It's Half Past Double Dip Recession O'Clock
25/01/11 -- The pound fell sharply in early trade following the shock news that UK GDP fell 0.5% in the last quarter of 2010, contrary to expectations of an increase by a similar amount.
It's all the weather's fault. The sudden arrival of heavy snow and sub-zero temperatures is largely to blame, how very British.
"This really isn't our fault. We inherited a lot of snow and ice from the previous reckless Labour administration," said David Cameron. Probably.
Prices rising and growth falling, what does the Bank of England do now? Fire up the Thomas Caxton and order more ink?
The pound dropped below 1.58 against the dollar shortly after the news and fell to not much more than 1.16 against a suddenly popular euro.
Chicago Close
24/01/11 -- Soybeans
March beans settled 7 3/4c lower at USD14.04 1/2 a bushel; March soymeal closed USD0.60 higher at USD380.20; March soyoil ended 38 points lower at 57.18. The outlook for much improved rainfall in Argentina took the bullish shine off beans today. "In an amazing turn of events in Argentina, some of the driest areas will see two week rain totals of 8-14 inches. This very wet weather begins late Tuesday and lasts (at least) into early February," says QT Weather. The USDA announced the sale of 114,000 MT of 2010/11 soybeans to China, who also agreed to buy 11.5 MMT of US beans for the 2010/11 and 2011/12 marketing years.
Corn
March corn ended down 2c at USD6.55 1/4 a bushel; March corn also closed down 2c at USD6.65 a bushel. Private analyst Informa upped its corn acreage estimate for 2011 slightly to 90.9 million acres on Friday. The much improved Argentine weather outlook is probably less helpful for corn than beans. Strength in wheat lent some support, but the market seems nervous about pressing much higher with funds already holding a record long position. Everybody is bullish and downside risk is almost inconceivable, which is dangerous territory to be in. Meanwhile the two-headed ethanol monster continues to devour US corn.
Wheat
CBOT March wheat closed up 10 3/4c at USD8.35 1/4 a bushel; KCBT March wheat climbed 8c to USD9.08; MGEX March wheat rose 13c to USD9.50 1/4. As you can see ten dollar wheat isn't that far away in Minneapolis. China is dry, and set to remain that way, but we've been here before and they only emerge as a major wheat buyer very, very rarely. The market is however waking up to the fact that the US are pretty much the only volume seller of quality wheat. Unless you want Argentine unreliability. Much of their exportable surplus will likely go to neighbouring Brazil anyway.
EU Wheat Close
24/01/11 -- EU wheat closed mostly higher with March London wheat up GBP2.25 at GBP201.00/tonne, and new crop Nov GBP0.50 higher at GBP172.50/tonne. March Paris wheat rose EUR1.75 to EUR261.25/tonne and Nov fell EUR0.75 to EUR229.00/tonne.
In London new crop Nov set a new contract high of GBP173.50, in Paris old crop March did likewise hitting EUR263.75/tonne. The Mar/Nov London spread is GBP28.50/tonne, broadly similar to that in Paris.
London wheat gained relative to Paris as the pound weakened against the euro, falling below 1.17 at one point.
The UK continues to export wheat, and seems highly likely to go well over 2 MMT this season - 2.3/2.4 MMT would be my guess, which would be a million tonnes more than Defra currently estimate.
Many trade pundits estimate that maybe 10% of the UK crop still has to be sold ex-farm - around 1.5 MMT. Other talk suggests that maybe 30% of new crop has already been sold.
Tunisia bought 100,000 MT of optional origin hard wheat again on Friday, and Algeria are back in the market tendering for wheat again today too, having already supposedly bought somewhere in the region of 600 TMT- 1 MMT in the past few weeks.
Nearby Feb Paris rapeseed fell sharply late in the day, closing EUR11.75/tonne lower at EUR503.00/tonne on talk that price finally is rationing demand. Reports suggest that OSR is now so expensive that it is more economical for the large fuel companies to fail to meet their biodiesel blending obligations and pay the fine instead than meet EU-imposed mandatory levels of inclusion.
Early Call On Chicago
24/01/11 -- The overnight grains closed firmer with the bulls nicely comfortable in a first class carriage supping Bollinger on this particular gravy train. Wheat finished with gains of around 7-10c, with beans up 6-8c and corn 1-3c higher.
Heavy, possibly drought-busting, rains are in store for Argentina during the next fortnight. Will they arrive too late to be of much help for corn? Certainly they should aid beans, planting of which isn't even fully completed yet.
The market seems to be ignoring this forecast though and concentrating on continued rains in Australia, dryness in China and extreme cold in the US.
French wheat has set new three year highs as stocks dwindle, America has plenty - but there's no point giving it away is there? It's a sellers market.
Buyers meanwhile are scratching each others eyes out to get to the front of the queue.
The US EPA said that they will extend the recently announced E15 blend of 15% ethanol in gasoline to include vehicles built from the 2001 model year and later (from the 2007 upwards permitted in October).
That's another shot in the arm for corn demand then. Not that it really needed it. China keep buying soybeans like they're the last iPad in the store and meanwhile the US wheat shop is the only one left open after the Australian one got flooded, the Russian one burnt down and the French one is only open between midnight and 12.01am.
Oh, and guess what, that's right the USDA have just announced a sale of 114,000 MT of 2010/11 soybeans to a certain slightly jaundiced looking Far Eastern gentleman today.
Early calls for this afternoon's CBOT session: corn 1-3c higher; beans 6-8c higher; wheat 8-10c higher.
EU Rapemeal Prices
24/01/11 -- Latest guide prices for EU rapemeal.
Basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Jan11 | 234.00 | unch |
| Feb/Apr11 | 234.00 | +1.00 |
| May/FH Jul11 | 232.00 | +2.00 |
| Aug/Oct11 | 193.00 | +1.00 |
| Nov11/Jan12 | 197.00 | unch |
| Nov11/Apr12 | 199.00 | +1.00 |
Are We Nearly There Yet Dad?
24/01/11 -- New crop November London wheat has set a fresh contract high of GBP173.50 this morning, up GBP1.50 on the day so far. Front month March Paris wheat has also set a lifetime high of EUR263.75/tonne, and currently trades just below that, up EUR3.50 on the day.
Resurgent Chicago wheat is up 12c on the overnights, adding to 21c gains on Friday, boosted by robust weekly export sales of over 1 MMT. The pace of French sales has to slacken off now as we enter the second half of the 2010/11 marketing year, that leaves the door open for the US, and to a more limited degree Argentina and Australia to boss the export arena.
The world's major wheat buyers haven't stopped buying wheat, if anything they've upped the pace as if they're frightened that we're going to run out. We aren't, but they don't know that do they? So we'd better let them have just one or two more cargoes just in case. Tunisia bought 100,000 MT of optional origin hard wheat again on Friday.
In the UK, GBP160/tonne ex farm is now widely achievable for new crop wheat off the combine. The current futures spread suggests that would value August 2012 as available at around GBP135/tonne - would that be the sale of the century or fools gold?
Argentina Set For A Deluge
24/01/11 -- Parts of drought parched Argentina are in for a serious soaking, with more a foot of rain suddenly in the forecasts for the next fortnight.
"In an amazing turn of events in Argentina, some of the driest areas (where seasonal rains have been eight inches below normal and drought conditions categorized as “extreme”) will see two week rain totals of 8-14 inches. This very wet weather begins late Tuesday and lasts (at least) into early February," says QT Weather.
The market either hasn't heard or doesn't care, with the overnights up around 8-10c on beans.
Is It Just Me
24/01/11 -- Or is everybody's favourite search engine getting a little bit too big for it's boots? They've just announced a tasty 29% rise in net profits to USD2.5 billion in the past quarter, yet their new "intelligent" software which tries to guess what you're searching for as you type may be starting to drive people away. It certainly is in my case, and I now seem to spend 50% of my search time using Bing instead. Sometimes less is more.
