Chicago closing comments
Beans closed around 30-40c higher supported by crude & a weaker dollar. Forecast heavy rains potentially impairing weekend planting progress and the ongoing Argy uncertainty also added some support as traders built in some long weekend premium.
Corn closed modestly higher with gains of around 4c in quiet pre-holiday trade, crude supports. Planting progress due out Tuesday night is expected to show 85-90% done.
Wheat closed around 7c firmer on short-covering ahead of the long weekend although 5/6 mmonth lows were set earlier in the session. Widespread rains will favour the spring crop.
Arla to Close Manchester Dairy
Arla Foods is today informing employees at its Manchester dairy of its intention to close the dairy and distribution facility at Wythenshawe, Manchester.
Under the proposals, raw milk, currently processed at Manchester, will be transferred to the company’s processing facilities at Ashby, Stoiurton and Hatfield Peverel.
”Our proposal is based on the thorough review of our production and distribution facilities that we have carried out in line with our strategy of improving our performance in standard milk,” says Lars Dalsgaard, Business Group Director - Supply Chain.
The closure, to be completed by January 2009, is subject to consultation and would result in the loss of around 300 jobs.
UK trades/markets
Wheat cash & futures markets keep edging lower.
Wheatfeed continues to get dragged down by wheat with Jun/Sep pellets traded ex South East locations at £110 yesterday, down £5 in a week. Interestingly in many cases recently it's been compounders who are selling these summer positions. An indication that May compound sales have been poor, or simply end-users juggling their books? I know where my money is going on that one, and it doesn't look like it's going to get any better in June either. Certainly I am hearing stories of end-users cancelling next week deliveries and asking if May balances can be deferred into June. Like they think things are going to pick up in June, that well known big summer feeding month!
Bank Holiday weekend material appears to be trading/offered at all sorts of prices, with transport difficult (ie expensive) to get across the long weekend, this is being reflected in the price that merchants/end-users are willing/able to pay. As one wag said yesterday "I haven't got the room, I haven't got the lorries & I haven't got the sales, it wouldn't matter if it was £50/tonne!"
Oct08/Apr09 traded a couple of times yesterday at £116 ex the standard South East range of locations, with other bits and pieces reported done at nominal premiums for 8mm pellets & specific mills.
Hand to mouth buying is the order of the day on pretty much everything else.
Got potential resale offers on hi-pro soya Humber/Southampton £POA.
The rapemeal market is dead, with prices around £8-10 up off their recent lows buyers have backed away. Stocks appear to be more than adequate to cover crushers planned downtime during June/July, ahead of new crop in August. The weather appears conducive to favourable crop development and existing crusher/shipper sales are reputedly only around 25% of anticipated production.
Nearby Erith material reported traded £178 yesterday and £177 this morning for odd loads here and there.
Early call on Chicago
Corn futures are expected to open 1 to 3 higher; soybeans 15 to 17 higher; wheat 3 to 4 higher. Prices were higher in overnight trade on firming energy markets. Technical strength is also supporting prices. There could be some profit-taking later in the session ahead of the long weekend, however.
US farmers, the handout kings
The Economist--If you measure the success of a pressure group by its ability to cram lousy policy through Congress, you might imagine that Big Oil or Wall Street would top the league: they are the lobbies most berated on the campaign trail. You would be wrong. If there were any doubt, the past few days should have confirmed that America's farmers are the capital's handout kings.
Consider their latest masterpiece, the 2007 farm bill that Congress this week delivered, several months late, to George Bush. Congress and the farmers have conspired to make an already unjust agricultural policy—a system that has subsidised the “farming” activities of such paupers as David Letterman and David Rockefeller—even worse. Through a complicated and overlapping system of government-sponsored insurance, counter-cyclical assistance, disaster aid and legacy payments tied to nothing, the five-year, $307 billion bill lavishes cash on wealthy farm households, the main restriction on collecting it being a means test that applies to couples making more than $1.5m a year. And even that can be avoided by employing a reasonably competent accountant.
Shockingly, the bill's authors tied some future subsidy payments to today's record commodity prices, therefore guaranteeing already well-off farmers high incomes. Commercial farm households, which get most of the largesse, will have an average income of $229,920 in 2008, says the Agriculture Department. And it means, as the department points out, that the government could owe billions in subsidy payments to these big farmers if and when prices dip again.
Farmers of all kinds get a slice of the action. American sugar producers, for example, are guaranteed 85% of the domestic sugar market, according to the bill. This measure will drain $1.3 billion over ten years from federal coffers, and will force consumers to pay an extra $2 billion a year in higher sugar prices.
The bill invites new trade disputes: Brazil is already considering a WTO suit over the barriers to ethanol produced from sugar cane. Congress has also ignored the world's hungry, declining to soften a rule requiring the government to buy all foreign food aid from American farmers and transport it on American ships.
Most legislators probably know the farm bill is a disgrace, but they voted for it overwhelmingly anyway, revealing the cynical genius of the farm lobby. The bill's backers scared urban congressmen about losing money for food stamps, a programme contained in the bill. They scared rural ones into worrying about offending farmers. They scared Speaker Nancy Pelosi and the Democratic leadership about maintaining their House coalition, which is built on new wins in rural districts.
Resistance disintegrated when a few sops were thrown. Urban interests were promised support for the purchasing power of food stamps, which has declined since the 1990s. Ms Pelosi and other western legislators got money for fruit and nut growers. Mitch McConnell, the Senate's minority leader, even got tax breaks for the racehorse industry in his native Kentucky.
Mr Bush vetoed the measure on May 21st. But the bill won so much support in Congress that the legislative branch has enough votes to override him, thanks to Republicans voting with the Democrats against their own president. John McCain boldly voted against the bill; Barack Obama didn't. The fat cats of agribusiness can rest easy for now.
Early call on Chicago
Corn futures are expected to open 1 to 3 higher; soybeans 10 to 20 higher; wheat mostly 4 to 8 higher. Continued strength in edible oil markets pushed overnight grain and soybean prices higher. Rain showers across the Corn Belt will slow remaining planting, but temperatures will rise into the weekend.
USDA Weekly Export Sales Report Expectations
The following are pre-report expectations ahead of today's USDA Export Sales Report due at 13.30BST.
Wheat 250-600,000MT
Corn 350-750,000MT
Soybeans 175-450,000MT
Soyoil 5-25,000MT
