Chicago Close - Friday

01/06/12 -- Soybeans: Jul 12 Soybeans closed at USD13.44 1/4, up 4 1/4 cents; Nov 12 Soybeans closed at USD12.58, down 12 1/4 cents; Jul 12 Soybean Meal closed at USD394.50, unchanged; Jul 12 Soybean Oil closed at 48.59, down 61 points. For the week front month Jul 12 beans were 37 3/4 cents lower and Nov 12 was down 31 1/4 cents. Meal fell USD14.80 and soyoil slumped 153 points. A very weak performance by crude oil in May continued into the first day of June with NYMEX ending the day down more than USD3.00/barrel for a loss of over 8% on the week. Fund selling on beans was fairly light under the circumstances, estimated at 3-4,000 contracts on the day. Weekly soybean export sales of 418,700 MT were below trade ideas of 450-700 TMT and less than half of last week's 954 TMT. The early winter wheat harvest, and rains this week in some of those areas, may encourage increased double cropping with beans boosting this year's acreage above current USDA projections by around a million acres according to some pundits.

Corn: Jul 12 Corn closed at USD5.51 1/2, down 3 3/4 cents; Dec 12 Corn closed at USD5.10, down 12 cents. On the week as a whole Jul 12 was down 27 cents and Dec 12 down 11 1/2 cents. Funds were said to have been net sellers of around 3-5,000 corn contracts on the day. As with beans, an alarming slump in crude oil values, coupled with dismal US jobs data and falling equities piled pressure on corn. Jul 12 hasn't closed this low since November 2010. US crude oil stocks are at 22 year highs, gasoline consumption is falling leading to lower ethanol incorporation. Weekly export sales were just 282,700 MT - well below the expected 450-650 TMT. Concerns over hot and dry weather next week were eased somewhat when the latest weather forecasts adopted a less threatening look. "The jet stream forecast shows a ridge of high pressure over the Great Plains weakening Monday through Wednesday, not strengthening as indicated on yesterday's forecast. Temperatures would be much cooler in the northern half of the United States and closer to normal," said Martell Crop Projection. Unconfirmed rumours suggest that China has bought 300,000 MT of US corn this week.

Wheat: Jul 12 CBOT Wheat closed at USD6.12 1/4, down 31 1/2 cents; Jul 12 KCBT Wheat closed at USD6.37, down 28 cents; Jul 12 MGEX Wheat closed at USD7.39 1/2, down 13 1/4 cents. For the week Chicago Jul 12 fell 67 3/4 cents, with Kansas down 63 cents and Minneapolis falling 46 3/4 cents. For Chicago wheat almost half the week's losses came today in what was a very "bad boy" performance. Funds were said to have sold around 7-10,000 Chicago contracts on the day. Weak outside markets also weighed on wheat, but perhaps more so due to the fact that harvesting of winter wheat is already underway. The market seems to expect good winter wheat harvesting progress over the weekend. We have 3-4 months to go yet before we get any harvest pressure on corn or soybeans. Cereal harvesting in Europe and the Black Sea is also drawing ever closer. Weekly export sales were 319,200 MT, below trade expectations of 350-500 TMT and well down on last week's 827 TMT. The recent dollar strength will continue to hinder US export potential. It is interesting to note that Jul 12 CBOT wheat, which rallied 16.5% in the week ended 18th May has subsequently given up most of those gains to now only stand 2.5% above the lifetime contract low.

EU Grains Close - Friday

01/06/12 -- EU grains finished generally lower with Jul 12 London wheat ending down GBP0.60/tonne to GBP171.00/tonne, and new crop Nov 12 falling GBP0.40/tonne to close at GBP154.75/tonne. Aug 12 Paris wheat was unchanged at EUR208.00/tonne, whilst Nov 12 was EUR2.75/tonne lower at EUR208.75/tonne.

The pound was under pressure on news that British manufacturing activity shrank at its fastest pace in three years last month. That helped London wheat to suffer smaller losses than across the Channel.

On the week as a whole Jul12 London wheat fell GBP4.00/tonne and Nov 12 GBP4.75/tonne. Aug 12 Paris wheat shed EUR4.75/tonne and Nov 12 EUR7.75/tonne.

There are still pockets of old crop wheat kicking around on farm in the UK, with long-holders hoping for once more shot at a big payday. It should be noted that Jul 12 feed wheat at GBP171.00/tonne is the equivalent of EUR212.00/tonne, so export interest is going to be zero at these levels.

There's also said to be more than 100,000 MT of wheat sat in futures stores in the UK. Given that new crop off the combine is running at around a GBP30.00/tonne discount to old crop, carrying the latter to the wire is a risky strategy.

As far as new crop is concerned, the life-saving April/May rains mean that the UK cereal crop has good potential, although they also bring increased disease risk, say the HGCA.

Meanwhile FranceAgriMer raised their estimate on the proportion of the soft wheat crop there rated good/excellent to 70% today, very substantially better than just 24% this time last year. Both winter barley and spring barley ratings were also increased to 65% and 83% good/excellent respectively. Corn good/excellent also improved, jumping five percentage points from 64% last week to 69% this time round.

Harvest pressure will be upon the French market by the middle of the month, the first winter barley of 2011 had already been cut before the end of May this time last year. With EU wheat exports lagging year ago levels by almost a third, carryover stocks into 2012/13 may be larger than was anticipated. FranceAgriMer recently raised their estimates on 2011/12 French ending stocks for both wheat and barley due to lower exports than expected.

The harvest should also be underway in the south of Russia and Ukraine by the end of the month too. We may have a clearer idea of what the impact has been of the recent arrival of rain will be by then. In the south of Russia wheat is said to be generally very short, much as it was here in the UK twelve months ago, although it will be remembered that we still ended up with surprisingly good yields here.

I see no reason why the normal Eastern European marketing strategy of "if it's been combined, sell it" shouldn't prevail again this year, which is likely to depress the world market in the first half of the 2012/13 campaign.

The Lunchtime News

01/06/12 -- The electronic Globex market sees wheat down 8-10 cents, beans 15-18 cents weaker and corn mostly 5-6 cents easier. It's another broad-based sell-off. World stocks are lower again, with the German DAX leading the way with losses of 3.7%. Crude oil extends its recent decline with Brent more than USD3.00/barrel lower on the day, falling below USD100/barrel for the first time in eight months. NYMEX WTI crude is also more than USD3.00/barrel weaker.

The USDA's weekly export sales were 319,200 MT for wheat, below trade expectations of 350-500 TMT, and well down on last week's 827 TMT. Corn sales came in at just 282,700 MT, again well below the expected 450-650 TMT and last week's 452 TMT (although China did take some old & new crop). Soybean sales of 418,700 MT were also below trade ideas of 450-700 TMT and less than half of last week's 954 TMT. Lacklustre across the board it has to be said.

Eurozone worries continue. The rate of contraction in Spain's manufacturing sector was even worse than Greece's in May, the BBC report.

The pound is down more than a cent against the dollar, which is firmer across the board adding more pressure to the grains.

Weak Chinese manufacturing data is adding to the negative tone.

US weather appears to have delivered less rain than was hoped for/anticipated. Ukraine and Russian rains may not have turned crop losses around either, but as ever, when the funds want out the market is only going to go one way, regardless of the fundamentals. It seems unlikely that the old adage "new month, new money" is going to apply today.

The Morning Paper

01/06/12 -- Hurrah! It's flaming June, and we kick the whole month off with a long leisurely, sun-baked weekend. God bless you Ma'am. Except it's going to rain. And there's work to be done, the sort of work that you can only do on a long weekend when the phones aren't ringing. Still, I will get to walk Chummy the Wonder Dog past some nice fields of local wheat, barley and rape and might take a few piccies and post them up at some point. I think I know what I am going to find after a week of sunshine and warmth followed by a couple of days of steady rain.

It's noticeable that there's more winter barley round here this year. A lot more. Getting parity with wheat, or even a premium at times this season has obviously captured a bit of interest. It may therefore be that the new big hungry Saltend wheat monster (think along the lines of the Honey Monster except not as cute - this one has Roman Abramovich for it's Dad, Imelda Marcos for it's Mum and Bernie Eccleston as it's ever so slightly weird "Uncle" that's often found hanging around outside Mum's bedroom) may not be getting quite as much of it's feedstock from North Yorkshire as we might have thought. Not this year at any rate.

Whilst the Middlesboro wheat monster (not so well parented, the product of drunken night out where John Terry "copped of" with Barbra Cartland) appears to be stuck in some sort of coma, crude oil is completely falling out of bed. Brent and NYMEX are starting June where they finished May, in a terminal decline with the former already down more than USD1.50/barrel this morning and the latter not far behind.

A crappy US jobs report, plus US crude stocks rising 2.2 million barrels to the highest levels in nearly 22 years yesterday saw NYMEX crude finish the month of May nearly 18% lower than it began it last night. Brent meanwhile suffered its biggest monthly loss since 2008 in May.

I wonder what the monster's respective parents are thinking right now given that their copulation probably took place before much of the extreme volatility on the commodity markets that we have witnessed in recent years took place: "Pass me that fag packet. Look, feed wheat is always GBP100/tonne, give or take...."

Chicago Corn Down 12.5 Percent In May To New 17-Month Low

31/05/12 -- Soybeans: Jul 12 Soybeans closed at USD13.40, down 33 1/4 cents; Nov 12 Soybeans were at USD12.70 1/4, down 22 3/4 cents; Jul 12 Soybean Meal ended at USD394.50, down USD15.40; Jul 12 Soybean Oil closed at 49.20, down 49 points. Jul 12 beans finished May USD1.65 1/2, or 11%, lower than they began the month, with meal down USD41.00 and oil losing 585 points. Funds sold an estimated 8,000 soybean contracts on the day, much of that was likely to be in the nearby July as they begin to roll over a hefty front month long position into the deferred months. Weak crude oil, which has also suffered a terrible month during which NYMEX has fallen almost 18% was also a contributing factor. A cooler, wetter outlook across the next few days was also seen as negative, although after the weekend things turn warmer and drier again, according to the latest forecasts. Trade estimates for tomorrow's weekly export sales report for beans are 450-700 TMT versus 953,700 MT last week.

Corn: Jul 12 Corn closed at USD5.55 1/2, down 4 1/4 cents; Dec 12 Corn ended at $5.22, up 1 1/2 cents. Funds were said to have sold 8,000 contracts on the day with Jul 12 closing at a new 17-month low for a front month. For the month of May it's down 79 cents, or 12.5%. Increased competition from South America, where FOB values have been running around USD20/tonne lower than US levels have been suppressing recent export activity. China appears to have gone cold on US imports. Trade estimates for tomorrow's weekly export sales report are 450-650 TMT versus 482,100 MT last week. US weather is seen a little less threatening across the next 2-3 days. Weekend rainfall totals will be scrutinised come Monday morning, and it would be no surprise at all to see new month, new money pushing things higher again on the weather once we get into the middle of next week.

Wheat: Jul 12 CBOT Wheat closed at USD6.43 3/4, down 10 cents; Jul 12 KCBT Wheat ended at USD6.68 3/4, down 10 1/4 cents; Jul 12 MGEX Wheat closed at USD7.52 3/4, down 11 1/4 cents. Jul 12 Chicago wheat was 10 3/4 cents lower on the month. Funds were said to have been net sellers of around 4,000 Chicago contracts on the day. Recent rains in Russia, and with more expected over the next few days combined with much cooler temperatures, has eased some production concerns there. Rain in Kansas may disrupt harvesting, but should be of benefit to slower maturing crops in the north of the state. Europe's wheat crop could easily come in better than the the USDA suggest, with the EU Commission this week forecasting a crop of 134.6 MMT, 2 MMT down on last year but 2.6 MMT above the USDA's recent forecast. Meanwhile exports in Europe are down by almost a third despite the weak euro. Trade estimates for tomorrow's weekly export sales report are 350-500 TMT versus 827,100 MT last week.

EU Grains Close - Thursday

31/05/12 -- EU grains finished mixed with Jul 12 London wheat down GBP1.50/tonne to GBP171.60/tonne, and with new crop Nov 12 unchanged at GBP155.15/tone. Nov 12 Paris wheat was up EUR0.75/tonne to EUR211.50/tonne.

For the month of May that places Jul 12 London wheat GBP6.40/tonne lower and Nov 12 down a much more modest GBP0.85/tonne. Nov Paris wheat is EUR7.75/tonne higher on the month, much of that due to acute euro weakness.

As the 2011/12 marketing year draws to a close Brussels granted 178 TMT of soft wheat export licences this week, bringing this season's campaign total to a fairly poor 12.0 MMT, 32% down on the 17.7 MMT exported at the same point last season with just four weeks left to go.

So, despite the euro falling to a near two year low against the US dollar, EU wheat isn't exactly flying off the shelves.

EU 2012/13 production prospects have improved considerably in the past couple of months, although eastern Germany, Poland, Slovakia and the Czech Republic could do with some of the recent rainfall that western Europe has been enjoying recently.

Ukraine has also benefited from recent rainfall, with the Ag Ministry there today saying that they could have a grain harvest as high as 50 MMT this year - their third-largest harvest in the past 20 years.

Record corn production could be on the cards once again, with a crop of 26-27 MMT possible. Despite a slump in wheat prospects to 12.0-12.5 MMT this year from 22.3 MMT in 2011, large carryover stocks mean that they could still export a record volume of grain in the 2012/13 season, including 14-15 MMT of corn, 5 MMT of wheat and 2.5-3.0 MMT of barley.

Export duties imposed in the first four months of the 2011/12 season mean that Ukraine's carryover grain stocks into the new season will be 11-12 MMT, far higher than the normal 3-5 MMT of ending inventories, the Ministry estimate.

Russia's production prospects have also improved with "drought-breaking" rains arriving for many areas of European Russia, according to Martell Crop Projections.

The Lunchtime News

31/05/12 -- The overnight grains are relatively flat with beans down 6-9 cents, wheat down 5-6 cents and corn 1-3 cents lower. Crude oil had been posting modest gains for most of the morning, but has now started to slip a little with NYMEX currently down 40 cents to USD87.42/barrel, the lowest for a front month in over 7 months.

There's a bit of calm around concerning Europe today, but it's surely only a matter of (a short) time before the next mini crisis within one huge bloody BIG crisis comes along.

It seems to me that we've just about managed to stumble along this past couple of years (my, has it really been that long? These crises grow up so quick these days don't they?) with in the main "only" Greece at the forefront of our worries. We've thus far managed to keep that particular fire contained. Things are now changing though, with Spain now also starting to combust.

The EU/ECB/IMF troika fire-fighters are already overworked, if Spain bursts into flames they are going to run out of water fast. And what happens then?

There's a sense that this week's rains have stabilised crops in Ukraine and southern Russia, although the problem area for the latter has simply been pushed further east into Siberia and the Urals. It should be noted though that these areas aren't ever as productive as those to the west.

Ukraine's Ag Minister is fairly bullish on grain production prospects there, despite the various weather problems that they've had. Having raised their estimate to 47.2-48.0 MMT earlier this week he's now saying that 47.0-50.0 MMT could be on the cards following decent rains this week, that could end up being their third-largest harvest in the past 20 years.

The big switch into corn production this year is probably the main reason behind this. Output could hit 26-27 MMT this year given that farmers there have sown a record 4.6 million hectares with the crop, he estimates.

At this point you might be forgiven for thinking; "he's the Ukraine Ag Minister, what else is he gonna say?" However, a crop of 26-27 MMT off 4.6 million ha equates to an average yield of 5.65-5.87 MT/ha, last year they got 6.44 MT/ha so it's not an entirely outrageous suggestion.

Scattered showers and thunderstorms of 0.25-0.75 inch seem to be the general forecast for the US Midwest today, combined with temperatures below normal through to Saturday.

UK crops look great and they aren't half bad in France by all accounts either. My German spies tell me that things look pretty good over there too except in the east. My buddy Lourens says that crops in his area of NW Germany are growing before his eyes "like magic beans" following the recent beneficial combo of warmth & rain and now a little cool down. "This week temperatures dropped 10C, to 14-17 C. And a very, very nice slow rain is passing widespread over northern Germany," he says.

Brazilian dockworkers are on strike at Brazil’s largest port of Santos.

US weekly export sales data is delayed until tomorrow due to the Memorial Day holiday on Monday.

The Weather

31/05/12 -- I received an interesting email in my inbox this morning from my American chum Gail Martell of Martell Crop Projections which caught my eye, some of which I thought I'd share with you, along with a couple of her excellent and original maps. If you want to know more about Gail's excellent online service then pop along to Martell Crop Projections to find out more.

"The weather conditions have changed in European Russia, turning sharply cooler and wetter over the past 5-7 days. A massive ridge of high pressure has moved to the east, and is now affecting Kazakhstan and eastern Russia. This has opened the door for rain showers and cooler air in European Russia crop lands the Volga, Black Earth and Southern District," says Gail.

"Rainfall was badly needed in Southern Russia, particularly, where intense spring drought developed in a 6-8 week period. Maximum temperatures frequently reached the mid and upper 80s F - 15 F above normal.

"See the attached 7-day rainfall map showing heavy, drought-breaking rains in many areas of European Russia. Krasnodar and Stavropol in southern Russia got exceptional heavy rainfall. Welcome heavy rainfall has also reached the Volga. However the Black Earth region known for its exceptional high yields, missed out on the best rain. More rain is needed to fill in the dry pockets."

"Russia's eastern grain belt in the Urals and Siberia now is experiencing unfavourable hot and dry weather. The eastern Russia grain belt in Asia produces far less wheat than European Russia, 30% in Siberia and Urals, against 70% in European Russia where more productive winter wheat is grown," she adds.

"Winter wheat and rapeseed have benefited from heavy rainfall in France and United Kingdom over the past month. Likewise, generous rains have given wheat a needed boost in Southeastern Europe, Romania and Bulgaria."

"However, stubborn drought has persisted in Germany, Europe’s largest rapeseed grower and second biggest wheat country. Crop yields in Germany may turn out very poor, as the dry conditions began more than 3 months ago. It would be hard to recapture a normal yield in rapeseed and wheat , when only 50-60% of of normal rainfall has been received in the recent 90 days. Prolonged drought also has damaged winter wheat in Poland, Slovakia and Czech Republic, as shown on the 90-day European rainfall map," she states.

The Morning Paper

31/05/12 -- Last night's corn close of USD5.59 1/2 on the Jul 12 contract was the lowest for a front month since December 2010. Funds sold an estimated 4,000 contracts on the day of what was reckoned to be mostly old crop, proof once again that whether or not the funds fancy a particular commodity at a particular time is almost certainly more important than the fundamentals of supply and demand.

Spanish 10-year borrowing pushed above 6.7% yesterday whilst stock market there fell to its lowest levels in 9 years. Greece has been put on the back burner until the June 17 elections, with the anti-austerity SYRIZA party neck on neck with the pro-austerity conservatives in the polls.

All this is encouraging a risk-off mentality, with NYMEX & Brent crude slumping around USD3.00/barrel yesterday. That gives US crude oil it's largest one month percentage drop since the dark days of late 2008, and for Brent represents its steepest in two years, according to Reuters.

The euro continues to take a pasting, and the dollar benefits from its usual safe haven status, meaning the the common currency is at a near two year low against the greenback.

It's raining steadily here this morning, as it seems to be all over northern England and Scotland, with heavier rain in the forecast for this afternoon. What we've got now is seen pushing further south into the Midlands and East Anglia later this afternoon. You don't need to be Poirot to figure that this make generally already great looking crops even better.

There's a front carrying an arc of rain stretching from southern and eastern Ukraine up across the south of Russia and towards Moscow today and tomorrow, with more rain and much cooler temperatures following behind it for the weekend. Again this can only do good.

Down Under the NSW Department of Primary Industries say that growers there will sow a whopping 668,500 ha of rapeseed this year - easily the largest area on record. This represents an increase of, wait for it, 73% on last year's harvested area and 22% more than they were forecasting last month.

This isn't a pipe dream either, most of it is already in the ground: "About 94% of the estimated 668,500 ha of canola was sown by 21 May, with the remaining area to be sown by the end of the month," they say.

"The recent rainfall over the period of 24-27 May was welcomed across the State. This much needed rainfall will consolidate crops that have been sown, and enable the bulk of the remaining crop to be sown," they add.

Wheat plantings in the state are forecast at 2.94 million ha, up 2.1% from the 2011/12 harvest. "An estimated 1.62 M ha had been planted (55% of potential plantings) prior to the rain of the 24 May. Estimates had 35% of the north sown, 60% of the potential area sown in the centre and 61% in the south. Sowing activity rose in the week following the recent rain, which will lift these percentages quickly, as growers aim to finish sowing in the coming two weeks," they conclude.

Chicago Close - Wednesday

30/05/12 -- Soybeans: Jul 12 Soybeans closed at USD13.73 1/4, down 13 1/2 cents; Nov 12 Soybeans closed at USD12.93, down 1/2 cent; Jul 12 Soybean Meal closed at USD409.90, down USD2.60; Jul 12 Soybean Oil closed at 49.69, down 48 points. Outside markets dragged beans lower, with crude oil sharply lower and Spain now competing with Greece for centre stage as the European debt crisis lurches on. NYMEX crude closed below USD88/barrel for the first time since October. Funds sold an estimated 4,000 soybean contracts on the day. Weather forecasts for the week ahead are not as wet as they were yesterday, offering showers rather than the good soaking that the newly planted crop would prefer. Temperatures are seen moderating though, although the 6-10 day forecast is turning the heat back up again and includes very little rainfall. It would seem that maybe this is due to La Nina lingering on, contrary to what the experts were telling us a month or two ago.

Corn: Jul 12 Corn closed at USD5.59 1/2, down 3 cents; Dec 12 Corn closed at USD5.20 1/2, up 3 cents. Funds were net sellers of 4,000 contracts on the day, with outside influences weighing on old crop. New crop was supported by reduced precipitation forecasts nearby and a drier outlook going forward. Good/excellent crop conditions fell five percentage points this week and the trade is thinking that another 3-5 points could be cut off again on Monday. That makes the USDA's current, and record, 166bpa yield estimate already look way too optimistic. The European crisis continues to undermine the grains complex though, and saw the euro slump to a near 2-year low against the dollar. The current "flight to safety" mode looks like maintaining the recent dollar strength, which may cap some US grains upside.

Wheat: Jul 12 CBOT Wheat closed at USD6.53 3/4, down 3 cents; Jul 12 KCBT Wheat closed at USD6.79, up 1 cent; Jul 12 MGEX Wheat closed at USD7.64, down 7 3/4 cents. Funds were said to have sold around 3,000 Chicago wheat contracts on the day, as part of a general broad-based commodity sell-off. There's rain in the forecast for eastern Kansas, which should benefit later-maturing winter wheat crops there. Spring wheat areas should also get a good chance of rain this week, further enhancing crop conditions which the USDA upped five percentage points to 79% good/excellent on Tuesday. Australian, Ukraine and Russian prospects are seem improving on rains too. The Head of the Russian Grain Union says that they will have a wheat crop comparable with last year at around 56 MMT in 2012/13, and that exports will be 22-23 MMT - 4-5 MMT more than the USDA currently project.

EU Grains Close

30/05/12 -- EU grains finished mostly lower with Jul 12 London wheat down GBP0.90/tonne to GBP173.10/tonne, and new crop Nov 12 falling GBP0.60/tonne to close at GBP155.15/tonne. Aug 12 Paris wheat was down EUR4.75/tonne to EUR2108.00/tonne, whilst Nov 12 was EUR0.75/tonne lower at EUR210.75/tonne.

Outside markets were very soft, contributing to today's weakness, with crude oil around USD3.00/barrel lower at the close of play in Europe, meaning that Brent has lost around 13% so far this month and NYMEX even more - in the region of 17% easier.

The Spanish stock market fell to its lowest levels in 9 years and borrowing costs there rose to around 6.5% on heightened banking concerns.

In a move akin to a vote of confidence from the board of directors for a Premiership football manager the Spanish PM insisted that they will definitely not need a Troika bailout - where have we heard that one before?

That's right, Ireland, Greece, Portugal....

The euro slumped to its worst against the US dollar since July 2010.

Asian millers say that they will switch from wheat to corn for animal feed for the first time in over a year. South Korea bought 346 TMT of corn today and Japan has bought 500 TMT of South American origin corn this month.

Rain in Ukraine has improved crop prospects there, whilst things are even looking up in Russia. The president of the Grain Union there said today that this year's wheat harvest will be roughly equal to last year at 56 MMT, despite drought pessimism. Wheat exports in 2012/12 meanwhile will reach 22-23 MMT, he said - well above the 18 MMT currently projected by the USDA.

Rains and cooler temperatures are in the forecast for the US Midwest today through to Friday. The USDA last night reported spring wheat crop conditions jumping five percentage points to 79% good/excellent.

After 6-10 days of warm and sunny weather, things are forecast to turn cooler and wetter across much of the UK by the second half of the long holiday weekend at the latest. Crops here are will appreciate that and are looking excellent.

Lunchtime News

30/05/12 -- The overnight grains see beans around 10 cents lower, wheat down 7-8 cents and corn narrowly mixed. EU grains are lower across the board too as Spanish banking jitters weigh.

Spanish government borrowing costs are now around 6.5% and the Madrid stock market has hit a nine-year low today. The Bank of Spain governor resigned yesterday, a month before his scheduled departure.

Meanwhile a new opinion poll out today shows that the left-wing Greek anti-austerity SYRIZA party have regained the lead over the pro-bailout conservatives.

NYMEX crude is USD1.33/barrel lower at USD89.43/barrel. Brent is down a cent short of USD2.00/barrel on denials that China is planning a large new stimulus package to reactivate growth.

The head of the Russian Grain Union says that the country will harvest around 56 MMT of wheat this year, similar to last season's production and in line with the USDA's estimate earlier this month. What isn't in line with the USDA though is his forecast for wheat exports of around 22-23 MMT, that's 4-5 MMT more than Washington currently estimate.

Awash with wheat India is said to be currently loading 100,000 MT at it's western port of Kandla bound for the Middle East and Africa circa at prices said to be around USD255.00/tonne FOB. Expect them to remain keen exporters following their third record wheat harvest in a row and limited storage capacity.

The EU Commission says that it will decide on whether to extend the temporary suspension of import duties, brought in last June, on feed wheat and barley before they expires at the end of next month.

Despite another decline in US winter wheat crop ratings in the top producing state of Kansas last night early yield reports are generally favourable. Spring wheat good/excellent ratings jumped five points to 79%.

Corn good/excellent fell five points to 72%, soybean ratings won't be out until next week. There are some fairly vocal reports out there of corn stress due to lack of rainfall and high temperatures.

EU Rapemeal Prices

30/05/12 -- Rapemeal prices on the continent are mostly a little easier today as EU crop conditions & prospects improve. 2013/14 prices are marked a little higher, but still offer substantial savings to the coming crop, with Aug/Oct 2013/14 a hefty EUR42/tonne discount to the same period in 2012/12.

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


The Morning Vibe

30/05/12 -- European woes are back to the forefront once again this morning, led by concerns over Spanish banks. The pound is down to a four month low of 1.5560 against the US dollar, the euro has slumped to its worst against the US currency since July 2010. Crude is back below USD90/barrel on demand concerns in Europe.

London and Paris wheat are lower in early trade. Crop conditions here look magnificent, and they're pretty good in France too by all accounts, although things deteriorate the further east you go. MARS said yesterday that "more rain is needed in parts of Germany, Poland, Slovakia and Hungary."

Russia's Grain Union say that the country has exported 25.1 MMT of grains so far this marketing year (to May 16), which should place it in line to finish the 2011/12 season with a record total of around 26.5-27.0 MMT.

Ukraine's Ag Ministry say that spring sowings there are now more or less complete at 8.9 million hectares.

Rain is in the forecast for Ukraine and the south of Russia today/tomorrow.

The Indian government are paying the price (literally) for setting their domestic wheat procurement level too high. Local agencies have bought almost 34 MMT of the recent harvest already on their behalf, more than they've ever bought, and they are still buying it.

That's more than the government's target of 31.9 MMT for the entire financial year of 2012/13 - and that doesn't end until next March! Given the large volume already in store from two successive years of bumper production Lord knows where they are going to store this lot.

No surprise then that they are actively looking to export to the likes of Iran.

Brazil is hoping for a bumper second crop corn harvest this year. Parana, Brazil’s largest corn state, got beneficial rain of 1.5 to 2 inches in the last 10 days, according to Martell Crop Projections.

"Soil moisture has still not been completely replenished in the wake of a severe summer drought, but winter corn nonetheless has received a welcome boost from (this) rainfall. CONAB anticipates a record Brazil corn harvest this season of 67 MMT, which would allow for 12 MMT of exports. This is a significant increase from just 5 years ago when Brazilian corn exports were negligible," they say.

"Parana grows around one-quarter of the national harvest. Plantings of winter corn are up significantly this season, with the Mato Grosso winter-corn area rising by 39%," they add.

Chicago Closing Comments - Tuesday

29/05/12 -- Soybeans: Jul 12 Soybeans closed at USD13.86 3/4, up 4 3/4 cents; Nov 12 Soybeans closed at USD12.93 1/2, up 4 1/4 cents; Jul 12 Soybean Meal ended at USD412.50, up USD3.20; Jul 12 Soybean Oil closed at 50.17, up 5 points. Funds bought an estimated 3,000 soybean contracts on the day in what seems to be the re-establishment of a long beans short corn position. The IGC estimated South America’s 2011/12 soybean crop at 114.4 MMT versus their previous estimate of 115.9 MMT. Argentina’s crop is estimated at 41.0 MMT versus thir previous estimate of 42.9 MMT. Informa Economics cut their projections for the already tight 2011/12 and 2012/13 US soybean ending stocks. After the close the USDA reported US soybean planting at 89% complete (versus 61% normally), with emergence running at 61% (versus 30% normally). Celeres report that 86% of the Brazilian 2011/12 bean crop has been sold versus 66% on average for this time of year. The Government of Heilongjiang said their 2012 soybean planted area will fall 23% this year as farmers switch to corn.

Corn: Jul 12 Corn closed at USD5.62 1/2, down 16 cents; Dec 12 Corn closed at USD5.17 1/2, down 4 cents. Funds selling, estimated at 15,000 contracts on the day, pushed corn lower despite mixed weather reports. A dry May has seen corn planting progress at a record pace but this dryness is starting to cause concern in some areas. Nevertheless, when the funds are selling the market goes down. The USDA said after the close that corn emergence is running at 92% compared to 69% normally, but they cut their good/excellent crop rating by five points to 72%. Illinois fell 13% and Indiana 14% in the top two categories versus last week. These seem to be the two main states exhibiting moisture stress. Illinois is typically the second largest US corn producing state, with Indiana ranked fifth. Recent rains in Ukraine are seen improving crop conditions there for newly planted corn. Given favourable weather the FSU country could emerge as a thorn in the side of the USD as the world's second largest corn exporter in 2012/13. Not everybody likes Ukraine corn, but they could sure help the price depressed as they career around the world scouting for buyers.

Wheat: Jul 12 CBOT Wheat closed at USD6.56 3/4, down 23 1/4 cents; Jul 12 KCBT Wheat closed at USD6.78, down 22 cents; Jul 12 MGEX Wheat closed at USD7.71 3/4, down 14 1/2 cents. Funds were given credit for selling 5,000 CBOT wheat contracts on the day. Weekend rains and more in the forecast for some of the driest areas of Ukraine and southern Russia put wheat under pressure from the off. Eastern Australia is also seen picking up some needed moisture, although Western & Southern Australia is still dry. The EU Commission estimated the wheat crop there at 134.6 MMT - 2.6 MMT above the USDA's recent forecast. The wheat harvest is underway in Kansas, three weeks earlier than normal, and yields seem to be better than was feared. The USDA say that winter wheat harvesting is 9% done, versus 3% last week and just 1% normally. Good/excellent ratings fell four points to 54%, although that is still significantly better than the 33% in the top two categories of this time last year. Spring wheat good/excellent rose five points to 79%.

EU Grains Close - Tuesday

29/05/12 -- EU grains finished generally lower with Jul 12 London wheat ending down GBP3.00/tonne to GBP174.00/tonne, and new crop Nov 12 falling GBP3.25/tonne to close at GBP155.75/tonne. Aug 12 Paris wheat was unchanged for the seventh straight session at EUR212.75/tonne, whilst Nov 12 was EUR4.50/tonne lower at EUR211.50/tonne.

Wheat was modestly lower for most of the morning, but those losses picked up later in the afternoon when Chicago opened and wheat there came under instant pressure.

The winter wheat harvest in Kansas is now well underway, and early indications are that yields are generally better than expected/recently feared.

Rain relief has arrived for Ukraine, with generally good coverage across parched areas to the south and east. The Ministry there now say that their grain harvest could now amount to 47.2 MMT, possibly as high as 48 MMT, given the recent improvement in the weather.

Their 2012/13 grain exports are estimated at 22.5 MMT, a large proportion of which is expected to be corn. Indeed they may well become the world's second largest corn exporter after the US in the season ahead.

Russia's spring grain plantings are now estimated at 90% complete. Some sporadic rain has fallen in southern districts, but more would be helpful.

The EU Commission's crop-monitoring unit, MARS, tweaked their 2012 EU grain production estimates today, pegging the EU-27 wheat yield at 5.34 MT/ha, marginally down on last year although 0.7% above the five year average. UK yields were estimated at 8.18 MT/ha, 5.6% up on last year.

EU-27 barley yields are seen at 4.43MT/ha, 2.8% up on last year, with yields here in the UK rising 1.7% to 5.6 MT/ha. EU-27 rapeseed yields are seen rising slightly to 2.87 MT/ha, although the UK will suffer a drop of 14.5% from last year's record to 3.34 MT/ha, they add.

The EU Commission estimate all wheat production in the bloc at 134.6 MMT, 2 MMT down on last year but 2.6 MMT above the USDA's recent forecast. EU-27 rapeseed output will only be marginally down from 19.3 MMT to 19.2 MMT, they estimate. That is also well above other analysts estimates in the 17.5-18.0 MMT area.

This year's barley crop will total 55.4 MMT, 1.8 MMT above the USDA's May estimate and a 3.9 MMT increase on last year, they add.

The Late Lunch

29/05/12 -- As America returns to work following the Memorial Day holiday we see the overnight soybean market 10-12 cents higher, corn 2-4 cents lower and wheat 8-10 cents weaker. Crude is around half a dollar firmer to start the week.

There are still mixed reports coming out of Russia, but Ukraine certainly seems to be wetter. So too is eastern Australia, although WA is still dry.

The Ukraine Ministry say that this season's harvest could amount to 47.2 MMT, possibly as high as 48 MMT, given the recent improvement in the weather. Even so that would be 15-18% down on last year.

The Kansas wheat harvest was ongoing across the long weekend, holiday or not. Reports are variable but perhaps err on the side of "better than expected" under the circumstances.

Bangladesh is shopping for 50,000 MT of wheat. India may be the most likely source.

Kazakhstan says it has exported a record 10.6 MMT of grains in the 2011/12 marketing year so far, and may export up to 15 MMT next season despite a projected drop in output in 2012 given the huge volume of carryover still in the pipeline from the bumper 2011 harvest.

The Buenos Aires Grain Exchange cut their Argentine soybean crop estimate below 40 MMT last week, and Oil World now say that output could fall to 39 MMT by the time harvesting is complete.

The USDA will report on US corn and soybean planting progress after the close tonight, with the former likely to be all but done now, 76% of the 2012 soybean crop was in the ground as of a week last Sunday. Winter wheat crop conditions, particularly in Kansas, will also be of interest.

EU Rapemeal Prices

29/05/12 -- Rapemeal prices on the continent are firmer in line with overnight strength in soymeal.

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


EU Grains Close

28/05/12 -- EU grains finished mixed but mostly a little lower on the day with Jul 12 London wheat up GBP2.00/tonne to GBP177.00/tonne, and with new crop Nov 12 down GBP0.50/tonne to GBP159.00/tone. Nov 12 Paris wheat was down EUR0.50/tonne to EUR216.00/tonne.

It was a very quiet day with the US and much of the continent closed for our traditional public holiday which has been delayed to coincide with the Queen's Jubilee celebrations next week.

Mixed reports continue to come out of Russia and Ukraine. The Ukraine national weather centre say that the winter grain harvest there will be 43% down on last year at 14.5 MMT, with winter wheat yields likely to average 2.6 MT/ha - that's a near 22% decline on last season, although marginally better than the 2.45 MT/ha that the USDA predict.

The Ukraine Ag Ministry meanwhile say that crop conditions have improved on the back of recent rains and they now rate 71.5% of the winter wheat crop as good/satisfactory.

Russia appears to have had scattered, buy heavy in some places, rains in recent days.

In Kazakhstan meanwhile spring grain planting is more than three quarters complete.

Crops in the UK, France and western Germany will be benefiting from the recent warmth after a good soaking in April and early May, although the eastern half of Germany and Poland are said to be too dry.


27/05/12 -- There's a chance of a decent shot of rain for southern and eastern Ukraine and southern Russia later in the week. Click the map to enlarge, showing fairly widespread rains over most of Ukraine Tuesday/Wednesday and fair coverage in some of the drier areas of Russia's Southern District, where 28% of the nation's wheat is grown.