecasting 2011 US corn plantings at 92.1 million acres, slightly more than the USDA's Feb Outlook Forum, they are out with more official estimates at the end of the month.
Early calls for this afternoon's CBOT session: beans down 15-20c, wheat down 12-15c, corn down 8-10c.
Easter Eggs Limit Up
22/03/11 -- Easter egg prices are through the roof this year according to the Daily Wail, with the cost of a Galaxy Minstrels Egg up by 140%, they say.
Political unrest in the Ivory Coast is one of the reasons, they add.
How come we bought a KitKat one the other day for a pound then? I went into the local Costcutter and said "I'll have one of those Easter Eggs please."
And the girl behind the counter says "Certainly, which one would you like?"
I said "Oh, now, there's so many of them isn't there...erm, I think I'll go for the KitKat Chunky."
So she passes me a KitKat Chunky one, and I said "No, I just wanted an ordinary KitKat one, lard arse."
Honest.
Boulton Is Back Shocker!
22/03/11 -- After years in the wilderness ageing crooner Michael Boulton kicks off a 115 city worldwide tour at The Performing Arts Center at Kent State University in Tuscarawas on Thursday night. Groovy.
UK Inflation Higher Than Expected
22/03/11 -- New this morning that UK inflation increased from 4.0% in January to 4.4% in February, beating the markets' expectations of a 0.2% rise, is behind the pounds' new lease of life.
Merv the Swerve will have to get his pen and paper out again to write his "sorry" note to the Chancellor for exceeding the BoE's 2% target for the fifteenth month on the trot no less.
Retail Price Index inflation - which includes mortgage interest payments - rose to 5.5% (from 5.1% in January). That's now the highest rate in 20 years and makes the prospect of an interest rate rise before too long look a bit more likely.
The pound has broken through resistance around 1.6330 against the US dollar and is currently banging on the door of 1.64, a level not seen since Jan 2010 fourteen months ago.
More Gossip
22/03/11 -- What little wheat UK farmers do have to sell is being locked in the barn for a rainy day I hear. Compounders are reporting it being difficult to prise spot wheat out of sellers gnarled and sweaty "bunch of carrots" mitts for collection in the next week or two.
This isn't necessarily because they've fallen in love with the notion that ex-farm wheat at anything that doesn't start with a "2" is giving it away, but more to do with the fact that they don't want to cash in any more chips in the current 2010/11 tax year, I am being told.
The spot price of Range Rovers has gone through the roof then I suppose?!
Breaking News
22/03/11 -- Twitter has just gone over capacity as reports circulate that a US warplane has been shot down over Libya. The BBC is reporting one has "crash landed" but that their is no evidence it was shot down at this stage.
From an economic viewpoint, also being reported on Twitter "each Tomahawk cruise missile costs roughly $1 million" and "we fired 100+ of the buggers over the weekend - do the math."
Maybe that's one reason why the dollar is weak today, the grain markets seem a bit spooked too.
EU/Western Russia Weather
22/03/11 -- Here's a stitched together map of the rainfall forecast for the EU and Ukraine/Western Russia/Kazakh for the next seven days from the excellent Martell Crop Projections. Looks like it's staying dry for most of the UK, northern France and central/western Germany but welcome moisture in most other places:
Chicago Close
21/03/11 -- Soybeans: May 11 soybeans closed at USD13.63, up 1/2 cent; Nov 11 Soybeans closed at USD13.45, up 11 cents; May 11 soybean meal closed at USD366.40, down USD1.50; May 11 soybean oil closed at 55.88, up 11 points. Celeres said that Brazil's harvest advanced considerably in the past week from 30% to 44% done. Argentina’s Ag ministry pegged soybean production there at 50 MMT. "Santa Fe and Cordoba crops received beneficial rainfall amounts of up to 1.2 inches last week. Soybeans filling pods will benefit, and more rain is in the 7-day outlook, which may be heavy up to 2.5 inches in Santa Fe, Entre Rios," say Martell Crop Projections.
Corn: May 11 corn closed at USD6.86 1/2, up 3 cents; Dec 11 corn closed at USD6.09 1/2, up 11 cents. Argentina’s Ag ministry pegs corn production there at 20.8 MMT. For all the talk of US corn sales to China all we have to go on is sales of 116,000 MT to "unknown" last Thursday and again similar today. Sales of 1-2 MMT is what the trade chatter suggests, but as each day passes without official confirmation from the USDA this looks more and more unlikely. Weekly corn export inspections of 29.503 million bushels were a bit below trade estimates.
Wheat: May 11 CBOT wheat closed at USD7.21, down 2 cents; May 11 KCBT wheat closed at USD8.42, down 3 cents; May 11 MGEX wheat closed at USD8.69 1/4, up 1 3/4 cents. USDA export inspections of 25.749 million bushels were in line with expectations. "US hard red wheat area remains hot and dry in the Southern Plains. Wheat is deteriorating without rain to compensate and there is no precipitation in the 7-day forecast," say Martell Crop Projections. Elsewhere the North China Plain wheat received welcome rain of 0.40 to 1.2 inches over the weekend, the first moisture in 3-4 weeks," they add.
EU Wheat Closing Comments
21/03/11 -- EU wheat closed lower with Mar London wheat down GBP1.20 to GBP193.15/tonne and new crop Nov GBP4.05 easier at GBP159.25/tonne. May Paris wheat declined EUR5.75 to EUR226.00/tonne, with Nov down EUR4.00 lower at EUR203.50/tonne.
It was another choppy day, with Nov London wheat opening GBP2.65/tonne higher and trading within a GBP8.05/tonne trading range across the session. Volume was relatively light.
Last week's wild swings it seems have heightened traders' awareness of downside potential, both May and July London wheat set an intraday high of GBP200.00/tonne, but neither were capable of penetrating that level to push higher.
A firmer sterling and euro contributed to EU grains overall weakness.
EU wheat crops seem to have largely done OK without looking "bumper" across the winter, with the German Farm Cooperatives Association pegging production there at 24.6 MMT on Friday, up from 24.0 MMT in 2010.
Rapeseed output is seen down to 5.42 MMT from 5.73 MMT on the back of a "very cold winter and lack of snow cover in recent weeks," they said. Winter barley output is forecast at 7.92 MMT from 8.68 MMT and spring barley production at 1.61 MMT from 1.73MMT.
The US winter wheat crop is struggling, and the chance of a late season hard freeze this weekend in parts of Kansas won't help.
Early Vibe
21/03/11 -- The bulls are firmly back in the driving seat to start the week it would seem. Events over the weekend don't appear to have done too much harm, with the Japanese nuclear situation improving slightly and the UN strikes on Libya getting off to a reasonably good start.
Bullish, but with caution, is maybe the theme this morning. Certainly recent wild market fluctuations will have taken a lot of the gung-ho mentality away. Whilst money that was taken out early last week does appear to be coming back in again, sell stops will be in place for if and when the unpredictable comes along.
Spring is officially here and we are set for a fairly dry, warm and settled week ahead here in the UK. France could do with some rain, but the situation there is far from critical, yet.
Mar London wheat goes off the board on Wednesday, and with a current open interest of none there isn't likely to be an awful lot of action there over the next couple of sessions.
Nov11 London wheat opened GBP2.65/tonne higher early doors but has slipped away a little since then to currently stand GBP0.30/tonne lower. Paris wheat also opened in positive territory but has also turned red in the last fifteen minutes or so.
The Globex market is also drifting back off the overnight highs with beans up 2-4c, corn up 8-12c and wheat up 6-8c.
The pound is nudging 1.63 against the dollar again for the first time in a fortnight ahead of inflation figures due out tomorrow. If they're bad, and I think that they will be, then ideas that an interest rate rise is on the cards before too long will resurface.
Sources in Brazil's Rio Grande do Sul report that, unlike in Matto Grosso, conditions are "just perfect for levelling out the crop before harvest" and that "quite a lot of what they’re loosing in production in the center-west of the country is being made up for here."
