Weekend Ramblings
As the euro continues to plunge lower than Kerry Katona's IQ, European wheat is making inroads to all sorts of unusual destinations and far flung corners of the world.
Bunge have sold 30,000 MT of French wheat to Mexico for loading at the end of this month, according to reports. That highlights just how uncompetitive US wheat has become, and the advantage of having a currency only marginally more desirable than the Zimbabwe dollar.
Feast or famine Spain (usually the UK's top wheat export home) has had more than it's fair share of rain this winter, helping it to expect a bumper grain harvest this summer. The country expects a winter grain crop 13.4% higher than last season at 15.17 MMT say the Ag Ministry, with soft wheat output increasing by 18% to 4 MMT and barley production up by 17%.
Wheat output might be seen higher in Europe this year, but it's expected to be lower just about everywhere else of any significance (apart from those lovable surrender monkeys Argentina). Talking of people who love to take a dive in the penalty box, German analysts F O Licht say that 2010/11 global wheat production will fall to 653.9 MMT from 675.4 MMT in 2009/10.
The sausage-munching firm say that world barley production will also decline from 149.7 MMT to 140.8 MMT in the coming season. Global corn output is seen increasing from 786.6 MMT to 795.2 MMT, they add.
The "back of a fag packet" USDA are out on Tuesday with their May stocks estimates. The trade is estimating 2009/10 soybean US ending stocks to fall from 190 million bushels last month to 180 million this time round. Corn stocks are seen declining slightly to 1.861 billion, with wheat carryout also a tad lower at 946 million bushels - that's a hefty 25.75 MMT.
They will also have a stab at predicting ending stocks for 2010/11 too, with soybean inventories seen recovering to around 340 million bushels, with corn expected at 1.9 billion and wheat staying at similar levels to the current MY at 953 million.
The Argy soybean harvest is now 77% complete, according to those pathological liars the Ag Ministry. The corn harvest is 63% done and the sunflower harvest just about over, they add. Winter wheat planting kicks off this month, with big increases on the cards. No stranger to cards, the Argies.
Talking of liars, the Indian Farm Ministry say that monsoon rains will arrive on time and be normal this year. Blimey, they have enough trouble sussing out what's happened in the past, but now they can see into the future as well. Look out for these lads in a forthcoming edition of Dr Who. They still insist that 2010 wheat output will be higher than last season, bless. Shouldn't these people be in a home or something? (Prison more likely - Ed)
UK Party Leaders Considering House Share
What could possibly go wrong?
CBOT Closing Comments
Soybeans
May soybeans settled 5 3/4 cents higher at USD9.51 1/4 per bushel; July soymeal ended unchanged at USD278.40; July soyoil settled 32 points, higher at 38.44. Crude was down heavily again, and outside influences like the DJIA also weighed. There was an element of a rebound from last night's sharp losses. as the trade now starts to look to next week's USDA report. Informa Economics estimated 2010 soybean acres at 78.5 million compared to the USDA's March estimate of 78.098 million.
Corn
May corn ended up 3/4 cent to USD3.64 3/4 per bushel, and July corn closed up 3/4 cent at USD3.72. It was a relatively quiet end to frenetic week, outside influences like the stock market, US dollar and crude oil have weighed on corn. Even so, with US plantings at around 75% complete, corn has performed quite well under the circumstances. Informa Economics pegged 2010 US corn acres at 89.6 million, higher than the USDA's March estimate of 88.941 million.
Wheat
CBOT July wheat ended 2 1/4 cents higher at USD5.10 1/2; KCBT July wheat settled 1 1/2 cents higher at USD5.21; MGE July wheat finished 4 1/2 cents higher at USD5.41 1/2. Temperatures in the low thirties will pose a risk for wheat in western Kansas and Nebraska and the Dakotas over the weekend. Large shorts in wheat leave the market vulnerable to seemingly unprompted short-covering. Informa peg this season's winter wheat crop at 1.466 billion bushels - just under 40 MMT - that's 57 million bushels lower than 2009's production. They estimate average yields at 46 bu/acre, that might be optimistic based on the findings of the Kansas wheat tour earlier in the week.
EU Wheat Closing Comments
May London wheat ends GBP0.55 easier at GBP102.75/tonne, and May Paris wheat up EUR1 at EUR134.00/tonne.
Phew, what a week! The currency markets have been all over the place, with sterling fluctuating between 1.53 against the dollar at the beginning of the week to under 1.46 by Friday morning.
Now that the UK election is out of the way, it seems like we may see some more stability enter the market if the leading protagonists can thrash out some sort of deal.
The weekend papers will be full of it, that's for sure, but watching the news tonight I feel that we might see some sort of Tory-Lib Dem alliance by the early part of next week. If so, that might lead to some sort of sterling stabilisation by the middle of next week.
Uncertainty is what the market doesn't like.
Whilst the euro remains acutely weak, some export inroads will continue to be made into more 'unlikely' homes.
Recent rains across most parts of Western European were much needed.
In the UK crop development is around 7-10 days behind normal, according to ADAS.
Barley offers into UK intervention picked up again last week - before the lower May price kicked in - with 12,532 tonnes being put up, total offers now stand at 153,168 tonnes after withdrawals/rejections.
USDA Cut Indian Wheat Production Estimate
The USDA has cut it's estimate for Indian wheat production for 2010 to 79 MMT from it's previous estimate of 82 MMT.
“The initial optimism regarding the 2010 wheat crop following favourable growing conditions through mid-March was tempered by a sudden significant rise in temperature, which affected proper grain development, lowering yield prospects,” they said.
Extreme heat during March and April in northwest India damaged maturing wheat in Uttar Pradesh, Punjab and Haryana the report said.
Titanic Elects New Captain...
...sort of, but will the old one be in the mood to vacate his position? He's clung onto a post he wasn't even elected to man for so long now, why should he leave after this little setback? That reminds me of a song we know doesn't it children...
Every time just like the last
On his ship, tied to the mast
To distant lands
He's sent our pounds
Never a frown, with Gordon Brown...
Cue more tiresome playground squabbling, in-fighting, my Dad is bigger than your Dad and "is your Nick coming out to play Mrs Clegg?" stuff.
Certainly the forex market doesn't seem to like the look of it that's for sure, the pound is at it's lowest levels in a more than twelve months against the dollar.
CBOT Closing Comments
Soybeans
May soybeans closed 22 3/4 cents lower at USD9.45 1/2; soymeal ended USD4.50 lower at USD278.40; July soyoil settled 81 points lower at 38.12. Beans came under heavy selling pressure late in the session as the US stock market collapsed. The dollar was very strong and crude oil acutely weak as nervousness over the knock-on effects of the Greek problems spread. As their harvest wraps up, Brazilian analysts CONAB and the IBGE both upped their production estimates to 67.9 MMT, and the Argentine harvest is now well advanced at almost 75% done. Weekly export sales from the USDA were a bit disappointing, although China did buy both old and new crop beans.
Corn
May Corn futures closed at USD3.64, down ¾ cent; December Corn futures were at USD3.84 ¾, down 4 ½ cents. Spillover weakness from soybeans pressured corn late on, although weekly export sales were a marketing year high at 1,850,800 MT for old crop. The trade had been expecting sales of around a million tonnes, so today's numbers are pretty impressive, especially as they fall on top of the previous week's total of 1,430,700 MT. China frustratingly wasn't confirmed as buying more US corn than the 115,000 MT that the USDA had already confirmed last week.
Wheat
July CBOT Wheat closed at $5.08 ¼, down 3 ¾ cents; July KCBT Wheat was at USD5.19 ½, down 4 ½ cents; July MGEX Wheat at USD5.37, down 6 ½ cents. The Wheat Quality Council completed their tour of Kansas today, pegging final yields at 40.7 bu/acre. That is down on last season's final yields of 42 bu/acre, and considerably lower than the trade had been expecting. That puts final output in the state that accounts for around a quarter of all US winter wheat at 333.5 million bushels, almost 10% lower than last season's 369.6 million bushels.
EU Grains Closing Comments
London wheat ended GBP0.80 higher at GBP103.50/tonne Thursday, with Paris wheat up EUR3.75 at EUR133.00 as the pound and euro both nosedived.
All markets were extremely nervous in the continued fallout from the unfolding Greek tragedy, and uncertainty over the implications for the rest of Europe. Stock took a hit, with the Dow Jones Industrial Average falling almost 1,000 points at one stage, before rebounding nearer the close to end with losses of just under 350 points.
Even so, that's the worst one-day drop since February 2009. Lots of stories are around at the moment to explain the huge movement. Some suggest a trade accidentally authorised for a sell order for USD16 billion, instead of USD16 million worth of e-minis.
Computer generated stop loss selling is also said to have maybe been partially to blame. Stock in one US firm, Accenture, made history by plunging from an opening price of USD41.78/share to just one cent (!!) before closing at USD41.09/share.
UK wheat rose as the pound shed around 2.5% on the day against the dollar, the euro was also sharply lower.
That won't do export hopes any harm.
Trade talk suggests that the UK's 'burdensome' wheat stocks are a lot more difficult to get price from farmers' grasps than many had thought. One certain merchant is apparently kicking ass on farm and outbidding just about everyone else for what wheat is left available for sale. Who might that be? I couldn't possibly say as I never use the F word.
