Nogger's Blog

Chicago Close - Friday

25/05/12 -- Soybeans: Jul 12 Soybeans closed at USD13.82, up 6 cents; Nov 12 Soybeans closed at USD12.89 1/4, up 13 cents; Jul 12 Soybean Meal closed at USD409.30, down USD1.50; Jul 12 Soybean Oil closed at 50.12, up 70 points. On the week as a whole Jul 12 beans were down 23 cents and Nov 12 up 1 1/4 cents. Jul 12 meal was USD8.60 lower and Jul 12 oil down 20 pips. The commitment of traders report shows funds decreasing their net long on soybeans by around 16,000 contracts as of Tuesday night. For nearby beans today was maybe a little bit of consolidation heading into a three day weekend with US markets shut on Monday for the Memorial Day Holiday. Weekend weather developments will maybe dictate market direction when trading resumes Monday night. "Thunderstorms are expected Friday night along a warm front stretching horizontally across the grain belt from Nebraska to northern Ohio. This front will be the focus of showers Saturday and Sunday, as it lifts northward into South Dakota, Minnesota, Wisconsin and Michigan," say Martell Crop Projections.

Corn: Jul 12 Corn closed at USD5.78 1/2, unchanged; Dec 12 Corn closed at USD5.21 1/2, up 6 1/2 cents. On the week as a whole Jul 12 corn fell a hefty 57 cents and Dec 12 a more modest 15 1/2 cents. This was the lowest close for Jul 12 on the weekly chart since late 2010. Funds were said to have bought around 4,000 contracts on the day heading into the long weekend, but that would still see them as a net seller of around 30,000 on the week if daily estimates are correct. Rumours that China has been cancelling US corn purchases and switching to South America are unconfirmed. It is note though that Brazilian FOB prices are around USD20/tonne cheaper than US values at the moment. The record fast pace of US corn plantings this year has the market focusing on the weather earlier than usual. Monday's usual crop progress report from the USDA is delayed until Tuesday next week. As of last Sunday night planting was 96% complete, emergence at 76% and good/excellent crop conditions at 77%.

Wheat: Jul 12 CBOT Wheat closed at USD6.80, up 17 cents; Jul 12 KCBT Wheat closed at USD7.00, up 13 cents; Jul 12 MGEX Wheat closed at USD7.86 1/4, up 11 cents. At the end of a choppy week Chicago wheat is 15 1/4 cents lower overall, with Kansas down 5 cents and Minneapolis down 5 3/4 cents. Heat and dryness in Russia and the US Great Plains is seen supporting the market. The commitment of traders report shows funds cutting their net short position in Chicago wheat by 57,000 contracts in the week through to Tuesday night. The US wheat harvest in Kansas is underway, with mixed reports filtering through with regards to yields. Many expect yields to tail off as the harvest progresses as recent adverse weather conditions are likely to have taken a heavier toll amongst the more immature wheats around the state. Good/excellent crop conditions in the State have slumped from 60% to 43% in the past fortnight. Revised crop conditions will be out on Tuesday.

EU Grains Closing Comments

25/05/12 -- EU grains finished mostly higher with Jul 12 London wheat up GBP1.00/tonne to GBP175.00/tonne, Nov 12 London wheat was GBP1.50/onne higher at GBP159.50/tonne. Aug 12 Paris wheat was unchanged at EUR212.75/tonne, whilst Nov 12 was up EUR3.75/tonne to EUR216.50/tonne.

For Nov 12 Paris wheat this was the highest close on the weekly chart in almost 12 months.

On the week as a whole Nov 12 London wheat gained GBP1.50/tonne and Nov 12 Paris wheat EUR1.25/tonne.

Drought, particularly in Russia, Ukraine and the US is making the headlines and supporting the market.

The Euro was back under renewed pressure after Spain's fourth-largest bank, Bankia, asked the government there for a EUR19 billion bailout and said that it in fact made a EUR2.98 billion loss in 2011 rather than the EUR309 million profit it announced in February.

The weak euro should support wheat prices on the continent where the same warm and dry weather that we are currently experiencing in the UK is also prevailing in France and Germany. As with here, this should be largely beneficial to crops after a cool and wet April and early May, although it may not be too long before some are saying it's too hot and too dry here as well.

In the UK most crops are looking magnificent and appear to be growing before your eyes now that they finally have some much-needed heat units.

Corn planting in France is said to be 93% complete by FranceAgriMer, with emergence running at 76%.

Brussels only issued 84,0162 MT of soft wheat export licences this week as the marketing year end nears - the lowest volume in 14 weeks. That brings total year to date exports to a rather disappointing 11.85 MMT.

The US and much of Europe, including France and Germany, will be closed for a public holiday on Monday.

Point of interest: A year ago today drought talk was all the rage in the UK, France, Germany, Ukraine and Russia. The first winter barley was cut in the Charantes area of France on 24th May 2011, with resulting yields described at "catastrophic". Yields there finally averaged 5.7 MT/ha, around the same as here in the UK.

EU Rapemeal Prices

25/05/12 -- Rapemeal prices on the continent unchanged across the board today for the first time in months.

Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous session:

Chicago Corn Slumps To 17-Month Low

24/05/12 -- Jul 12 Soybeans closed at USD13.76, up 13 1/2 cents; Nov 12 Soybeans closed at USD12.76 1/4, up 18 1/2 cents; Jul 12 Soybean Meal closed at USD410.80, up USD5.00; Jul 12 Soybean Oil closed at 49.42, up 51 points. Export sales of 953,700 MT for soybeans were marginally below expectations of 1.0-1.25 MMT, but heavily weighted in favour of old crop once again at 800,100 MT - keeping nearby supplies very tight. China bought more than half of the old crop (436,800 MT) and most of the new crop (118,000 MT). Even so, new crop sales are also at an all time high for this time of year showing that demand is very robust. The Argentine crop was cut by 1.1 MMT to 39.9 MMT by the Buenos Aires Grain Exchange today, 2.6 MMT lower than the USDA's current estimate and 9.1 MMT, or 19%, down on last year. Funds bought an estimated 6,000 soybean contracts on the day.

Corn: Jul 12 Corn closed at USD5.78 1/2, down 25 cents; Dec 12 Corn closed at USD5.15, down 8 cents. This was the lowest close for a front month since late 2010. Funds selling, estimated at around 17,000 contracts on the day, put corn under pressure throughout the session. Weekly export sales were disappointing at 482,000 MT, less than half of what was anticipated (1.0-1.3 MMT) although China was a featured buyer of both it was largely on the back of switched sales from unknown. The International Grains Council raised their 2012/13 global corn production estimate by 13 MMT from last month to 913 MMT, a 5.4% increase on last year and an all time record high. Corn ending stocks are also raised by 6 MMT to 141 MMT. That added to the bearish tone even though both totals are well below the USDA's initial estimates for the coming season. The bulls have been trying to get a weather market going in the US this past week or so citing heat and dryness in some Midwest states, latest forecasts have taken on a cooler, wetter look in the 6-10 day timeframe.

Wheat: Jul 12 CBOT Wheat closed at USD6.63, down 2 1/2 cents; Jul 12 KCBT Wheat closed at USD6.87, up 1/2 cent; Jul 12 MGEX Wheat closed at USD7.75 1/4, unchanged. Weekly export sales for wheat were a combined 827,000 MT of almost all new crop, well above expectations for sales of 350-550,000 MT. Accumulated sales for the new crop marketing year are now in excess of 3.3 MT. The IGC have cut their estimate for world 2012/13 wheat production by 5 MMT to 671 MMT, and lowered their projected ending stocks for next season by a hefty 15 MMT to 191 MMT. The Kansas wheat tour earlier this month concluded with an estimated record 49.1 bu/acre yield State-wide. Early yields on what has been cut so far are ranging 43 to 57 bu/acre. It would seem likely that these earlier maturing crops will have been less badly effected by the recent high temperatures and lack of moisture that has seen good/excellent crop conditions in the State slump from 60% to 43% in a fortnight. Yields may drop as harvesting progresses. Funds were said to have been around even on the day as neither a featured buyer nor a seller.

EU Wheat Closing Comments

24/05/12 -- EU grains finished mostly higher with Jul 12 London wheat ending up GBP0.25/tonne to GBP174.00/tonne, and new crop Nov 12 up GBP1.85/tonne to close at GBP158.00/tonne. Aug 12 Paris wheat was unchanged at EUR212.75/tonne, whilst Nov 12 was EUR0.75/tonne firmer at EUR212.75/tonne.

Reports of heavy overnight rain in southern and eastern Ukraine should help wheat crops there. The south of Russia is apparently seeing more scattered showers, and although crop production estimates here are being trimmed most local analysts agree that this is not a repeat of 2010 - at least not yet.

The Russian Grain Union says that the 2012/13 grain harvest will “at least" match last year’s 94 MMT, with wheat production at "at least" 56 MMT. SovEcon have trimmed their estimate slightly to 87m-91 MMT from 87m-93 MMT.

The International Grains Council have cut their 2012/13 world wheat production estimate by 5 MMT from last month to 671 MMT, 3.5% down on last year. World ending stocks are seen falling 15 MMT, or 7.3% from last month to 191 MMT - although this is still more than three month's usage.

World corn production on the other hand is seen rising to an all time record 913 MT, 13 MMT up on last month's estimate and 47 MMT more than global output last year.

"Early seeding has reinforced expectations for a huge US harvest. Assuming a significant rise in harvested area, and with yields forecast to match the 10-year trend, US production is projected at 355 MMT, up by 13% year-on-year," they said.

Meanwhile corn production in Ukraine this year is pegged at around 23.0-25.5 MMT by an assortment of local groups, around half of the country's total cereal harvest - a much larger share than we have seen from them before and one that could propel them to be the world's second largest exporter after the US in the coming season.

It would seem that wheat's misfortune is going to be corn's gain in 2012.

In other news, the UK is technically in a double dip recession, according to the latest figures from the Office for National Statistics.

EU Rapemeal Prices

24/05/12 -- Rapemeal prices on the continent are mostly a little lower today.

Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:

Lunchtime News

24/05/12 -- The overnight grains are higher with beans up around 18-20 cents, wheat up 7-9 cents and corn 2-4 cents firmer. Crude oil is around a dollar higher.

The USDA's weekly export sales report came in at a combined 953,700 MT for soybeans, a bit below the expected sales of 1.0-1.25 MMT. Once again though it is noticeable that the vast majority of these sales were for old crop (800,100 MT) keeping nearby supplies very tight. China bought more than half of the old crop (436,800 MT) and most of the new crop (118,000 MT).

Corn sales at 482,000 MT were less than half of what was anticipated (1.0-1.3 MMT) although China was a featured buyer of both - largely on switched from sales to unknown. Wheat sales were a combined 827,000 MT of almost all new crop, above expectations for sales of 350-550,000 MT.

The IGC have cut their estimate for world 2012/13 wheat production by 5 MMT to 671 MMT, and lowered their projected ending stocks for next season by a hefty 15 MMT to 191 MMT. Even so that's still a plentiful number being the equivalent of more than three months worth of consumption.

The cut in wheat production was due as "adverse conditions lowered harvest expectations in the EU, Russia and Morocco," they said. Earlier this week the FAO said of Morocco: "Prospects for the 2012 winter wheat and coarse grain crops, about to be harvested, are poor. In November, timely but significantly above average precipitation delayed planting activities into December and January. Subsequently, rainfall levels dropped rapidly to minimal amounts from December until early March. In addition, the unusually low temperatures in early and mid-February affected standing crops. Despite a resumption of rainfall in April, much of the yield potential had already been lost as the typical reproductive period of March, especially for wheat, has passed."

Conversely corn production is increased by the IGC, up 13 MMT from last month to 913 MMT, a 5.4% increase on last year and an all time record high. Corn ending stocks are also raised by 6 MMT to 141 MMT.

"Early seeding has reinforced expectations for a huge US harvest. Assuming a significant rise in harvested area, and with yields forecast to match the 10-year trend, US production is projected at 355 MMT, up by 13% year-on-year," they said.

Early wheat harvesting is underway in southern Kansas, with yields said to a a bit disappointing so far.

Ukraine Latest

24/05/12 -- Agritel report this morning that the Ukraine grain harvest is likely to total 45.0-47.50 MMT this season. Corn's share of production has increased dramatically over the past couple of years, whether by design or default, with output this year pegged at 23.0-25.5 MMT, around half of the total cereal harvest. That beats last season's record production of 22.8 MMT, according to the USDA.

Wheat production is seen at 12-14 MMT this year, versus the USDA's total of 22.1 MMT in 2011.

My agronomist chum over there, Mike Lee, tweets this morning that there's been heavy rain over much of Ukraine this morning, including the needy south and the east. He's also posted a picture up of a healthy looking field of Ukraine wheat at the flag leaf stage here.

The Morning Paper

24/05/12 -- Hurrah! The sun is shining & I've finally got my new mobile phone up & running after two days of pratting around. The dog is asleep on the carpet in a little patch of sun that is streaming in through the window, all is well with the world.

Well, apart from Greece that is. This particular millstone has been hanging around the neck of Europe since late in 2009 when the then PM, George Papandreou, was forced to announce that previous governments had lied about the size of the nation’s deficits.

European Council President Herman Van Rompuy said last night: "We want Greece to remain in the euro area while respecting its commitments." It clearly isn't going to do the latter from where I am standing, so where does that leave us on the former?

Caught between a rock and a hard place it would seem. Continue to throw more money after bad, or risk seeing the rest of Europe rapidly dragged into the mire. The consequences however of doing the former also potentially means acting likewise for Spain, Ireland, Portugal & Italy and the only way to do that is to turn the printing presses on 24/7.

Either route spells disaster for the euro.

So along we dither, as we have done for the last 2 1/2 years now. Something has to give, and Greece might finally force the issue soon after the June 17 elections now only a little more than three weeks away.

The repercussions of a Greek exit would have a major knock-on effect around the globe, not least in China who relies heavily on Europe as a consumer home for it's exports. So, amidst concerns about Chinese demand for soybeans and corn, with growth there already faltering, combined with a likely strong increase in value of the dollar (and question marks over grain & oilseed demand from Europe) and throw in the combined might of a mass exodus of fund money and the results of a Greek divorce look pretty clear for the grain market.

So what happens if Greece doesn't get expelled from school (or run away to join the circus) despite breaking all the rules? To stay they will undoubtedly want/need a further restructuring of their debt and/or more handouts and write downs. They will also have set a dangerous precedent for similar concessions to be shown to the next country up to the bowl saying "please Sir, can I have some more?"

That also would appear to signal further and significant euro depreciation, possibly less violently so than in scenario #1, but probably over a more protracted period. The ensuing prolonged European recession also looks bad for consumer demand in the EU and thus Chinese growth.

It's looking like a lose, lose situation. The question is will it be a sudden shorter-term lose, or a slower longer-term one? We might know the answer a month from now.

Chicago Closing Comments

23/05/12 -- Soybeans: Jul 12 Soybeans closed at USD13.62 1/2, down 19 3/4 cents; Nov 12 Soybeans closed at USD12.57 3/4, down 24 1/2 cents; Jul 12 Soybean Meal closed at USD405.80, up USD0.80; Jul 12 Soybean Oil closed at 48.91, down 155 points. Reports of China cancelling soybean purchases amidst a slowdown in growth there was bearish, along with news that the government there will auction off 600,000 MT of state-owned soybeans tomorrow (although the age & condition of these beans may be questionable). So too was a cooler and wetter outlook in the 6-10 day forecast. Outside markets offered little support with NYMEX crude falling below USD90/barrel for the first time in almost 7 months. Funds sold an estimated 9,000 soybean contracts on the day. Trade estimates for tomorrow's weekly export sales are in the 1.0-1.25 MMT area.

Corn: Jul 12 Corn closed at USD6.03 1/2, up 6 1/2 cents; Dec 12 Corn closed at USD5.23, up 1 cent. There are rumours circulating of Chinese corn purchases too, although some reports suggest that these are merely deferrals. Funds were sadi to have been net buyers of around 9,000 corn contracts on the day on switches between corn buying and wheat selling following last week's sharp rally in wheat. Asian buyers who had previously switched into cheaper feed what are now said to be reversing back into corn. Tightness in physical availability supported old crop values relative to new crop. Trade estimates for tomorrow's weekly export sales are in the 1.0-1.3 MMT area.

Wheat: Jul 12 CBOT Wheat closed at USD6.65 1/2, down 20 cents; Jul 12 KCBT Wheat closed at USD6.86 1/2, down 15 cents; Jul 12 MGEX Wheat closed at USD7.75 1/4, down 5 1/4 cents. Rain is in the forecast for the Great Plains and southern Russia, both of which are badly needed with many market observers saying that the next two weeks is critical for the latter. Funds were net sellers of 6,000 Chicago wheat contracts on the day on unwinding of spreads with corn. Asian buyers are seen switching out of wheat and into corn at current price differentials. Spain cereal crop may see losses up to 26% due to drought this year, say Copa Cogenca. Meanwhile Morocco's may slump by more than half to 3.8 MMT, according to the FAO.

EU Wheat Slips On Outside Influences

23/05/12 -- EU grains finished mostly lower on the day with May 12 London wheat thankfully going off the board unchanged and untraded at GBP175.75/tonne, and with new crop Nov 12 down GBP2.65/tonne higher to GBP156.15/tone. Nov 12 Paris wheat was down EUR2.50/tonne to EUR212.00/tonne.

Outside influences weighed on the market with European leaders meeting to discuss the Greek situation and how to stimulate growth. NYMEX crude fell below USD90/barrel to it's lowest levels in almost seven months, whilst the FTSE100, Dax & Cac 40 all posted declines of around 2.5% as confidence in a credible solution to the crisis waned. The euro fell to its lowest level against the US dollar since August 2010 today.

US wheat and soybeans also fell sharply, although corn did a reasonable job of bucking the trend.

Rain of varying degrees of intensity and confidence are in the forecasts for some of the driest parts of the wheat world in the week ahead.

Following last week's steep price rally for US wheat there is talk of Asian buyers, who had been booking cheap Australian and other origin wheat switching back into corn now that it is the cheaper grain for the first time in some while. East Asian countries import more than 30 MMT of wheat and 37 MMT of corn every year, around 50% of which is used for animal feed.

A report out from the HGCA today says that no significant wheat usage is forecast for either Ensus or Vivergo this season "as one is currently out of production and the new plant at Hull is not expected to be online until the summer."

UK wheat closing stocks for the current 2011/12 season are forecast to at 1.53 MMT, similar to 2010/11 whilst remaining at historically low levels. Wheat exports are estimated at 2.45 MMT, 8% lower than 2010/11, they add.

Domestic cereal crops out in the field are generally looking in very good shape, far better than this time last year, auguring well for decent yields come harvest time.

Paris Nov 12 wheat hit 11-month highs on Monday, prompting some new crop selling amongst French farmers. Reports suggest that good volumes of old crop wheat are coming out of the woodwork in Poland. Heavy rains there last week have been replaced by warm temperatures and plenty of sunshine this week - excellent growing conditions.

Lunchtime News

23/05/12 -- The market is back under pressure again today with the electronic grains seeing wheat down around 16-18 cents, with beans 20-24 cents lower and corn attempting to buck the trend but 1-4 cents lower. Crude is 70 cents weaker.

Dow Jones reporting that China has indeed been cancelling soybean purchases following the recent price falls seems to be generating some further exiting of weighty longs. Yesterday's rumours were more concerned with corn cancellations, so it will be interesting to see if we get some of those in the next 24 hours too.

There are rains in the forecast for the US Plains, although there are also some reports that they will be too late to be of much use to some winter wheat in the region. There's rain too for Ukraine, southern Russia and eastern Australia, all of which will be welcome. Cooler temperatures are also on the cards for Ukraine and the European side of Russia with dryness there moving east into Kazakhstan, the Urals and Siberia.

European grains are lower too, with some needed warmth likely to do wonders for UK crops which have been wet and cool for the past six weeks now. It looks like a mixture of sunshine and showers for France through into the weekend.

European concerns see the single currency down to its lowest level against the dollar in 21 months on talk that both Greece and the remainder of Europe are both working on a Greek exit strategy. That's only prudent, but there's a feeling around that they may be more likely than not to have to implement such procedures before too long.

Looking some way down the line various analysts are all predicting monster soybean crops out of South America in 2012/13. Agroconsult say that next season's Brazilian soybean crop could top 80 MMT, with Celeres not far away at 79.2 MMT. Both estimates are higher than the USDA's recent 78 MMT, and well above production this year of around 65-66 MMT.

Enthused by recent prices, Brazilian farmers already have 84% of this season's crop sold and 26% of next year, according to Celeres. This time last year they had no forward sales of the 2011/12 crop at all.

Argentina's 2012/13 soybean crop could be anywhere between 55-60 MMT if the weather plays ball, according to a variety of different early forecasts.

EU Rapemeal Prices

23/05/12 -- Rapemeal prices on the continent are lower following last night's weakness in Chicago soymeal.

Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous session:

The Morning Vibe

23/05/12 -- For once it really does look like this out there today. MrsN#3 may or may not have picked a good day to go to the Chelsea Flower Show depending on which way you look at it. Still that leaves me all day to lie here in a deckchair supping beer and doing the occasional blog. If only. Getting my goat today is Orange wanting to charge me £25 for a new SIM for my new phone (the old one is too big, I now need a Micro SIM) as I didn't buy the phone from them. The cheeky buggers! Do one Orange. Amusingly moments after I was told this they sent me a text to enquire how, on a scale of 0-10 I would rate their customer service and how likely I was to recommend them to a friend, and did I have any other comments on how their service could have been improved upon.

Anyway back to the markets. Looks like we've had a pretty hefty shake-up these past few sessions as Greek jitters turn into Greek electroshock therapy.

If and when they do opt out it will be swift and sudden, with Bloomberg reporting yesterday that they "may have only a 46-hour window of opportunity" to make such a move, after New York closes on a Friday and before markets open again on a Monday morning in Wellington, New Zealand.

The 38 year old leader of Greece's left-wing Syriza bloc, Alexis Tsipras, who has only been an MP for three years looks like a smarmy second hand car salesman who could only be trusted as far as you could throw him. Yet his party, which finished second in the recent elections, is now considered to be the favourite to win next month's re-run. Lord knows what will happen if they do.

Meanwhile, Dow Jones are reporting this morning that Chinese crushers have cancelled soybean purchases scheduled for delivery in the next few months after recent price falls wiped out their crush margins.

The sell-off continues in the overnight markets, at least for wheat and soy products. Beans are at their lowest since late March, with soyoil below 50c for the first time this year.

Nov 12 London wheat is currently GBP2.80/tonne lower, with Nov 12 Paris wheat down EUR4.75/tonne.

The FTSE100, Dax and CAC 40 are all around 1.75% lower.

Decent rain is in the forecast for eastern Australia, although WA remains dry. Southern Ukraine and Russia are also finally getting some welcome moisture. Kansas may also get some rain in the coming week.

Chicago Dives As Fund Money Exits

22/05/12 -- Soybeans: Jul 12 Soybeans closed at USD13.82 1/4, down 30 1/4 cents; Nov 12 Soybeans closed at USD12.82 1/4, down 24 cents; Jul 12 Soybean Meal closed at USD405.00, down USD11.50; Jul 12 Soybean Oil closed at 50.46, down 46 points. Outside markets helped to drag the soy complex lower with the US dollar firming on the usual "flight to safety" and Greek woes never far away funds sold an estimated 9,000 soybean contracts on the day. Reports of China cancelling/defaulting on coal and iron ore purchases that are now either too expensive compared to the spot market and/or no longer wanted due to a slowdown in growth were unsettling and may have contributed to some of today's selling. With soybean prices now well over a dollar off the highs there may also have been an element of stop loss selling. The fundamentals though haven't changed greatly, with Celeres dropping their Brazilian soybean production estimate to 64.95 MMT. The new 6 to 10 day US weather forecast has a wetter look which will help newly planted beans.

Corn: Jul 12 Corn closed at USD5.97, down 36 cents; Dec 12 Corn closed at USD5.22, down 18 1/2 cents. Funds were said to have dumped an estimated 25,000 corn contracts, once again proving (for old crop) no matter how tight the supply line is when there's a mass exit for the door the only way is down. Rumours of Chinese corn cancellations were circulating the floor today along with suggestions that they mave have switched allegiance to Brazil for their corn supplies. On the back of last week's "solar panel trade war" scaremongering that may also have unsettled a few. Reports that the Greeks had announced the existence of a Euro exit strategy will also have unnerved long holders. Revised weather models showing a cooler and wetter outlook, typical of a switch into an El Nino weather pattern, was also seen as bearish given the almost the entire crop is already in the ground nice and early. Monday’s crop progress report showing the corn crop being rated at 77% good/excellent is apparently the 2nd highest ever for this time of year.

Wheat: Jul 12 CBOT Wheat closed at USD6.85 1/2, down 18 1/2 cents; Jul 12 KCBT Wheat closed at USD7.01 1/2, down 13 1/2 cents; Jul 12 MGEX Wheat closed at USD7.80 1/2, down 16 1/4 cents. Wheat gor dragged into the mire by corn and beans with funds said to have been net sellers of around 6,000 Chicago contracts on the day. The USDA show spring wheat planting is just about done versus 78% normally, with good/excellent crop conditions pegged at a healthy 74%. Winter wheat crop conditions fell from 60% to 58% good/excellent, although that is well ahead of the 32% seen at this time last year. Profit-taking may have been a feature given the magnitude of last week's sharp rally. Forecasts for "normal" rains in Kansas in the coming 6-10 days may help some of the later maturing wheat there. The south of Russia could also be in for up to 2 inch rains in the next few days with temperatures also turning cooler, both of which will be very welcome.

EU Wheat Declines On Russian Rains

22/05/12 -- EU grains finished mostly lower although technical and very thin May 12 London wheat, which expires tomorrow, closed up GBP0.25/tonne at GBP175.75/tonne. Nov 12 London wheat fell GBP1.65/onne to GBP158.80/tonne. Aug 12 Paris wheat was unchanged at EUR212.75/tonne, whilst Nov 12 was down EUR2.00/tonne to EUR214.50/tonne.

It was a bit of a "turnaround Tuesday" with Chicago grains falling quite sharply, dragging Europe lower in sympathy.

Much needed rain in eastern Ukraine and Russia may arrive just in time to save ailing wheat crops there.

"Very dry conditions began around a month ago in southern Russia, where 28% of the national wheat harvest is produced. The stressful dry spring conditions developed on top of winterkill losses in Krasnodar. This is one of the 4 key wheat growing areas in the Southern District, where no rain has occurred for over a month. Very extreme heat made drought stress worse, temperatures 10-20 F above normal. Maximum temperatures in the upper 80s F and low 90s F have frequently developed, highly unusual at 45-48 N latitude," say Martell Crop Projections.

"The strong ridge of high pressure responsible for weather stress is expected to move east into Kazakhstan, Siberia and Urals in the coming days. Near normal temperatures would resume in Russia and Ukraine, along with a chance for heavy, soaking rain. Southern Russia is expecting very heavy rain in Krasnodar, Stavropol and Rostov - perhaps up to 2 inches.

"Yet drought and heat stress would develop in Russia's eastern grain belt. Siberia and Urals would be subject to stressful growing conditions, though it appears the heat would be less intense. The ridge of high pressure would weaken somewhat. The eastern Russia grain belt is less important to bottom line grain production, Siberia and Urals contributing just 30% to the national grain harvest, compared with 70% from European Russia," they say.

Meanwhile Ukraine has received generous rainfall in scattered showers over the past 10 days. Some areas like Kryvyi Rih, a key wheat area in eastern Ukraine, have caught up to normal with the recent rains entirely wiping out spring drought, they add.

EU Rapemeal Prices

22/05/12 -- Rapemeal prices on the continent show little change for once today, with last night's CBOT soymeal gains being erased by losses in the overnight electronic market.

Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:

Chicago Closing Comments

21/05/12 -- Jul 12 Soybeans closed at USD14.12 1/2, up 7 1/2 cents, Nov 12 Soybeans closed at USD13.06 1/4, up 18 1/4 cents; Jul 12 Soybean Meal closed at USD416.50, down USD1.40; Jul 12 Soybean Oil closed at 50.92, up 60 points. It's early days yet, but the trade is already attempting to get a weather market going for newly planted soybeans. The outlook for this week is warm and dry. That should enable US farmers to more or less wrap up planting at what would be a very early date, but instead the newswires are full of the need to add "risk premium". The USDA report that 76% of the 2012 crop is now in the ground versus 46% a week ago and 42% normally at this time. The crop is well forward at 35% emerged compared to the five year average of 13%. Weekly export inspections were uninspiring at 12.68 million bushels versus 20.54 million last week.

Corn: Jul 12 Corn closed at USD6.33, down 2 1/2 cents; Dec 12 Corn closed at USD5.40 1/2, up 3 1/2 cents. Export inspections released were a modest 23.26 million bushels versus 27.63 million last week and 36.07 million last year. They need to be 35.2 million to stay on track with USDA projections for the current 2011/12 season. Midwest warmth and dryness is perceived as an early threat to new crop corn. The USDA said that corn planting had advanced to 96% complete versus 87% last week and 81% normally. Emergence is 76% against 48% on average at this time. In addition the USDA gave us the first crop condition ratings of the year, pegging 77% of the crop as good/excellent.

Wheat: Jul 12 CBOT Wheat closed at USD7.04, up 8 3/4 cents; Jul 12 KCBT Wheat closed at USD7.15, up 10 cents; Jul 12 MGEX Wheat closed at USD7.96 3/4, up 4 3/4 cents. Funds were said to have been featured buyers of around 8,000 Chicago contracts on the day. Export inspections were 24.89 million bushels versus 28 million last week and 31.2 million a year ago. The USDA announced the sale of 100,000 MT of new crop HRW wheat to Iraq. Winter wheat crop conditions fell two percentage points to 58% good/excellent, in line with expectations. Of concern though was the Kansas crop declining sharply for the second week running to 43% good/excellent. Two weeks ago that figure was 60%. Spring wheat planting is said to be finished.

EU Wheat Mixed But Mostly Higher To Start The Week

21/05/12 -- EU grains finished mixed but mostly higher with May 12 London wheat ending up GBP0.50/tonne to GBP175.50/tonne, and new crop Nov 12 up GBP1.65/tonne to close at GBP160.45/tonne. Aug 12 Paris wheat fell EUR0.25/tonne to EUR212.75/tonne, whilst Nov 12 was EUR1.25/tonne firmer at EUR216.50/tonne.

It was a very choppy session in which London and Paris wheat both opened sharply higher, following the lead of wheat on the electronic Globex market, but then quickly capitulated mid-morning before staging a fightback in afternoon trade.

Nov 12 London wheat had a GBP4.50/tonne trading range on the day, with Paris wheat fluctuating within an EUR8.00/tonne range.

Forecasts for perhaps as much as an inch of rain for hot and dry southern Russia were responsible for tempering early gains, although there is some disagreement over how much rain will be left in storms originating in Central Europe by the time they reach Russia. Eastern Ukraine though should at least get some benefit en-route.

Even so, Ukraine's winter wheat output is now pegged at 10-12 MMT, around half of the 22.3 MMT they produced last year.

Russia's spring planting campaign is around two thirds complete, whilst Ukraine's is almost done according to their respective Ag Ministry's.

The German Statistical Office say that the country's farmers will harvest a 9.5% lower wheat area than they did a year ago, along with 8% fewer barley acres. Winter losses mean that German spring barley plantings are up almost 30% this year, with the spring wheat area jumping more than 180%, although the amount of land given over to the latter is still rather insignificant.

Rabobank are forecasting Paris wheat futures to average EUR200/tonne in Q2, EUR190/tonne in Q3 and EUR180/tonne in Q4 of 2012. Whist those prices are higher than their previous estimates they are all well below current levels.

UK weather conditions are seen improving this week, with temperatures of 25C on the cards by the middle of the week in many places, apart from down the east coast. It will certainly do the crop here plenty of good to get some sun on its back.

Similar could be said of France too, which has had its winter moisture deficit fully restored in the past six weeks.

It's been a quiet start to the week on the Greek crisis front, but trouble is never far away from that quarter it would seem. The pound is off last week's 3 1/2 year highs against the single currency, but a push back up above the 1.25 level seems likely and could come at any time.

Early Call On Chicago Now Redundant

21/05/12 -- The overnight gains are currently mixed with wheat down 2-4 cents, beans around 7-12 cents higher and corn 2-5 cents firmer. The new CME electronic trading hours begin today, with that market now open between 11pm right the way through the night, morning and afternoon all the way to 8pm on the current BST.

Do we need an early call now that trading will continue right the way up to the opening bell and beyond the close of the traditional open outcry session? Not really, so let's call this my lunchtime review.

Crude oil is a bit firmer, although not far off the lows of 2012 and the dollar around unchanged.

Wheat shot higher in early trade but has fallen back into negative territory on forecasts for showers moving east from Europe into Ukraine and Russia in the next couple of days. Conditions in western Ukraine are said to be "near perfect" with weekend rains disrupting corn planting but with a warmer and drier outlook for later in the week.

Ikar have cut their estimate for Russian grain production this year to 91 MMT from 93.5 MMT last month. Wheat output is now estimated at 54 MMT, 2 MMT below the USDA said earlier this month.

Does a 2 MMT shortfall justify a 17% rally in Chicago wheat prices last week? I think we can safely say that it doesn't, but the fund shorts got caught with their pants down and their pecker in the cookie jar whilst attempting to negotiate Pooh Creek without the aid of navigational assistance. I'll try and post a picture of that later.

Tonight's USDA crop progress report will be interesting to see if US winter wheat conditions have declined again from last week. They probably will be down 1-3%, Kansas conditions will be of most interest. early harvest reports out of Oklahoma are pretty good, with decent yields and quality.

Corn planting is expected to be around 95% complete (87% last week), with soybean sowing at 65% done (46% last week).

This wheat rally has caught everyone by surprise considering that Jul 12 was setting lifetime contract lows a little over a week ago, and that the Kansas Crop Tour was reporting record yield potential just the week before that.

Russian spring grains are around two thirds done, according to the Ministry. Ukraine spring plantings are also well advanced.

The USDA have just announced the sale of 100,000 MT of new crop HRW wheat to Iraq.

Outside markets offer little support, with a slowdown in Chinese growth and the omnipresent spectre of Greece walking away followed by a Eurozone meltdown. The latter scenario would see significant further dollar strength.

Heightened fears over the implications of a Greek exit from the euro could resurface at any moment sending the market straight back where it came from. Volatility is the future.

EU Rapemeal Prices

21/05/12 -- Rapemeal prices on the continent are mostly a little steadier today, supported by ideas of crop losses in eastern Europe and Ukraine.

Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous session:

Brain Hemorrhage

21/05/12 -- Anyone trying to contact me by mobile phone at the moment will struggle. My super dooper Samsumg Galaxy S appears to have suffered a brain hemorrhage. Five or six factory resets still can't seem to help it.

Which is a bugger, but also a nice excuse to upgrade. My love affair with Samsung is about to go the same way as MrsN#1 & #2 it's sad to say.

Thinking about it wouldn't it be a good idea if you could do a factory reset on the missus?

Factory reset: This will erase all previously stored grievances and return you model to its original unsullied cake-free condition. Saggy saddle bags will revert to their previous pert condition and all contacts such as incredibly irritating ginger sister and neurotic self-centred mother-in-law will be lost. Are you sure? Too right I'm sure.

UK Farm Sector Profits Up 25% In 2011

21/05/12 --  Just like bookies, it's pretty rare that you see a poor one. Gross value added profits in UK farming were up 25% in 2011, according to this report from the NFU.

"Britain’s self-sufficiency in food has dropped by 15 per cent in the past 20 years," warns NFU President Peter Kendall.

Not the time to be turning wheat into fuel for a quick buck then either some might say!

The Morning Vibe

21/05/12 -- The overnight grains are sharply higher to start the week I see, seemingly brushing away all those solar panel war fears!

Fresh news is somewhat thin on the ground. Russian/Ukraine drought concerns say the morning wires, yet my agronomist chum Mike Lee in Ukraine tweets that "Looks set to be a warm and dry week in Ukraine after a cool and wet weekend. The wet weather meant corn planting stopped over much of Ukraine from Wed thru Sun night."

Russia's spring grain planting is two thirds done at just over 20 million hectares, according to the Ag Ministry there.

China's April soybean imports were 4.88 MMT, up 26% on April 2011, according to customs data.

The USDA will report on planting progress tonight. Last week we had soybeans at 46% complete, corn at 87% and spring wheat at 94% done. Maybe of more interest will be winter wheat crop conditions which fell three points to 60% good/excellent last week on a national level, and from 60% to 52% in Kansas.

Including the overnight (or is it now the all day?) market, July CBOT wheat is up 20% since May 11. An astonishing rally in such a short period which must have cost the fund shorts dearly.

At home we look set for a shot at some warmer more settled weather this week, which certainly won't do our crops any harm at all. New crop Nov 12 London wheat currently trades GBP3.70/tonne higher in early trade at GBP162.50/tonne this morning, close to its highest since last June.