US Weather And Crop Impact
A beneficial weather outlook for the week ahead has been one of the main factors driving prices lower over the last few sessions. US weather analyst Gail Martell of Martell Crop Projections has got this to say about weather prospects and the likely impact on crop development this week:
Corn and soybeans: Wetter Midwest forecast
A couple waves of showers are expected this week that will greatly improve field moisture for soybeans and corn, a welcome welcome change from the dryness of the past 3-4 weeks. Showers doused key corn states Iowa, Minnesota and Nebraska on the weekend. Soybeans are in the midst of the critical pod setting and filling stage and would benefit most from drenching rains. Corn is advancing rapidly from kernel-filling into the dough stage after a week of very warm temperatures.
Beneficial rain over the weekend: Western Corn Belt states Iowa, Nebraska, South Dakota and Minnesota were hit with strong thunderstorms Saturday that boosted field moisture. Most rainfall amounts were .5-1.5 inches but locally 2 inches of rain occurred. Thunderstorms fired up again Sunday along a slow moving front in Kansas, northern Missouri and northern Illinois, but showers petered out in Indiana and Michigan last night. See the accumulated August rainfall map (attached). The Monday-Wednesday rainfall is expected to be heaviest in a band from Kansas to Illinois, as this slow moving front grinds south and east across the Midwest. See the attached 3-day forecast outlook.
Heavy rain a possibility late in week: Additional strong thunderstorms may develop again later this week in the Midwest when another strong Canadian trough drops into the Midwest, reinforcing and strengthening the initial trough. The European Model (see attached map) indicates a very wet pattern for late this week, especially if tropical moisture from Claudette is entrained into the trough. The GFS model sees a less-wet forecast on Day 5 (Friday). If we believe the European Model, Mid South soybeans would get drenching rain, along with the Midwest.
Spring Wheat: Dampness stalling harvest
Damp conditions are slowing down grain drying and stalling harvesting in North Dakota and Western Minnesota, and the forecast is ominous for more of the same. Thirty percent of ND wheat was still green on August 16th, which is at least 2-3 weeks behind schedule. North Dakota wheat ratings are impressive, 88% good-excellent and only 2% poor, but getting the crop harvested is proving to be very difficult due to delayed maturity and persistent dampness. Warm and dry weather may not resume until the weekend. The USDA say that only 3% of ND wheat was harvested August 16, well behind the 43% five year average.
CBOT Closing Comments
Corn
September corn closed at $3.14 ¼, down 5 cents, whilst prices were lower this was some way off session lows set earlier in the session. Weak crude and stocks and a firmer dollar weighed on the entire complex from the start. The crop progress report continues to indicate that although conditions remain good, progress is lagging, with only 40% of the crop at the dough stage, compared with 64% normally. The crop was 9% dented, below the average of 26%, although good to excellent ratings held steady at 68%.
Soybeans
September beans closed at $9.88, down 36 ½ cents, whilst November finished at $9.54 ½, down 27 cents. An improved weather outlook, combined with unfavourable outside influences got beans off to a defensive start to the week. Export inspections were 5.62 million bushels, compared to last week’s 10.082 million bushels. The crop progress report pegged 66% of the crop as good to excellent as of Sunday, unchanged from the previous week, with 72% setting pods compared to 85% for the five year average.
Wheat
September wheat finished at $4.71 ¾, down 10 cents, making new contract lows on the spot month of all three US exchanges. Spillover weakness from beans weighed on wheat, along with a firm dollar and weak crude oil. Export inspections were 13.915 million bushels, towards the low end of trade guesses. The crop progress report showed 94% of the winter wheat is harvested, in line with normal. However only 13% of the spring wheat crop is harvested compared to 33% last year and 48% for the five year average. Commodity funds added to their short positions, selling an estimated 3,000 wheat contracts today.
EU Wheat Stumbles Lower
EU wheat futures continued to stumble lower Monday, on a combination of harvest pressure and weaker US and outside markets like crude oil and equities.
Paris November milling wheat ended down EUR1.50 at EUR128.75/tonne, whilst London November feed wheat closed down GBP1.10 at GBP96.65/tonne.
Although the UK harvest is still lagging behind normal, cropping elsewhere is winding up. About the only good thing that can be said for the UK weather is that things aren't as bad as last year.
Weak technicals & heavy fundamentals continue to weigh on the market, wheat production keeps getting revised upwards in many countries as a clearer picture becomes available as harvest progresses.
In the US the spring wheat harvest is well behind, with only 13% of the crop in the bag as of Sunday night, compared to 48% normally at this time of year.
Milk Link My Arse
After a year of pratting about over whether to have some cutting-edge Nogger content on their website, UK milk-buyer Milk Link finally bit the bullet last week and emailed me to say that they've got the go ahead.
"However this would need to be on the basis of a 6 month free trial with the option to continue past that period at the price that you’ve already indicated. Could you please confirm that you would be in agreement with this and reply to my colleague Steve X also," they said.
Well, I thought, they only reported £10 million in pre-tax profits in June, things must have taken a pretty dramatic downturn since then.
I strangely felt compelled to decline their generous offer of six months work for such a handsome sum. I also felt moved to pen this missive to their customer services dept., although I don't hold out much hope of a reply:
Hi there,
I'm in the market for some milk and wondered whether you might be interested in supplying me?
All the papers keep telling us that we're in a buyer's market, whether it's houses, cars, whatever. So, hell, why not milk as well I thought?
Here's the deal, I'm looking for you to supply me with free milk for the next six months. If I like your milk, then I'd be happy to consider paying for it after that. Sounds like a fair deal to me, what do you say?
Could you please confirm that you would be in agreement with this, so I can crack on and cancel my existing order. Arthur, my local milkman, simply isn't in touch with the ever-changing super-competitive market in which we now find ourselves. He also makes a bit of a noise some mornings, which I find most irritating. It's a dog eat dog world we live in, as Arthur is shortly about to find out, and if I hear one more time about his wife's impending hip operation then I think I'll scream.
We're not mucking about here, we're talking two or three pints of the stuff every day, and more at Christmas, so it's quite a big order. I've got Arla and Dairy Crest chasing me for my business, but I thought I'd give you first shout.
Please revert soonest.
Best regards
eCBOT Close, Early Call
The overnight eCBOT market closed sharply lower with wheat around 10c lower, corn down around 6-8c and beans 25-32c lower.
A stronger dollar and weak crude oil set a bearish tone to the start of the week. European stocks are lower and Wall Street is expected to follow suit.
Large spec funds added to their shorts in CBOT wheat last week, according to CFTC data. They also modestly reduced their short positions in corn.
The weather forecast for the week ahead includes plenty of rain for the Midwest, whilst temperatures are cooling down, there is no sign of a frost just yet. Not so on the Canadian Prairies, where growers are expected to have woken up to frost this morning.
Large parts of the EU wheat harvest are already completed, and the USDA will report tonight on how the US spring wheat harvest is going. Also we will get the latest on crop condition and development for corn & beans.
Rain is needed in Argentina, where wheat plantings are the lowest in over 100 years, as the crop reaches the head filling stage. El Nino hasn't shown up in Australia yet, and wheat production estimates there are inching up. September/October is the critical time for wheat development Down Under.
Early calls for this afternoon's CBOT session: corn called 5 to 7 lower; soybeans called 20 to 25 lower; wheat called 5 to 10 lower.
Great PR - Sue Your Customers
In a piece of stunningly bad PR, drinks giant Diageo - amongst many other things the world's biggest whisky producer - has decided to sue Sainsbury's according to a report on Reuters.
Millions of Diageo products, from Guiness to Gordon's Gin, are probably stacked on Sainsbury's shelves right now. But that hasn't stopped uber-sensitive Diageo, manufacturer of Pimms, from saying that Sainsbug's Pitchers drink "infringes its intellectual property rights".
Diageo are certainly in the news at the moment, after coming under fire from the Scottish NFU last week when it was revealed that they'd imported 3,000 MT of Swedish malt into Scotland last Wednesday.
Who said there's no such thing as bad publicity?
I'm Dead Famous Me - Bread And Circuses
How's your knowledge of ancient Roman satirical poets then? Similar to mine then. No I've never heard of Juvenal either, but apparently he lamented that, at the end of the day, everything boiled down to just bread & circuses.
Confused? All will be explained here: “Bread and circuses” – buying exposure to Food/Agriculture
Grain Market Snippets - I Wish The USDA Was My Girlfriend
My sources tell me that the Russian grain crop is getting bigger, not smaller as the chumps at the USDA forecast last week. Reports of widespread drought damage in the Urals (Mrs Nogger#1 had widespread damage in the Urals, but that's another story), have been deliberately over estimated by local government in an attempt to con extra compensation out of Moscow. Fancy that, a Russian being economical with the truth. Nogger's crystal ball tells him that local forecasters will increase their production estimates this week.
Oooooooooooooohhhh....
The voices circulating inside my head are also telling me that it's strange that China, who you will recall were suffering from the worst drought in more than fifty years back in February, should eventually pull off a larger wheat crop than last year. Back then Dow Jones published a a news report that said Chinese wheat production would be down 10% this year "in a best case scenario" going on to say that irrigation can only help 60-70% of the crop. Now, miraculously, production this season will come in 2 MMT higher than last year at 114.5 MMT, say the gullible USDA, who appear to have swallowed it hook line & sinker. I wish the USDA was my girlfriend. The Chinese telling porkies, whoever would have dreamt up such an absurd suggestion.
Ooooooooooooohhhh....
Get your woolly gloves and hats out, Jacky Jack Frost is set to put in his third appearance in a week on the Canadian Prairies Monday, according to QT Weather. It won't quite make it into the northern US Plains though, temperatures here will get down to the mid to low 40's, they say. It felt like a frost wasn't too far away for bloody North Yorkshire yesterday either. What happened to the long hot BBQ summer then? I'm forecasting four foot of snow for the Bank Holiday weekend at the end of this month.
Oooooooooooohhhh....
My spirit guide has exclusively revealed to me the menu for next year's GAFTA Dinner, how spooky is that? And categorical proof, should anybody out there doubt it, that I am in direct contact with voices from beyond the grave. Next year's menu will include, flatbreads, rosti potatoes and crepes. Anything that can be slid under a door easily basically.
Oooooooooooohhhh....the voices are fading....what's that, Everton will win the Premiership, despite an unlucky against the run of play defeat on the opening day of the season? I think we must have a crossed line with the spirit world, I'm going to hang up now.
