US Harvest Pace At A Crawl
It's official, this year's US harvest pace is comfortably the slowest in the last thirty years. The flip-side of benign and non-threatening weather all summer long, is a very late maturing crop and combines rolling in the snow.
The USDA confirmed last night that only 17% of the corn crop has been harvested so far, that is a quite astonishingly low just four point increase in a week. That's well behind the five year average of 46%, and five points lower than the previous slowest pace in the last thirty years of 22 percent on October 18, 1992. Illinois sees just 11% of the crop in the barn, compared to 68% normally.
For soybeans the harvest was 30% complete as of Sunday, only a seven point increase on last week and less than half the five year average of 72%. The previous slowest harvest pace in the last thirty years was 34 percent on October 18, 1985. In rain-sodden Illinois only 13% of the crop is in, compared to 79% normally.
Winter wheat plantings were 69% complete, compared to 78% normally, the USDA said. It's the soft red winter wheat states in the east that are particularly struggling. They need to get their beans cut before they can plant wheat. In Illinois wheat planting crawled from 12% complete last week to just 13% done as of Sunday. The five year average is 67%.
India Might Be In The Wheat Import Market Soon
Canny, cagey, cunning, unscrupulous or just plain bent? Trying to guess what the Indian government are up to is like attempting to figure out the plot of the Da Vinci Code.
Unless you have been living in a cave and not reading this blog, you will probably know by now that up until now they have been keeping the doors to their state-owned wheat granaries firmly shut.
That is despite reputedly owning anywhere from 28-32 MMT of wheat depending on who's figures you believe (I believe neither, but that is a seperate issue), and appeals from the local milling industry that there is virtually no more wheat left in the country in private hands.
The worst monsoon rains since 1972 have slashed summer rice production, and demand for wheat this year is consequently expected to be higher than ever in the world's second largest consuming nation. The USDA currently have India down to consume almost 77 million tonnes of wheat in 2009/10.
News this morning then, that the government have finally set the minimum price for wheat tenders should come as good news, right?
Not so, when you consider that domestic Indian wheat prices have been running at around Rs 1,200-1,300/100kg and that the government have now fixed the minimum tender price at Rs 1,379.70 - Rs 1,728.23/100kg, according to the Hindu Business Line.
Indian wheat futures prices have jumped the exchange imposed daily limit up this morning, as the tender prices are hugely above what the market had been expecting.
With international wheat prices currently substantially lower than the levels now being asked for the the government, this could spark a wave of import interest from Indian millers.
It seems like another bit of neat buck-passing by the government to me, very similar to their manoeuvres a few months ago on sugar. Then, by introducing a strict limit on the quantity of domestic sugar stocks that large users could hold (but crucially not on imported stocks), they effectively forced the likes of Nestlé and Pepsi to switch to using mostly imported sugar.
With a domestic usage rate of almost 6.5 million tonnes/month, and the winter wheat harvest still six months away Indian millers need a hell of a lot of raw material between now and then.
Required further reading: "...this cushy situation can change rapidly if India’s plight is officially accepted and becomes more widely known"
CBOT Closing Comments
Soybeans
November soybeans finished at $9.96 ¼, up 18 ¾ cents, December soymeal futures finished at $298.30, up $3.60, December soy oil futures finished at 37.59 cents, up 65 points. The USDA reported that 39.092 million bushels of soybeans were inspected for export for the week ending October 15, that was well above trade estimates. A dry weekend and early start to the week will again give way to another round of rain beginning Tuesday in the west, spreading eastwards, further hampering harvest efforts.
Corn
December corn futures settled at $3.86 ¼, up 14 ¼ cents. A weak dollar and firm crude oil helped corn today. Oil increased for an eighth straight day, its longest winning streak in two years, to close at it's best levels in twelve months. It's back to normal as far as US weather is concerned starting tomorrow, with widespread rains sweeping in from the west. The USDA reported that 24.569 million bushels of corn were inspected for export for the week ending October 15, which was towards the low end of trade estimates.
Wheat
December wheat futures closed at $5.17 ¾, up 19 cents. The USDA reported 18.627 million bushels of wheat were inspected for export for the week ending October 15, in line with expectations. Wet weather delaying corn and soybean harvesting may also ultimately lead to lower US winter wheat seedings. Large spec fund shorts have been vulnerable to a technical bounce in wheat futures in recent sessions. A weak dollar was also supportive.
EU Wheat Ends Higher Monday
EU wheat began the week on a firmer footing with Paris November milling wheat closing up EUR1.25 at EUR127.75/tonne, and London November feed wheat finishing up GBP0.75 at GBP101.25/tonne.
Stories of drought in Ukraine affecting newly planted crops added some support today, as too did reports of a pick-up in demand from the ethanol sector.
In the UK too, winter wheat hasn't got off to the best of starts, with a generally very dry September and October to date threatening early crop development.
US wheat was firmer as persistent wet weather delays the soybean and corn harvest, threatening winter wheat plantings on land yet to be harvested.
The pound began the week where it left off on Friday, in steady mode, which kept a lid on UK price rises.
Egypt have released a shipment of French wheat that had been quarantined over supposed breach of quality standards, according to media reports.
Fletch Leaving Shocker
Manchester Utd are leaving midfielder Darren Fletcher out of the squad for the trip to the Luzhniki Stadium to face CSKA Moscow in the Champions League on Tuesday night due to injury.
"Darren's brother is expected to join us in the January transfer window, but that's not much use to me tonight is it?" said United manager Jim Taggart.
What?
EU To Cough Up EUR280 Million In Aid To Dairy Farmers
Outward-bound EU Farm Commissioner Mariann Fischer Boel has emptied out her handbag and announced EUR280 million in aid to it's beleaguered dairy farmers.
The funding, which still needs to be approved by the Finance Council, has won support from 21 of the 27 EU member states.
Boel said that the cash will effectively empty the 2010 kitty, leaving no money to fund any new requests for help from other agricultural sectors in next years budget.
It seems unclear at the moment how the money will be allocated. Possibly it will help fund the recent change to the rules that will now allow up to EUR15,000 of temporary aid to be paid by individual member states to each EU dairy farmer.
eCBOT Close, Early Call
The overnights closed firmer, helped by a weak dollar and steady crude oil. Beans closed around 10 cents higher, with wheat up 7-8 cents and corn 3-4 higher.
Crude oil is close to the highs of 2009, and looks like it is gearing up to attempt to push above $80/barrel.
The USDA will report tonight on harvest progress, but not until after the close.
A decent couple of days over the weekend should have helped, but progress could still be the lowest in 30 years.
For beans 34 percent on October 18, 1985 is the current 30-year worst harvest progress to date, and for corn it's 22 percent on October 18, 1992.
Last week beans were just 23% harvested compared to 49% last year and 57% for the five year average. For corn it was 13% harvested compared to 20% last year, and 35% for the five year average.
Rain is back in the forecast for the second half of the week, starting in the west tomorrow pushing eastwards renewing showers and also dropping temperatures back below normal.
Meanwhile Hurricane Rick out in the Pacific is expected to bring more rain to the south and Delta starting Wednesday.
Early CBOT calls are: corn called 2 to 4 higher; soybeans called 10 to 12 higher; wheat called 6 to 8 higher.
I'm Back - With A Couple Of Observations
Having driven fairly extensively around the North, East and Midlands this past week, maintaining the blog has taken a bit of a backseat. Blog devotees will be please to know that I am back from my travels and plan on going nowhere now for the rest of the week.
One thing that struck me whilst out and about is the number of unplanted fields around at the moment. Possibly more so than even last year, particularly around the Humber.
With barley about as popular as a ginger-haired stepson at the moment, I doubt very much that these unplanted acres will be going into spring cereals. Spring rape performed pretty well this year so maybe that is the plan? I guess it could be considering that soybean prices have held up reasonably well compared to wheat over recent months.
The wisdom of increasing rapeseed production shortly after of a record US soybean crop, and potentially record output from both Brazil and Argentina in the spring, might look questionable come next summer though.
Another thing that struck me is how dry it is everywhere, we certainly had a very dry September, and October is shaping up to go the same way.
The radio this morning is full of the story that Gordon Brown is warning of drought, floods and heatwaves, unless global governments get their arses into gear before crucial climate change talks in Copenhagen in December.
Mind you they were also reporting when asked what his favourite type of biscuit was he took 24 hours to formulate a reply. A man who takes a full day to prevaricate over the virtues of a chocolate hobnob vis-a-vis a custard cream perhaps isn't to be trusted to speed up a reappraisal in attitude to climate change in my humble opinion.
"Anything coated in chocolate," was his in-depth reply, just in case you were wondering. I always knew he was attracted to Jaffa's.
