India Has 17.8 MMT of Grains Stored Outdoors
Successive bumper harvests have seen the volume of India's state-owned grain reserves almost double from 9.4 MMT in 2008 to 17.8 MMT in 2010, according to this report in the Hindustan Times.
Almost a third of the country's stocks stored by the Food Corporation of India and other state agencies across India are stored this way, they say. More than half of that, an estimated 10 MMT, is now enduring being stored under tarpaulin for it's second monsoon season, and some of it is older than that.
Haven't Seen The Word 'Awash' Just Lately
Or 'burdensome' come to that. Back refreshed from a weekend away with MrsN#3, and looking forward to a fun-packed week I wonder idly this morning how awash we really are we with wheat now, and has the overall picture really changed that much?
With EU wheat prices having risen by a third in little more than a month or so, you'd certainly think so.
The USDA currently say that 2010/11 will finish with wheat ending stocks of 187 MMT, in round figures that's still 50% more than in 2007/08.
It's maybe more than slightly disconcerting however to not that almost half (48%) of this 187 MMT is in China, India, Egypt and Syria (2007/08: 42%). None of these countries are noted for their export prowess, and at least two of them are bent as a nine-bob note. Additionally the quality of these stocks is questionable certainly in the first two. China alone currently accounts for 35% of all the wheat ending stocks in the world (2007/08: 31%).
Based on those numbers it certainly seems that the world's wheat reserves are getting more concentrated into fewer hands, and seemingly those of traditionally non-exporting nations are holding an increasingly larger slice of the cake.
In the case of China we have a country with a proven track record of exaggerating production numbers. In the case of India we have a country with a long history of stock mismanagement. And Egypt hardly have an unblemished record in any category you wish to chose from. It seems fair to assume that a fair chunk of the world's wheat either isn't really there, or at the very least is well past it's sell-by date.
Mother Nature it appears hasn't been overly kind to "Poundland" - the FSU - in blessing them with another seemingly unlimited volume of new crop grain to greedily exchange for cash this year either.
So the EU might actually get a look in on the export front this season, especially if the euro doesn't recover too much. The US has of course got plenty of wheat to export itself, and will be looking to offload some of the weighty reserves it has built up steadily since 2007/08, they've more than trebled in that time frame.
CBOT Closing Comments
Soybeans
August soybeans closed at USD10.17, up 1 cent; August soybean meal closed at USD299.90, down USD0.30; August soybean oil closed at 39.07, up 17 points. Private exporters announced the sale of 175,500 MT of soybeans to China for 2010/11 delivery and also a further sale of 175,000 MT to "unknown" for 2010/11. This strong export interest looks likely to underpin the market for the remainder of 2010.
Corn
September corn closed at USD3.71 1/4, down 5 1/4 cents; Dec corn closed at USD3.84 1/2, down 5 3/4 cents. Corn was down around 24 cents for the week. Mostly favourable weather is expected to benefit the corn crop in the Midwest over the next two weeks. Iowa, the top corn state, has received nearly the same heavy rain as 1993 in June and July. Despite that corn potential this year is way better than 1993, say Martell Crop Projections.
Wheat
Sep CBOT wheat closed at USD5.96 1/4, down 1/4 cent; Sep KCBT wheat closed at USD6.15, up 3 1/4 cents; Sep MGEX wheat closed at USD6.28 1/2, up 5 3/4 cents. Wheat was up between 9 to 17 cents for the week overall. The trade is still focusing on the hot and dry weather in Russia. Argy plantings are running well behind schedule at 79% complete versus 99% a year ago.
EU Grains Closing Comments
Nov London wheat closed GBP1.20 higher at GBP133.95/tonne; Nov Paris wheat ended up EUR1.00 at EUR179.75/tonne. On the week as a whole London wheat gained GBP4.95/tonne and Paris wheat EUR7.25/tonne
Fund money continues to flood into the market, with Paris wheat trading a record volume - in excess of 50,000 lots for the first time ever yesterday.
Perennial bears have also been overwhelmed by the sudden surge in wheat, forcing them to also exit the market, helping to drive prices higher.
Bullish news, such as that coming out of Russia, is immediately being seized upon to drive the market higher. Bearish news such as better than expected French/US yields is being largely ignored.
The last time we whipped ourselves up into such a frenzy was 2008, and that all ended in an enormous puddle of tears as I recall.
The German Farmers' Union DBV yesterday reported that German wheat yields this season would be down by 10-20%. They are Germans, and they're farmers, do I need to say anymore?
I'm not disputing that things are bad in Russia or Kazakhstan, but do they really warrant a global price increase of a third?
You Really Are Doing My Head In Now
Hose? Garden hoes? Oh, you mean letter O's. Erm, hang on *sobs and wipes away tears* no, there's no O's in it either. Now clear off the lot of you, or I'll call the internet police.
Bloody Hell Stop Emailing And Twittering Me Will You
Haven't you got better things to do? It's only been up there five minutes ago and I'm already inundated with requests as to which large grain merchant is going to be bidding £200/tonne for barley whilst simultaneously offering wheat at fifty quid next week.
It's simple, just get some firm offers/bids in hand based on a premium over the futures market will you?
How could a mulit-million pound big bad grain merchant do such a thing to a little cottage industry like me? I'm so upset I probably will have to turn to drink. Again. The danger with that though is who knows what I will decide to put on there after I've had a few? Where did I put that Roger Mellie Profanisaurus again? And stop asking for clues Phil, but no, there's no F in it.
My Faith In Human Kindness
Has been both shattered and restored in the same blinking day! Restoring it, and proving than not everybody needs to turn every single thing they do into an "earner", and that sometimes complete strangers will just do you a favour for the hell of it, is John Hollis of JT Hollis Farms Ltd. Clearly a top man. Thanks for the assistance John.
Now then, which large grain merchant was responsible for doing the shattering this morning then I hear you ask. Oh, that's an interesting one isn't it? The most disappointing thing about it is that I haven't really got the time to have a laugh at their expense this afternoon, that may have to wait until next week. It will be very funny when it happens though, especially on this market, so keep watching!
Which reminds me of the previous occasion that somebody "extracted the Michael" only to subsequently find that an advert for KW had suddenly popped up on their website as if by magic! I LOVE computers and the internet I do.
CBOT Closing Comments
Soybeans
August soybeans closed at USD10.16, up 3/4 cent; August soybean meal closed at USD300.20, down USD3.10; August soybean oil closed at 38.90, up 64 points. Private exporters announced the sale of 110,000 MT of soybeans to South Korea for 2010/11 delivery. In addition weekly export 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. The Census Bureau monthly soybean crush came in below trade expectations at 129.17 million bushels. Argentina said it will impose new import tariffs on various Chinese goods, that will do little to aid it's soyoil export hopes to China.
Corn
September corn closed at USD3.76 1/2, down 3 1/4 cents; Dec corn closed at USD3.90 1/4, down 3 1/4 cents. An early rally in corn faded as the wheat market eased back. Crude oil was stronger as the US dollar lost significant ground, both were supportive to corn. Export sales this morning were a combined total of 1,155,000 MT for both marketing years, a bit above expectations for sales of 850,000 - 1 MMT. China took 58,700 MT of old crop and "unknown" accounted for 304,800 MT of new crop. China has purchased 1.19 MMT of US corn to date.
Wheat
Sep CBOT Wheat closed at USD5.96 1/2, up 8 1/4 cents; Sep KCBT wheat closed at USD6.11 3/4, up 10 1/4 cents; September MGEX wheat closed at USD6.22 3/4, up 9 1/4 cents. Futures closed higher but finished well off the day’s highs. Sharply higher EU futures got wheat off to a strong start as Black Sea production problems remain to the forefront. Weekly export sales of 382,100 MT were in line with expectations. Funds were estimated to have purchased 6,000 contracts of wheat in Chicago and were also noted buyers in Kansas. Russia increased the size of their crop area ruined by drought to 10 million ha.
