Early Call On Chicago
21/02/12 -- The overnight grains are mixed but mostly lower on the first trading day of trading after the long weekend with beans narrowly either side and corn & wheat around 6 cents easier.
Greece has got its bailout approved but the market is already wondering if it will be enough before the ink is even dry. That last one wasn't, so why should this second one in less than two years be any different? All it has done is maybe bought a bit more time.
The market is now turning its attention to the upcoming USDA Outlook Forum, although it seems most likely that they will simply re-iterate last week's baseline numbers of 94 million acres of corn and 74 million acres of soybeans getting sown in the US this spring. It's more than a month off before we get a set of more official figures with the March 30 planting intentions report.
European weather has warmed up, easing any further winter kill fears.
Pakistan says that it expects wheat production and exports there to match last year's bumper levels. India will also shortly begin harvesting an anticipated record crop of it's own.
Russia has exported 19.8 MMT of grain to date in the current marketing year, according to the Ag Ministry there, leaving 7.2 MMT to go before they hit their newly revised 27 MMT cap.
My agronomist mate in Ukraine, Mike Lee, reports that the Agrarian Confederation there estimate that 3.5 million ha of winter crops will need resowing this spring but that yields will be at the 5-year average. He also suggests that corn seed "is getting hard to come by."
Beans look set to remain the strongest leg of the complex. They were up by 3.1% last week, compared to wheat rising 2.2% and corn increasing by only 1.6%.
The USDA have just reported 250,000 MT of soybeans sold to China for 2012/13 and 110,744 MT of corn to "unknown" for 2011/12.
Early calls for this afternoon's CBOT session: beans flat to 2 cents firmer, corn and wheat down 5-7 cents.
Drought!
21/02/12 -- It seems strange to be talking about drought in February, but just about every tabloid newspaper and even our own beloved BBC have jumped on this particular bandwagon this week it seems.
Already 2012 is being talked of as the driest for decades with comparisons with 1976 abounding. It may surprise you to hear that I was alive in 1976, contrary to my youthful appearance. We went to Scarborough for our holidays in fact as I clearly recall. And it pissed it down so hard one day that we had to sit and wait in the car (posh see, had our own car we did) for it to ease off a bit before we got out.
"It's not rained here for three days," one concerned farmer in a small village deep in the heart of Cambridgeshire said. "I've filled both the indoor and outdoor pools up to the brim as well as all seventeen baths in our fourteen bedroom Jacobean Manor House, I've also washed all the Range Rovers, the Merc, the little run around Porche and the Jag as well just in case," he added.
"I remember 1976 well, the Wurzels topped the charts with their beautiful haunting ballad I Got A Brand New Combine Harvester and Daddy bought Essex," he reminisced.
"Things were tough back then. Daddy had to do quite a lot of the work himself in those days you know. He didn't have SatNav or TomTom like we do these days. There they are over there, give them a little wave. Good workers these Eastern European types, do anything for you. Good boy TomTom. Look, stick, stick. Fetch. Go get it SatNav. Good boy."
EU Rapemeal Prices Continue To Rise
21/02/12 -- Rapemeal prices on the continent continue to rise, with front-end premiums getting larger by the day. Mar 12 is alreay EUR10/tonne higher on the week so far.
Latest guide prices for EU rapemeal today, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:
| Feb12 | unq | n/a |
| Mar12 | 200.00 | +5.00 |
| Apr12 | 194.00 | +3.00 |
| May12 | 188.00 | +3.00 |
| May/Jul12 | 185.00 | +3.00 |
| Aug/Oct12 | 169.00 | +2.00 |
| Nov12/Jan13 | 173.00 | +2.00 |
| Feb/Apr13 | 175.00 | +2.00 |
An Australian Take On The Grain Market
21/02/12 -- Be honest, it's not every day that you read a grain market report that includes the expression "and we’ve all got poo on our socks" is it?
Well, we're obviously not reading enough reports from Down Under, where PentAG Nidera say that this is exactly how the Australian grain market feels right now.
Intrigued? I though so: And these were clean on this morning as well
Morning Snippets
21/02/12 -- Well, the Greek deal has finally been approved although it comes bundled with so many caveats and conditions that Agrimoney are already reporting this morning that they "might severely dent its economy, besides scaring off investors, meaning a third rescue package might eventually be needed."
The euro is barley changed on the widely expected news. Most of the grains are a little lower in what seems to be a "buy the rumour, sell the fact" trade.
Elsewhere, Pakistan says that it (like neighbouring India) is expecting a bumper wheat harvest this year - somewhere in the region of 24 MMT. That will be it's third "bumper" crop in a row.
China says that it imported 4.61 MMT of soybeans in January, a 10% fall on January 2011.
The Russian Ministry say that the country has exported 19.8 MMT of grain in the 2011/12 marketing year to date.
The USDA's Outlook Forum on Thursday/Friday will report on what they think US farmers might plant for the 2012 harvest. Last week's baseline projections of 94 million acres of corn and 74 million acres of soybeans were made on data gathered in November. Out of interest, last season's Outlook Forum gave us 92 million acres of corn (pretty much spot on) and 78 million acres of soybeans (3 million too high).
EU Wheat Mostly Higher To Kickstart The Week
20/02/12 -- EU grains finished mostly higher with front month Mar 12 London wheat up GBP2.50/tonne to GBP166.50/tonne and Mar 12 Paris wheat down EUR0.25/tonne to EUR217.00/tonne.
Crude oil and outside markets rose on optimism that Greece would finally get its bailout money and on news that China had lowered bank reserve requirements over the weekend.
The euro was firmer, helping London wheat gain more than it's Parisian counterpart with America closed for a public holiday.
Another bit of supportive news for wheat this side of the Channel may have been a Defra announcement that much of southern and eastern England is officially in a state of drought.
It's somewhat premature to be talking about crop losses yet, but the nation's students have promised to assist by bathing and brushing their teeth even less frequently than normal.
Saudi Arabia bought a mixture of 330,000 MT of US, Canadian, Australian and European wheat over the weekend without specifying how the order was split.
Ukraine announced that it had exported 62% more grain so far this season, although the majority of that has been corn. Wheat shipments are only up 12.5% whereas corn exports have increased by more than 200%.
EU Rapemeal Prices
20/02/12 -- Rapemeal prices on the continent continue to climb with nearby availability particularly tight.
Guide prices, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:
| Feb12 | unq | n/a |
| Mar12 | 195.00 | +5.00 |
| Apr12 | 191.00 | +6.00 |
| May/Jul12 | 182.00 | +5.00 |
| Aug/Oct12 | 167.00 | +3.00 |
| Nov12/Jan13 | 171.00 | +3.00 |
| Feb/Apr13 | 173.00 | +3.00 |
Greece Is The Word
20/02/12 -- Today is supposed to be the day that Greece gets its second bailout approved by Brussels. It feels like it will actually get pushed through at long last. If so, there's a list of concerns as long as your arm to follow, not the least of which surely has to be how are they going to push through with the austerity measures promised to obtain this EUR130 billion?
Another key issue is the target of getting it's debt-to-GDP ratio down to 120% by 2020. Am I the only one who suspects that in reality they won't be putting a lot of effort into achieving that particular goal? Why should a country that's cooked the books and lived well beyond it's means for the last decade worry about what might happen in eight years time?
Nevertheless, the euro is higher on the back of short-term optimism.
Other fresh news is thin on the ground with America closed for President's Day.
Ukraine's Ag Ministry say that the Black Sea nation has exported 12 MMT of grain so far this marketing year, an increase of 62% on last season. Wheat only accounts for a quarter of that total, with corn responsible for 58%. That's a big shift from a year ago when corn accounted for less than 30% of all grain exports as at this date.
Drought in the UK is suddenly all over the media as "parts of England struggle with groundwater levels lower than in 1976," say the BBC. There's an interesting map of the UK here from the Met Office, showing 2011 rainfall as a percent of normal.
The recent snow won't have helped too much as 10cm of the white stuff is only the equivalent of 1cm of rain, according to an expert that I've just heard on the radio. If we learnt anything from last year it should surely be not to write the crops off as lost just yet though.
