EU wheat futures higher "blindly following Chicago"
London-based feed wheat futures are £2.50-3.50 higher this morning despite the outlook for bumper crops in Europe. Paris-based milling wheat futures are EUR4.25-6.25 higher.
All around the European market place, traders warned fundamentals are very different between the U.S. and the European market.
While the U.S. corn and soybean crops struggle with flooding, bumper wheat harvests are expected to begin soon in the European Union, as well as in the Ukraine and Russia.
"Corn is so important for feeding animals, but the E.U. and Black Sea are set for a huge wheat crop," added the trader. "We are blindly following Chicago."
And despite recent movement on the futures market, cash trade remains very thin. Farmers have been hesitant to sell in hopes of higher prices and uncertainties over quality, especially after being burnt by quality-destroying rain during harvest last season. At the same time, consumers are without coverage, attempting to hold out for new crop stocks.
Estimates are that France's soft wheat harvest will be delayed by about two weeks due to fairly cool temperatures and ample moisture. This tends to lead to a much higher yields, but lower protein.
VION to Takeover Grampian
Europe's largest meat processing company, VION has signed an agreement to acquire Grampian, one of the UK's largest food companies.
The acquisition sees VION strengthen its UK position, where it has successful operations in the fresh pork, bacon and sausage markets.
The takeover bid has now to be submitted to the competition authorities.
"This announcement is evidence of the great importance VION attaches to the UK market. At the heart of VION's business is a 'Passion for Better Food' and Grampian is key to developing this strategy," said Daan van Doorn, Chairman of the VION Board of Management.
"The combined group will become a major player in the UK food industry. Together with Grampian's management we want to further intensify the cooperation with our retail clients by investing in Grampian, sharing knowledge and developing partnerships."
VION is also one of Europe's largest food companies. Its roots lie in the agricultural and meat sectors and it has strong ties there. VION holds a central position in the supply chain and translates market and consumer developments to the agricultural sector. VION thereby provides an active contribution to and investment in a sustainable future for the agricultural sectors in Holland, Germany and the UK.
In the UK, VION currently has four business operations. Key Country Foods is a major UK retail bacon processor. VION also has a majority share in J&J Tranfield, a leading supplier and manufacturer of pizza and sausages. VION Food UK Ltd is responsible for the sales of bacon, fresh pork, beef and convenience products to the UK market.
VION company Oerlemans Foods offers fresh frozen vegetables, potato products and fruit through its UK sales office.
Grampian Country Food Group Ltd was founded in Scotland in 1980 and has developed into one of the UK's leading food companies, supplying the major multiples with chicken, pork, beef and lamb. The company currently employs 17,500 staff (of which 4,500 in Thailand), with an annual turnover of £1.7 billion (€ 2.5 billion) and has production locations in the UK and Thailand. The head office is located in Livingston, Scotland.
US ethanol output faces sharp cuts
FT -- Large numbers of small to mid-size ethanol producers could shut down over the coming months after flooding across the US midwest caused irreparable damage to the year's corn crop and pushed corn prices up sharply, says a report by Citigroup.
At least five small to mid-size ethanol plants had shut down in recent days, said David Driscoll, Citigroup's US food manufacturing analyst, in an equity research report.
The widespread flooding, on a scale the region has seen only twice in the last 25 years, had forced down ethanol margins over the past 10 days, leaving small and mid-sized ethanol producers running at substantial losses against cash costs, Mr Driscoll said.
"As a result of the rapid margin deterioration, we believe that many, if not all, of the small to mid-size producers will be forced to shut down over the next few months." This could result in as much as 2bn-5bn gallons of ethanol going off-line in the next few months, he said.
Mr Driscoll said corn - now selling at more than $7 a bushel, compared with about $4 a year ago - meant extreme tightness in the corn market, suggesting the increased potential for political intervention in ethanol markets.
The intervention would be aimed at cutting ethanol output and bringing corn to the food market. Corn prices have risen by $1 in the last 10 days.
"Just the spectre of political intervention will likely cause the market to question the magnitude of future biofuel growth, adding further pressure on valuations across the ethanol industry," Mr Driscoll said.
This has led Citigroup to reduce its earnings-per-share estimates for ethanol companies and drop ratings to "sell" on those that are strictly into ethanol production, including VeraSun Energy and BioFuel Energy.
Cheshire dairy farmers strike deals direct with supermarkets
Chester Chronicle -- CHESHIRE dairies are cutting out the middle men and striking up their own deals with supermarkets to get their milk on the shelves.
An increasing number of Cheshire’s dairy farmers are fed up with the low prices they are receiving for milk from producers and instead they are going it alone. But farmer union representatives, and the farmers themselves are concerned that the credit crunch will put customers off spending those extra pennies on the local choice.
Chairman of Cheshire NFU, Denis Parton who is also a Tarporley farmer welcomes the interest in locally sourced milk.
He said: “It is a lot of hard work to sort it all out. It is not for every farmer. But as we have seen lots of farmers are having to do this to keep themselves going and to get a better price for their milk.”
“Supermarkets are actually now looking more closely at their locally sourced milk. Waitrose and Marks and Spencer’s lead the way, and the other supermarkets like Tesco followed.”
Samsung unveil mobile phone made from corn
As if things weren't bad enough already using corn for fuel, now the ever-resourceful cat and dog eating Koreans are using it to make mobile phones!
Techworld.com -- Samsung Electronics has shown two new mobile phones made with plastic made from corn as it expands initiatives aimed at being more nature-friendly.
The W510 is the first mobile phone Samsung has ever made using the new corn-based plastic, the company said. Samsung did not use any heavy metals, such as lead, mercury or cadmium, in the handset either. The company has been working on the new plastic as a way to produce more environmentally-friendly materials.
Several companies have worked on corn-based plastics, including NEC and Fujitsu of Japan, to replace petroleum-based plastics in products such as laptop PCs and mobile phones. The idea of using corn-based plastics has been around for years, and has been reignited in recent years by the high price of oil.
In the 1990s, companies started putting corn-based plastics in a range of products, including plastic bags, water bottles and diapers, but companies avoided using them in heavier products because the plastic was weak.
More recently, researchers have mixed corn-based plastics with petroleum-based plastics to create a stronger material suitable for laptops and handsets.
Kellogg Effectively Raises Prices on Some Cereals
Chicago -- Kellogg Co has cut the box size of six of its US cereals, including Froot Loops and Corn Pops, effectively raising prices for the second time this year as it tries to cope with soaring grain and energy costs.
The box size reduction essentially raised the price on the six sweetened cereal brands by low-to-mid single digits on a percentage basis, Kellogg spokeswoman Susanne Norwitz said.
The company raised prices the same amount on many cereal and snack brands by a similar amount in January, she said.
The smaller box sizes began heading to stores on June 2. Rival General Mills Inc previously reduced the size of its boxes last year to bring the shelf price in line with that of other cereal makers.
Food price have risen sharply in the past several years as food companies pass on higher costs to consumers.
On Friday, the Labor Department said the food component of its consumer price index was up 5.1 percent in May from a year earlier.
Kellogg recently said that costs from commodities, energy, fuel and benefits would rise by an amount equal to about 80 cents per share for the year, from an initial forecast of 65 cents.
Chief Executive David Mackay said in April that more than 80 percent of the company's commodity costs are hedged this year.
Overnight market developments
Corn set fresh all-time highs again overnight, adding to Friday night's strong gains with July hitting $7.57 3/4c, before easing back slightly on profit-taking, July currently stands 18c firmer at $7.49 3/4c. July beans are 20c firmer at $15.80 and July wheat is following along for the ride 3 1/2c firmer.
National Australia Bank Ltd has dropped it's 2008 Australian wheat output estimate to 24.3 million metric tons, down from the 25.1 million tons estimated last month, but still 85% up on last year's 13.1MMT.
The corn market has a classic "buy the rumour" look to it and it may not be until the harvest is upon us that things start to ease back.
Burrell: I've seen the Queen's thri'penny bits
In his sensational new book "I'll Say Anything For Money", former royal butler and convicted liar Paul Burrell reveals that he has seen our majesty the Queen's jugs. Burrell goes on to claim that he has also witnessed a three-way lesbian love romp between the the Queen, The Duchess of Kent and Queen Juliana of the Netherlands.
At his home in Farndon, Cheshire, loathesome Burrell proudly showed off his impressive array of royal memorabilia including a cotton bud that he says was once used by Princess Diana to clear some ear wax and a small bar of soap encursted with the ginger pubs of none other than the Duchess of York. Centrepiece of the collection however, which will be auctioned off on eBay later this month to raise money for what Burrell descibes as "me", is an old pair of the Queen Mother's teeth.
In Burrell's cringingly smarmy book, the sensational follow-up to "Discretion Is My Middle Name Ma'am," he also reveals that Prince Phillip's todger is "enormous," Princess Margaret once offered him a hand-shandy in exchange for a bottle of scotch and that Prince Edward is in love with a horse.
