Review Of The Week
CBOT CORN
Corn lost 45 3/4c on the week as a whole, with the lions share of that coming with Friday's limit down move. This, added to the previous weeks heavy decline, make for corn's biggest two-week plunge in at least 45 years. US corn production will total 12.2 billion bushels this year, up 1.1 percent from 12.072 billion projected a month ago and second only to last year's 13.1 billion-bushel harvest, the USDA said Friday. Unsold supplies of U.S. corn before next year's harvest will total 1.154 billion bushels, up 13 percent from 1.018 billion forecast a month ago, the department said. Analysts expected an estimate of 1.12 billion bushels, on average.
CBOT SOYBEANS
Soybeans closed the week 82c lower, as with corn the majority of that fall coming with Friday's 70c limit down close. US farmers will harvest 2.983 billion bushels of soybeans this year, up from 2.934 billion projected in September, according to the report. U.S. reserve supplies before next year's harvest will total 220 million bushels, up from 135 million forecast last month, the USDA said.
CBOT WHEAT
Wheat lost 76 3/4c on the week, most of it also Friday. U.S. wheat reserves before the next harvest will be 4.7 percent more than forecast a month ago, as increased production more than offsets higher feed use, the USDA said. About 601 million bushels of unsold wheat will be in storage when the current marketing year ends on May 31, nearly double the 306 million on hand at the start of this year. Global stockpiles will total 144.4 million tonnes by May 31, the USDA said. That's up from last month's estimate of 139.9 million and up from 119.8 million tonnes at the end of last May.
LONDON FEED WHEAT
London wheat closed the week £9.50/tonne lower, with front-month November closing below £90/tonne for the first time for a front-month since September 2006. The NFU forecast this year's UK wheat crop at 17.17 million tonnes, which gives us a surplus of over 3mmt.
PARIS MILLING WHEAT
Closed the week with losses of EUR17.25/tonne at levels last seen in Jan 2007, dragged down by lack of export demand (Egypt passed on French wheat, buying US and Russian wheat this week) and the general sell-off in all commodities.
PARIS CORN
Posted a loss of EUR8.50/tonne on the week as a whole on harvest pressure and falling wheat prices. Prices now the lowest since March 2006.
PARIS RAPESEED
Finished the week EUR30.50/tonne lower pressured by falling crude oil and lack of demand. Prices now at their lowest levels since July 2007.
CRUDE OIL
Finished the week posting an overall loss of $16.24/barrel. The biggest one-week decline since March 2003 when a U.S.-led coalition invaded Iraq. The International Energy Agency lowered its 2009 consumption projections by 440,000 barrels a day to 87.2 million barrels a day, citing a weaker economic outlook from the International Monetary Fund.
STERLING
Finished the week 6 1/2c lower against the dollar, hitting its lowest levels in five years, on concern a dispute between the U.K. and Iceland over financial assets in each other's countries will escalate.
Grains Market Review Of The Week
EU and US grains markets set multi-month lows during the week as fears over the looming global economic recession grew.
CBOT SOYBEANS
Harvest pressure, an increased stocks figure from the USDA, sharply weaker crude and a slow down in exports all conspired to give soybeans a hammering throughout the week. A firmer opening Friday on hopes that the revised $700 billion dollar rescue package would aid demand gave way late in the session and beans closed in negative territory once again. On the week Nov beans lost 172c, or nearly 15 percent, to close at $9.92, the first time futures have dipped below $10/bushel in almost twelve months.
CBOT CORN
Harvest pressure, declining demand, weaker crude and the continued exit of spec money all featured to drive corn sharply lower. Dec corn lost 89c, or over 16% on the week to close at $4.54/bushel. Spot corn hasn't traded at these levels since the first week of 2008.
CBOT WHEAT
Wheat declined, although not as much as beans and corn, pressured lower by the general malaise in commodities as a whole. Export interest is better for wheat than the other grains at the moment, and the US have a quality advantage over some other major exporting nations. Dec wheat lost 75 3/4c or just over 10 percent on the week, to close at $6.40 1/4c, a level last seen for a spot month at the beginning of August 2007.
LONDON FEED WHEAT
November LIFFE wheat fell £4/tonne or around 4% on the week as futures continued to slide on a large crop, lack of quality and poor export interest. Prices for the spot month slipped below £100/tonne for the first time since the beginning of June 2007.
PARIS MILLING WHEAT
November closed the week at EUR160/tonne, EUR5.80/tonne lower, posting a loss of around 3.5 percent, on lack of export interest, large world crops and weighed down by falling global markets. The last time spot futures were sub-EUR160/tonne was June 2007.
PARIS RAPESEED
November closed the week with a loss of EUR18.20/tonne, or 5 percent. Sharply weaker crude oil and US soybeans pressured rapeseed throughout the week. Spot rapeseed is now levels last seen in Aug 2007.
PARIS CORN
November corn closed the week EUR10.70/tonne easier, or 7.3%, on harvest pressure, lack of demand and weaker US markets. Spot corn is now at it's lowest level since August 2006.
Review of the week
CBOT CORN
CBOT corn closed with Sepember 18 1/4c lower on the week. There is still some uncertainty about the overall impact on yields for this late planted crop. Still the IGC Friday increased it's global production estimate to 774mmt from 759mmt a month earlier.
Sharply lower wheat prices also weighed on corn.
CBOT SOYBEANS
CBOT soybeans had a quiet week, fluctuating this way and that before closing with a net gain of 11c overall for the Sept future. Uncertainty over the impact of Hurricane Gustav and the Russian/West conflict is supportive for crude oil which is in turn helping soybeans at the moment.
Ideas that Chinese demand which has waned badly this last month will increase due to a public holiday there next month has also added some modest support.
CBOT WHEAT
CBOT wheat suffered it's biggest weekly drop in five months, closing lower every session this week for September to finish with a loss of 86 1/4c on the week. The IGC upped it's global production estimate 10mmt from last month to 672mmt.
The only areas of concern for wheat recently have been Argentina and Australia, both have seen or are expected to get significant rains this week/weekend.
LONDON FEED WHEAT
November wheat lost GBP5.50 on the week, and is now GBP32/tonne lower since the beginning of July.
With a UK wheat crop of around 17mmt expected (up 24% from 13.7mmt in 2007), giving us a 4mmt exportable surplus of largely feed grade wheat due to adverse weather conditions in July and August its not surprising that wheat is under pressure.
The Ukraine are reckoned to have a crop in the region of 27mmt (almost double 2007's 13mmt) and 89% of it is said to be feed wheat (down from 60% in 2007).
In June/July Ukraine exported almost 1mmt wheat, just over 1mmt of barley and over 1.5mmt of corn.
PARIS MILLING WHEAT
November Paris milling wheat closed the week with a loss of EUR8.80/tonne as virtually every country around the world is reporting larger wheat crops than earlier anticipated.
PARIS RAPESEED
The November contract finished the week EUR6.50 lower as the European harvest draws to a close. The EU is reckoned to have a crop of around 19mmt and the Ukraine one of almost 3mmt. Canada will be the next big producer to start cutting and they are reckoned to have the potential for a record crop too, well in excess of 10mmt compared 8.8mmt in 2007.
PARIS CORN
Nov corn closed EUR3 lower on the week as the wheat market declined.
CRUDE OIL
October crude closed the week just 87c firmer despite the threat to US supplies from Hurricane Gustav and the threat of Russia pulling the plug on gas supplies to Europe.
Review of the week
CORN
Sep CBOT corn gained 56 3/4c on the week on ideas that the US crop will ultimately come in lower than the recent USDA figure of 12.288 billion bushels. Results of the recent Pro Farmer crop tour released Friday appear to confirm this.
SOYBEANS
Sep CBOT soybeans closed the week $1.09 1/2 firmer as the US weather outlook turned drier prompting ideas that the USDA Aug 12 crop production estimates may have been overstated. US growers may harvest 2.93 billion bushels of soybeans, 1.4 percent less than the government estimate of 2.973 billion, Pro Farmer said in a statement Friday.
US WHEAT
Sep CBOT wheat closed 41 1/4c higher on the week on strong world demand for milling quality grain.
UK FEED WHEAT
Nov London feed wheat closed the week where it started it at £125.50/tonne. Quality uncertainties still linger for UK wheat but the longer the harvest drags on the more likely it becomes that a larger percentage of UK wheat will not make milling grade and be only fit for feed.
EU MILLING WHEAT
November Paris-based milling wheat closed the week EUR5.25 firmer at EUR194.75/tonne following the lead from the US and ideas that much of the remaining crop still to be cut in northern Europe will only now make feed grade.
EU RAPESEED
Nearby Nov rapeseed closed EUR18.30 higher on the week at EUR402.50/tonne supported by crude oil and the rally in soy complex. Significantly larger 2008 supplies in the EU, Canada and the Ukraine may well cap any rallies. UK farmers seem more interested in cracking on with the harvest than selling at the moment but that could change if we get a decent week weather-wise in the week ahead.
EU CORN
Nov corn closed the week with a modest gain of EUR4.25 at EUR179.25/tonne supported by firmer US prices but conscious of increasing EU feed wheat supplies.
CRUDE OIL
October crude closed a volatile week just 65c firmer overall after rallying over $6/barrel Thursday only to lose all those gains Friday with a similar drop. The Baku-Tbilisi-Ceyhan pipeline, which moves oil from Azerbaijan through Georgia to Turkey's Mediterranean coast, resumed normal flows Friday after a fire had earlier shut it for best part of a month,
STERLING
The pound closed the week with a 1.38 cents drop against the dollar. The pound has now declined for a fifth straight week against the dollar, the longest losing streak since February 2006. Gross domestic product was unchanged from the first quarter, the Office for National Statistics said, compared with a previous estimate for growth of 0.2 percent. The report adds to pressure on the Bank of England to set aside concerns about inflation and cut its benchmark interest rate before the end of the year.
Review of the week
The grains complex took another bruising this week as U.S. cash grain prices tumbled to their lowest level in many months, as average elevator bids for spot supplies plunged 2%-5% for wheat, some 6% for corn and about 13% for soybeans this week.
SOYBEANS
August Chicago Board of Trade soybean futures closed $1.58 3/4 lower on the week
Near ideal growing conditions, falling crude oil prices and reduced Chinese demand dragged the market lower.
CORN
Sep CBOT corn futures lost 66 1/2 cents during the week, ending below $5 a bushel.
US WHEAT
September Chicago wheat settled 28 3/4 cents lower on the week as heavy selling in corn and soybeans spilled over into wheat pits. Large supplies of new crop wheat the world over continues to weigh on wheat.
PARIS WHEAT
November Paris-based milling wheat closed the week EUR4 lower. Weakness in the euro and fears of quality losses due to recent rains helped to halt milling wheat's decline.
LONDON WHEAT
November London feed wheat closed £5.50 lower on the week. Harvesting in the U.K. remains fairly slow due to cooler temperatures following recent rains. This will likely see more of the UK crop destined for feed usage and missing out on making milling quality.
Competition from lower-quality wheat out of Ukraine continues to put pressure on the U.K. feed wheat market.
According to Gleadell's website UK ex farm feed wheat values are now down to £106-110 at harvest, rising to £115-119 for November and £122-126 for May. Spot barley values are now just £104-106 they say.
PARIS RAPESEED
The November Paris rapeseed future closed the week EUR28.50 lower. The rapeseed harvest is now pretty much completed in large parts of Europe and overall final yields have been good.
Ukraine has had a good harvest and will be an aggressive exporter in 2008, with promising crops also reported in France, Germany, Poland and Hungary.
The UK crop is estimated to be around 60-70% done, with yields and quality variable.
Falling crude oil prices have added to rapeseed's woes during the week.
PARIS CORN
November corn lost EUR13 on the week on pressure from the outlook for more of Europe's wheat crop to be feed grade than originally expected.
The IGC said world corn production in 2008/09 was now projected at 759 million tonnes, up 3 million tonnes from it's previous forecast of 756 million.
CRUDE OIL
Crude-oil futures suffered a loss of 8% for the week to close at a three-month low Friday, as a surging dollar and concerns about growth in Europe prompted traders to pull their investments away from the commodities sector.
Crude for September delivery dropped $4.82 to close at $115.20 a barrel on the New York Mercantile Exchange, after earlier hitting a low of $115.10, a level not seen since early May. The contract finished the week with a loss of $9.90.
Review of the week
August CBOT soybean contracts plunged 41 cents during the week, retreating from one-week highs, during an abrupt Friday freefall. "Mostly favourable weather in the Midwest is helping the (region's corn/soy) crop," said Doane Agricultural Services. "While some hot and dry weather is expected in the Midwest, the heat wave is forecast to be temporary, and soil moisture levels remain adequate."
September CBOT corn futures closed with losses of 12 1/4 cents, after late-week losses erased two-week highs achieved Wednesday. "There continues to be much debate regarding the final results of late-planted crops," said MF Global. "Most traders are looking for yield estimates sharply higher than previous USDA numbers ... as a result of near-perfect weather through the month of July."
September CBOT wheat lost 17 cents on the week despite a modest rally Friday. "There are no signs that cash wheat prices will go back to the $9-$10 level," said Oklahoma State University extension farm economist Kim Anderson. "Substantially higher wheat prices require lower-than-expected U.S. corn production, U.S. spring wheat production, or foreign wheat production. At the present time, this does not appear very likely."
November London feed wheat closed the week with a loss of £3.25/tonne on harvest pressure and reports of largely favourable yields across much of the EU.
As Gleadell note in their weekly report the volumes coming out of Bulgaria, Romania and the Ukraine are sizeable and are setting the benchmark for not just the Spanish Mediterranean market but also North Spain – both traditional UK markets. More worryingly, aggressive offers are being made into Brittany and ‘any origin’ feed wheat (eastern European origin) has traded into North Germany.
EU wheat production could rise well over the current estimate of 131 mln t – possibly to 134 mln t say Gleadell. This would give the EU an exportable surplus of approaching 20 mln t, and to compete on the export market at the moment our prices must move lower.
August Paris-based milling wheat closed the week with losses of just EUR0.50/tonne. These are some concerns that rains throughout June & July may adversely affect wheat quality in France, Germany, the UK and Ukraine. This is helping widen the differential between feed and milling grade wheats.
August Paris corn lost EUR9 on the week pressured by ideas that there is likely to be more feed grade wheat around in Europe this year than originally anticipated.
The Paris November rapeseed future lost EUR4.50 during the course of the week, largely due to harvest pressure. The UK harvest is seen around 40% complete and the word "variable" seems to be being widely used to describe it. The French and German crops however are reckoned to be around 90% done and yields and quality there are much better.
As with wheat the Ukraine has had a bumper rapeseed harvest & will be an aggressive exporter in the coming season.
September crude oil finished the week 37 cents higher than it ended the previous Friday. A volatile week saw it trade around $4 either side of the close with a low for the week of $120.42 and a high of $128.60/barrel.
Grains Markets Weekly Review
CBOT Wheat
A 23 1/4c gain Friday saw Sep close 7c higher on the week. There seems to be some evidence that US wheat has found it's correct level for the time being around the $8/bushel mark.
CBOT Soybeans
Futures bounced late Friday but Aug still managed to close 71 1/4c lower on the week as crude fell and US weather remains largely non-threatening.
CBOT Corn
Sep corn lost 32 1/4c on the week. Reports are circulating suggesting that two Midwest ethanol plants that had been shut down due to soaring corn prices will soon re-open. However, with crude also falling, the economics of the viability of the ethanol industry are constantly changing.
LIFFE/Euronext Feed Wheat
Nov posted a loss on the week of £6.00/tonne. A favourable weather outlook should enable rapid harvest progress in the coming week. The differential between feed and milling grade is widening.
Gleadell are citing a further downside risk of another £10/tonne for feed wheat given current parities.
LIFFE/Euronext Milling Wheat
Nov milling wheat closed unchanged on the week. There seems to be a trend developing that suggests milling premiums over feed are expanding. Wet weather in France during May and June may have led to some quality losses it seems.
LIFFE/Euronext Corn
Nov corn posted a net weekly loss of EUR5.30/tonne, following the Chicago market lower.
LIFFE/Euronext Rapeseed
Rapeseed plunged in the first half of the week before recovering slightly, however Nov still lost EUR18.50/tonne on the week. The French harvest is in full swing and bits and pieces have been done in the UK. A favourable weather outlook next week could bring more harvest pressure.
The UK physical market is £20/tonne lower on the week according to Frontier.
Falling crude oil has also weighed on rapeseed this week. Sep Crude lost $6.21 on the week to close at $123.26/barrel.
