EU Grains Closing Comments
Nov London wheat closed GBP3.25 higher at GBP132.75/tonne; Nov Paris wheat ended up EUR3.75 at EUR178.75/tonne. Futures posted significant gains but also closed below session highs.
Nov Paris corn finished EUR4.50 higher at EUR168.25/tonne; Nov Paris rapeseed advanced EUR3 to EUR367.75/tonne; Nov Paris malting barley closed up EUR0.75 at EUR186.75/tonne.
Nov London wheat rose to a fresh 13 month high of GBP137/tonne at one point as "smart investment money" continues to flow into the market. Although end-users are largely still sitting on their hands, they are becoming rather spooked to say the least by the swiftness and magnitude of this recent price spike.
More imminent production cuts look likely to be on the cards for Russia, whilst output in Kazakhstan may well also fall below current estimates.
The German Farmers' Union Deutscher Bauernverband (DBV) helped to keep the pot boiling by saying that wheat yields there are likely to be 10-20% down on last year.
The Ukraine Ministry forecast 2010/11 wheat exports 27% lower than last season at only 6.7 MMT.
Algeria bought 300,000 MT of option origin wheat yesterday, which is likely to be fulfilled by French grain. Although our mates Egypt bought Russian wheat again this week, it was at least almost USD50 up in price on a few short weeks ago. They may find that the Russian (and Kazakh) shops are shut come the new year.
So there you have it, lots of bullish news to get your teeth into.
Normally shy and reticent UK farmers are apparently falling over themselves to sell wheat at these prices, and I don't blame them. Pretty much the only buyers are the City boys who probably haven't even started shaving yet, or kissed a girl, let alone seen a field of wheat.
It has to be worth noting that the differential between front month August Paris wheat and November finished at almost EUR22/tonne tonight. That's rather a large differential for only three months isn't it? The two month difference between Nov and Jan is just EUR1.25/tonne, that's a very striking disparity.
The fresh-faced young batty boys with the braces aren't buying August you see, that's far too nearby for comfort. They prefer the safety zone of four months away November, for now. Tarquin and his mates will start shaking like a flatpack MFI wardrobe in a force nine gale as November approaches however. After all they don't want 100,000 MT of wheat turning up at Canary Wharf do they?
Help Wanted
Has anyone got a spreadsheet of the daily front month closes for London wheat going back several years, as many as possible in fact?
A virtual coconut to anyone who can assist.
xx
USDA Weekly Export Sales
The USDA's weekly export sales report for the period July 9-15:
Wheat
Net sales 382,100 MT for the 2010/11 marketing year were in line with expectations for sales of 350-450,000 MT. Exports for the week were 544,700 MT.
Corn
Net sales of 614,100 MT for delivery in 2009/10 and 540,900 MT for delivery in 2010/11 came in a bit above expectations for sales of 850k-1 MMT. China took 58,700 MT of old crop and "unknown" accounted for 304,800 MT of new crop. Actual exports were 948,400 MT.
Soybeans
Net sales of 111,800 MT for delivery in 2009/10 and 1,115,400 MT for delivery in 2010/11 were above trade estimates for sales of 550-950,000 MT. Unknown destinations (578,000 MT) and China (341,000 MT) took the bulk of the new crop. Actual exports this week came in at 274,800 MT, with China taking 132,000 MT.
Brazil To Plant Record Soybean Area For 2011
In their first estimate of Brazilian soybean plantings for 2011, Ag Rural are predicting a record area will be given over to the oilseed. They are calling for 24 million hectares to be planted to soybeans, half a million up on last year, or an increase on just over 2%.
Some of those extra acres will come from corn, encouraged by significantly higher returns from soybeans as CBOT hovers around USD10/bushel.
They haven't put a figure on production yet, although there is some trade talk of a crop in excess of 70 MMT if everything comes together and they are able to replicate the bumper yields of 2010.
At this early stage that's a big ask, especially with La Nina forming in the Pacific Basin. This is a big concern this year, La Nina's last appearance in 2007/08 didn't cause much disruption, but crucially that episode only developed late in the growing season. This La Nina is developing now, before soybean planting has even begun.
La Nina tends to delay the arrival of rains in Central and Southern Brazil, that could hold back plantings, potentially cutting yields.
German Harvest Latest
The German Farmers' Union Deutscher Bauernverband (DBV) say that wheat yields are likely to be 10-20% down on last year, although harvesting of this season's 3.25 million hectares has only just begun.
The 2010 harvest is marked by extreme weather events, they say. The long snowy winter and the continued wet and cold weather in April, delayed crops. Since mid-June, high temperatures and prolonged drought have now accelerated the harvest and led to premature ripening of wheat, barley and rapeseed, they say.
The winter barley harvest on the sandy soils in the eastern areas of Lower Saxony is already almost complete, whilst On the heavy soils in the northern parts of Germany it is in full swing, they add.
Nationwide barley yields vary quite widely with some regions seeing falls of 10% on last season, yet others such as Bavaria witnessing an improvement of 10% on last season. Overall they expect barley yields to be around 3% lower, they say. Quality is coming out "surprisingly well" especially in eastern areas, they add.
The rapeseed harvest is underway, but it is too early to make an accurate prediction on yield and oil content levels, although early results confirm that the recent heat must lower yields from last season's bumper levels, they conclude.
Chinese Imports
Chinese customs data shows that the nation imported a record 6.2 MMT of soybeans in June, bringing the half year to date cumulative total to 25.8 MMT, a 17% increase on last year.
Imports from the US for the year to date are currently running at 13.8 MMT, 15% up on twelve months ago.
Only one cargo of US corn arrived in China in June, bringing net imports for the year to date to 88,000 MT, much more is in the pipeline for this month and beyond.
For wheat Jan/June imports are more than double year ago levels at 885,000 MT.
Crumbs! They Must Be Crackers
We've sold off Cadbury's to the Yanks, now Jacob's Cream Crackers and Penguins look set to suffer a similar fate with the news that United Biscuits might be up for sale, according to this report on Reuters: Get off my Jaffa's
Ukraine Latest
The Ministry say that the rapeseed harvest will amount to 1.5 MMT this season, down almost 17% on last year. They've already harvested 75% of the planted area, gathering 1.1 MMT so far, they say.
The heavy rains that have dogged the harvest may cause some wheat quality downgrades in some areas, they add.
The Ministry have set a 2010/11 revised export target of 16 MMT, including 6.7 MMT of wheat (-27% on 2009/10), 5 MMT of corn and 3.7 MMT of barley. Sixteen million would be down 23% on last season and 35% lower than the "boom" year of 2008/09.
