Chicago Grains Extend Slump
25/11/11 -- Soybeans: Jan 12 Soybeans closed at USD11.06 1/2, down 16 cents; Mar 12 Soybeans closed at USD11.15 3/4, down 15 3/4 cents; Dec 11 Soybean Meal closed at USD282.70, up USD0.20; Dec 11 Soybean Oil closed at 48.23, down 109 points. Beans closed at or close to session lows which saw front month Jan 12 get within 5 cents of dipping below USD11.00/bushel. On the week as a whole beans declined 61 3/4 cents, meal USD15.70 and oil 265 points. Weekly export sales were better than expected 921,600 MT, but even that couldn't stem the bearish tide of money flowing out of ag commodities this week. The unfolding European debt crisis has seen the US dollar rise the best part of 5% against the euro in the past month, weighing on US commodities.
Corn: Dec 11 Corn closed at USD5.82 1/2, down 6 1/4 cents; Mar 12 Corn closed at USD5.90, down 5 1/2 cents. On the week as a whole Dec corn was down 27 3/4 cents closing at the lowest levels for a front month since before last Christmas. Corn export sales fell below expectations for the third week in a row at 312,000 MT for 2011/2012 and 38,000 MT for delivery in 2012/2013. Funds sold an estimated 5,000 contracts on the day, meaning that they've been net sellers for each of the last seven trading sessions dumping 69,000 lots during that time. Whilst EU wheat sales are lagging last season's pace, corn sales here are sharply higher with Brussels granting three times as many export licences as a year ago. Ukraine is also rampaging around the world with it's bumper corn crop for sale, and then they've got feed wheat to shift too, along with Australia.
Wheat: Dec 11 CBOT Wheat closed at USD5.74 1/2, down 4 3/4 cents; Dec 11 KCBT Wheat closed at USD6.43 1/2, down 5 1/2 cents; Dec 11 MGEX Wheat closed at USD8.27 1/4, down 8 1/2 cents. On the week overall Chicago wheat shed 23 3/4 cents, Kansas wheat 25 cents and Minneapolis wheat 90 cents. The huge spread between Minneapolis and Chicago wheat has given up 66 1/4 cents on the week. US weekly export sales for wheat were better than the expected 300 to 450 TMT at 614,500 MT. The devil is in the detail though, weekly shipments have now fallen below the level needed to meet what the USDA says America will export in 2011/12 six times in the past seven weeks. Dollar strength is a big problem, and despite Chicago wheat now residing at the lowest levels since July 2010 they haven't even come close to getting a foot in the door with the likes of Egypt during the entire current marketing year.
EU Wheat Closing Comments - Friday
25/11/11 -- EU grains finished mostly higher for a change, with Jan 12 London wheat up GBP1.00/tonne to GBP142.25/tonne and Jan 12 Paris wheat rising EUR2.25tonne to EUR181.00/tonne.
On the week as a whole that saw Jan 12 London wheat trade down to GBP140.00/tonne, a lowest for a front month since July 2010, London wheat was down GBP2.25/tonne whilst Paris wheat fell EUR1.00/tonne.
The European debt crisis continues to morph into a volcano waiting to erupt, the fallout from which could land anywhere. This week we have seen Portugal and Hungary have their credit rating downgraded to "junk" status. The latest tremors came today as S&P's cut Belgium's rating and said that the outlook there was negative. Meanwhile yields on Italian two year bonds are now nudging 8 percent.
Don't panic though, Europe have got their best anti-volcanic eruption squad on the case. They've had a meeting about it this week, and have gone away to have a bit of a think and they've promised to get back to us in a fortnight. If there's anything left to rescue by then that is.
The euro is back under pressure, with the pound nudging 1.17 again there but falling to close near the low of the week of 1.5434 against a flight to safety that is the US dollar. A badly-received German bond auction this week seems to indicate a wholesale investment exodus out of Europe completely, although there were some reports of Japanese money switching out of Germany and into UK gilts.
Australia is said to have had a third of it's old crop wheat left in store from last season as of Oct 1st. Much of that may be low grade wheat due to last season's rain hampered harvest, a situation repeating itself again this year.
Whilst quality looks like being an issue there again this season quantity doesn't, with the National Australia Bank today increasing it's domestic wheat crop forecast from 25 MMT to 26.6 MMT.
Ukraine meanwhile looks like ending up with a record grain harvest of around 57.5 MMT in bunker weight with less than 10% of the nation's corn crop left to cut.
They've stepped up their export activities considerably in the last six weeks since the government lifted export duties on wheat and corn.
Almost halfway through their marketing year US wheat exports currently stand at 13 MMT, against a USDA target of 26 MMT for the entire season. Whilst that might sound good on paper, the fact is that US shipments have slackened off considerably in recent weeks, falling below the required average to hit that goal in six of the past seven weeks.
Early Call On Chicago
25/11/11 -- The overnight grains were lower with beans ending with losses of around 13-14 cents, corn down 3-5 cents and wheat falling in the region of 3-6 cents. Crude oil is almost a dollar easier and the US dollar is firmer in the usual flight to safety manner.
The eurozone debt crisis continues on it's merry way to oblivion. Italy sold off USD8 billion of six month bills with yields at 6.5%, almost double the rate it paid a month ago. Yields on 2-year bonds are now well past the supposedly unsustainable 7% mark at 7.8% and rising.
Grains have taken a spanking all week and look set to start the day with another beating when Chicago opens this afternoon.
Australia has more wheat than you can shake an excrement smeared stick at, with stocks of 9 MMT as of October 1st, more than 50% higher than a year ago meaning that it's still sitting on around a third of last season's record crop.
It's now in the middle of harvesting another 26-27 MMT crop with yields better than expected in places, and as expected in others. Quality seems to be below par and there could be some weather damage again east SA, Victoria & NSW, my buddy Corey over there tells me.
Despite remaining aggressive sellers ending stocks are still likely to be above 8 MMT at the end of the new season, the IGC said yesterday.
Ukraine's grain harvest now stands at 56 MMT with just 8% of the nation's corn left to cut. They're likely to end up with a corn crop of around 22 MMT in bunker weight, of which they'll be looking to export 10-12 MMT compared to 5 MMT last season.
That will compete head-to-head with US corn and Ozzie feed wheat into Asia.
Chicago wheat hasn't been this low since news of the Russian drought was all over the media in July 2010. Beans are "knock, knock, knocking on eleven's door" as one wag put it on Twitter this morning, we haven't been down there since October 2010. Corn is at it's lowest levels of the year.
Funds/investors are piling out of the grains so the market can only go one way as long as this exodus continues. That's all you need to know.
US weekly export sales for wheat were better than the expected 300 to 450 TMT at 614,500 MT. Sales aren't exports until they been shipped though, and shipments failed to hit the 477 TMT needed to match the USDA's export target for the sixth week in seven coming in at 362,600 MT.
Corn sales fell below expectations for the third week in a row at 312,000 MT for 2011/2012 and 38,000 MT for delivery in 2012/2013. Weekly shipments of 973,900 MT were however a marketing year high.
Soybean sales and shipments were robust at 921,600 MT and 991,700 MT respectively. China accounted for more than 80% of those exports. You have to wonder therefore just how sharply US shipments will drop off once South America starts harvesting in the New Year.
Early calls for this afternoon's CBOT session see beans down 13-15 cents, corn down 3-5 cents and wheat down 4-6 cents.
Tesco Slash Prices As Supermarket Wars Hot Up
25/11/11 -- Supermarket giant Tesco has decided to take the bull by the horns and slash it's prices to woo back defecting shoppers if this is anything to go by.
Hurry up and fill your boots whilst stocks last, they'll be flying off the shelves at this price: Christmas has come early
EU Rapemeal Prices Keep Tumbling
25/11/11 -- The rapemeal market continues to fall out of bed in line with soya with old crop prices down EUR10-11/tonne on the week. Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Nov11 | 148.00 | -2.00 |
| Dec11 | 149.00 | -1.00 |
| Jan12 | 149.00 | -1.00 |
| Feb/Apr12 | 149.00 | -1.00 |
| May/Jul12 | 148.00 | -1.00 |
| Aug/Oct12 | 139.00 | unch |
| Nov12/Jan13 | 145.00 | -1.00 |
The Early Vibe
25/11/11 -- The market has resumed the day after Thanksgiving where it left things on Wednesday night - in decline. The overnight Globex market sees wheat down 2-4 cents, corn 3-5 cents lower and beans falling 8-12 cents.
Ukraine's grain harvest now stands at 56 MMT, of which 20.4 MMT is corn off 92% of the planted area with yields on the latter up 35% on last year.
The National Australia Bank has upped it's domestic wheat crop forecast from 25 MMT to 26.6 MMT. That could be an all-time record depending on who's figures you use. The National Bureau of Statistics recently went out on a limb and said that the 2010 crop was 27.9 MMT, far higher than ABARES estimate of 26.3 MMT.
Hungary becomes the latest country to have it's credit rating downgraded to junk status, this cut came from ratings firm Moody's.
Yields on Italian two-year bonds are now pushing 7.5 percent this morning. In Portugal, who Fitch yesterday downgraded to junk, they're running at 16.68 percent. Either the ECB fires up the printing presses to keep buying these worthless bonds or it runs out of money, I can't see any other outcome at the moment.
On the week so far beans are down 58 1/4 cents, corn down 24 3/4 cents and CBOT wheat 21 1/4 cents lower including the overnights.
London Wheat Posts Fresh Lows
24/11/11 -- EU grains ended mixed with Jan 12 London wheat down GBP1.75/tonne to GBP141.25/tonne and Jan 12 Paris wheat falling EUR0.25/tonne to EUR178.75/tonne.
Jan 12 London wheat fell as low as GBP140.00/tonne at one stage, the contracts lowest level since October 2010 and the lowest price for a front month in almost a year and a half. New crop Nov 12 set a twelve month low of GBP136.00/tonne.
It was a relatively quiet session with the US closed for Thanksgiving. Following a meeting in Strasbourg between German Chancellor Angela Merkel, French President Nicolas Sarkozy and new Italian PM Mario Monti the French leader said that changes to treaties relating to how Europe is run will be proposed ahead of the next EU leaders summit on December 9. Merkel stressed that the suggested alterations would not affect the ECB. Yields on Italian 10 year bonds rose up back above 7% whilst Super Mario was out of the office.
Brussels issued soft wheat export licences for 352 TMT this past week, bringing this season's cumulative total to 6.1 MMT, 36% down on this time last year. The EU also extended the suspension of import duties on feed wheat and barley imports until the end of June 2012.
Meanwhile Russia has exported 13.7 MMT of grains so far this marketing year, a 50% increase on twelve months ago and meaning that they are in line to hit their suggested self-imposed limit of 23-24 MMT by the end of March.
That's another four months of aggressive marketeering still remaining from them, likewise from Ukraine, and with Kazakhstan eagerly waiting to take up any slack that may be in evidence come the spring.
The International Grains Council released their November crop estimates, pegging world grain production up 64 MMT on a year ago at 1.816 billion tonnes, which it says is due to "sizeable recoveries in output" in the aforementioned three former Soviet states.
For wheat, the second largest world crop ever combined with "ample carry-in stocks from last year" will boost availability this year taking 2011/12 ending stocks to 200 MMT - the largest in a decade, they estimate.
For corn, a new record high global crop of 853 MMT will also be met with record consumption of 861 MMT. With corn harvesting in the northern hemisphere just about complete attention is now starting to switch to the southern hemisphere where "farmers in Argentina, Brazil and South Africa are set to plant more maize than in 2010/11," they said.
Adding that "prospects remain favourable, with rains in South America and Australia mostly boosting yield expectations for wheat and helpful for plantings of maize and sorghum."
If I Could Turn Back Time
24/11/11 -- They say that you can't turn the clock back don't they? Even though that's rubbish because you can quite easily in reality can't you, you just pick it up and turn it back and it's done.
So I thought well what else is there to do on a no news day than turn the clocks back twelve months? As my mucker Jonathan Waterhouse has just pointed out things were very different back then, the polar opposite in fact.
Twelve months ago tomorrow it started to snow big time, the earliest widespread snowfall for 17 years, according to the BBC. This year we've just had the warmest October on record and November hasn't exactly been icy either.
Cows are still out in the daytime in many parts and winter feeding doesn't really seem to have got going.
As Jonathan said, this time last year we were looking at prices going up on a daily basis and wondering how high they would end up, today it's just the opposite.
Jan London wheat was GBP171.50/tonne on this day in 2010, en-route to ending the year just 50p short of the magical GBP200.00/tonne mark. Currently we're almost GBP30.00/tonne lower than were we were on 24/11/10 and if we keep on doing the opposite to last year we'll be at GBP114.00/tonne by the year end!
This week last year Jan London wheat posted the highest front month close for 2 1/2 years, and now we're recording near 18 month lows.
This time last year Europe had exported 9.6 MMT of soft wheat, up until last week that total was 5.8 MMT this time round.
A line from a market report on the blog back then: "The USDA announced the sale of two cargoes of US SWW wheat sold to Egypt, reaffirming the notion that US wheat is cheaper than anything else around at the moment." Well that's certainly changed quite a bit.
What hasn't changed a great deal is currency. The pound was 1.1850 against the euro and 1.5740 against the dollar twelve months ago. We were all fretting about the PIGS then, and they're still causing all the problems 12 months later.
Nogger's Newsround
24/11/11 -- It's a quiet day as the Septics munch their way through 45 million roast turkeys (yes, that's what they reckon: 45 million of the buggers). So obviously there's no Chicago today, but there will be an overnight Globex market in the morning and a shortened 15.30-18.00 GMT day trading session tomorrow.
What else is happening? Portugal's credit rating has been cut to junk status by Fitch as we appear to move one step closer to the end of Europe as we know it. Who will buy Portuguese bonds apart from the ECB? Nobody. And if the ECB was an employee of yours you'd sack him for gross negligence.
A break up of the eurozone which would have been considered unthinkable by many not long ago seems to be looking increasingly likely.
Incidentally, Egypt has also had a ratings cut from junk to really junk by S&P's today.
The mood in the trade is very much doom and gloom at the moment. So why not cheer yourself up by reading about the Welsh (no surprises there) student (no surprises there either) who had to call the fire brigade out to rescue her (yes, female, no surprises there once more) after she became trapped in a clothes horse.
Warning: may contain ginger content
A 18-year-old female ginger Welsh student doing something stupid, well who'd have thought it. A career in the feed trade clearly awaits Miss Morgan (she obviously isn't destined for the catwalk is she? - the cat flap more like).
EU Rapemeal Prices
24/11/11 -- Guide prices for EU rapemeal, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Nov11 | 150.00 | -3.00 |
| Dec11 | 150.00 | -3.00 |
| Jan12 | 150.00 | -3.00 |
| Feb/Apr12 | 150.00 | -3.00 |
| May/Jul12 | 149.00 | -3.00 |
| Aug/Oct12 | 139.00 | -1.00 |
| Nov12/Jan13 | 146.00 | -1.00 |
Contagion: The Big C
24/11/11 -- The European debt crisis isn't just getting worse by the day, it's now deteriorating faster than that. Germany's most badly received bond auction since the euro was born yesterday shows that even Europe's strongest economy is getting sucked in. Guilty by association.
The cost of borrowing over ten years for Germany is now higher than the rate enjoyed by the UK, according to the BBC today.
"Super" Mario Monti gets his first meeting as Italy's new PM with Germany's Angela Merkel and France's Nicolas Sarkozy later today. That should be interesting given the widening gap between the views on how to resolve the crisis held by the latter two.
As the crisis careers out of control it's starting to look like every man (or woman) for themselves. Personally, I can't see that tough-talking Merkel is going to easily be persuaded that Germany should pick up the tab for the rest of Europe's reckless misdemeanours.
In contrast, France isn't opposed to putting a bit of loose change into the cancer research collection tin, but that's only because it knows that it's probably got the big C already.
Greece and Portugal remain on life support and Ireland has been left to die in an isolation ward off to the side whilst Spain coughs it's guts up in reception.
It's a long time to Christmas isn't it?
Chicago Slumps To Fresh 2011 Lows
23/11/11 -- Soybeans: Jan 12 Soybeans closed at USD11.22 1/2, down 30 1/2 cents; Mar 12 Soybeans closed at USD11.31 1/2, down 31 1/4 cents; Dec 11 Soybean Meal closed at USD282.50, down USD9.50; Dec 11 Soybean Oil closed at 49.32, down 146 points. Soybeans traditionally end firmer the day before Thanksgiving, but the market was having none of that today, front month beans haven't closed this low since Oct 7th 2010. A slump in Chinese manufacturing data prompted ideas that nobody is immune from the fallout surrounding the ongoing European debt crisis. US markets are closed Thursday and trade a shortened session Friday. The USDA weekly export sales report is delayed until then with trade estimates for beans 500 to 750 TMT.
Corn: Dec 11 Corn closed at USD5.88 3/4, down 10 1/4 cents; Mar 12 Corn closed at USD5.95 1/2, down 10 1/4 cents. Corn took out the 2011 lows, closing at the lowest for a front month since last December. Funds sold an estimated 11,000 contracts on the day, meaning they are thought to have dumped 90,000 of their length in the past couple of weeks. The firm dollar, falling crude oil and a broad-based commodity sell-off all weighed on corn values. Trade estimates for Friday's weekly export sales report range from 400 to 600 thousand MT. Last week's sales were very poor at 208,900 MT - the lowest in more than a year.
Wheat: Dec 11 CBOT Wheat closed at USD5.79 1/4, down 14 3/4 cents; Dec 11 KCBT Wheat closed at USD6.49, down 12 cents; Dec 11 MGEX Wheat closed at USD8.35 3/4, down 24 1/2 cents. Chicago wheat also took out the 2011 low, posting the worst close for a front month since July 2010. Trade estimates for Friday's weekly export sales range from 300 to 450 thousand MT. Shipments will also be scrutinised, they need to average 477 TMT for the remainder of the season to meet USDA targets. There have been no high profile US sales made so far this week as Black Sea grain continues to dominate the market.
EU Wheat Continues To Decline
23/11/11 -- EU grains ended mostly lower again although expiring Nov 11 London wheat unchanged at GBP143.25/tonne. Tomorrow's new front month Jan 12 finished down GBP1.50/tonne to GBP143.00/tonne and Mar 12 was down GBP3.00/tonne also to GBO143.00/tonne. Jan 12 Paris wheat ended EUR2.25/tonne easier at EUR179.00/tonne.
Nov 11 London wheat went off the board a whopping GBP56.00/tonne below it's high set six months ago in May. Meanwhile Jan 12 Paris wheat was very close to ending below key support at EUR178.50/tonne.
It was another widespread risk-off session, and for some stop-loss selling and capitulation kicked in ahead of a closed American market tomorrow.
Bad news is still coming thick and fast with Chinese manufacturing activity slumping to a 32-month low in November.
Yields on EU bonds were up again, and a German bond auction was heavily under subscribed. When the market doesn't even want those we really are in trouble. Italian 10-year bond yields rose to 6.97 percent, very close to the "critical" 7 percent. Spanish bond yields were trading at a similar level.
On the fundamental news front the EU are tomorrow expected to extend the existing waiver on import duties on wheat and barley, which expires at the end of the calendar year, until the end of the marketing year on June 30th 2012.
Ethiopia bought 300,000 MT of what was probably Black Sea wheat, and Israel is said to have bought a 100,000 MT combo of Ukraine wheat, corn and barley.
EU and US grain is still finding it difficult to find homes. Although French wheat wasn't priced as far out as it has been in Egypt's weekend tender the business still went to the Black Sea.
At current rates the EU-27 is on course to export 15 MMT of soft wheat in 2011/12, 2 MMT lower than the USDA currently estimate and almost 8 MMT down on last season.
Nogger's Car And Other Stuff
23/11/11 -- The "Buy Nogger A Car" fund got off to a stuttering start yesterday, a bit like the old motor itself, although kind thanks have to go to the Hyde Hall Partnership for setting the ball rolling.
The garage strangely said that they could find nothing wrong with the old jalopy. I find myself wondering if I've turned into a doddering old grandad driver who can't make his mind up whether to stop, go, unwrap another Werthers Original, put on his flat cap or wet himself when the lights change to green.
I somehow doubt that you've heard the last of this, so keep that money flooding in.
Meanwhile the jobs looking a bit poorly isn't it? Where's me old mate "liffeswheat" then, he's gone a bit quiet of late hasn't he since his "some joker called Nogger trying to call a top in the wheat market" post on Twitter several months ago.
Calling a bottom in this wheat market will be more testing.
Front month Jan12 Paris wheat currently resides EUR2.50/tonne lower at EUR178.75/tonne. A break and close below key support at EUR178.50/tonne could trigger a tumble all the way down to the next support at EUR154.25/tonne, according to my chums at FCStone.
I still maintain that the European debt crisis is the single most important factor in determining future market direction. And that doesn't look like getting resolved just yet does it?
In addition the market seemed to have forgotten about the US debt ceiling issue until this week, and now we have signs that China are getting sucked into the mire as their export demand takes a hit from it's biggest buyer, cash-strapped Europe.
Once again we are reminded that the grain market these days is all about money flows, with fundamentals only playing a supporting role. Which ever side of the fence you are on, you have to take the rough with the smooth.
Going forward, as I've said at just about every presentation I've done this year, I can see wheat trading anywhere from GBP120/tonne to GBP250/tonne between now and 2015, and maybe even stretching that enormous differential on both the upside and downside. I wouldn't rule out GBP100-GBP300/tonne, which makes getting your timing right extremely crucial whether you are a grower or a consumer.
It makes fixing your input prices pretty interesting too.
EU Rapemeal Prices
23/11/11 -- Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Nov11 | 153.00 | -3.00 |
| Dec11 | 153.00 | -4.00 |
| Jan12 | 153.00 | -5.00 |
| Feb/Apr12 | 153.00 | -5.00 |
| May/Jul12 | 152.00 | -6.00 |
| Aug/Oct12 | 140.00 | -3.00 |
| Nov12/Jan13 | 147.00 | -2.00 |
The Morning Vibe
23/11/11 -- It's a sea of red again this morning after what can only be described as a feeble attempt to stop the rot in Chicago last night.
The overnight Globex market currently sees Chicago wheat around 6-7 cents lower, with corn down around 5 cents and beans falling 16 cents. Beans and meal are trading at fresh lows not seen since October 2010 and corn and wheat are very close to their 2011 front month lowest closes of 5.87 3/4 and 5.84 1/2 respectively.
Funds continue to desert corn in particular, having jettisoned an estimated 79,000 lots (10 million tonnes) of their length in the last two weeks. First notice day on the December contract is only a week away, which may be encouraging a few to get out of the nearby contract.
The repercussions of the eurozone debt crisis are being felt around the world, with new figures out this morning showing Chinese manufacturing activity falling to a 32-month low in November. Europe is of course their largest export home.
US debt problems are now also back in the limelight.
Looks like we can expect further declines for London wheat this morning. Let me see now, where did I put that box of 3's....
Chicago Closing Comments
22/11/11 -- Soybeans: Jan 12 Soybeans closed at USD11.53, up 5 cents; Mar 12 Soybeans closed at USD11.62 3/4, up 4 3/4 cents; Dec 11 Soybean Meal closed at USD292.00, up USD2.40; Dec 11 Soybean Oil closed at 50.78, up 89 points. The soy complex managed a very modest bounce from recent declines which have pushed prices to more than 12-month lows on beans and meal. If that's the best it can do then further declines look likely. Meal continues to under-perform on perceived strong demand for soyoil (and thus beans) from the biodiesel sector. Funds were said to have been buyers of 2,000 lots of soybeans and 3,500 soyoil on the day, but were net sellers of 1,000 meal contracts.
Corn: Dec 11 Corn closed at USD5.99, up 1 1/4 cents; Mar 12 Corn closed at USD6.05 3/4, up 3/4 cent. As with the soy complex corn only managed to muster a tiny little correction, with front month Dec not able to close above USD6/bushel. Funds were said to be continued sellers, liquidating a further 4,000 contracts on the day. Export demand is fairly slack so this week's weekly sales and shipment numbers from the USDA will be of interest. They are delayed until Friday due to tomorrow's Thanksgiving holiday. Based on shipments so far the US is on target to export 34.25 MMT of corn in 2011/12, 5.75 MMT less than the current USDA forecast.
Wheat: Dec 11 CBOT Wheat closed at USD5.94, up 2 1/2 cents; Dec 11 KCBT Wheat closed at USD6.61, down 6 cents; Dec 11 MGEX Wheat closed at USD8.60 1/4, down 36 1/4 cents. Aside from front month Dec the remainder of the Chicago contracts closed with losses of around 6 cents. Minneapolis wheat fell out of bed as traders look to unwind spread trades that have pushed it up to massive premiums over Chicago. US exports continue to lag with shipments of 477,000 MT/week required to hit the USDA's 2011/12 target of 26 MMT - a level only achieved once in the last six weeks. Black Sea competition remains fierce.
EU Wheat Manages Modest Revival
22/11/11 -- EU grains finished mostly higher for once, with Nov 11 London wheat up GBP1.95/tonne to GBP143.25/tonne and Jan 12 Paris wheat rising EUR1.25tonne to EUR181.25/tonne.
It was hardly what you would call a major reversal of the strong downtrend that we have been stuck in since the spring, but the few remaining bulls will take anything that comes their way at the moment.
Profit-taking, a minor correction, call it what you will. The bottom line is that London wheat has fallen by more than a third from it's April highs, and Paris wheat by marginally less than that, 32%, from it's spring high set in early May.
The eurozone debt crisis continues to be the main driver in the market. Yields on Spanish three-month bills more than doubled to 5.11% today, from 2.29% at a similar auction held in October. They are now paying more to finance their debt than Greece or Portugal.
London wheat fared a little better than it's Parisian counterpart as sterling sunk to a six week low versus US dollar and a three week low against the euro.
Ukraine announced a record grain harvest of 55.4 MMT to date, and also said that it will plant an additional 2.3 million hectares of spring grains due to damage to the recently sown winter crop there.
The Russian grain harvest now stands at 97.5 MMT in bunker weight, according to their Minister of Agriculture and will likely come in at 92-93 MMT in clean weight says their vice PM - an increase of more than 50% on last year.
Nov London wheat goes off the board tomorrow.
Early Call On Chicago
22/11/11 -- The Globex grains were mostly a little higher with beans and wheat posting gains of around 1-2 cents and corn flat. Hardly what you would call a major reversal after last night's steep losses, and technically not a lot of help to the bulls.
Crude is up a bit, but well off early highs and global stock markets have also turned from green to red.
The market still has a bad case of the jitters and probably can't wait to take a day off for Thanksgiving on Thursday.
US economic growth has been revised down for Q3. Spain had to cough up a yield more than double what it was just last month in a three month debt auction and is now paying higher rates than Greece or Portugal.
The hole in MF Global's customer accounts is now pegged at USD1.2 billion, says the FT. That's almost a quarter of the client funds it was supposed to keep separate from it's own.
Ukraine has harvested a record 55.4 MMT grain crop and has stepped up it's export activities considerably in the past few weeks. Russia continues to ship grain like there's no tomorrow as prices fall, concerned that the government is going to pull the plug sometime in the spring.
They can't call time on exports soon enough for Kazakhstan who have a record grain crop of their own to dispose of and would very much like to have access to North Africa and the West via Russian ports on the Black Sea.
The wheat harvest in Australia is now in full swing, and despite exporting a record volume of the grain in the marketing year 2010/11 just ended in September, they still have plenty of carryover from last season's record crop to add to another bumper production year.
US wheat prices remain uncompetitive, despite recent falls, and the question now is not really if US exports will miss the USDA target but by how much.
South American weather doesn't look too threatening yet, can we actually go a who growing season without a weather scare there? It's early days yet, in Argentina soybean plantings are around halfway through with corn about 75% done.
We're looking at CBOT soybean and meal prices at their lowest since October 2010 and corn & wheat very close to their lows of the year. Is this a buying opportunity or time to throw in the towel? I have to confess that at this stage I'm not sure and could be persuaded to join either camp relatively easily.
There's no denying though that the momentum is downwards for the time being. I think I'd rather wait for the corner to be turned than predict what's around it right now.
Early calls for this afternoon's CBOT session: beans up 1-3 cents, corn & wheat mixed, 2 cents firmer to 2 cents weaker.
EU Rapemeal Prices
22/11/11 -- Guide prices for EU rapemeal, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Nov11 | 156.00 | -3.00 |
| Dec11 | 157.00 | -2.00 |
| Jan12 | 158.00 | -1.00 |
| Feb/Apr12 | 158.00 | -1.00 |
| May/Jul12 | 158.00 | unch |
| Aug/Oct12 | 143.00 | -1.00 |
| Nov12/Jan13 | 149.00 | -1.00 |
Buy Nogger A Car
22/11/11 -- The buy Nogger a beer thing has paid a few dividends over the past couple of years, so I thought today I'd aim a little bit higher. En route to a meeting this morning the bloody car has conked out again. Having recently forked out GBP1,200 to have a new clutch and dual mass flywheel fitted the thing is now seriously starting to get my goat. It currently resides in Skipton Road Garage from whom I am expecting to hear the worst sometime this afternoon. So come on dig deep...
Meanwhile on the trade front there's resale stuff kicking around on just about everything. Got 29% suns to sell ex Liverpool, Portbury and on the Humber (GBP129 and GBP129.50 traded yesterday). I've also got soya hulls on the Humber and Liverpool; EU wheat distillers on the Humber; US maize distillers ex Liverpool and Avon; rapemeal Liverpool, Humber and Erith; Hipro soya ex Avon; Citrus in Liverpool, etc, etc.
Lookie, lookie, for you I make special price beautiful lady etc.
Chicago Beans Hit One Year Low
21/11/11 -- Soybeans: Jan 12 Soybeans closed at USD11.48, down 20 1/4 cents; Mar 12 Soybeans closed at USD11.58, down 20 1/4 cents; Dec 11 Soybean Meal closed at USD289.60, down USD8.80; Dec 11 Soybean Oil closed at 49.89, down 99 points. A weight of bad news encouraged further selling driving prices down to levels not seen since this time last year. As well as the old chestnut of EU debt concerns we now have worries over the US debt ceiling resurfacing. The fallout surrounding the MF Global bankruptcy is ongoing, with some investors finding that their funds are still tied-up. Weekly export inspections of 40.8 million bushels were disappointing although more than enough to meet the USDA's current sales target for 2011/12.
Corn: Dec 11 Corn closed at USD5.97 3/4, down 12 1/2 cents; Mar 12 Corn closed at USD6.05, down 13 cents. Dec corn closed below the physiologically important USD6/bushel level for the first time in seven weeks. Funds were said to have sold 11,000 contracts on the day meaning that they are thought to have liquidated 75,000 lots, or around 9.5 MMT, in less than a fortnight. Export inspections of 45.3 million bushels were better than expected and on a cumulative basis ahead of last year. Crude oil was lower and the dollar firmer, both bearish for corn. The USDA peg this season's corn harvest at 96% complete, 8% ahead of normal.
Wheat: Dec 11 CBOT Wheat closed at USD5.91 1/2, down 6 3/4 cents; Dec 11 KCBT Wheat closed at USD6.67, down 1 1/2 cents; Dec 11 MGEX Wheat closed at USD8.96 1/2, down 20 3/4 cents. Weekly export inspections of 11.6 million bushels were below what is needed to meet the current USDA projections for the 2011/12 marketing year. Egypt bought Black Sea wheat again over the weekend with US origin too expensive to even be put up for offer. The firm dollar continues to hamper US exports. After the close the USDA pegged winter wheat crop conditions in the US up three points to 50% good/excellent.
EU Wheat Falls Again On More Negative News
21/11/11 -- EU grains ended lower once more with Nov 11 London wheat down GBP1.30/tonne to GBP141.30/tonne and Jan 12 Paris wheat falling EUR2.00/tonne to EUR180.00/tonne.
The market fell on a bombardment of negative outside news. Reports that a bipartisan super committee have failed to reach agreement on cuts to the US budget deficit sent stock markets tumbling.
The strongest talk yet that France's AAA credit rating was ripe for a downgrade added to the risk off mentality, as did news of Hungary asking the IMF/EU for financial assistance and China's Vice Premier Wang warning that the global economic outlook remains grim.
Crude oil was lower and the afternoon Chicago market failed to offer any support, with corn falling below the important USD6.00/bushel level on the opening, where it stayed for most of the remainder of the session.
Egypt bought Black Sea wheat once again over the weekend, although it has to be said that the differentials between that and French wheat have narrowed over the past week.
The world export market remains very competitive. Ukraine has reportedly exported 1 MMT of corn in the past fortnight, as much as it shipped in the whole of the four months of July/October.
The Russian grain harvest is likely to come in at around 92-93 MMT in clean weight says First Vice Prime Minister Viktor Zubkov, an increase of more than 50% on last season.
The US announced weekly export inspections for wheat of only 11.6 million bushels today, 31% below the 16.6 million needed to meet the USDA's target for the season.
Early Call On Chicago
21/11/11 -- The overnight grains closed lower with beans around 9-10 cents weaker, corn down 6-7 cents and wheat 5-7 cents lower. Crude oil is around a dollar weaker and more than six below last week's high.
It's another risk off day with corn approaching the six dollars mark. European stocks are all down in the region of 2-2.5% with the US debt ceiling back on the agenda along with Moody's warning France on it's AAA credit rating and Hungary requesting financial assistance from the IMF/EU.
China's Vice Premier Wang is warning that the global economic outlook remains grim. It's unusual for a Chinese official to be so candid. Maybe the word "grim" was dumbed down for the public compared to what he really foresees?
US competitiveness is also under question. Egypt stuck with Black Sea wheat again over the weekend. Once more US wheat didn't get offered.
Meanwhile last week's export sales for corn were a disaster and news today that of the 3.8 MMT of soybeans China imported in October only 0.5 MMT came from the US is hardly inspiring either.
Syria is re-tendering for 100,000 MT of wheat having pulled last week's tender saying that prices were too high.
Early calls for this afternoon's CBOT session: beans down 8-10 cents, corn down 5-7 cents, wheat down 6-8 cents.
EU Rapemeal Prices
21/11/11 -- Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Nov11 | 159.00 | unch |
| Dec11 | 159.00 | unch |
| Jan12 | 159.00 | unch |
| Feb/Apr12 | 159.00 | -1.00 |
| May/Jul12 | 158.00 | unch |
| Aug/Oct12 | 144.00 | +1.00 |
| Nov12/Jan13 | 150.00 | unch |
That's Another Fine Mess You've Gotten Me Into
21/11/11 -- Egypt bought 180,000 MT of Russian wheat and 60,000 MT of Russian/Kazakh/Ukraine wheat over the weekend all at levels just under USD250/tonne FOB (the equivalent of around GBP159/tonne). French wheat was in the ballpark with offers around USD250-255/tonne and Argy wheat once again was the cheapest at USD233-239/tonne, but both lost out due to freight differentials.
The wheat is for shipment in February meaning that Egypt still hasn't actually bought any Ukraine wheat it will physically take delivery of in 2011 yet. It will be interesting to see if there are any quality problems when it does start to arrive. For now though their acceptance in these tenders is enough to keep Russia and Kazakhstan pricing keenly.
Ukraine's grain harvest is almost over at 97% done producing a crop in excess of 55 MMT, according to the Ministry there. Yields are up 30% on last year.
China's Jan/Oct soybean imports total 41.5 MMT, a 5% drop on 2010. Corn imports are running at 938 TMT, 37% down on last year and wheat imports at just over 1 MMT, 15% down on the same period in 2010.
Spain has elected a new government over the weekend with the centre-right Popular Party scoring a bit of a landslide victory. Winning was the easy part, tackling the country's debt problem will be somewhat trickier.
Across the pond America's debt problems had almost been forgotten by many as the market concentrated on Europe.
Remember the 30 seconds to midnight deal struck in the summer to raise the US debt ceiling? The "deal" was only a temporary fix between opposition Democrats and Republicans, staving off deciding specifically where the required budget cuts were actually going to come from.
It's ironic then that for all President Obama's finger pointing a strong words that Europe should get it's act together we now find ourselves in a situation where the so-called super committee set up to nail these budget cuts is "on the brink of failure" according to the BBC.
They say that with the US national debt now above USD15 trillion the committee can't agree where the USD1.2 trillion of savings required are going to come from. The deadline is Wednesday and Reuters are reporting that "negotiators plan to announce they have failed to reach a deal" later today.
The stock markets don't like the sound of that, and neither does the overnight Globex market either, and I'd expect London and Paris to follow suit and open lower this morning.
