CBOT Closing Comments
Soybeans
August soybeans at $11.70 ½, down 14 cents, November beans finished at $10.10, down 28 ½ cents. Beans fell foul of profit-taking ahead of Wednesday's USDA report. If you look at the charts they have gained the most over the last few weeks, so were vulnerable to a correction. Old crop supplies stay very, very tight, but new crop is a totally different story.
Corn
September corn closed at $3.34 ¼, up 2 ¼ cents, December corn ended at $3.30 ½, down 4 cents. Private exporters reported corn sales to Egypt of 60,000 MT for 2008/09 marketing year and 60,000 for 2009/10 marketing year. Analysts are expecting the USDA crop production report to show a 12.49 billion bushel corn crop on the August 12th USDA report with ending stocks for 2008/09 at 1.748 billion bushels and 1.697 billion bushels for 2009/10. Crude oil closed mixed and Ethanol was slightly lower.
Wheat
September wheat finished at $4.94 ¼, up 4 ¾ cents. Prices did pop very briefly above $5, but quickly fell back again, suggesting that a break and hold above this level will be needed to confirm a harvest low is in. Analysts believe the August crop production report will peg US wheat production at 2.151 billion bushels on Wednesday’s report. Weather conditions should be favourable for continued harvest and crop maturity over the next week.
EU Wheat Futures End Flat Monday
EU wheat futures started the week lower, but clawed back those losses at the end to close at or around unchanged levels, helped by a firmer dollar.
Paris November milling wheat futures closed flat at EUR130.50/tonne, and London November feed wheat also closed unchanged at GBP98.25/tonne.
The market remains hopelessly lacklustre, crop production in western Europe is pretty good to better than expected, output in the Black Sea however is largely worse than anticipated.
There is certainly harvest pressure, of that there is no doubt, but why wouldn't there be in the middle of August?
Media reports suggest that, yet again, there have been worker disputes at the work in progress Ensus refinery in Middlesbrough in the past week. These appear to have been resolved, at least for now, but will inevitably push production back another week or two.
UK weather, although not as bad as last year, remains stubbornly uncooperative. In the south east things seem fine, but elsewhere harvesting is late with only around 60% of winter barley cut, compared to 90% normally.
eCBOT Close, Early Call
The overnight grains all closed narrowly mixed, with few changes more than a couple of cents either way.
A firmer dollar and weaker crude are a little bearish. There is a pick up in "we're turning/have turned the corner" talk in the US after last week's better-than-anticipated jobs data.
Book-squaring ahead of Wednesday's USDA report is likely to be a feature, and it seems unlikely at this stage that we will see any major movements one way or the other before then, unless something major comes out of the blue.
US weather looks generally favourable, some increased heat later in the week shouldn't be too threatening at this stage.
After the close tonight we will also get crop progress & condition ratings from the USDA.
The Black Sea harvest is well advanced, although yields are said to be disappointing. Not so in western Europe where yields seem to be coming in better than expected.
US wheat has got a small boost from talk that Japan will need more of the grain in the season ahead, after it's own crop has suffered due to rain. Japan, as we know, usually buys mostly US wheat in it's regular weekly tenders.
Early calls for this afternoon's CBOT session: corn called 1 to 3 higher; soybeans called 2 lower to 3 higher; wheat called 1 to 2 lower.
USDA Report: What Nogger Says
Only the USDA could decide that a review of their June corn acreage numbers, didn't also warrant a review of their soybean planting figures as well.
It already seems to me that, before the numbers are even out, they may well end up being consigned to the "unreliable and outdated information" folder.
The trade is now saying that corn acres were probably in reality anywhere between a half and two million lower than the USDA's June number of 87.035 million. Back in June you may recall that the USDA stunned the trade with an estimate 1 million higher than the highest trade guess and a whopping 3 million above the average trade guess.
Yield potential has undoubtedly improved since then, so at least some if not all of the anticipated reduction in corn acres should be offset by that.
The USDA's June soybean acreage estimate was 77.483 million acres, and it looks like we are stuck with that for the time being.
Until we get the USDA figures it is impossible to guess how far out from reality they will be. Recent reports have sprung regular "completely off the radar" surprises, this one promises to be no exception.
USDA Report: What The Experts Say
The USDA are out Wednesday with their latest musings on WASDE and a revised version of the June corn acreage report, after saying that planting delays in some states made it's June figures "uncertain".
Farm Futures magazine reckon that corn acres could be as much as two million lower than the USDA's June figure, coming in at 85.04 million acres. That lower acreage will however be partially offset by higher yields, they say. They are not alone in projecting that final yields this season could come in a little above 160 bu/acre, as opposed to the 153.4 bu/acre in the USDA June report.
The average trade estimates ahead of Wednesday’s USDA crop production report for 2009 corn acreage, production and yield are 86.333 million acres, 12.49 billion bushels and 157.295 bu/acre.
For soybeans, the average trade estimates ahead of Wednesday’s report are production of 3.219 billion bushels and a yield of 42.13 bushels per acre.
The average trade estimates ahead of Wednesday’s USDA crop production report for 2009 all wheat and winter wheat production are 2.151 billion bushels and 1.5315 billion bushels respectively.
Ukraine Harvest Wrapping Up
The grain harvest in the Ukraine is already winding down, with an estimated 89% of planted area already cut, according to the Ag Ministry.
As of Aug 7th this season's harvest had produced 33 MMT of grain, including 20 MMT of wheat in bunker weight off 92% of the planted area. Wheat yields have so far averaged 3.16 MT/hectare, compared to 3.5 MT/ha a year ago.
The barley harvest is 91% complete at 11.6 MMT, they add.
With 89% of the harvest already in, they are going to have their work cut out to meet the official estimate of a total grain crop of 42-43 MMT this year, even if much of it is higher yielding corn.
In 2008 the Ukraine harvested a bumper grain crop of 53.3 MMT.
Pound Hits 10-Day Low vs Dollar
The pound is down to a 10-day low against the US dollar, falling to $1.6613 after getting as high as $1.7041 last week.
Last week's sanctioning of throwing an extra £25 billion pounds into the £150 billion QE kitty, £125 billion of which has already been spent, is obviously going to come at a cost.
It must be great to have your own little magic money machine like Alistair Darling mustn't it?
The more we print and the faster we print it, the quicker we'll drag ourselves out of all this, he might as well have said. What could possibly go wrong?
I'm Back! Early Thoughts....
I'm back in Blighty and it's business as usual ie it's raining. OK, to be fair it's been a decent couple of days here in North Yorkshire since I stepped off the plane. It would seem that the harvest is maybe a little further advanced than I'd expected from my ivory tower on the Costa.
Certainly, if you farm in the south east you seem to have done rather well for yourself. Some reports I read over the weekend talked of farmers "wrapping up their wheat harvest" and "quality much better than last year... I don't know anyone who's disappointed" etc.
Draw a very broad line from say Devon up to North Yorks and things don't appear to be quite so rosy. One report even said "worse than last year" - now that has to be bad! Generally though it would seem that things aren't quite that bad.
ADAS reckon that winter barley is about 60% cut nationally, with OSR harvesting at a similar level. Frontier say that "milling quality is good, with proteins looking better than a year ago. At this stage there is little damage to hagberg."
On the Continent Agritel, say that the French wheat crop could now come in at 38.4 MMT, and the association of German farm cooperatives (DRV), now estimating the 2009 German wheat crop at 26.6 MMT. Both these figures are higher than early season estimates due to better than anticipated yields.
So we don't appear to have a shortage of wheat again this season, lets hope that demand holds up. At least French wheat has started making inroads into the Egyptian market again, after months in the wilderness to cheaper Russian wheat.
It will be interesting to see what the quality of Black Sea grain is like this season after drought in Ukraine and Russia.
Looking at the week ahead, the news will likely be dominated by the USDA's latest stab at the global supply and demand numbers, plus an unscheduled reappraisal of US corn acres for 2009. As we have learnt recently from them, expect the unexpected. We can anticpate some profit-taking ahead of that, which may support corn as shorts unwind their positions.
The dollar seems to be back on a firmer footing after good jobs numbers last week, prompting some analysts to talk of the US being on the brink of economic recovery.
I see that sugar is continuing to go through the stratosphere, London white is currently $19.20/tonne higher at $556.40/tonne to another new all-time high. I did pick up a few extra sachets at Malaga airport, first come, first served!
