Nogger's Blog

Chicago Ends Week With Some Big Gains

29/06/12 -- Soybeans: Jul 12 Soybeans closed at USD15.12 3/4, up 46 3/4 cents; Nov 12 Soybeans closed at USD14.27 3/4, up 24 1/4 cents; Jul 12 Soybean Meal closed at USD436.00, up USD9.40; Jul 12 Soybean Oil closed at 52.21, up 129 points. For the week overall Jul 12 beans gained 70 1/4 cents, Nov 12 beans 52 1/4 cents, Jul 12 meal USD14 and Jul 12 oil 247 points. A bearish USDA report, with the US 2012 soybean acreage coming in 2.1 million up on March and 0.5 million above the average trade guess and Jun 1st stocks also above market forecasts, saw beans drop around 18 cents immediately after the market opened. This lasted just a few minutes before the market leapt back into positive territory trading the weather. Outside markets were also a positive influence, with crude oil jumping more than USD7/barrel for a near 11% gain on the day on optimism over Europe. The latter was also responsible for a weaker dollar today, which also helped the grains sector. For soybeans in particular recent price rises don't appear to have slowed up recent export activity, as they have for corn. Funds bought an estimated 7,000 soybean contracts on the day. All eyes now will be on their revised yield estimates next month. Informa Economics reduced their forecast to 42.7bpa, 1.2bpa lower than the existing USDA estimate.

Corn: Jul 12 Corn closed at USD6.72 1/2, up 20 1/2 cents; Dec 12 Corn closed at USD6.34 3/4, up 2 1/2 cents. For the week Jul 12 corn was 81 1/2 cents, or almost 14%, higher with Dec 12 up 80 3/4 cents. The USDA pegged the US spring corn planted area at 96.4 million acres, a new post-war record and half a million more than they said in March. Jun 1st stocks were a bit below the average trade guess at 3.148 billion bushels. As with soybeans the opening five minutes were volatile now that the CME Group have changed things around so that USDA reports like this one are issued during trading hours. Corn posted an 28 cent trading range in those first five minutes before also deciding to concentrate on the weather issues and buoyed by sharply higher outside markets and the weak dollar. Next week's action will be dictated by weekend weather events and the revised forecasts as we progress throughout the week. It seems certain though that yield potential has already been harmed, and could not possibly average the USDA's record 166bpa estimate even with good rains next week. The fact that this season's corn crop was planted in a very timely manner is working against it, with maturity well ahead of normal. Informa Economics reduced their yield estimate to 154.9bpa. Funds were said to have been net buyers of around 5,000 contracts on the day.

Wheat: Jul 12 CBOT Wheat closed at USD7.39, up 13 cents; Jul 12 KCBT Wheat closed at USD7.38 1/2, up 3 1/2 cents; Jul 12 MGEX Wheat closed at USD8.64, down 3 3/4 cents. On the week, Chicago wheat was 65 3/4 cents higher, with Kansas wheat up 52 1/2 cents and Minneapolis gaining 5 cents. The USDA report pegged spring wheat acres at just under 12 million versus the average trade guess of 12.6 million. The all wheat area came in 900,000 acres below expectations at 56 million, although that is still 1.6 million up on last year. Funds were said to have bought around 4,000 Chicago wheat contracts on the day. The commitment of traders report shows them flipping from 10,000 short to 25,600 long in the week through to Tuesday. They are estimated to have been net buyers of around 4,000 since then, placing their net long somewhere in the region of 30,000 contracts. South Korea bought 110 TMT of US feed wheat for Nov/Dec shipment. Indonesia bought 32 TMT of Indian wheat for July shipment in what is said to be the first bulk Indian wheat shipment to Asia in seven years. The Indian government literally has more wheat than it knows what to do with, domestic silos are full and the rest is stored out in the open with the monsoon season knocking on the door. The problem is that is has paid local farmers significantly more than world price to procure these stocks, so selling them off now will incur a hefty loss that will not go unnoticed by the political opposition.

EU Grains Closing Comments - Friday

29/06/12 -- EU grains closed mixed with Jul 12 London wheat down GBP1.50/tonne to GBP188.00/tonne and Nov 12 GBP0.50/tonne higher at GBP171.00/tonne. Aug 12 Paris wheat closed EUR0.75/tonne lower at EUR229.00/tonne, whilst Nov 12 was EUR2.50/tonne easier at EUR226.75/tonne.

The euro was firmer following news that a deal of sorts had been thrashed out between EU leaders at last night's summit, that contributed to weakness in Paris grains today.

For the week overall Jul 12 London wheat still gained GBP5.00/tonne despite today's losses and Nov 12 added GBP9.45/tonne. Aug 12 Paris wheat was up EUR14.75/tonne on the week and Nov 12 gained  EUR10.25/tonne.

The much awaited USDA report was neutral to slightly friendly for wheat, pegging the US spring wheat area some 600,000 acres below trade expectations. US Jun 1st stocks were however towards the top end of trade estimates at 743 million bushels.

US corn plantings came in above trade forecasts at 96.4 million acres, half a million higher than predicted in March and a hefty 4.5 million up on 2011. Soybean plantings were also increased by 0.5 million acres more than anticipated at 76.0 million acres, some 1.1 million up on last year.

Attention very quickly turned back to US weather however, and after a very brief dip that lasted no more than ten minutes after the news came out, the market was back up to where it had been before the announcement.

The trade will now start to focus on the USDA's yield estimates, revised versions of which will be issued on July 11th.

Outside markets surged on optimism on Europe, with crude oil gaining more than USD4.00/barrel and stock markets also posting strong gains. How long the euphoria lives remains to be seen, recent similar rallies have evaporated within a day or two once traders pick through the details (if there are any) of previous stimulus packages.

In Europe Coceral cut their EU-27 soft wheat production estimate by around 1 MMT due to losses in eastern member states. However output amongst the three main protagonists was increased following beneficial spring rains. France's crop was upgraded to 35.15 MMT, with Germany's now seen at 22.71 MMT and the UK's raised to 15.73 MMT.

At home the HGCA said for wheat that: "Overall yield potential remains good but the weather in the next next 4 weeks will be critical as crops move into the important grain fill phase."

Winter barley they said is "midway through grain fill with the earliest crops starting to ripen, but development has been slowed by the cool June temperatures, so harvest may be slightly later than normal." Yield potential was still "good" they added.

"Winter oilseed rape crops are typically at green seed stage and will soon move into the ripening phase. Crop development is behind recent years and this is& likely to lead to a later start to harvest. Lodging is the biggest issue at the moment with around 50% of the crop area affected to some degree which will affect ripening and potentially increase harvest losses," they concluded.

The Afternoon Sheet

29/06/12 -- The USDA numbers are already fish & chip wrappings within ten minutes of their release. Corn plantings came in 300,000 acres more than the average trade guess at 96.4 million, a 5% increase on last year. June 1st corn stocks were slightly lower than expected at 3.148 billion bushels. Considering that the trade is already factoring in a yield figure of around 155bpa versus the USDA's current 166bpa then 300,000 extra acres isn't going to go a long way in compensating for that.

Soybean plantings were estimated at 76.0 million acres, 1.5% up on last year and 500,000 more than the average trade guess. June 1st stocks were a little surprise, at 667 million bushels they were above the highest trade estimate.

This increased corn and soybean area appears to have largely come at the expense of spring wheat where plantings were pegged 600,000 acres lower than anticipated, taking the all wheat area 900,000 acres below expectations to 56.0 million. Even so that is still 3% more than a year ago.

So in the blinking of an eye, now that that is all over and done with we are back to trading a weather market.

Beans are around 18 cents higher, corn up 15-17 cents and wheat 8-10 cents firmer in early afternoon trade.

Elsewhere crude oil is now more than USD4.00/barrel higher following a wave of initial relief over the EU debt "deal" which appeared to show a more willing to compromise approach from Germany. The more cynical amongst us would note that allowing Spanish banks to fail would not have been in the interests of German banks, many of whom were the ones that lent them the money that they are struggling to repay in the first place.

German lenders’ exposure to Spanish banks, corporates and governments amounts to EUR113 billion, according to the Bank for International Settlements.

The US dollar is down sharply in a "risk on" move, which is adding further support to US grains.

The USDA Quarterly Stocks Numbers

29/06/12 -- The USDA's quarterly stocks numbers are out, here they are:

USDA Jun1st Stock Estimates:

The USDA Acreage Numbers

29/06/12 -- The USDA's eagerly awaited acreage numbers are out, here they are:

USDA June Planting Estimates: (million acres):

World Weather

29/06/12 -- Here's something new for you, and it's gratis too, you tight-fisted gang of freeloaders. A brand new world weather website with the emphasis very much on agriculture.

It's called World Ag Weather and here's a link for you to save your poor little fingers the effort of typing it in: www.worldagweather.com

The guy behind the site is Richard James, an associate of Gail Martell of Martell Crop Projections fame, so some of the maps on there may have a familiar look to them.

Whilst I had nothing to do on this hot afternoon, as Rod Stewart would say, awaiting the release of the USDA numbers, I took a snapshot of all his different 14 day precipitation forecasts from around the world and stitched them all together for your perusal and personal edification.

Take a look here

This map uses the Canadian Meteorological Centre (CMC) forecasts, although Richard also has similar forecasts using the GFS model on his site too.

I spoil you sometimes don't I?

The Early Vibe

29/06/12 -- The early vibe is positive, a deal of sorts has been thrashed out by EU leaders overnight. The market is reacting with predictable and "we've seen it all before, but it's got to be better than nothing" optimism. Crude is USD1.70/barrel higher, and the grains are mostly higher too - led by soybeans which are 15-17 cents or so firmer.

The gist of the Euro deal seems to be this: Ailing EU banks will now be able to  borrow from the bailout fund directly to shore up their finances. That means that the governments of the countries involved won't have to agree to budget-cutting austerity measures in order to obtain the necessary finance before passing it on. It won't be them that is borrowing the money, it's their banks.

The other key change seems to be that governments requiring direct financial assistance themselves will be given easier terms of compliance, with fewer strings attached than the loans that have already been dished out to Greece, Ireland and Portugal. In addition the ESM won't get preferential status on these loans, the theory being that this clause has hitherto held back private investors from buying government debt.

It seems that, as in the football, it's Spain and Italy who are doing most of the smiling this morning.

So, the deal makes it easier for those already up to their necks in debt to borrow more money, at lower rates, and on easier terms than before. It also sets the stage for those that have already borrowed to want to swap the restrictive loans they've recently taken out for the new shiny "pay us back when you feel like it" ones.

Hardly sounds like a long-term debt solution to me, more a way of creating more bad loans that can't - or won't - be repaid. As you might expect though, the prospect of more cheap quick-fix money sloshing it's way into the system sees the French and German stock markets up around 2.5% this morning, with the FTSE100 up a more restrained 1% or so.

So now, we sit and wait for the USDA who are out at 13.30 London time this afternoon.

There seems to be a bit of rain around on the US radar overnight centred on southern and western Nebraska and into western Iowa. These are the top and third top US corn producing states. Iowa also grows the most soybeans.

These rains are expected to move east, centring over Iowa tomorrow before continuing on into Illinois and Ohio over the next 4-5 days. Drought busters they aren't though, generally offering only 0.25-0.50 inches, with a few places set to pick up better 1-2 inch amounts in the 4-7 day period.

The 8-15 day forecast offers better and more widespread coverage of an inch or so in many parts of the Midwest and up to 2 inches further south and east in states like Kentucky, Tennessee, Georgia and Alabama.

Whilst we are on the subject of weather, I haven't yet had chance to get out and have a good look at things round here yet. We managed to dodge the worst of yesterday's torrential rain and" hail the size of golf balls" that reportedly fell in some places.

The recent high winds have already given the crops, rapeseed in particular, a fair old battering.

Nov 12 London wheat has opened GBP1.25/tonne firmer in early trade. Where it closes tonight may have more to do with what the USDA say this afternoon and revised US weather forecasts than  what's going on out in the field, strange as it may seem.

Chicago Mostly Lower Ahead Of USDA Report

28/06/12 -- Soybeans: Jul 12 Soybeans closed at USD14.66, down 5 cents; Nov 12 Soybeans closed at USD14.03 1/2, down 8 1/2 cents; Jul 12 Soybean Meal closed at USD426.60, down USD1.40; Jul 12 Soybean Oil closed at 50.92, down 44 points. Funds were said to have been net sellers of around 6,000 soybean contracts on the day. Who knows what tomorrow's USDA reports will bring? The trade is expecting a significant increase in soybean plantings from the 73.9 million acres reported in March. Given recent US weather events and the likely reduction to yields a sharp increase in planted area is certainly needed. Demand for US soybeans remains strong with the Chinese Ministry today forecasting their imports at 6.79 MMT, up 58% from last June, according to my records. The USDA reported weekly export sales of 793,100 MT, above expectations of 500-700 TMT, and in addition the sale of 110,000 MT to "unknown" for 2012/13 delivery.

Corn: Jul 12 Corn closed at USD6.52, up 2 1/2 cents; Dec 12 Corn closed at USD6.32 1/4, down 3/4 cent. Corn closed well off early session highs as US weather forecasts put in more rain and on book-squaring ahead of tomorrow's USDA reports. The USDA’s corn quarterly stocks report has surprised the trade in 8 out of the last 9 quarters, I read. Funds sold an estimated 5,000 corn contracts on the day. Weekly export sales were a disappointment again at 292,800 MT versus the 300-500 TMT expected. There is more rain in the 5 day forecast but longer range forecasts call for above normal temperatures and below normal precipitation for the major crop producing states. Yield estimates from private analysts for the US corn harvest this year are now centred around the 155 bu/acre mark, with several warning of a rapid decline to 150 bpa or less if things don't improve quickly.

Wheat: Jul 12 CBOT Wheat closed at USD7.26, down 6 cents; Jul 12 KCBT Wheat closed at USD7.35, down 9 cents; Jul 12 MGEX Wheat closed at USD8.67 3/4, up 23 1/2 cents. Funds were said to have been light sellers on the day, in line with the other two main products in the sector, shedding an estimated 3,000 Chicago wheat contracts on the day. Weekly export sales for wheat failed to meet expectations, coming in at 324,500 MT versus the 450-650 TMT anticipated. Iraq, Jordan and Tunisia have all bought elsewhere this week. Russia's crop keeps shrinking, but they will still likely be aggressive sellers of what they have got at least during the first half of the 2012/13 season. In tomorrow's report US all wheat plantings are estimated at 56.9m (vs 55.9m in March), June 1st wheat stocks are pegged at 726 million bushels versus 862 million this time last year.

EU Grains Close

28/06/12 -- EU grains closed generally flat with Jul 12 and Nov 12 London wheat both unchanged, along with Aug 12 and Nov 12 Paris wheat.

Prices still hover around 12-month highs on surging US markets concerned about yield losses in corn and soybeans due to heat and dryness. Traders are also a little nervous however ahead of tomorrow's important USDA planting and stocks data.

Latest weather forecasts for the Midwest this afternoon appear to be factoring in more rainfall in the coming 5-day period. However most recent forecasts have failed to deliver promised precipitation.

Today and tomorrow's EU leaders summit is also a cause for nervousness, with few expecting too much in the way of serious and tangible progress to be made.

It seems to be shaping up that the Black Sea countries won't have the same volume of wheat to export in 2012/13, which may stop prices falling out of bed once the harvest gets going in earnest.

Harvesting is already underway around 10 days earlier than normal in the south of Russia, where yields are so far disappointing. Local analysts IKAR today cut their grain harvest estimate from 88.4 MMT to 84.5 MMT, with the wheat harvest coming in at 48.5 MMT compared to 56.2 MMT last year. Grain exports will total 17.5 MMT, compared to an estimated 27 MMT in 2011/12, they added.

Brussels only issued 21,000 MT of soft wheat export licences this past week, a very poor total with just one week of the 2011/12 marketing year left to go.

On the rapeseed front the NFU said as far as the UK crop goes "Continuous rain since March, significantly above average. Crop looks good, although estimates are conservative until it is in the barn. Prospects are likely to improve on current estimates."

In France they say "the end of winter was harsh, with frost damage to eastern crops and particularly oilseed rape in the North East. Spring rain improved the dry conditions of winter crops. Areas are stable at 1.5m Ha, but production will fall to 5 MMT (400 TMT down), with yields at 3.15 MT/ha."

Lunchtime News

28/06/12 -- The electronic grains currently see beans 4-6 cents higher, corn up 2-3 cents and wheat 6 cents easier. Crude is up half a dollar.

London wheat is GBP1.00-1.50/tonne lower, Paris wheat is EUR1.50-2.00/tonne easier.

The EU leaders summit gets underway today in Brussels. Not many are expecting an awful lot new apart from the usual shallow promises and hot air. Italian borrowing costs are up again, and there are rumours around that PM Super Mario Monti may be about to resign.

It's hot and dry in the US still, with many now likening the current situation to the summer of 1988. It's nothing like 1988, Bros were top of the charts for a kick off and now they are probably working in MacDonalds or something.

I do recall 1988 as it happens, the US drought was nightly news on UK television, with graphic images of livestock farmers taking flame throwers to cacti to burn off the spikes so that their animals would have something to eat.

I also recall soya in the UK going from around GBP140/tonne to something like GBP260/tonne in a relatively short space of time. Luckily for me the boss, in his retirement year and wanting to go out with a bang, was bullish on soya and was long all the way up. By the height of the summer we were going to be on massive Christmas bonuses, Porches, the lot. By Christmas soya was back to GBP140/tonne, and all we got was a hundred quid and a box of Quality Street.

Hence the reason for posting the chart below. Now I'm not saying that soya will be fifty or sixty quid down by Christmas, but the odds that it might be at some point within the next 8 months or so are perhaps greater than you would currently think.

It may also be worth considering that as recently as February the UK media were saying that 2012 was shaping up to be the driest year since 1976, and it hasn't stopped raining since!

Russia's IKAR have today reduced their grain production estimate there this season from 88.4 MMT to 84.5 MMT, around 10 MMT down on last year and half a million below the Ministry's revised forecast earlier in the week.

Wheat production will amount to 48.5 MMT this year, compared to the Ministry's 46-49 MMT estimate and versus 56.2 MMT last year. Grain exports will total 17.5 MMT, compared to the Ministry's 16-18 MMT and an estimated 27 MMT in 2011/12, they add.

USDA weekly export sales for both old and new crop where applicable (vs expected): soybeans 793,100 MT (500-700 TMT); corn 292,800 MT (300-500 TMT); wheat 324,500 MT (450-650 TMT).

Soybean sales strong again, corn sales disappoint again. High prices for the latter seem to be performing some kind of rationing at least.

China took 115,900 MT of the old crop beans and 285,000 MT of the new crop. The USDA have also announced the sale of 110,000 MT of new crop soybeans to "unknown" this afternoon.

The Chinese Ministry say that June soybean imports will probably total 6.79 MMT, that's up 58% on last June, according to my records.

Latest weather news just in from Martell Crop Projections:

"The heat dome in the United States is expected to weaken the next 48-72 hours under attack from “ridge-rider” showers. From .50 to 1.25 inch of rainfall is expected in a band from Nebraska to northern Ohio, including Iowa, northern Illinois and northern Indiana. The 5-day cumulative rainfall forecast is wetter showing 2-inch amounts, again along the northern rim of high pressure in the Upper Midwest."

However: "Very hot weather is forecast for July 1-5 with a strengthening dome of high pressure. Maximum temperatures are expected to increase 9-15 F above normal.The Climate Prediction Center 6-10 day outlook is threatening with a hot forecast in the July 3-7 period. However, it shows 'normal' rain in the northern Midwest and Great Lakes, which would be similar to the weather conditions expected in the next few days."

Chart Of The Day

28/06/12 -- A chart (click on it to enlarge) showing the ups and inevitable downs of Chicago soymeal over the last 30 years. It will not escape your notice I'm sure that the peaks and troughs are getting closer together.

In 2004 the market collapsed by 50% in 7 months. In 2008 there was only three months between the high and the low, during which time meal slumped 36%. And no, 2008 wasn't a never to be repeated sub-prime responsible one-off - within eight months the market was almost back to the highs of 2008, before again capitulating 34% in nine months to a March 2010 low.

Within less than a year we were back up 40% to a Feb 2011 high, down USD90 (or 22%) to a Dec 2011 low, from where we have now risen another 37% to the recent highs.

EU Rapemeal Prices

28/06/12 -- Rapemeal prices on the continent are higher once again, reflecting overnight strength in Chicago soymeal.

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

Branson (Again)

28/06/12 -- Yes folks, he's at it again, the bearded bell-end. Today's Virgin Media inspired let-down is a total email failure. How long it will be until it's fixed is anyone's guess. They are probably working on it in Mumbai right now though I'm sure. "How are you, is nice day, no? Yes. My name is Patrick (yeah, sure it is), how may I help you? No, no, everything is fine at our end, it must be something you've done wrong. Try wiping your entire computer, dismantling all the internal components one by one, then reassemble them - making sure that you put everything back where it came from, then reboot your machine whilst reciting the entire works of Shakespeare verbatim. Yes, I'll hold......there now, has that fixed it? No? You must have put one of the pieces back in the wrong place. Now here's what I want you to do, have you got a baseball bat handy?"

Needless to say, if you email me today don't go expecting a rapid response.

Chicago Ends Well Off Session Highs

27/06/12 -- Soycomplex: Beans finished mixed and well off session highs that saw Jul 12 26 1/2 cents higher at one stage on profit-taking ahead of Friday's upcoming USDA reports. Funds were estimated to have been light sellers of around 2,000 soybean contracts on the day. Whilst weather concerns remain, many analysts point to the fact that there is still time for the crop to recover and that Jul/Aug rains have more impact on final yields for soybeans. Will those rains come though? The GFS weather model keeps promising, but failing to deliver. Weekly export sales estimates for soybeans tomorrow are 500-700 TMT. After that all eyes will be on Friday's June acreage numbers and the quarterly stocks report.

Corn: Corn also closed well off session highs, with the Dec 12 more than 30 cents higher at one stage in typically choppy weather market trade. Funds were said to have bought a net 10,000 corn contracts on the day. If correct that would make them adding around 62,000 to their net length this week alone. US ethanol producers lowered production by more than 17,000 barrels a day last week according to the Dept of Energy weekly report. Valero Energy said that they are temporarily closing another ethanol plant - this one is in Linden, Indiana - due to high corn prices and tight availability. Chicago temperatures are expected to hit 100F tomorrow before cooling off a little into the weekend. Weekly export sales for tomorrow are expected to be in the region of 300-500 TMT. Unlike soybeans, the USDA aren't expected to alter the US corn planted area by too much on Friday from the already 75-year record 95.9 million acres.

Wheat: Just like the other two main commodities, wheat also closed modestly higher but well below the highs of the day. Funds were said to have been net buyers of around 3,000 Chicago wheat contracts on the day. Russia’s Ag Ministry said that Russia’s grain harvest has started 10 days earlier than normal due to the crops maturing faster due to the hot and dry conditions. Early yields are said to be 30-40% down on last year although quality is very good. Jordan bought 50 TMT of Black Sea origin wheat for October shipment. Tunisia bought 125 TMT of optional origin wheat for Aug/Sept shipment. Egypt stays out of the market, but despite the predicted lower exports out of the Black Sea in 2012/13 Russian wheat is still likely to undercut US and EU origin supplies at least until the end of the year. Estimates for tomorrow's weekly export sales are 450-650 TMT.

EU Wheat Close - Wednesday

27/06/12 -- EU grains finished mostly higher again although Jul 12 London wheat was GBP0.50/tonne lower at GBP189.50/tonne, new crop Nov 12 was GBP2.70/tonne higher to close at GBP170.50/tonne. Aug 12 Paris wheat rose EUR3.25/tonne to EUR229.75/tonne, whilst Nov 12 was also EUR3.25/tonne firmer at EUR229.25/tonne.

Nov 12 London wheat closed within GBP2.50/tonne of the lifetime contract high spurred on by weather concerns in America and the Black Sea.

Early grains harvesting is underway in southern Russia, with wheat yields reported to be around 30-40% lower than last year, although quality is good. Ukraine winter barley yields are also said to be disappointing.

Meanwhile triple digit temperatures in America, combined with a general lack of rainfall, are seeing crop ratings tumble and yield prospects diminish sharply.

StatsCanada pegged wheat plantings there slightly lower than expected at 23.81 million acres, although that is still 11% up on last year. Rapeseed sowings are seen at a record high 21.27 million acres, 13% higher than a year ago and above the 20.9 million that the trade expected.

The next set of important planting data out is from the USDA on Friday. They are expected to put the US all wheat area around a million acres higher than they said in March at 56.9 million acres. Corn plantings are only expected to show a modest increase by most, although one or two think that up to a million acres more there could also be on the cards.

Record Canadian Rapeseed Plantings

27/06/12 -- StatsCanada are out today with their latest revised planting estimates for the 2012 harvest. They forecast the all wheat area at 23.81 million acres, 11% up on last year, although fractionally below the 23.9 million that the trade was expecting.

Barley plantings are pegged at 7.37 million acres, 14% up on last year but lower than the 7.9 million anticipated. Rapeseed sowings are estimated at a record 21.27 million acres, 13% higher than a year ago and above the 20.9 million that the trade expected.

The Daily Sheet

27/06/12 -- The electronic grains see beans and corn both around 8-10 cents higher and wheat down 2-3 cents. Crude is 28 cents weaker at USD79.08/barrel.

Early grain harvesting has begun in the south of Russia. Wheat quality is good, but yields are not I am told. Barley yields are also poor, although as ever it is often the worst of the crop that gets harvested first.

India is actively trying to find buyers for it's very large wheat surplus, aided by a weakening rupee.

The European debt crisis continues. In what could be a hint towards a full-blown national bailout request the Spanish Prime Minister has said that they cannot afford to finance themselves for long at current rates.

Yields on 10-year Spanish bonds are nearing 7%.

The EU leaders summit gets underway tomorrow. Germany appear to be holding most of the picture cards. German Chancellor Angela Merkel yesterday said that the idea of jointly-issued debt wouldn't happen "as long as I live" which would appear to knock that one on the head for the time being.

How the crisis can be resolved whilst the Germans play hardball is difficult to envisage. Some experts foresee a German exit from the eurozone as the best way out of an increasingly difficult situation. The rest of the bloc can then get the printing presses out and hey presto!

Of course that would lead to a sharp drop in the value of the euro, and likely make a new deutsche mark a highly desirable currency. Neither of which would aid German exports to its neighbours, which wouldn't be in Germany's interest.

And so we continue to go round in ever decreasing circles.

Revised US weather models this afternoon will be eagerly awaited. Yesterday's GFS model was showing decent rains from southern Minnesota, through Iowa and into northern Illinois in the 4-7 day period. It is noted though that other models were offering far less precipitation, and that recent GFS forecasts have largely failed to deliver.

StatsCanada are out later with their planting estimates for 2012. The market is expecting an all wheat area of 23.9 million acres (+11% on last year), a barley area of 7.9 million acres (+22%) and a rapeseed area of 20.9 million acres (+11%).

EU Rapemeal Prices

27/06/12 -- Rapemeal prices on the continent are mixed today. Nearby availabilty remains tight, supported by fully steady soymeal prices. The EU Commission forecast rapeseed yields in Europe to come in 2.87 MT/ha this year, 4% down on the five year average.

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

Chicago Closing Comments

26/06/12 -- Soybeans: Jul 12 Soybeans closed at USD14.70 1/2, down 12 cents; Nov 12 Soybeans closed at USD14.13 1/4, down 12 1/4 cents; Jul 12 Soybean Meal closed at USD427.20, down USD5.60; Jul 12 Soybean Oil closed at 50.88, down 39 points. Funds were said to have sold an estimated 7,000 soybean contracts on the day in profit-taking and light liquidation ahead of Friday's upcoming USDA reports. The trade is expecting them to increase their US soybean area by around 1.5 million acres from their March estimate. June 1st stocks are expected to come in at around 635-640 million bushels, slightly higher than the 619 million twelve months ago. A variety of private analysts are pegging soybean yields this year in the 41-42 bu/acre region versus the USDA's 43.9 bu/acre.

Corn: Jul 12 Corn closed at USD6.46, up 15 cents; Dec 12 Corn closed at USD6.24, up 30 cents. There was good follow through from yesterday's limit up move with funds buying an estimated 31,000 contracts on the day, taking their net purchases to over 50,000 lots in the past two days. Private forecasts for US corn yields this year currently line up around 155-157 bu/acre versus the USDA's 166 bu/acre estimate. The corn planted area is seen only increasing marginally from the USDA's 95.9 million acres estimated in March. June 1st stocks are pegged at 3.182 billion bushels versus 3.670 billion in 2011. Argentina’s Ag Minister said that in a trade visit there China’s Premier Wen said that they are interested in buying more corn from Argentina. The Chinese recently announced that they were adjusting their quarantine regulations in a precursor to importing more corn from South America.

Wheat: Jul 12 CBOT Wheat closed at USD7.29, up 4 3/4 cents; Jul 12 KCBT Wheat closed at USD7.35 3/4, up 2 3/4 cents; Jul 12 MGEX Wheat closed at USD8.53, down 27 cents. Funds were said to have bought a net 7,000 Chicago wheat contracts on the day in short-covering encouraged by spillover support from resurgent corn. On Friday the USDA is seen placing the US all wheat planted area at 56.85 million acres, almost a million up on their March estimate. June 1st stocks are pegged at 726 million versus 862 million a year ago. Stats Canada are out tomorrow with their planting estimates. The Canadian all wheat area is forecast at 23.9 million acres, an 11% increase on last year's washed-out effort. Flooding is an issue again this year, although not as bad as it was twelve months ago. India is flexing its muscles in the export market, reportedly selling 200,000 MT of wheat to Middle East buyers at heavily discounted prices, with at least another 800,000 MT up for sale. It's domestic stocks are huge, storage of which is a serious issue.

EU Grains Closing Comments

26/06/12 -- EU grains closed mixed with Jul 12 London wheat up GBP2.00/tonne to GBP190.00/tonne and Nov 12 GBP0.20/tonne lower at GBP167.80/tonne. Aug 12 Paris wheat closed EUR6.50/tonne firmer at EUR226.50/tonne, whilst Nov 12 was EUR1.00/tonne higher at EUR226.00/tonne.

Jul 12 London wheat posted another fresh high in more than a year as old crop remains tight and new crop availability looks further away than was anticipated a month or two back. Open interest is pretty thin in the contract, but it's the longs who are holding the aces it would seem.

Hot and dry conditions in the US are the main market driver at the moment, although with the winter wheat harvest past halfway and spring wheat largely escaping the worst of the weather at 77% good/excellent last night this is much more of a corn and soybean problem than a wheat one. Nevertheless wheat is more than happy to go along for the ride.

The EU Commission research unit MARS say that EU-27 wheat yields will be very similar to last season and the 5-year average at 5.32 MT/ha, with gains this month in France, Germany and the UK balanced by losses in Spain.

In France "abundant rainfall and (a) temperature increase during May and June depict a promising scenario for winter and spring cereals," they say.

"Cereals in major regions of the UK keep a higher-than-normal green biomass despite the tough weather conditions they have been subject to. However, disease pressure is expected to be high, given the continued rainfall, with an additional uncertainty on how it will managed," they add.

They now estimate UK wheat yields to average 8.16 MT/ha this year, which would be the second highest on record, and with a planted area of just under 2 million ha would suggest a crop of around 16.2 MMT this year. That would be around 5.3% up on last year.

French wheat yields are seen increasing 8.4%, with German yields up by 4.2%.

UK barley yields are forecast 2.6% higher at 5.81 MT/ha, with French yields coming in 13.2% up on last year and German yields rising 6.1%.

UK rapeseed yields are pegged at 3.34 MT/ha, 14.5% down on last year's record 3.91 MT/ha. French yields are forecast down 3%, but German yields are seen rising almost 20% on last year's drought-ravaged crop.

Lunchtime News

26/06/12 -- The electronic grains are mixed with wheat 2-5 cents lower, soybeans 5-7 cents higher and corn up 10-15 cents. Crude oil is down 20 cents at USD79/barrel.

US weather offers no more encouragement today than it did yesterday.

India says it urgently needs to move 1 MMT of wheat stored out in the open as the monsoon season arrives. Having paid over the odds for it domestically the government, not surprisingly, have wheat oozing from every orifice.

Reports suggest that the government have finally decided to bite the bullet and sell some stocks off at discounted levels to get some movement, rather than see the stuff rot in the fields.

A Dow Jones survey estimates June 1st corn ending stocks at 3.18 billion bushels compared with 3.67 billion a year ago. Soybean stocks are estimated at 640 million, versus 619 million last year and wheat stocks are pegged at 726 million versus 862 million.

A similar survey estimates US all wheat plantings at 56.9m (vs 55.9m in March), corn plantings at 96.0m (95.9m) and the soybean area at 75.6m (73.9m).

The USDA will reveal all on Friday.

The world and his wife are lining up to knock big percentages off the USDA's optimistic yield projections this year.

Farm Futures magazine puts corn yields at 156.9 bu/acre this year, down from the USDA's estimate of 166 bu/acre and pegs soybean yields at 41.3 bu/acre against the USDA's 43.9 bu/acre. Their estimates are typical of where a whole host of others are lining up.

Standard Chartered say that China could import 72.2 MMT of soybeans in 2012, an average of 6 MMT a month, and far more than any other estimate around.

A Spanish bond auction today saw three-month bills pay yields of 2.36 percent, nearly triple the 0.85 percent they got away with paying only a month ago. The rate on 6-month bills was 3.24 percent, almost double the 1.7 percent paid in May. Italy's borrowing costs also spike higher today.

EU Rapemeal Prices

26/06/12 -- Rapemeal prices on the continent are mixed today. Despite a sharply higher close in Chicago soymeal last night traders say that yesterday's levels already had some in-built protection.

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

The Morning Paper

26/06/12 -- Follow through buying after last night's limit up move on corn currently sees the grain post further gains of 6-7 cents on the electronic market as I type. In fact that should be re-type as corn was 10-15 cents higher when I started writing this. Beans and wheat are taking a bit of a breather, mostly 2-3 cents lower. Strike that, they were 2-3 cents lower, now it's 6-7 cents lower on beans and 10-12 cents easier on wheat.

Cyprus has asked for a bailout, and may require as much as EUR10 billion, according to the morning press. In a reflection of the times we are in the market reaction is "EUR10 billion? Is that all? I'm only interested in amounts larger than EUR100 billion these days."

EUR10 billion is, for Cyprus, a very large amount - more than half it's entire economy in fact, according to Reuters.

The market is focused on the upcoming EU leaders summit at the end of the week, and hoping (rather than banking on) for a rabbit to be extracted from the hat. It seems likely to be another lot of hot air, and noble but vague statements that they have a cunning plan to ensure that good times are round the corner.

They can't however tell us what that plan is, because that would spoil the surprise. But rest assured sweet cheeks, there really IS a plan. Honest.

The new Greek finance minister won't be a part of it though. He's now the old Greek finance minister, having lasted less time than England's Euro hopes, after resigning due to ill health less than a week into the job. If he's that ill he has to resign on the back of it then you'd have thought he'd have known it a week ago wouldn't you?

Fundamentals....

Egypt's GASC says it's managed has "at least" seven months worth of wheat stocks following it's own domestic harvest and will probably not be back in the market to buy on the international stage until August.

Last night's USDA crop condition ratings saw corn good/excellent cut six percentage points, as opposed to soybeans which only saw a 3 point cut amongst the top two categories. Corn ratings have held up better than soybeans in the previous couple of weeks reports, so you maybe could say that this is the USDA making up for a bit of lost time on corn.

With good/excellent of 56% now well below last year's 68% at this time the pressure is on for a large reduction in prospective yields in the USDA's July 11th report. With more than one eye on that they may well be tempted (or even forced) to come up with a big acreage number for corn on Friday.

Ditto soybeans, where the March acreage estimate of 73.9 million was below even the lowest trade estimate at the time. There is every likelihood that they will up that by at least a million and maybe more.

Creative accounting they call it in Washington, and most other places too.

Nov 12 London wheat is a pound lower in early trade, it too seemingly doing a bit of consolidation following yesterday's steep gains. Last night's close was the highest in just over a year for it, taking ex farm levels to over GBP155/tonne off the combine for feed wheat.

Is that a "the plate only gets passed around once" selling opportunity? Or merely a stepping stone to higher levels? From a purely UK perspective it may be worth remembering that the last time it pissed it down this much all summer - 2008 - we finished up with our highest ever wheat yield of 8.3 MT/ha and the one an only time we managed a crop in excess of 17 MMT.

We've had four 8.0 MT/ha yields (plus that 8.3 MT/ha) in the last 12 years. Looking at the crop in the field now I don't think that there would be many who would bet on this season being any lower than that. So we are probably in line to at least match our second highest wheat yield on record.

A quick flick through the record books tells me that front month November wheat has never been higher than it is today on the 1st of August in any year in history. It's only been higher than it is today on the 1st of November once - the great Russian crop disaster year of 2010.

Our yield in 2010 was a not very special 7.7 MT/ha, and production was less than 15 MMT incidentally.

So is 2012/13 going to offer a repeat performance of the hitherto one-off season of 2010/11? Well, the Russian crop has been downgraded significantly, but things are nowhere near as dire as they were in 2010 my spies over there tell me. Neither would many be willing to stake too many roubles on them introducing an export ban at the beginning of August as they did back then.

We will of course (presumably) have Vivergo to feed, assuming that they can make the economics (and the plant) work. In theory that takes a million tonnes off the market, although the reality of the situation is likely to be less than that.

Ensus? Well, who knows? They've been quieter than Ann Frank's drum kit recently. That could make a difference, although crude oil slumping 25% in the past eight weeks whilst Nov 12 London wheat has gone up a tenner wouldn't seem to suggest that the economics of turning wheat into bioethanol have suddenly become more viable.

Chicago Jumps, Led By Limit Up Corn

25/06/12 -- Soybeans: Jul 12 Soybeans closed at USD14.82 1/2, up 40 cents; Nov 12 Soybeans closed at USD14.25 1/2, up 50 cents; Jul 12 Soybean Meal closed at USD432.80, up USD10.80; Jul 12 Soybean Oil closed at 51.27, up 153 points. Funds were heavy buyers on the day, booking an estimated 12,000 soybean contracts along with 4,000 of meal and 5,000 of oil following a hot and dry weekend in the US with the promise of more to follow this week. Note that new crop is now gaining on old crop. The USDA reported the sale of 120,000 MT of soybeans to China for 2012/13 delivery. After the close they cut good/excellent US crop ratings by three percentage points to 53%. A choppy week lies ahead it would seem, dictated by daily weather forecasts, Friday's USDA stocks and planting numbers and developments in Europe.

Corn: Jul 12 Corn closed at USD6.31, up 40 cents; Dec 12 Corn closed at USD5.94, up 40 cents. The first five positions on corn all closed the daily 40 cent limit higher in the grip of a full blown weather market, helped by funds coming in to buy an estimated 21,000 contracts on the day. Lack of rainfall and high temperatures across much of the corn belt as corn enters the key pollination stage early are behind the move. After the close the USDA cut good/excellent corn ratings by six percentage points to 57% - a larger drop than the trade was anticipating. This time last year the crop was rated 63% good/excellent and yet we still only finished up with a 147 bu/acre yield. The current USDA estimate of a record 166 bu/acre yield clearly has to be reduced considerably next month.

Wheat: Jul 12 CBOT Wheat closed at USD7.24 1/4, up 51 cents; Jul 12 KCBT Wheat closed at USD7.33, up 47 cents; Jul 12 MGEX Wheat closed at USD8.80, up 21 cents. Funds were said to have been net buyers of around 8,000 Chicago wheat contracts on the day. Spillover strength from corn and short-covering were a feature. Backing up the bullish theme was the Russian Ministry cutting their grain production estimate from 94 MMT to 85 MMT, with the wheat harvest now predicted at 46-49 MMT versus 56.2 MMT last year. Exports are also seen sliding from 20 MMT this season to 16-18 MMT in 2012/13. The Ukraine state weather centre also lowered it forecast for grain production there too. After the close the USDA said that the US winter wheat harvest is 59% complete, more than twice the normal pace. Spring wheat crop conditions were raised to 77% good/excellent, with 57% of the crop headed compared to just 18% normally.

EU Grains Surge Higher On US Weather

25/06/12 -- EU grains closed sharply higher with Jul 12 London wheat up to GBP188050/tonne and Nov 12 London wheat rising GBP6.45/tonne to GBP168050/tonne. Aug 12 Paris wheat rose EUR5.75/tonne to EUR220.00/tonne and Nov 12 was up EUR8.50/tonne to EUR225.00/tonne.

These were more than 12-month highs for both Nov 12 London and Paris wheat as US weather across the weekend remained hot and dry. Forecasts for the week ahead offer more of the same with temperatures in the Midwest set to hit 100F.

"Corn silking and pollination is advancing in the earliest planted fields. This is a yield-sensitive period of crop development that demands .20 inch of moisture, per day, for successful kernel development. There is not enough ground moisture to supply increasing crop needs on the majority of Midwest farms," said Martell Crop Projections.

The USDA is expected to cut corn good/excellent crop condition ratings by around 3-5% this evening.

Chicago corn touched limit up (plus 40 cents) in afternoon trade, dragging wheat with it.

Adding fuel to the fire was Russia's Ag Ministry cutting their grain production estimate from 94 MMT to 85 MMT, a drop of almost 10% on last year due to winterkill and spring drought. Export potential will fall 26% to 20 MMT from 27 MMT this season, they added.

Similarly, Ukraine's national weather centre forecast the grain crop there at 43-44 MMT vs the Farm Ministry's estimate of 48-49 MMT and compared 54 MMT in 2011/12.

The market is extremely excited, and now almost universally bullish, by the news coming out of America (which is bullish for corn rather than wheat) and is backed up by reduced production estimates for Black Sea wheat.

For now, European debt concerns appear to have been placed on a very low simmer at the back of the hob. Almost a lone voice in the wilderness today was billionaire investor George Soros calling on Europe to start a fund to buy Italian and Spanish bonds, warning that a failure by finance leaders at this week's EU summit to produce drastic, tangible and credible measures to stave off the debt crisis could spell the demise of both the eurozone and the euro.

EU Rapemeal Prices

25/06/12 -- Rapemeal prices on the continent are sharply higher following another largely hot and dry weekend in the US that sees soymeal prices USD12-17 firmer in the electronic Globex market this morning.

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

The Morning Paper

25/06/12 -- A quick glance at the electronic market will tell you that it's been a hot & dry weekend in the US, with not a lot of relief in sight.

There is little in the way of rain forecast for the entire Midwest for the next 2-3 days, with fair coverage for Nebraska, Iowa, northern Illinois and southern South Dakota in the 4-7 day timeframe. As ever, there's a chance of some more widespread 0.75-1.5 inch coverage in the 8-15 day forecast (1st-9th July), but that is still some way off and recent widely touted rainfall events have largely disappointed (a bit like England in the Euros).

European grains have opened sharply higher, following the US lead, with Nov 12 London wheat up GBP3.95/tonne in early trade to GBP165.50/tonne - it's highest in just over a year. Nov 12 Paris wheat is also at a more than 12-month high of EUR221.00/tonne.

Apart from that fresh news is pretty limited so far. Spain has formally requested a bailout of up to EUR100 billion for its banks. The euro is down a bit on the news even though it was a formality in coming.

EU leaders continue to "talk the talk" ahead of their summit at the end of the week. Last week's EUR130 billion growth stimulus package announced by Germany, Spain, Italy and France seems like another hot air publicity stunt to me.

Meanwhile I read with interest over the weekend one report that points out that of the EUR500 billion that the The European Stability Mechanism (ESM) is supposed to have in its "pledged" theoretical kitty almost a fifth is to come from the already skint Portugal, Ireland, Spain and Greece. A further 18% is meant to come from Italy.

Charity begins at home, they say.

The grains may be up, but crude oil is down again. Having briefly managed to claw its way back up above USD80/barrel on Friday WTI NYMEX crude currently trades at USD79.36/barrel. One report out from Credit Suisse last week suggested that USD50/barrel could be on the cards in a "worst case scenario" before the current slump ends.