Beans Rally On Strong Exports, Chinese Buying

27/08/15 -- Soycomplex: Beans closed higher, helped by strong new crop weekly export sales which included heavy Chinese interest. The USDA reported net old crop cancellations of 131,600 MT, but new crop sales of an impressive 1,457,400 MT which were primarily for China (887,500 MT) and unknown destinations (399,500 MT). Trade expectations were for combined net sales of around 0.5-1.0 MMT. These new crop sales were up 86% from the previous week. Exports of 231,400 MT were down 42 percent from the previous week. Cumulative exports for 2014/15 are now 49.47 MMT with 2 weeks of the season left to run. The USDA forecast for the entire season is 49.67 MMT. The USDA also reported that 130,000 MT of soybeans sold to unknown destinations for 2015/16 delivery under the daily reporting system. These will be included in next week's export sales. The Chinese stock market was up more than 5% today, posting its first rise in 6 sessions, adding a bit more to the friendly tone. Lanworth estimated US soybean yields at 46.2 bu/acre, with production at 3.85 billion bushels. The USDA were at 46.9 bu/acre and 3.916 billion bushels earlier this month, and production was 3.969 billion bushels a year ago. The IGC added 2 MMT To their global 2015/16 soybean forecast, taking that up to 318 MMT, which is 4 MMT below production in 2014/15. They also added 3 MMT to global consumption in 2015/16 and cut ending stocks by 4 MMT to 44 MMT. The USDA currently peg the world bean crop at 320 MMT in 2015/16 and have carryout far higher, almost double the IGC's number in fact, at 86.9 MMT. The reason for the discrepancy is unclear. The IGC said that world rapeseed/canola production this year would fall 9% due to disappointing crops in Europe and Canada. The USDA have production 10% lower at 64.58 MMT. MDA CropCast raised their world rapeseed production estimate by 0.36 MMT to 63.99 MMT. Canada's crop was estimated at 13.23 MMT, down 15.6% on a year ago. Sep 15 Soybeans closed at $8.86 1/4, up 8 1/2 cents; Nov 15 Soybeans closed at $8.79, up 14 cents; Sep 15 Soybean Meal closed at $322.90, down $1.50; Sep 15 Soybean Oil closed at 26.89, up 77 points.

Corn: The corn market closed around a couple of cents firmer. Weekly export sales showed net cancellations of 131,800 MT for delivery in 2014/15, a marketing-year low, which the USDA said "was down noticeably from previous week and from the prior 4-week average." There were net sales of 986,600 MT on new crop and actual exports themselves came in at 820,600 MT. Cumulative shipments to date this season total 44.13 MMT versus a USDA target of 46 MMT with two weeks left to go. Lanworth estimated the US corn crop at 13.7 billion bushels on yields of 166.8 bu/acre. The USDA are currently using a figure of 13.686 billion bushels, with yields at 168.8 bu/acre. Production last year was 14.216 billion bushels. Agritel said that this year's Ukraine corn crop could be closer to 25 MMT than the 26-27 MMT previously expected due to heat and dryness during the grain filling stage. They see exports at 15 MMT. The USDA have production at 27 MMT and exports at 17.5 MMT. The Ukraine Ag Ministry said that the country had exported 2.74 MMT of grain (mostly corn) to China between Jan–Jun this year, almost 8 times more than a year ago. MDA CropCast cut their world corn production estimate by 0.73 MMT from a week ago to 948.4 MMT, mainly due to reductions in expectations for Argentina. Their 2015/16 corn crop is now estimated at 22 MMT, down from 24 MMT in 2014/15. The USDA still have the 2015/16 Argentine corn crop at 25 MMT. The IGC added 2 MMT to their world corn production estimate, taking their figure up to 968 MMT, which represents a 3.5% decline versus 2014/15. They see global consumption unchanged from previously at 972 MMT and added 3 MMT to world ending stocks taking those up to 198 MMT. The latter is some 3 MMT higher than the USDA's August WASDE forecast. The IGC have the US corn crop estimated at 340.0 MMT (or 13.385 billion bushels) versus a previous estimate of 332.0 MMT. They slashed their outlook on the EU corn crop to 60.1 MMT from a previous estimate of 66.9 MMT. Arlan Suderman of Water Street Solutions reported that at a grain industry conference in Southeast Asia this week one of the speakers projected corn prices below $3 per bushel. "Sources say that the projection was based on big production prospects, sluggish demand and comparisons with grain price drops in the big financial collapse of 2008," he said. Sep 15 Corn closed at $3.63 3/4, up 2 cents; Dec 15 Corn closed at $3.75, up 1 3/4 cents.

Wheat: The wheat market closed lower. Weekly export sales of 529,100 MT for delivery in 2015/16 were up 68 percent from the previous week, but down 7 percent from the prior 4-week average. That actually beat albeit modest trade expectations of 250-425 TMT, but that still wasn't enough to get a rally out of the wheat market. Exports of 357,200 MT were down 41 percent from the previous week and 15 percent below the prior-4 week average. The Buenos Aires Grain Exchange said that excessive wetness in Argentina may have washed out around 2% of their estimated 3.7 million ha of winter wheat plantings. There's talk that Brazil may have bought a few US HRW cargoes over the past week or so, but they didn't show up as a featured buyer in today's weekly export sales report. Taiwan were said to have bought 49,350 MT of US milling wheat for October shipment. APK Inform estimated the Ukraine wheat crop at 25.1 MMT in clean weight, up 4% on 24.1 MMT a year ago. They see domestic consumption at 12 MMT and 2015/16 wheat exports at 12.5 MMT, slightly below the USDA's 13 MMT figure. SovEcon estimated Russia’s 2015 grain crop at 101.0 MMT versus a previous estimate of 99.0 MMT. Rabobank estimated Australia’s wheat crop at 23-24 MMT. MDA CropCast cut their forecast for the global wheat crop by 1.17 MMT to 714.5 MMT due to dryness in Canada where their crop was estimated at 25.1 MMT versus 29.9 MMT a year ago. The IGC added 10 MMT to their world wheat production estimate, taking that up to 720 MMT - essentially the same as a year ago. Although they increased consumption by 4 MMT they added 5 MMT to world ending stocks taking those up to an ample 206 MMT. In fact, world 2015/16 total grain stocks would hit a 29-year high of 447 MMT, they said. They have the Russian wheat crop estimated at 59.0 MMT versus a previous figure of 54.0 MMT. They see Ukraine at 25.0 MMT versus a previous estimate of 22.0 MMT, and have Europe at 151.9 MMT versus a previous estimate of 148.5 MMT. They lowered their outlook on Canadian production this year though, down to 25.5 MMT from a previous estimate of 28.0 MMT. ACPB (a French Growers Group) estimated France’s 2015 soft wheat crop at a record in excess of 40 MMT, with yields also at a record 7.8 MT/ha. Egypt purchased just one cargo of Russian wheat in their tender. The price paid was said to be little more than $190/tonne. They then immediately released another tender, the results of which are expected tomorrow. Sep 15 CBOT Wheat closed at $4.84 1/4, down 5 1/2 cents; Sep 15 KCBT Wheat closed at $4.64 1/2, down 2 cents; Sep 15 MGEX Wheat closed at $4.94 1/2, down 1 3/4 cents.

And If You Know Your History...

27/08/15 -- A very interesting potted history of the Liverpool Corn & Feed Trade Association - the oldest still functioning grain trade body in the world!

Prior to 1806 Liverpool Corn Market used a building near to the town hall to trade grain.

In 1806 a company was formed issuing 100 x £100 shares on the site later used in 1851.

The Association also used the Atlantic Building in Brunswick Street where the Newsroom was established. The London Newsroom was called “The Baltic” and Liverpool’s “The Atlantic”.

Prior to 1845 Liverpool was only involved in a small volume of export of grain as high domestic grain prices supported by the Corn Laws prohibited imports.

With a quickly rising and more urbanised population Robert Peel PM realised the need to repeal the Corn Laws which happened in that year. Imports then flooded the country into mostly West Coast ports from newly colonised lands. making Liverpool of supreme importance in feeding the country and fuelling the continuing industrial revolution. So the merchants set up the LCTA

In 1853 the association of the Liverpool Corn Trade was founded - making it the oldest grain trade in the world still functioning, with Robert Woodward as the first Chairman

In 1883 the name was changed to the LCTA with Edmund Taylor as President - offering the first future delivery contracts for various wheat grades. This was accompanied by the first move in the world to binding grain contracts in law with stamps issued as legal tender by the association to be affixed to official contract forms.

In 1886 the association was incorporated. The Atlantic Newsroom transferred to the Corn Exchange Buildings to allow spot and the new idea of “Futures” trading - that'll never catch on!

The Association also laid down rules for Arbitration, Grain Standards, and through port Charges, a Clearing House, and Payments for goods.

In 1886 these rules were amalgamated into one to rationalise the trading.

In 1891 the first futures contract was traded.

In 1893 a clearing house for C.I.F contracts was opened, including contract registration, margin calls and delivery allowing the new ideas of hedging etc on the Chicago model of 1871.

This was possible only after the first successful transatlantic cable partly sponsored by Liverpool merchants was finished in 1875.

1897/9 a Mr Leiter of Chicago attempted to ‘corner’ the Liverpool futures market which looked like working until the strength of the Liverpool merchants held fast with Mr Leiter eventually losing a fortune as he attempted and failed to liquidate his paper profits. The CBOT seeing this adopted many of the practices embodied in the LCTA.

Futures trading - these sales meant the need for extended storage and during the period Liverpool had more portside stocks than the rest of Europe! This grain was all brought in in bags and handled and stored that way.

By 1868 the Association ran new purpose built facilities in Waterloo and East Float, Birkenhead for grain in bags or the more towards bulk. These were the only places in Europe that could take and unload 5,000 ton vessels, unloaded via ‘skip’ whether bulk or bags. Tonnage continued to increase leading the association to commission the granary at Alexandra Dock which with further expansion made Liverpool the greatest warehousing and storage centre for grain in Europe.

The UK imposed a levy on wheat, which was vigorously opposed by the LCTA. This lead to less US wheat being imported and the rise of Argentina as the main supplier up until the outbreak of the Great War.

1914-1921 - Control was set on the import and movement of Grains within the UK. However due to its geographical position during this time Liverpool was the UK "Bread Basket" - at the end of the war 62 ships were awaiting discharge at Liverpool to feed the hungry populace. Nineteen LCTA members were lost in the hostilities.

1921-1930 - In these years of depression trade continued to increase through Liverpool as did the use of the hedging facility of the futures market. With better communications not only UK and US traders were taking advantage of this, but also those from the new and old European counties formed after Versailles. During this period LCTA established silos in Manchester via the Canal. Both ports then became delivery points.

1930 showed the first signs of a crack in this growth and through to 1939 with US drought and Russian market uncertainties futures no longer held the attraction they had. This was compounded by Government acts in the UK and Canada which severely limited international trade.

1935-1945 - Futures trading was suspended. The LCTA was charged by the Government to keep the whole of the North West of the country and North Wales supplied with grains and Animal Feeding Stuffs. Twenty nine LCTA members again paid the ultimate price for their country.

1941 - The Corn Trade Building was destroyed in the Blitz.

Restrictions remained in force until 1953 - the LCTA’s 100th year and also the date of the laying of the foundation stone for the new Corn Trade Building to replace the one destroyed in 1941.

1981 - The LCTA was reformed as Liverpool Corn and Feed Trade Association.

Many thanks to Eric Thomas for all the info!

EU Grains Mostly Higher As China Steadies The Ship

27/08/15 -- EU grains traded mostly a little higher Thursday, helped by an easing of fears over China, where the stock market closed 5% higher overnight, it's first rise of the week. Hong Kong's Hang Seng index also finished higher, up 3.6%, and European markets also trade positive.

Crude oil is up sharply too, and now trades closing above $42/barrel in New York.

Risk appetite is being boosted by the strongest jump in US equity markets since 2011 yesterday, Barclays said in a note.

At the finish, Nov 15 London wheat was up GBP0.25/tonne to GBP114.75/tonne, Sep 15 Paris wheat was up EUR0.25/tonne to EUR163.00/tonne, Nov 15 Paris corn was down EUR1.75/tonne to EUR169.25/tonne, whilst Nov 15 Paris rapeseed was up EUR7.00/tonne to EUR358.75/tonne.

Defra said that there was 71% more UK wheat carried over from old crop into the new 2015/16 marketing year at the end of June than there was a year previously. The tonnage being carried was estimated at 2.0 MMT (excluding stocks in Scotland and Northern Ireland), which is the largest volume since 2009.

The total also excludes intervention stocks and/or any wheat tendered on LIFFE.

Around half of that volume was still being held on farm, which is 260% more than a year previously, they said. The largest on farm stocks were in the East of England region, followed by the East Midlands and then Yorkshire & Humber.

The large carry that had been on offer – Nov 15 London wheat closed GBP14.25/tonne higher than the Jul 15 contract on the day that the latter went off the board – and a dissatisfaction with prices in general was clearly behind this.

There was also 780,000 MT of barley on hand at the end of last season, a 9% rise on year ago levels and the largest since at least 2007.

UK corn stocks were the highest on record at 280,000 MT, and up 47% on a year ago, they added.

Wet weather over the past week has slowed the UK harvest down, with around 55% of the combinable area now cut, up only 5 points on a week ago. The wheat harvest has only moved on from 40% done a week ago to 45% complete this time round, say the HGCA.

Their yield estimate is unchanged on a week ago at 8.3-8.6 MT/ha, up around 6-10% on the 10-year average. "Harvest progress remains behind the five year average where around 60% of the UK wheat crop was harvested by this point in August," they add.

The UK winter barley harvest is 99% done, an a quarter of the spring crop is now in. Oats are 40% done and the winter OSR harvest is 95% complete, they say. Yields are above the recent average on all except oats, which are in line with the norm at 5.7 MT/ha.

News that a strike at the port of Rouen means that the Senalia facility has suspended the loading and unloading of grains cargoes merely adds to the port's woes.

That's keeping front month Paris wheat on the defensive - the premium on offer for Dec 15 is more than EUR11/tonne today.

Heat and dryness in Ukraine means that their 2015 corn crop is likely to be closer to 25 MMT than the 26-27 MMT previously expected, say Agritel. The USDA are currently at 27 MMT, having raised that from the 26 MMT forecast in July.

APK Inform estimated the Ukraine wheat crop at 25.1 MMT in clean weight this year, up 4% on a year ago. Consumption is forecast at 12 MMT and exports at 12.5 MMT. The USDA are currently at 25.5 MMT for production and 13 MMT for exports.

MDA CropCast cut their world wheat production forecast by 1.17 MMT to 714.5 MMT, a 3 MMT drop on a year ago due to earlier dryness in Canada. Their crop was now pegged at 25.1 MMT, down 16% on 29.9 MMT a year ago.

They raised their outlook for the world barley crop by 0.47 MMT to 138.1 MMT, a 2.3 MMT decline on a year ago.

They also raised their estimate for the 2015 world rapeseed/canola crop by 0.36 MMT to 63.99 MMT, down 1.6 MMT on a year ago.

Multi-year low prices for soybeans, and soybean and palm oil mean that rapeseed "is not in control of its own price destiny right now – although the tightness in the supply of high oil yielding oilseeds is helping stem the fall in price. As and when prices begin to rise, especially if veg oil markets see a change in fortune, OSR should be one of the first to respond," said the HGCA.

Based on the market close last night, EU rapeseed prices are down almost 12% since the beginning of July, despite lower EU and world production this year.

The euro trades lower against both the US dollar and sterling today, giving rise to the notion that the recent single currency appreciation might have been a bit overdone.

The ECB desperately wants a weaker currency to stimulate Eurozone exports, so this recent strength will be unwelcome  to them.

ECB Chief Economist, Peter Praet, delivered forceful remarks yesterday that downside risks to inflation in the Eurozone had increased, which could lead to QE being "front-loaded" - and the last time this was hinted at the euro took a battering.

The euro trades at under 1.13 against the US dollar today, having attained more than 1.17 on Monday. It stands close to 1.37 versus the pound, having been less than 1.35 on Monday.

Barclays remain bearish on the outlook for the euro, forecasting the EUR/USD to drop below parity by the end of the year, and continuing to slide, hitting 0.93 by Q2 of 2016. They predict the GBP/EUR at 1.47 by the end of the year, rising to 1.52 by Q2 of 2016.

Chicago Soybeans End At Lowest Levels Since Mar 2009

26/08/15 -- Soycomplex: Beans closed at fresh lows for the recent slump. The Chinese stock market was down again, despite recent efforts by their central bank to shore things up. The market is now at levels not seen since March 2009. China's Ministry of Commerce estimated August soybean imports at 5.71 MMT, down sharply from 9.5 MMT in July, albeit that this was a record high. The vast majority of that will likely come from South America as well, not the US. Argentine president elections are due to take place on October 25. Argentina’s leading opposition candidate has told farm groups that he would lower soybean export taxes and lift quotas on wheat and corn shipments. Local farmers there remain on strike until Friday. Trade estimates for tomorrow's weekly export sales report are in the region of 0.5-1.0 MMT for beans. For meal, sales of 50-275 TMT are what the market is expecting. Sep 15 Soybeans closed at $8.77 3/4, down 16 1/2 cents; Nov 15 Soybeans closed at $8.65, down 12 3/4 cents; Sep 15 Soybean Meal closed at $324.40, down $3.20; Sep 15 Soybean Oil closed at 26.12, down 70 points.

Corn: The corn market closed around 3-4 cents lower. The US Energy Dept reported that US ethanol production dropped 13,000 barrels/day to 952,000 barrels/day for the week ending August 21. That's the the lowest production figure since the week ending May 1. Crude oil stocks remain at near 80-year highs. Ethanol stocks were steady at 18.6 million barrels. The Ukraine Ag Ministry estimated their 2015/16 grain crop at 60.46 MMT, with exports at an all-time high 37.0 MMT. Most of that will be corn. "The weather forecast is in flux transitioning into a hotter and drier pattern in the US heartland. This would be ideal for soggy corn fields in a wet summer growing season. Temperatures have chilled down in the Midwest the past few days, but are expected to warm up in the week ahead. August has been rather cool to date in Midwest corn and soybeans. Mostly dry conditions are expected in corn and soybeans, contrary to the extreme wetness that dominated for many weeks. A narrow band of heavy rain is predicted in the Upper Midwest in South Dakota, Minnesota, Iowa and Wisconsin. Strong thunderstorms would develop along an unstable horizontal front," said Martell Crop Projections. Estimates for tomorrow's weekly export sales report are around 400-900 TMT. Sep 15 Corn closed at $3.61 3/4, down 3 3/4 cents; Dec 15 Corn closed at $3.73 1/4, down 3 3/4 cents.

Wheat: The wheat market finished mostly lower. Egypt's GASC tendered for wheat for October shipment, with the results expected tomorrow. This will be a useful barometer to test Russian exporters willingness to partake, given the recent slump in value of the rouble and uncertainty over the current export duty. It will also tell us who else is competitive, just don't go expecting it to be the US. Russia’s President Putin said that the country plans to increase wheat supplies to Egypt this year. Russia sold 4.0 MMT of wheat to Egypt in 2014, covering 40% of their needs. Egypt's Supplies Minister said that the country has enough wheat bought already to last it until Feb 10. Thailand were said to have bought 300,000 MT of Black Sea feed wheat for Jan-Aug shipment. Tunisia bought 75,000 MT of optional origin soft wheat and 125,000 MT of optional origin durum wheat. Oil World said heavy rainfall in Argentina since the start of August may cause “significant” damage to their developing winter wheat crop. Production this year may fall to 8-9 MMT, down from 12.8 MMT a year ago, said Dr Cordonnier. That could present a window of opportunity for US wheat to be exported to Brazil once more. Estimates for tomorrow's weekly export sales report are around 250-425 TMT. Sep 15 CBOT Wheat closed at $4.89 3/4, down 5 1/4 cents; Sep 15 KCBT Wheat closed at $4.66 1/2, up 1/2 cent; Sep 15 MGEX Wheat closed at $4.96 1/4, down 1/2 cent.

EU Grains Mostly Lower On Chinese Jitters

26/08/15 -- EU grains closed mixed, but mostly lower. Chinese jitters remain to the fore, with the stock market in Shanghai lower again overnight despite yesterday's stimulus measures. Shares in Europe followed suit today.

At the close, Nov 15 London wheat was down GBP0.50/tonne to GBP114.50/tonne, Sep 15 Paris wheat was EUR2.75/tonne easier at EUR162.75/tonne, Nov 15 Paris corn was down EUR1.25/tonne to EUR171.00/tonne, whilst Nov 15 Paris rapeseed was EUR3.00/tonne lower at EUR351.75onne.

The euro was a bit weaker today, meaning that support at the 1.36 level against the pound held, although some analysts are now predicting that this might not be the case for long, signalling a move down to the 1.34 area. The market appears to have completely abandoned hope of a UK interest rate rise this year, and is now questioning whether a Q1 of 2016 rise is even possible.

That could keep sterling under pressure for a while, which should help to underpin London wheat a little. We shall have to see how exports perform in the coming months to get an idea whether the harvest lows are now in, or if there's worse to come yet. The low of the calendar year was set around August/September in both 2013 and 2014.

The pace of Russia's wheat exports requires close monitoring, as these have been well behind year ago levels, despite a very similar sized crop now seeming likely.

This of course is due to the alarming slump in value of the rouble and the current export duty (and the rouble value-based mechanism that calculates it).

Some analysts are now predicting that now that NYMEX crude has fallen below $40/barrel, a test of $30/barrel could be on the cards. A further 25% drop in crude would surely give the Russian currency under even more downside.

A report by APK Inform yesterday said that Russian exporters had pretty much stopped offering wheat until the rouble finds its feet and the government clarify possible new changes to the duty.

Rusagrotrans today said that they still expect Russia to export 3.8 MMT of grains this month, falling to 3.2 MMT in September. They had previously predicted August exports of 3.7-4.0 MMT versus 4.5 MMT a year ago. Exports of 3.8 MMT seems a bit high, as that would only represent a drop of 15.5% on last year - and August 2014 exports were an all-time high.

In other news, Algeria said that it had produced a 4 MMT grain crop this year, up 14% on a year ago. They said that they aim to produce a crop of 6.7 MMT by 2019, reducing their reliance on imports. The North African nation will be the world's third largest wheat importer this season, after Egypt and Indonesia, shipping in 7.7 MMT of the grain according to USDA estimates. They are also set to import large volumes of corn (4.4 MMT) along with 600,000 MT of barley.

Tunisia released a tender for 100,000 MT of milling wheat, 159,000 MT of durum and 50,0000 MT of feed barley. France will be hoping to pick up at least some of that business. Iraq are in the market for 50,000 MT of soft wheat, although they frequently buy more than they tender for.

The fortunes of rapeseed prices seem closely tied to those of soybeans - and the latter trades at the lowest levels since 2009. "As we know, 2015/16 rapeseed supply and demand is expected to be somewhat tighter than the situation for soybeans, however the influence of the oilseeds complex as a whole has kept rapeseed prices subdued," noted the HGCA.

Front month rapeseed prices closed near EUR400/tonne on Jul 1 before closing EUR50/tonne lower than that on Monday for a decline of 12.5% in less than 2 months.

Chicago Grains Rally Attempt Largely Fizzles Out

25/08/15 -- Soycomplex: Beans closed with small gains, but well off the intra-day highs. By "Turnaround Tuesday" standards this proved to be a pretty modest affair at the end of the day. News that China had cut interest rates for the fifth time since November, and cut bank reserve requirements, added a bit of support to a nervous soybean market hovering around multi-year lows. The USDA announced another 210,000 MT of beans were sold to unknown destinations for 2015/16 delivery, presumed to be China. "Unknown" was in the market yesterday for 120,000 MT as well. Farmers in Argentina started a 5-day strike yesterday, disruptions in supplies are expected to be minimal though. Sep 15 Soybeans closed at $8.94 1/4, up 1 1/2 cents; Nov 15 Soybeans closed at $8.77 3/4, up 3 3/4 cents; Sep 15 Soybean Meal closed at $327.60, up $1.20; Sep 15 Soybean Oil closed at 26.82, up 27 points

Corn: The market closed around 3-4 cents lower. The Chinese stimulus measures announced today are seen as being more of benefit to soybeans than to corn. The US remains wet, and the forecast looks cooler. "Western Iowa was hit with strong thunderstorms last week that produced 3 - 5 inches of rainfall. Small pockets of excessive rainfall also developed in Illinois, Wisconsin and Missouri in an unstable weather pattern. The Midwest cumulative rainfall in July and August has now reached 7.7 inches, 14% above normal. Recall that record heavy rainfall developed previously, in June, causing historic flooding in Missouri, Illinois, Indiana and Ohio and damaging corn prospects. With one week to go in August, the forecast continues wet for the Upper Midwest. Heavy rain is predicted in South Dakota, Minnesota, northern Iowa and Wisconsin. Welcome drying is predicted in the Great Lakes and eastern Midwest. Strong cooling is predicted providing the first real taste of fall. Temperatures are projected to fall 6-12 F below normal the next 3-4 days," said Martell Crop Projections. Sep 15 Corn closed at $3.65 1/2, down 3 1/4 cents; Dec 15 Corn closed at $3.77, down 3 1/2 cents.

Wheat: The market closed around 7-10 cents lower across the three exchanges as early attempts to rally fizzled out. The USDA reported that the spring wheat and barley harvests are well advance compared with normal last night, and demand for both is slack. The Canadian harvest is also reported to be moving along smoothly. Russia is now past halfway done on their wheat harvest at 55.4% complete producing a crop of 46.4 MMT to date, according to their Ag Ministry. Average yields are said to be down more than 8% at 3.11 MT/ha. APK Inform said that Russian sellers had more or less withdrawn from the market due to the falling rouble and current duty on wheat exports. Winter planting in Russia for the 2016 harvest is almost 9% complete on 1.5 million ha. In Ukraine, they've harvested around 70% of the planted area, producing a grain crop of 37 MMT to date. The 2015 Ukraine corn harvest is yet to start. Winter planting for next year's harvest is already said to be 70% complete on 5.77 million ha. Jordan cancelled a tender for optional origin wheat for Nov/Dec shipment. Taiwan purchased 49,400 MT of US wheat. Sep 15 CBOT Wheat closed at $4.95, down 8 1/4 cents; Sep 15 KCBT Wheat closed at $4.66, down 9 3/4 cents; Sep 15 MGEX Wheat closed at $4.96 3/4, down 7 3/4 cents.

EU Grains Recover Some Composure

25/08/15 -- EU grains managed to mostly stage a mini "Turnaround Tuesday" of their own today, recovering most of yesterday's losses.

News that China was to cut interest rates 0.25% to 4.6% tomorrow seemed to reassure global equities markets, with stocks in London, Paris and Frankfurt all posting decent gains.

At the close, Nov 15 London wheat was down GBP0.30/tonne to GBP115.00/tonne. In Paris Sep 15 wheat gained EUR2.00/tonne to EUR165.50/tonne, Nov 15 corn added EUR0.25/tonne to EUR172.25/tonne and Nov 15 rapeseed was up EUR6.00/tonne to EUR354.75/tonne.

Crude oil was higher too today, and the recent spate of euro strength also saw a mini reversal, boosting Paris grains a little.

APK Inform reported that Russian shippers has all but stopped selling milling wheat onto the international market until the rouble stabilises. The current mechanism for calculating the cost of the export duty incurred on selling wheat abroad carries too many risks, they said.

The Russian government are supposed to be looking into alternative ways of calculating the duty and/or raising the ceiling at which it kicks in. A decision on that isn't expected for at least another couple of weeks at the earliest though.

The Russian currency is currently falling so fast that in rouble terms domestic grain prices are rising, they said.

As mentioned yesterday when the sky was falling in, looking back to the last Egyptian tender where they paid $184.39/tonne for Russian wheat on an FOB basis. At today's exchange rate that's around RUB13,000 - well above the level at which the duty kicks in, and in fact RUB1,000 more than the equivalent when the deal was done.

The higher the price paid in rouble terms, the larger the export duty due. According to my calculations, when the last deal was done the duty payable was around $7.50/tonne, today it would be around $14/tonne - almost double.

So the duty payable has doubled in little more than a week, and the consignment that was sold still won't be shipped until the end of September. The risk on what the rouble might do between now and then could be hedged, but the possible value of the export duty can't really.

Hence the slowdown in Russian sales. Of course this doesn't mean that the wheat isn't out there to sell, it just isn't really coming onto the market yet. As, when and if the Russian government does change the mechanism then that could change. They are still confidently predicting a 59.8 MMT wheat crop this year.

The 2015 Russian wheat harvest is now past halfway done, and yields so far are down more than 9% at 3.15 MT/ha - only about 54% of the European average predicted by MARS yesterday.

That's a pipe dream for a Kazakhstan farmer though, average yields these this year are only 1.51 MT/ha. Amazingly, this is up by almost a third on a year ago!

Chicago Soybeans Hit Lowest Level Since 2009

24/08/15 -- Soycomplex: Beans closed lower, but well off session lows, as traders attempted to weigh up the implications of the developing situation in China. They account for two thirds of all global soybean trade after all. Despite ending well off the lows of the day, this was still the first sub-$9/bushel close on a front month since 2009. The USDA reported weekly export inspections of 210,128 MT, taking cumulative shipments to 1.822 billion bushels, with 11 days remaining in the 2014/15 marketing year. The USDA projection for exports this season is 1.825 billion bushels. They left crop ratings unchanged at 63% good to excellent. They said 87% of the crop is setting pods, one point behind the 5-year average, with 96% of the crop blooming - 2 points behind the norm. The final results of last week's ProFarmer crop tour put the average US soybean yield at 46.5 bu/acre and estimated production at 3.887 billion bushels, both are slightly below the USDA's thinking - but not by much. If Chinese demand was to fall off a cliff then the soybean market really is in trouble. As yet though there is no evidence that it has, or will. Soybean imports in July were in fact at record levels. Since the Chinese devalued the yuan it's lost around 3% in value against the US dollar, which will make imports more expensive, but not dramatically so. The USDA reported 120,000 MT of soybeans sold to "unknown" for 2015/16 today, which frequently means "China" of course. Sep 15 Soybeans closed at $8.92 3/4, down 12 1/2 cents; Nov 15 Soybeans closed at $8.74, down 15 1/2 cents; Sep 15 Soybean Meal closed at $326.40, down $0.50; Sep 15 Soybean Oil closed at 26.55, down 81 points. The low of the day on Nov 15 beans was $8.55, almost 20 cents below the close.

Corn: The corn market closed around 3 cents higher, having been around 12 cents lower at one stage. The market seemed to conclude that China isn't a major player in the world corn import market. It certainly doesn't buy much from the US at the moment, although it is a significant home for corn from Ukraine. The USDA left crop conditions unchanged at 69% good to excellent, although there was a one point switch into excellent. They said that 85% of the crop is at the dough stage, up from 71% a week ago and 4 points ahead of the 5-year average. Denting, at 39% was 18 points up on the week, but 4 points behind the 5-year average. MARS cut their estimate for EU-28 corn yields this year from 6.71 MT/ha a month ago to 6.40 MT/ha, saying that "large areas of Europe have been negatively impacted by high temperatures and dry conditions, hitting summer crops during their most critical grain-filling stage." Adding that "record temperatures and critically low soil moisture levels led to critical situations in eastern France and southern Germany. Another area of concern is the status of summer crops in Poland which have been affected by the hot and dry conditions." Weekly US corn export inspections came in at 883,987 MT. Marketing year shipments to all destinations total 1.721 billion bushels versus the USDA's projection for the full season of 1.81 billion. APK Inform said that Ukraine seaports exported over 150 TMT of corn last week. Russia's Ag Ministry estimated corn production there this year at a record 13 MMT. Weakness of the Russian rouble and Ukraine hryvnia will help both their exports in 2015/16, which should get off to a brisk start once the harvest begins. Sep 15 Corn closed at $3.68 3/4, up 3 1/2 cents; Dec 15 Corn closed at $3.80 1/2, up 3 1/4 cents. The low of the day on Dec 15 was 365 1/2 cents.

Wheat: The wheat market closed with small gains, having been more than 12 cents lower at one stage. As with corn, the market seemed to conclude that the Chinese situation will have more of a negative impact on beans than it will for wheat. The USDA reported that the 2015 US spring wheat harvest has raced to 75% complete as of Sunday night. That's up from 53% done a week ago, and far higher than the 5-year average of 47%. The US barley harvest is similarly advance at 86% complete versus only 50% normally at this time. Weekly US export inspections were poor at only 277,992 MT, that was around half those of the previous week and for the same week a year ago. A sudden switch to a strong euro and weaker US dollar might now start to help US exports a bit though. Excessive wetness in Argentine (possibly El Nino related) is causing damage to their winter wheat crop. Plantings were already down 700,000 ha on last year, according to the Buenos Aires Grain Exchange (the Rosario exchange has them even lower). Rain now threatens to wipe out 200-300,000 ha of what did get planted, in a best case scenario, says Dr Cordonnier. A worst case scenario is for losses on up to 700,000 ha, he says. Some private local estimates now put production there at only 8-9 MMT, versus 12.8 MMT a year ago. That would obviously cut their 2015/16 exports significantly, and leave Brazil looking for supplies from outside the Mercosur trade bloc once again. The US would be well-positioned to supply those needs. Russia's Ag Ministry forecast a wheat crop there this year of 59.8 MMT, similar to last year's levels. Exports still lag a year ago significantly though due to the current duty tied to the value of the ever falling rouble. That hit new lows versus the dollar and euro today as crude dipped to fresh lows. Sep 15 CBOT Wheat closed at $5.03 1/4, up 3 3/4 cents; Sep 15 KCBT Wheat closed at $4.75 3/4, up 4 3/4 cents; Sep 15 MGEX Wheat closed at $5.04 1/2, up 3 cents. The low of the day in Chicago was $4.86 3/4 cents.

EU Grains: Well, It Could Have Been Worse

24/08/15 -- EU grains managed to stage something of a recovery from early Black Monday blues, helped by Chicago wheat and corn moving into the green in afternoon trade once the US market awoke and wiped the sleep from it's eyes.

Rapeseed remained well into the red, even if it was also well off session lows, under the influence of soybeans trading at prices not seen in years. They it would seem stand to lose the most from China catching a cold, they do after all account for two thirds of all global soybean trade.

At the close, Nov 15 London wheat was up GBP0.55/tonne to GBP115.30/tonne, Sep 15 Paris wheat was EUR3.25/tonne easier at EUR163.50/tonne, Nov 15 Paris corn was down EUR2.25/tonne to EUR172.00/tonne, whilst Nov 15 Paris rapeseed had slumped EUR8.75/tonne lower to EUR348.75/tonne. At one stage the front month rapeseed contract hit as low as EUR339.50/tonne to stand EUR18.00/tonne lower on the day.

London wheat came off the best due to the suddenly sharply firmer euro, against which the pound finished the day at 1.36, it's lowest since Jun 8.

Euro strength was tied to ideas that the Fed and BoE will now be delaying plans to start raising US and UK interest rates any time soon, faced with the Chinese-led global economic malaise. When China sneezes the rest of the world does indeed catch a cold it would seem.

The EU Commission's MARS unit released their August report, in which they said "Large areas of Europe have been negatively impacted by high temperatures and dry conditions, hitting summer crops during their most critical grain-filling stage."

They subsequently cut their forecast for EU-28 corn yields this year from the 6.71 MT/ha estimated a month ago to an average 6.40 MT/ha. That's 20% down on a year ago and almost 9% below the recent 5-year average.

Wheat yields were raised from 5.80 MT/ha to 5.81 MT/ha, which is 2.5% above the 5-year average. They've also increased winter barley yields to an average 5.61 MT/ha, which is 4.7% above the 5-year average. OSR yields were raised to 3.25 MT/ha, which is 3.8% above the 5-year average.

In the UK, they estimated average wheat yields at 8.09 MT/ha, up slightly on 8.07 MT/ha a month ago, although lower than the HGCA's current figure of 8.3-8.6 MT/ha. "First reports suggest good yields and quality, despite the fact that frequent rains hampered the harvest in Ireland and the northern UK," they said.

Average UK barley yields were trimmed from 6.09 MT/ha a month ago to 6.05 MT/ha, which is well below the HGCA's current figures. OSR yields here in the UK were estimated at 3.73 MT/ha, unchanged on a month ago and in line with current HGCA thinking.

FranceAgriMer said that 12% of this year's French wheat crop had protein levels of over 11.5%, a further 34% of the crop had proteins of between 11-11.5%, and another 40% was in the 10.5-11.0% region.

They said that 40% of the crop had a bushel weight of over 80kg/hl, with 91% of the crop over 78kg/hl, and that 96% had hagberg levels of over 240. That's a better and more consistent quality than last year.

The Russian Ag Ministry said that the 2015 harvest there was now halfway through, producing a total grain crop of 65 MMT to date. That includes 45.7 MMT of wheat and 12.7 MMT of barley. They estimate final grain production this year at 102.9 MMT, including 59.8 MMT of wheat, 17.4 MMT of barley and 13 MMT of corn.

Winter plantings for the 2016 harvest in Russia are already said to be 7.3% complete.

Russia's 2015/16 total grain exports (to Aug 19) were 3.8 MMT, according to Ministry data. That's 35% down compared to the same period a year ago. Exporters will be hoping that they can convince the government to raise the current export duty ceiling on wheat from the RUB11,000/tonne level at which it currently kicks in given recent rouble weakness.

The Good News: The Bloke In The Next Bed Wants To Buy Your Slippers!

24/08/15 -- EU grains trade lower across the board. Paris rapeseed fares the worst, down over EUR10/tonne on front month Nov 15 at one point, as soybean prices collapse to below $9/bushel  on a front month for the first time since the aftermath of the 2008 financial crisis.

The good news, if you can call it that, in so much as "the bloke in the next bed wants to buy your slippers" sort of a way, is that London wheat isn't taking as much of a pasting as the French grains are. That's because the euro is suddenly the market's favoured currency.

As mentioned on Friday, the market thinking is that the crisis in China (who's stock market fell more than 8.5% this morning) will be putting back ideas of a US and UK interest rate any time soon. The notion that US rates might rise as soon as next month, and that those in the UK could follow suit fairly shortly afterwards, is what has been supporting the dollar and sterling. That all appears to be out of the window now.

So the pound is down below 1.37 against the euro, which is also up to almost 1.15 versus the US dollar. Not that sterling is under pressure across the board, it's up to new highs against the South African rand, and the Australian, New Zealand and Canadian dollars - regarded as more commodity dependent currencies than the pound.

At noon, Nov 15 London wheat was down GBP0.75/tonne to GBP114.00/tonne, Sep 15 Paris wheat was EUR4.25/tonne easier at EUR162.50/tonne, Nov 15 Paris corn was down EUR3.00/tonne to EUR171.25/tonne, whilst Nov 15 Paris rapeseed had slumped EUR9.75/tonne lower to EUR347.75/tonne - we haven't seen a front month that low since May 1.

The Russian rouble, who's value is closely linked to crude oil prices, is also under pressure today, falling to new lows against both the euro and US dollar. NYMEX crude trades below $39/barrel on the spot - we haven't seen things down that low since the post sub-prime capitulation days of late 2008/early 2009.

The current situation in fact feels very reminiscent of those dark days, market fundamentals are out of the window as everybody stampedes for the exits. I guess we can only console ourselves with the belief that things can only get better. Can't they?

Talking of fundamentals, let's get back to those. What are they? They are that Russia's harvest is about halfway done, and they have a larger crop than most (myself included) thought was possible/likely earlier in the year. The Russian Ag Ministry now estimate the total grain crop there at 102.9 MMT, down only a fraction on 105.3 MMT a year ago. This year's number will include 59.8 MMT of wheat, 17.4 MMT of barley and 13 MMT of corn, say the Ministry.

Russia's exports have however been slow to get going, despite having some high profile success in recent GASC tenders. Traders there seem reluctant to commit too much on wheat sales, due to the existence of the current floating export duty on wheat. That is tied to the value of the rouble, and that as mentioned earlier is on the floor.

If we glance back at the last Egyptian tender, they paid $184.39/tonne then for Russian wheat on an FOB basis. At today's exchange rate that's around RUB13,000 - well above the level at which the duty kicks in, and in fact RUB1,000 more than the equivalent when the deal was done little more than a week ago.

The higher the price paid in rouble terms, the larger the export duty due. According to my calculations, when the last deal was done the duty payable was around $7.50/tonne, today it would be around $14/tonne - almost double.

It's not hard to see therefore why rapid changes in liability like this would make Russian exporters reluctant to commit to sales right now. The government are said to be looking at ways of making the duty fairer, but they haven't done so yet. Until they do that could keep a fair bit of Russian wheat off the market.

That however is about the only good news I can offer you. The other fundamentals are: Ukraine's crop is, like Russia's, also larger than we thought. And unlike Russia, they aren't shy in offering it up for sale. Ukraine seaports exported 628.8 TMT of grain last week, according to APK Inform. Of that 289.8 TMT was wheat, 150.9 TMT was corn and 188.1 TMT was barley.

The wheat crop in Europe also looks like being better than thought. Drought and dryness didn't harm the French crop, that's come in at a record 40.4 MMT, say their Ag Ministry. UK yields appear to be well above average too, with a crop of 15.5-16.0 MMT on the cards, according to my thoughts. And of course there's still a large carryover from last year to contend with, as well as lower exports than Defra forecast for the 2014/15 marketing year.

The EU Commission's MARS unit have today raised their forecast for EU-28 soft wheat yields to 5.81 MT/ha, which is 2.5% above the 5-year average. They've also increased winter barley yields to an average 5.61 MT/ha, which is 4.7% above the 5-year average. Spring barley yields were left unchanged from a month ago at 3.87 MT/ha, down 1% on the recent average. OSR yields were raised to 3.25 MT/ha, which is 3.8% above the 5-year average. Only corn yields are lowered, down from the 6.71 MT/ha forecast a month ago to 6.40 MT/ha, and 8.8% down on the recent average.

The Morning Brief: It's Not Going To Be Pretty

24/08/15 -- It's Monday, 9am, and it's looking like today is one where the shops sell out of red paint. The Chinese stock market has started the week 8.5% lower to post it's worst close since 2007.

European stocks have opened around 3% lower, NYMEX crude is below $40/barrel and Brent is now under $45/barrel - neither has been there since the post sub-prime capitulation days of late 2008/early 2009.

The overnight grains are sharply lower across the board, with soybeans paddling us back into territory that also hasn't been chartered for 6-7 years, below $9/bu on the "premium" front month.

The euro is suddenly the star of the class, benefitting from the notion that maybe the US and UK won't start to raise interest rates as early as the market expected, not against a global economic meltdown like this.

The pound is now below 1.37 versus the single currency for the first time since Jun 10. The latter is also up close to 1.15 against the dollar.

That's a potential double whammy for the Paris grains market when that opens later this morning: stocks and crude have gone for a shit, the overnight grains are sharply lower AND the euro is sharply higher (OK, that's a triple or even a quadruple whammy).

The Russian rouble has fallen to new lows against the US dollar and euro this morning as their economy is heavily reliant on revenues from oil. (Didn't I read somewhere some time back that the entire Russian budget was drawn up on the assumption that crude oil prices would average $100/barrel over the next 12 months?)

That's an interesting development as it should also mean the tax that exporters have to pay on wheat exports will now be even higher than it was last week.

I expect that the grain market will take that as only a very small crumb of comfort today though.

In the words of Ronnie Barker "Have you got any O's" to which Ronnie Corbett replies "What sort of O's? Panty Hose? Garden Hoes?  Water Hose?" only to be met with "No, letter O's"

I fear that we might need some number 0's to go in the middle for London wheat this week. Still at least we don't need the 9's. Not yet anyway!