Chicago Close
06/05/11 -- Soybeans: May 11 soybeans closed at USD13.25 1/4, up 5 1/4 cents; Nov 11 soybeans closed at USD13.08 1/2, up 1 3/4 cents; May 11 soybean meal closed at USD344.90, up USD2.20; May 11 soybean oil closed at 55.37, one point higher. It was an extremely volatile day with crude oil initially extending yesterday's losses, down USD4.00-5.00/barrel in early trade, before recovering to USD2.00/barrel higher and then retreating again to end around USD2.00/barrel lower. Informa cut it's US soybean planting estimate to 76 million acres. Statistics Canada also chipped in with a lower than expected canola stocks figure of 4.85 MMT, compared with trade estimates of 5-5.2 MMT.
Corn: May 11 corn closed at USD6.82 3/4, down 22 1/4 cents; Dec 11 corn closed at USD6.40 1/4, down 15 1/2 cents. Fund liquidation drove corn lower, although it earlier flirted with higher levels on what initially appeared to be bottom picking. Funds were said to have sold an estimated 15,000 contracts on the day, similar to yesterday's volume. On the week May corn lost 71 1/4 cents and new crop Dec 29 1/4 cents. An improved weather outlook should have helped corn plantings make great strides this week, although there is no way things will be in line with the five year average, let alone last year's pace.
Wheat: May 11 CBOT wheat closed at USD7.24 1/2, up 2 cents; May 11 KCBT wheat closed at USD8.68, up 20 cents; May 11 MGEX wheat closed at USD9.10 3/4, up 4 1/2 cents. CBOT wheat was 44 3/4 cents lower on the week, KCBT wheat was 25 lower, and MGEX was 34 1/2 lower for the week. Informa pegged the 2011/12 US winter wheat crop at 39.2 MMT, down four percent from their March forecast. The Kansas wheat tour project a yield of 37.4 bushels per acre, down eight percent from last year’s estimated 40.7 bushels per acre. They also peg Kansas production at 7.0 MMT, down from 9.1 MMT last year and the lowest projected crop since 1996.
EU Grains Close
06/05/11 -- EU grains closed mixed with May London wheat down GBP5.00/tonne to GBP198.00/tonne and with new crop Nov rising GBP1.15/tonne to GBP168.75/tonne. May Paris wheat fell EUR4.25/tonne to EUR240.00/tonne whilst Nov rose EUR3.25/tonne to EUR212.75/tonne.
On the week as a whole the old crop/new crop spread narrowed with May London wheat falling GBP7.00/tonne whilst Nov was only down GBP0.90/tonne. May Paris wheat was EUR0.50/tonne lower and Nov was up EUR2.00/tonne.
Brussels issued soft wheat export licences for 305,000 MT this week, bringing the marketing year to date total to 16.8 MMT, 12% up on this time a year ago. Barley exports are running at close to five times higher than last season at 4.2 MMT.
France Export Cereales say that the country's soft wheat exports to non-EU destinations will total 12.3 MMT this season, whilst still a record that's 0.7 MMT down on last month's estimate.
Whilst the UK finally has had some rain in the north and west, with the promise of at least something for most parts of the country by Monday, large parts of the continent remain dry.
Northern France has only had 50% of it's normal rainfall so far this year, with only 20% of normal falling in April.
In Ukraine spring grain plantings are well advanced at 5.9m ha as of May 5th, 78% of planned area. Even Russian sowings are starting to catch up at 4.7m ha sown as of May 4th, although there's still a long way to go to reach the planned 30 million mark.
Friday Night Rebound?
06/05/11 -- After steep losses yesterday and overnight, a few shorts appear to have emerged this afternoon, with crude oil up a dollar or two (having been USD4.00/5.00 down this morning).
That has seen Chicago grains trade a bit higher than the opening calls this afternoon with CBOT wheat currently up 13c, beans up 9-10c and corn 1-2c firmer. Even Paris rapeseed is showing strong gains, up around EUR10.00/12.00 after a week of declines.
Where it will all end is anybody's guess, but for now blind liquidation seems to be over. We have invasion of the bottom pickers.
Early Call On Chicago
06/05/11 -- The overnight grains closed mixed, but mostly lower with beans down 2-4c, corn down 10-12 and wheat mostly 1-2c firmer. Just like Kate Middleton, crude oil too a right royal rogering yesterday which spilled over into morning action although it appears to have recovered some of it's composure by early afternoon. Straightening it's hair and applying a little mascara, NYMEX and Brent crude are almost back to unchanged levels having been five dollars down earlier in the day.
Continuing with the royal analogy (nice pun Nogger), bottom picking might be the order of the day this afternoon, along with a couple of stiff G&T's and a flick through Harpers & Queen before a visit to Boots the Chemist.
China says that spring grain plantings there are significantly ahead, whilst things are progressing nicely in Ukraine and even Russia seems to have caught up with some of it's arrears.
The US wheat crop isn't looking too bright, although carryover stocks are relatively plentiful, the question is will the market see it that way?
Corn plantings in the US lag, we wont know until Monday night how much progress has been made this week. The best planting window isn't likely to arrive until May 14th, say QT Weather.
The UK is in for rain today through to Monday with the outlook unsettled for most of next week. France, Germany and Poland have less chances of much needed rain though.
Egypt say that with it's own new crop wheat, it has sufficient stocks to not need to enter the import market for eight months. China is also making itself conspicuous by it's absence from the soybean market.
US unemployment has risen to 9.0% compared with expectations of 8.8%.
Are we in for a bargain hunting or long liquidation afternoon? Early calls on Chicago are: beans down 2-4c, corn down 8-10c, wheat 1-34c firmer.
EU Rapemeal
06/05/11 -- EU rapemeal prices continue with their ginger-haired stepson impersonation today, with front month May having opened up to a EUR5.00/tonne discount to the remainder of the old crop Jun/Jul position.
Spot May is also now a EUR3.00/tonne discount ot new crop Aug/Oct, a sure sign of oversupply and lack of demand. A month ago it was a EUR10.00/tonne premium and now it's lost EUR16.00/tonne in a week.
At home the crushers reputedly have only 50% of their May/Jul rapemeal sold, shifting the rest of it might be like trying to get toothpaste back into the tube.
Here's the latest guide prices for EU rapemeal, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| May11 | 170.00 | -3.00 |
| Jun/FH Jul11 | 175.00 | -1.00 |
| Aug/Oct11 | 173.00 | -1.00 |
| Nov11/Jan12 | 174.00 | -3.00 |
| Feb/Apr12 | 175.00 | -4.00 |
| May/Jul12 | 175.00 | -4.00 |
| Aug/Oct12 | 170.00 | -5.00 |
Spot The Difference
06/05/11 -- The correlation between London wheat and Paris wheat price movements seems to altering as the two charts show (click to enlarge). I'm certainly starting to lose any faith I had in London wheat. Last night's close clearly didn't represent the reality of the situation. The volume here is so low that the market seems to have become too easy to manipulate.
Clearly I'm not the only one coming to these conclusions. One UK merchant I spoke to the other day said that they'd traded around 700 lots of wheat that day and only a handful of those were done in London, the vast majority was hedged in Paris.
Morning Musings
06/05/11 -- Having fallen around USD10/barrel yesterday crude oil is already down in excess of USD4/barrel this morning as spec money scrambles to get out of commodities. Copper, gold and silver are all lower too, particularly silver which has taken a right royal pasting in the past few days falling 27% since April 29th including this morning's declines.
In fact if you fancy taking a little look at what's happened on commodities since last Friday Reuters have thoughtfully created this little graphic for us here. Bear in mid though that these numbers are based on last night's closes, there's a few extra percent to add onto most of those already this morning.
So then, what's going on, don't these guys know that there are bullish stories aplenty in the ag sector? Well, yes of course they do, they just don't care. They didn't care about the turmoil and angst that they were creating on the way up either. Tarquin's Mummy wants him in for tea, so he's got to go.
There are also one or two bearish stories out there too, it's just that they've largely been getting ignored as the headline writers reach for their Big Book Of Superlatives.
"China Helps Keep US Corn Market All Bulled Up" - they buy a million tonnes, so what? "China buys 1/50th of US annual corn exports - less than what Israel usual import" hardly carries the same weight does it?
Chicago Close
05/05/11 -- Soybeans: May 11 soybeans closed at USD13.19 3/4, down 30 3/4 cents; Nov soybeans closed at USD13.06 3/4, down 31 3/4 cents; May 11 soybean meal closed at USD342.70, down USD4.90; May 11 soybean oil closed at 55.36, down 140 points. It was exit day on commodities, with NYMEX crude falling under USD100/barrel to a close at USD99.80, down 8.6% on the day to levels not seen since the Japanese earthquake and subsequent tsunami struck. Funds sold an estimated 7,000 lot of soybeans on the day. Weekly export sales did nothing to lend support coming in at just 21,000 MT, the second lowest weekly total since July 2005. Chinese demand certainly seems to have gone away, with this week's shipments also well below what is required to meet the USDA's export target for 2010/11.
Corn: May 11 corn closed at USD7.05, down 21 1/2 cents; Dec 11 corn closed at USD6.55 3/4, down 9 1/2 cents. Even corn couldn't but resist succumbing to heavy outside weakness despite the bullish late planting storyline. Weekly export sales were also disappointing at 284,200 MT versus expectations of 350-650,000 MT. All those sales were old crop meaning that we had no new crop sales at all this week for either corn or soybeans. That's the first time that has happened since before Christmas. Shipments were better at 798,500 MT but even that was 19% below the average for the past 4 weeks. Funds were estimated to have unloaded a further 15,000 corn contracts on the day as their resolve gets tested.
Wheat: May 11 CBOT wheat closed at USD7.22 1/2, down 18 1/2 cents; May 11 KCBT wheat closed at USD8.48, down 19 3/4 cents; May 11 MGEX wheat closed at USD9.06, down 17 cents. Like corn, wheat couldn't manage to swim against a tide of exodus fund money despite also having a bullish story of it's own. Export sales were in line with expectations at 549,600 MT whilst the Kansas wheat tour and Oklahoma Wheat Commission both estimate wheat yields in their respective states down sharply in 2011. The recent words of Société Générale and Goldman Sachs warning of an imminent oil-led commodities collapse are suddenly starting to look quite prophetic.
EU Grains Close
05/05/11 -- May London wheat closed GBP1.40/tonne lower at GBP203.00/tonne with new crop Nov down GBP0.55 to GBP167.60/tonne. May Paris wheat fell EUR3.00/tonne at EUR244.25/tonne whilst Nov was EUR1.00/tonne higher to EUR209.50/tonne.
Wheat closed well off session lows, surprisingly, which makes this look like a bit of a false close - so depending on overnight events that suggests to me that further losses are possible tomorrow.
Crude oil completely fell out of bed with Brent crashing through USD120/barrel to post losses of almost USD9/barrel by the time European markets closed. NYMEX crude, gas and heating oil all posted losses of 7-9% late in the day.
In addition we saw silver down 8.5%, with copper down 3.5% and gold falling 2.5%, with softs such as coffee, sugar and cocoa all losing around 2-5% in a broad commodity sell-off.
Both the BoE and the ECB left interest rates on hold in the UK and eurozone respectively. The pound rose close to 1.13 by the close of play, having traded as low as 1.1062 against the single currency earlier in the day. Dollar strength was also a feature.
Speculation that Russian grain stocks may be significantly higher than official estimates, prompting the government there to lift the export embargo sooner rather than later is also doing the rounds.
Rain is finally moving into the UK from the west, with more forecast over the next few days, although we haven't had anything resembling a drought-buster yet. France and Germany remain dry.
US wheat potential is poor. The second day of the Kansas wheat tour pegs yields there at 33.4 bushels an acre, down 16% on 39.9 bu/acre last year. Meanwhile, the Oklahoma Wheat Commission estimate the state's wheat crop at just 67.7 million bushels, down a stunning 44% from 120.9 million bushels in 2010.
The Wynnstay Acquisition Trail Rumbles On
05/05/11 -- Our chums at the Wynnstay Group have announced another acquisition today, welcoming Wrekin Grain into the fold for a reputed net consideration of GBP4m.
Wrekin will be integrated with Wynnstay’s existing grain trading arm, Shropshire Grain Ltd to form a new entity called GrainLink, they say. Ace, that's another website for me to do then!
Wynnstay acquires Wrekin Grain to increase national presence
Early Call On Chicago
05/05/11 -- Having traded higher early on the overnight grains reversed that trend to close with beans down around 10-12c, corn 5-7c lower and wheat down 5-8c.
Broad-based commodity liquidation is the theme for today again it would seem. Crude oil is down more than USD3.00/barrel as Brent crashed below support at USD120.00/barrel to currently trade around USD117.50/barrel.
Rising US inventories and a slow down in offtake at these elevated levels are also to blame, but it's a mass exodus from commodities that seems mostly behind today's moves. Gold, silver, copper, cocoa, coffee, cotton, sugar and gas are all lower as well.
On top of all that the dollar is having a rare up day.
The grains couldn't have picked a worse day to come out with some pretty miserable export numbers, but that is exactly what has happened.
Soybean export sales were just 21,000 MT of old crop, with no sales at all for new crop. The lowest combined weekly total in more than a year, and the second lowest since July 2005.
Corn sales were also disappointing at 284,200 MT versus expectations of 350-650,000 MT. All those sales were old crop meaning that we had no new crop sales at all this week for either corn or soybeans. That's the first time that has happened since before Christmas.
Wheat did at least manage to post a respectable sales total of 549,600 MT - in line with trade expectations for sales of 300-600,000 MT.
Day two of the Kansas wheat tour pegs yields in the state at 33.4 bushels an acre, down 16% on 39.9 bu/acre last year.
All the same old weather concerns that we had yesterday are still here today, but this has the vibe of a fundamentals go out the window sort of an afternoon.
Early calls: soybeans down 10-12c, old crop corn down 5-7c & new crop down 2-3c, wheat down 4-6c. I can easily see beans trading 20-30c down within half an hour of the opening.
USDA Weekly Export Sales
05/05/11 -- The USDA have today reported the following weekly export sales for the week ended Apr 28th 2011:
Wheat sales of 273,900 MT old crop and 275,700 MT new crop gave us a combined total of 549,600 MT - in line with trade expectations for sales of 300-600,000 MT. That's where to good news ends. Corn sales of 284,200 MT were below trade expectations of 350-650,000 MT and soybean sales were a disaster at just 21,000 MT, even though trade hopes weren't that high at 100-300,000 MT.
Soybean exports of just 200,200 MT were down 26 percent from the previous week and 58 percent from the prior 4-week average, the USDA said.
I guess we don't have to look too far past soybeans for this afternoon's whipping boy then?
EU Rapemeal Prices
05/05/11 -- EU rapemeal prices continue to fall out of bed.
May is down EUR19.00/tonne in a fortnight, with new crop Aug/Oct falling by EUR10.00/tonne.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| May11 | 173.00 | -2.00 |
| Jun/FH Jul11 | 176.00 | -2.00 |
| Aug/Oct11 | 174.00 | -1.00 |
| Nov11/Jan12 | 177.00 | -1.00 |
| Feb/Apr12 | 179.00 | -3.00 |
| May/Jul12 | 179.00 | -1.00 |
| Aug/Oct12 | 175.00 | unch |
Morning Mumblings
05/05/11 -- The overnights are higher, with wheat regaining some of last night's losses up 7-10c, and beans & corn around 3-5c firmer.
That's swimming against the tide as crude is down a dollar and a half plus, along with most other energies, metals and softs.
The pound remains under pressure ahead of the BoE's announcement on interest rates at noon. The ECB are also due to release a statement on rates in the eurozone later this afternoon.
China sold 43% of the wheat on offer in this week's public auction. They've also said that they are loading the first of a 1 MMT consignment of US corn bought in March (presumably part of the 1.25 MMT sold to "unknown" announced on 25th March). They also say that there are no plans to buy any more internationally at the moment.
Metcheck say that things are set to turn more unsettled as the high pressure that has dominated the UK finally gets pushed away. "A rather warm and unsettled weekend with rain and thundery showers becoming more widespread," lies ahead they say.
German farming association DBV say that "the expectations for the upcoming rape and cereal crops in many parts of Germany have received a setback." No shit Sherlock!
This afternoon's USDA weekly export sales are expected to show wheat sales of 300 and 600 thousand MT, corn sales of 350 to 650 thousand MT and soybean sales of 100 to 300 thousand MT.
Reports coming out of Russia suggest that grain stocks may in fact be "up to 8MMT" higher than originally thought. Local prices have been under the cosh as with an export ban in place growers and traders there have been unable to take advantage of the spike in world prices. There's some talk of the export ban being lifted as early as the end of this month. Spring plantings however are still well behind, which maybe makes this somewhat unlikely.
A union leader was arrested outside Vivergo yesterday as the dispute there grinds on, according to the BBC.
The HGCA have released some new information on how to manage Ramularia, I thought he was the Brazilian right-back, but apparently it isn't.
Chicago Close
04/05/11 -- Soybeans: May 11 soybeans closed at USD13.50 1/2, down 8 3/4 cents; Nov 11 soybeans closed at USD13.38 1/2, down 15 3/4 cents; May 11 soybean meal closed at USD347.60, down USD1.90; May 11 soybean oil closed at 56.76, down 51 points. Beans succumbed to general commodity weakness. New crop fell the most on ideas that corn planting delays will lead to more soybean acres in the US this year. Soybean weekly export sales, which have fallen away sharply recently, are only expected to be in the region of 100 to 300 thousand MT tomorrow.
Corn: May 11 corn closed at USD7.26 1/2, up 7 1/2 cents; Dec 11 corn closed at USD6.65 1/4, up 3 cents. Acute planting delays, particularly in the eastern corn belt, remain the main focus. Weekly export sales estimates for tomorrow range from 350 to 650 thousand MT. A lower number may trigger further old crop fund selling. US ethanol production was down slightly on the week to 875,000 barrels per day for the week ending April 29, down from 883,000 the previous week.
Wheat: May 11 CBOT wheat closed at USD7.41, down 19 3/4 cents; May 11 KCBT wheat closed at USD8.67 3/4, down 21 1/4 cents; May 11 MGEX wheat closed at USD9.23, down 20 1/2 cents. Wheat was also under pressure from long liquidation and broad-based commodity selling. The annual Wheat Quality Tour isn't throwing up too many surprises as yield potential declining as they progress west. Estimates for tomorrow's weekly export sales report are between 300 and 600 thousand MT.
EU Grains Close
04/05/11 -- EU grains closed with May London wheat down GBP1.60/tonne to GBP204.40/tonne and with new crop Nov falling GBP3.85 to GBP168.15/tonne. May Paris wheat fell EUR1.50/tonne to EUR247.25/tonne whilst Nov was down EUR5.25/tonne to EUR208.50/tonne.
In Paris, the May/Nov spread has widened from EUR25.75/tonne to EUR38.75/tonne in just a week, whilst in London the difference is less pronounced moving from GBP32.50/tonne to GBP36.25/tonne.
In London however we saw May close at a hefty and unusual GBP5.00/tonne premium to July.
The pound hit a fresh more than 13-month low against a resurgent euro of 1.1079 today. The euro set a new 17-month high against the US dollar. Both the ECB and the BOE are due to announce decisions on interest rates tomorrow.
Some rain relief may be on the cards for the UK this weekend, although France and Germany are likely to be less fortunate. Spain and Portugal remain unusually wet.
In the southern hemisphere wheat planting is just about ready to get underway. Australia is expecting another bumper crop in the east under excellent soil moisture profiles, although Western Australia remains dry. Argentina meanwhile looks set for a near record 18 MMT crop of it's own in 2011/12.
Russian spring grain plantings are behind schedule with only 2.65 million hectares seeded as of April 28th, less than 10% of the targeted area.
EU Rapemeal Prices
04/05/11 -- Here's the latest guide prices for EU rapemeal, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| May11 | 175.00 | unch |
| Jun/FH Jul11 | 178.00 | -2.00 |
| Aug/Oct11 | 175.00 | -4.00 |
| Nov11/Jan12 | 178.00 | -3.00 |
| Feb/Apr12 | 182.00 | -2.00 |
| May/Jul12 | 180.00 | -4.00 |
| Aug/Oct12 | 175.00 | -3.00 |
Early Call On Chicago
04/05/11 -- The overnight grains closed mixed, mostly lower but well off session lows, with beans down 4-6c, wheat down 3-7c and corn up one to down a quarter.
Crude is around half a dollar easier and the USD is setting fresh lows against many of the major currencies. Outside markets like metals are also mostly lower.
There aren't too many changes in fundamentals. Corn planting is well behind and although the outlook for the Midwest is warmer it also comes along with further rain.
Current weather conditions are more bullish for corn and wheat than they are for later planted beans.
In addition South American soybean production estimates keep creeping up, and Chinese buying interest - such as it is - appears to be switching down there too.
Tomorrow's weekly export sales report could be more important than usual following a dismal showing from corn and beans last week, more of the same could encourage further fund liquidation regardless of market fundamentals.
There is now some fairly widespread chatter of funds picking up their bat and ball and looking elsewhere for a new cash cow. Almost regardless of what the fundamentals say that would mean lower prices too.
In the US, anti-ethanol voices are getting louder. In the EU there is also finally talk questioning the green credentials of biofuels.
US ethanol production figures out later today could be vital for funds still holding significant volumes old crop corn.
China's weekly soybean auction attracted no bids.
Tunisia is shopping for 50,000 MT of optional origin milling wheat, excluding Russian/Ukraine shit.
The market still feels toppy to me, and due another downside correction. Will it be today, tomorrow of Friday?
Early calls don't suggest that it will be today at this stage: corn mixed, beans down 4-6c and wheat 3-5c lower.
A Quick Look Around
04/05/11 -- The pound is down to a 13-month low against a resurgent euro this morning, falling below 1.11 at one point for the first time since late March 2010.
The euro meanwhile is closing in on 1.49 against the dollar, a level not seen since December 2009.
Both the ECB and the BOE are due to announce decisions on interest rates tomorrow. Neither are strongly fancied to raise rates now, but the ECB's accompanying statement may hint at an increase before too long.
Poor UK housing and construction data this morning added to sterling's weakness, pushing it down against even a very limp US dollar.
Meanwhile metals are all lower as are many other commodities, with London sugar slipping below USD600/tonne for the first time since November.
London wheat is mixed with old crop July up GBP1.25/tonne and new crop Nov down GBP2.00/tonne. The strong euro has all the Paris grains under the cosh, with rapeseed again the ginger-haired stepson down EUR5.25-7.25/tonne.
I get an uneasy feel. A bit like helping your arthritic gran undo her bra. Except without the smell of mint imperials and cat wee.
Argentina To Produce Near Record Wheat Crop In 2011/12
04/05/11 -- According to my chums at the excellent FCStone World Food Production Blog, Argentina is set to produce a possible 18 MMT wheat crop in 2011/12.
That would be an increase of around 20% on this season, and herald a return to the halcyon days of the "mid-noughties" when the country regularly featured amongst the world's top exporters of the grain.
In fact production at that level would be second only to output in 2007. "Argentine farm groups and analysts are hopeful that high wheat prices will spur a substantial increase in plantings (and output) for the ‘11/12 wheat crop," they say.
Wheat production has been slashed in recent years on a combination of eighteen months of drought and farmer dissatisfaction with government tinkerings with exports.
Planting begins this month and harvesting begins at the end of the year.
Get The Brollies Out
04/05/11 -- It's not just Metcheck forecasting rain for the weekend, the BBC appear to concur with rains arriving for the north west on Friday and pushing east by Saturday (see vid here).
Indeed the local rain that Metcheck was forecasting yesterday as being heaviest for Sunday appears now to have been brought forward to Saturday. Sunday through to Tuesday should see a fair coverage even for the South East, according to Metcheck.
CBOT Close
03/05/11 -- Soybeans: May 11 soybeans closed at USD13.59 1/4, down 31 cents; Nov 11 soybeans closed at USD13.54 1/4, down 19 1/2 cents; May 11 soybean meal closed at USD349.50, down USD7.30; May 11 soybean oil closed at 57.27, down 92 points. A broad-based commodity sell-off which saw crude oil, gold and silver all sharply lower spilled over into beans. Ideas that the late planting progress in corn amy also produce more soybean acres also added fuel to the fire. Funds sold an estimated 4,000 soybean contracts on the day. Societe Generale followed in the footsteps of Goldman Sachs in warning that the commodities bandwagon might be about to get de-railed.
Corn: May 11 corn closed at USD7.19, down 11 3/4 cents; Dec 11 corn closed at USD6.62 1/4, up 1 cent. Funds sold an estimated 15,000 contracts as the continue to reduce their length in old crop. New crop just about managed to keep it's head above water on the back of the late planting story. Are funds beginning a new exit strategy? Thursday's export sales report is taking on a particular significance, if sales come in low again it could trigger further old crop selling.
Wheat: May 11 CBOT wheat closed at USD7.60 3/4, up 1 cent; May 11 KCBT wheat closed at USD8.89, up 7 1/2 cents; May 11 MGEX wheat closed at USD9.43 1/2, down 6 1/2 cents. Wheat was all over the place with funds selling an estimated 1,000 contracts of CBOT wheat. Monday's crop progress report seemed to favour Kansas wheat, whilst slow spring wheat plantings benefited Chicago wheat. The annual Wheat Quality Tour is underway, and on day one reports filtering through appear to show better than expected yield potential.
EU Grains Close
03/05/11 -- EU grains closed mixed with May London wheat up GBP1.00/tonne to GBP206.00/tonne and with new crop Nov rising GBP2.35/tonne to GBP172.00/tonne. May Paris wheat was up EUR1.75/tonne to EUR248.75/tonne whilst Nov fell EUR0.25/tonne to EUR213.75/tonne.
In Paris the old crop/new crop gap continues to widen, whilst London played catch up after two days of closures.
Rapeseed futures fell around EUR5.00/tonne, adding to recent losses. Reports that the European Commission may be set to question the viability of the EU biofuel industry via the complex issue of "indirect land use change" (ILUC) may have been to blame.
The Commission may announce moves to curb the least sustainable land-use for biofuels as early as July, according to media reports. That could render the European biofuel industry as it exists now as "no longer viable," say Copa-Cogeca.
The rules, regulations and mandates surrounding the biofuel industry in Europe in it's present form has morphed into an enormous house of cards, could it really be that one of the foundation cards is about to be removed?
Keep it under your hat, but a significantly wetter picture could be on the horizon for the UK by the weekend. Famed, but unstable, website Metcheck was giving decent rainfall chances for Saturday night here in North Yorkshire, followed by heavy (yes HEAVY) rain Sunday continuing into Monday morning before the site crashed earlier this afternoon. I can only assume that every farmer in the UK was attempting to get on there to see it for themselves?
The site is still down now as I type this report. Another weather website I frequent is giving above normal rain prospects for the UK, France and Germany in it's 6-10 day forecast. If such rains do materialise then they will be a God-send.
Early Call On Chicago
03/05/11 -- The overnight grains closed mixed, but mostly lower with beans down around 10-12c, corn 2-4c easier on old crop and 6-8c firmer on new crop, wheat was down 2-5c.
Crude oil is almost a dollar and a half weaker on the back of the Bin Laden news and the dollar is firmer. Both are negative for grains. Metals are also lower.
Corn is up on new crop after last night's disappointing planting progress data, although the outlook for the week ahead promises some ground to be made up this week. Even so it's already a given that next Monday's numbers will also be well behind normal for this time of year.
US winter wheat crop conditions showed a further slight deterioration, whilst spring plantings are well behind.
As mentioned earlier the whole thing looks tired, despite there being plenty of bullish stories out there. Bizarrely, the size of fund length, and their willingness (or otherwise) to hang onto it, might be the most bearish factor around.
This week's export sales report will be of interest. Is demand for US corn and soybeans slipping? I think so, and it may be another disappointing set of numbers on Thursday.
China are to auction off another 300,000 MT of soybeans tomorrow, suppressing the need for imports.
Celeres have upped their Brazilian soybean crop estimate to 72.55 MMT.
Early calls for this afternoon's CBOT session: beans down 10-12c, corn down 2-4c old crop and up 4-6c on new crop, wheat down 3-5c.
EU Rapemeal Prices
03/05/11 -- Latest guide prices for EU rapemeal.
Basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| May11 | 175.00 | -7.00 |
| Jun/FH Jul11 | 180.00 | -3.00 |
| Aug/Oct11 | 179.00 | -3.00 |
| Nov11/Jan12 | 181.00 | -4.00 |
| Feb/Apr12 | 184.00 | -3.00 |
| May/Jul12 | 184.00 | -2.00 |
| Aug/Oct12 | 178.00 | -2.00 |
Osama Bin Liner
03/05/11 -- His death seems to have moved the markets a little over the past 24 hours, even though we didn't really know if he was still alive. Now we don't really know if he's dead either. I mean if Elvis might still be alive, and we saw him get buried, then OBL could easily still be out there couldn't he? At least that's what the conspiracy theorists will say.
And was it just me, or was Obama talking as if he and Hilary Clinton had stormed the compound themselves? I think they should take that xBox off him you know. And were some of the scenes of raucous celebrations chanting U-S-A, U-S-A, ever so slightly reminiscent of some of the images we've seen showing political extremists in other countries around the world that the west would be quick to dismiss as fanatics?
Just a thought.
Do You Think This Needs Another Five Minutes?
03/05/11 -- BBQ season is upon us, so I'm indebted to Ken Martin of Nursing Schools for emailing to highlight the The 12 Most Common Causes of Food Poisoning to share with you all.
Strangely, stay away from the Dil Indian Restaurant where they once served me up a lovely little raw chicken kebab starter doesn't get a mention. It was like a scene from Fawlty Towers. "Oh, did you want a cooked one?" Then there was the Chinese in Coventry where my brother went to Uni that got closed down when they found an Alsatian in the freezer.
The whole lot is topped off though by my old mate Slammer, who once picked up a dead cat whilst passing the local Indian takeaway. He calmly walked in the door and slammed it down on the counter and said "and that's the last one you're getting until you've paid for the others" and walked out, leaving a shop full of bemused customers behind him.
Early Musings And All Our Yesterdays
03/05/11 -- Hurrah, the wretched kids are back to school, with fully 3 1/2 weeks of intensive playtime to endure before the little buggers are off again. I'm sure it wasn't like that in my day. We went to school whether it was open or not, and if it was shut when we got there then we used to sit in the playground scrawling integral calculus on the walls and reciting poetry.
And nicking the odd bit of lead flashing of course. Then off to the park for a three hour game of footie, catch a few sticklebacks and arrange an impromptu stickleback BBQ with some matches that we'd "found". Nobody ever ate the sticklebacks so there was no need for a fancy Jamie Oliver style rub or a drizzle of chilli-infused olive oil. Recipe: catch a few sticklebacks, find some pieces of wire, insert wire through stickleback's mouth and out near tail (killing before hand is optional), place stickleback kebabs over roaring open fire for about three hours turning occasionally, throw them away and start again. Go home stinking of smoke but deny categorically that you'd been anywhere near a fire. Repeat.
Anyway London wheat has been having just about as many holidays as the kids lately, so it may open firmer this morning with May Paris wheat having risen by EUR6.50/tonne in the last two sessions that London has been closed. May CBOT wheat is up 16 3/4 cents over the course of the last two session, although it's given up 11 1/2 of those gains in overnight trade.
Beans are also lower overnight and corn mixed, lower on old crop and higher on new crop after the USDA reported after the close last night that corn plantings are only 13% done, compared to trade expectations of 15-19% complete.
The USDA also reported winter wheat crop conditions down a little and spring wheat planting progress well behind normal.
With European weather concerns also an issue there are therefore plenty of stories for a bull to hang his hat on this morning, yet the market looks tired.
I still personally subscribe to the notion that all the grains are too high. Without the support of fund money we'd probably be around 20% lower than where we are today, in my humble opinion.
The "need to buy acres" and "ration demand" and all the other popular rhetoric that is kicking around at the moment is frankly a load of old bollocks. If corn can't buy acres at USD8/bu then when is it going to be able to? Slash, or add, 20% (or 50%!) off or to the price of everything and we'd still be having the same argument.
The prices are where they are, because the prices are where they are. They wouldn't be there without blind support from fund money and the misguided benefits for a biofuel industry incapable of standing on it's own two feet without subsidies, tax breaks and usage mandates.
An interesting article in the Wall Street Journal over the weekend quotes the CEO of Smithfield Foods Inc, the world's largest pork processor, as saying:
"The subsidy has been out there since the 1970s....if they can't make themselves into a viable economic model in 40 years, haven't we demonstrated that this is an industry that shouldn't exist?"
We probably now all know that around 40% of the US corn crop goes into the ethanol industry, but did you know that 40% produces little more than 1% of America's annual energy needs? And that comes at a cost in excess of USD5 billion to the US taxpayer.
Meanwhile 7.5 million lots of corn futures traded on CBOT in March, equivalent to more than 950 MMT, or more than the world's entire corn crop. In one month. And that doesn't include options trades!
Something has to happen to stop this money-making merry-go-round which benefits the few and penalises the many via spiralling food price inflation. When it does happen, and I do believe it is a case of when not if, then the funds will be first out of the door.
Much as they were when it all kicked off in North Africa and the Middle east, swiftly followed by the Japanese tsunami when we saw front month CBOT wheat fall more than USD2/bu and London wheat decline by more than GBP40/tonne between mid-Feb and mid-March.
Maybe a refusal to renew the ethanol blender's tax credit, due to expire at the end of the year, would do it? That would take USD5 billion straight back off the US budget deficit in one fell swoop.
Chicago Close
02/05/11 -- Soybeans: May 11 soybeans closed at USD13.90 1/4, down 2 cents; Nov 11 beans closed at USD13.73 3/4, down 1/2 cent; May 11 soybean meal closed at USD356.80, down USD1.30; May 11 soybean oil closed at 58.19, up 6 points. Beans closed modestly lower, pressured by falling corn on ideas that planting of the latter will start to catch up this week as weather forecasts improve. Weaker crude oil on the back of news of the death of Osama Bin Laden also weighed. Weekly export inspections were below expectations at 5.525 million bushels, with nothing headed for China.
Corn: May 11 corn closed at USD7.30 3/4, down 23 1/4 cents; Dec 11 corn closed at USD6.61 1/4, down 8 1/4 cents. Corn led the entire complex lower on ideas for a pick up in corn planting progress in the coming week. Funds sold an estimated 12,000 contracts on the day. Weekly export inspections were a bit flat at 34.635 million bushels. After the close the USDA reported that corn plantings had increased from 9% to 13% done this past week, a bit below trade estimates and well underneath the 40% planted this time a year ago. No progress was made in Illinois, Ohio or Indiana at all.
Wheat: May 11 CBOT wheat closed at USD7.59 3/4, down 9 1/2 cents; May 11 KCBT wheat closed at USD8.81 1/2, down 11 1/2 cents; May 11 MGEX wheat closed at USD9.4550, up 4 3/4 cents. Weakness in corn spilled over into wheat. Weekly export inspections of 36.394 million bushels keep export pace well ahead of last year. After the close the USDA reported only 10% of spring wheat planted as opposed to 43% this time last year. Winter wheat rated good/excellent fell one point to 34%, whilst poor/very poor rose from 40% to 41%. Kansas, Oklahoma and Texas all saw declines.
EU Grains Close
02/05/11 -- May Paris wheat was up EUR2.50/tonne to EUR247.00/tonne whilst new crop Nov was EUR41.75/tonne lower at EUR214.00/tonne.
London wheat was closed whilst Paris and Chicago were open for the second session in a row. That leaves London with some catching up to do in the morning.
It's been another largely dry and warm weekend for much of Europe. Crop development is running 3-4 weeks ahead of normal, whilst the lack of rainfall means that nitrogen uptake has been limited.
In the UK, April rainfall was only around 35% of normal at less than 20mm, according to ADAS. Anyone who manged to get 20mm may be patting themselves on the back, as only 3.8mm was recorded just down the road from me last month, and 3.2mm of that fell in the first week of the month.
Whilst the rest of this week looks set to remain largely dry, one weather service is citing above normal precipitation in it's 6-10 day forecast for the UK, France and Germany. Let's hope that they are right.
News of the probably death of Osama Bin Laden, and a similar fate for one of Gaddafi's sons over the weekend shook the oil market, which was over USD2/barrel lower at one stage.
In the US, corn planting is well behind schedule. The USDA will report on exactly how far behind after the close of Chicago tonight, although planting prospects have improved somewhat latterly.
"Conditions this week will warm up nicely in the Great Plains, reaching the upper 60s- 70s F on several days in Nebraska and western Iowa. It is a good omen for spring wheat field work and corn planting. Temperatures would continue below-normal in the Eastern Midwest and Great Lakes, however, with a chance for scattered showers," say Martell Crop Projections.
What Would You Say If...
01/05/11 -- I was to tell you that whilst we are busy turning grain and oilseeds into biofuels, we're also paying windfarms to switch OFF their turbines at peak production times (ie when it's windy), because they sometimes produce so much electricity then that we can't store it all? It's a "leaves on the line" and/or "wrong type of snow story" this one: You're having a laugh
