Crude oil - we've all been scammed again

Oilintel, Houston, TX - When we wrote at midday (Friday) that we had no idea where this market was heading today, we never imagined this would happen. July crude oil and contracts soared to new record highs while July heating oil, while outpacing both crude and gasoline, did not set a new record.

Crude oil soared to a new high of $139.01, surpassing the old record of $135.09 while gasoline hit $3.5650, 4.50 cents above the old record.

As if in direct defiance to the CFTC, speculators reacted as if Katrina II hit the Gulf and wiped out all refineries, the Saudi oilfields were on fire and Iran closed the Strait of Hormuz. A sequence of events like these would be necessary to justify the unprecedented gains today in energy futures, not a 4 or 5 cent drop in the dollar, or a well-timed forecast from Morgan Stanley.

You see Morgan Stanley would say "we owe it to our clients to let them know what we believe will occur." But the reality is, they know full well it will be leaked, and acted upon. They know they will get all the help they require in achieving their prediction of $150 per barrel by July 4. We just didn't think it would happen in a day or two.

What happened today is another severe blow to the U.S. economy as Wall Street keeps plowing the money that the Federal reserve made available to them back into commodities to make up for the huge losses they sustained in the housing crisis.

These large commission houses are laughing all the way to the bank as consumers everywhere make decisions about driving to work or eating that day. It's become a blatant and immoral scam that has to end. It's almost as if they know the end is near, so they will ride it as hard as they can until the CFTC pulls the plug.

Naturally, some analysts point to statements by an Israeli official today indicating that an attack on Iranian nuclear facilities might be unavoidable.

Of these factors, not one reduces the amount of oil available today, tomorrow or next week. It's time for the U.S. Congress and officials in London to change limits on speculative positions, strip away commercial status of all investment banks, and change the rules that stipulate commercial status only for companies that can document 90% of their business is energy-related, from a physical market standpoint.

Conspiracy theory #1

The CFTC announced Friday that it was withdrawing it's proposed rules to limit the size of position a speculative trader may hold. It gave no explaination why. Crude has it's biggest rise one-day ever. Grains shoot sharply higher. Corn sets all-time high. Discuss.

Link here: wheels within wheels

Agriprem regains UFAS accreditation

is there anybody there?

Next week: How to jump through hoops whilst balancing a ping pong ball on your nose.

Cargill to invest $1.5 bln in Russia in next 5 yrs

ST. PETERSBURG. June 7 (Interfax) - Cargill, the U.S. agri-food giant, plans to invest more than $1.5 billion in its Russian assets in the next five years.

The Russian government's latest initiatives to curb rising food prices will not hinder these investments, Cargill chairman Greg Page said Friday.

Cargill has invested about $1.5 billion in Russia in the last 5-7 years and, considering the country's potential and the Russian government's efforts to sharply increase grain production, the company thinks it would be reasonable to invest about the same amount in the next five years, Page said.

He said the company does not intend to acquire existing assets in Russia, but build new ones. There are plans to open a new production facility in the Tula region.

Asked about curbs on food price increases that the government imposed at the beginning of the year, Page said that any restrictions are unpleasant for business, but thankfully Russia did not restrict grain exports, which was appreciated. Other countries imposed tough restrictions on grain exports during this period, causing a major imbalance on the world market, he said.

Global price increases for food goods will force the governments of various countries to take protective measures, but in Russia's case these measures did not have any impact on Cargill's investment decisions, Page said.

He said world grain prices will continue to trend upward for a fairly long time, but all the countries in the former Soviet Union have strong potential to increase production.

Cargill first opened an office in Russia in 1991, and in 1995 it acquired the Yefremov glucose and treacle plant. In recent years, the company has developed an industrial complex in Yefremov and invested in the construction of a malt house, a plant to produce starch products and treacle, and a vegetable oil refining plant.

Cargill and its joint ventures own 75 elevators in Russia, Kazakhstan, Ukraine, Romania and Hungary, with combined capacity for about 2 million tonnes of grain.

F O Licht sees 2008-09 EU-27 wheat output up 18.3MMT

On Friday F.O. Licht forecast 2008-09 world wheat output will rise by 43.7 million tons to a record high of 652 million. This included a rise of 18.3 million tons in E.U. all-wheat output and 5.1 million tons in competing neighbour Ukraine. F.O. Licht also projects higher E.U. output for corn, barley, oats and rye.

Late call on Chicago

CBOT soybean futures are called to start the session 8 to 10 cents higher. The combination of higher outside markets, supportive weather forecasts, bullish demand outlooks amid the lingering Argentina farmers' strike and the resurgence of speculative money flowing into the market are seen buoying prices, analysts added.

Benchmark Chicago Board of Trade July wheat is called to open 3 to 5 cents per bushel higher on spillover support from CBOT corn and soybeans, analysts said. Weather looks bullish for CBOT corn and soybeans amid concerns about slow planting and development of the row crops due to excessive moisture. "They want to run, and we're going to follow," a CBOT wheat trader said about corn and soybeans.

Chicago Board of Trade corn futures are expected to open 3 to 5 cents higher Friday on the momentum from Thursday's new highs and on support from crop concerns and outside markets, analysts said. July corn is at an all-time high, and prices have broken out of a trading range that had confined the market for two months. July had been trading between $5.80 and $6.20. An analyst said the new highs will encourage more buying. "With the weekend approaching, we could see a little profit-taking today, but all I think we'll do is temper gains," the analyst said.

Morning Foods to close

Morning Foods have announced that they will be closed on 25/26th December 2008.


Early call on Chicago

Corn futures are expected to open steady to 3 higher; soybeans 8 to 11 higher; wheat 3 to 5 higher. With wet weather forecast for many more days, grain and soybean prices are called higher. There could be some profit-taking before the close Friday, however.

German Dairy Farmers End Milk Strike

Hamburg -- Thousands of German dairy farmers ended a 10-day milk delivery strike on Thursday, claiming victory in a dispute over low prices which has caused regional milk shortages.

Dairy farmers' association head Romuald Schaber said the strike was ending after several major German retailers agreed to raise or consider raising milk prices.

Schaber called on farmers to resume milk deliveries later on Thursday. He said detailed negotiations over price rises with retailers would begin.

Dairy farmers in Germany and other European Union countries including Belgium and the Netherlands have organised a series of protests at falling milk prices in the last week.

On Thursday, thousands of farmers held demonstrations outside the headquarters of supermarket chains and convoys of tractors drove in protest through several cities.

Movement in the German dispute came when discount supermarket chain Lidl said it would raise milk prices by 10 euro cents a litre.

On Thursday, a series of other supermarkets followed suit including Rewe, Norma, Plus and Edeka.

German Agriculture Minister Horst Seehofer said the supermarket's statements had laid the groundwork "for a breakthrough to new, fair milk prices".

German dairy farmers want a minimum 43 euro cents per litre of milk. Prices are now between 25 and 35 cents a litre.

But analysts said the key question would be whether the largest discount supermarket chain, Aldi, which dominates the retail market, also raised prices.

Seehofer said Aldi had also signalled its willingness to negotiate. The minister has repeatedly expressed support for the farmers, saying milk prices were way below production costs.

The farmers' association said the strike would resume if dairies and supermarkets failed to implement promised price rises.

USDA Attache: Canada 08-09 Wheat Production To Rise 24%

Canada's 2008/2009 wheat production is forecast to increase 24%, jumping to 24.8 million tons from the previous year's level of 20.1 million tons, according to a U.S. Department of Agriculture attache report posted Thursday on the Foreign Agricultural Services Web site.

Crude hovers either side of unch but likely to test $120 soon - analyst

The July NYMEX crude, RBOB gasoline and heating oil contracts are expected to open either side of unchanged to slightly higher this morning, says John Trolland of Oilintel. We expect to see some short covering after the past two trading sessions resulted in sharp moves to the downside. Tuesday and Wednesday saw July NYMEX crude oil fall $5.46 while July RBOB gasoline and heating oil contracts lost 19.56 and 17.62 cents respectively.

In last nights final story we suggested prices, after testing fresh lows, were likely to move higher due to prices in oversold territory and this is what occurred, until the last few minutes when crude oil slipped into negative territory again. At the same time we suggested that crude oil would likely encounter fresh selling somewhat above the $123.00 level, which it did, which confirms our belief that the market mentality has shifted to selling into rallies.

With no fresh market moving news overnight our first view for today's trading session suggest prices have a better chance of settling on the positive side of yesterday's close although in this market, anything is possible.

However, looking at technical indicators, this week's downtrend is not over. After a brief bounce higher this morning could be followed by another drop where crude oil could fall to $120.00, and even below that level. We expect this in the short-term, and in fact we see a test of $110.30 per barrel soon, but we're just not sure if that test will come this week. The $110.30 level was the major resistance level, when breached, started the drive higher to new records on an almost daily basis. That level is now the key support level, and if breached, points to much lower crude oil values.

Milk Link announces 0.5ppl increase to production bonus

Milk Link has announced a 0.5ppl increase in the production bonus paid to its members from 1 July 2008. The total bonus on all litres produced will rise to 0.8ppl, provided production is at least the same, or above last year on a month-by-month basis.

"The move will hopefully stimulate further production," the firms chief executive, Neil Kennedy said. "Although our member milk volumes are stable year-on-year, the securing of further important business wins with key retail customers means that we are now in a position where we need to incentivise higher milk production."

USDA Weekly Export Sales

Wheat 07-08 Net 140,200 MT; 08-09 97,600 MT.

Corn 2007-08 Net 530,200 MT;08-09 172,200 MT.

Soybeans 2007-08 Net 298,600 MT;08-09 293,000 MT.

Soymeal 2007-08 Net 264,100 MT.

Soyoil 2007-08 9,100 MT.

Smithfield 4Q tumbles 94 pct on grain costs

SMITHFIELD, Va. - Pork producer Smithfield Foods says fourth-quarter profits fell 94 percent, hurt by the rising cost of grain and falling prices for hogs.

The Smithfield, Va., company says profit for the quarter ended April 27 was $2.4 million, or 2 cents per share, compared with a profit of $37.1 million, or 33 cents per share a year ago.

Revenue is up 20 percent to $2.87 billion from $2.39 billion last year.

Thomson Financial says analysts predicted a profit of 7 cents per share on revenue of $3.55 billion.

The company says strong results in its pork operations were offset by weak hog production results.

Hog production is suffering from lower live hog prices and sharply higher grain costs.

Fuel protest bikers jam M62

Hundreds of bikers have caused rush-hour disruption on the M62 north of Manchester in a protest against rising fuel prices.

They gathered at Birch services before heading off in a slow-moving convoy including taxi and lorry drivers.

Rolling roadblocks by the Highways Agency led to long tailbacks and jams on many roads in and around Manchester.

Police stopped traffic on the motorway before the bikers left the service station, bound for Salford.

The Highways Agency warned motorists to find alternative routes if possible.

It was the latest in a long line of fuel protests and came as some Labour backbenchers joined a chorus of voices warning Prime Minister Gordon Brown not to go ahead with a planned 2p increase in fuel duty this autumn.

AA figures show around half of every £1.15 litre of petrol is made up of tax and VAT.

Revving their engines, they set off en masse at 8am from the service station and on to the motorway.

Early call on Chicago

Corn futures are expected to open 3 to 6 higher; soybeans 12 to 20 higher; wheat 3 to 5 higher. More rain across the Corn Belt has pushed prices higher in overnight trade. That strength should carry over into day trade.

USDA Export Sales Report Expectations

The USDA release their weekly export sales report at 13.30BST. Here's a note of what is expected:

Wheat 50-600,000MT (bit of a wide range there, why don't they just say zero to 1MMT and be done with it?)

Corn 400-850,000MT

Soybeans 300-750,000MT

Soymeal 75-175,000MT

Soyoil 0-10,000MT

LIFFE wheat opens GBP0.50 lower Thurs

London feed wheat has opened with Nov down 50p to GBP136/tonne.

Japan has bought 153,000MT in a tender overnight, 46,000MT from Canada, 21,000MT from Australia and the remaining 86,000MT from the US.

Whilst the news is mildly supportive, Japan tenders routinely for wheat on a weekly basis and there are "no great surprises here" a trader said.

"The market is (still) weak in general, we are looking at a huge volume of grain on the horizon," said an European trader. "We are sitting looking at potentially 20 million-25 million tons more wheat (in the European Union) this year."

Crude oil: the fat lady is backstage and about to perform

OILINTEL New York, NY - The demand for gasoline is about to get weaker. Countries that subsidize gasoline prices, so that their consumers are not exposed to the spiraling costs, are starting to cave under the financial pressure.
This was a very predictable consequence and it was just a matter of time before many governments react.

As we have written again and again, what happens in the U.S. inevitably spreads across the globe. In addition, Europe and Asia are not immune to rising oil prices.

In Asia, rising oil prices have become ominous. With many counties absorbing the costs associated with runaway oil prices, economies across the region are suffering.

Malaysia, for example, is raising retail gasoline prices by 40% because it can no longer afford to absorb the increasing costs. That means consumers in Malaysia will pay the equivalent of $3.30 per gallon, from about $2.31 per gallon currently. All but the absolutely necessary gasoline consumption will dry up. Economists estimate that the increase could raise inflation by 5% in Malaysia almost overnight.

Indonesia raised fuel prices last week by 28.7% or the equivalent of $0.65 per liter, or $2.46 per gallon. With millions of Indonesians living on $2.00 per day, it's clearly a decision that the government in Jakarta takes seriously, understanding the social impact. It is also clear that hundreds of thousands of Indonesians will no longer be able to drive and consume gasoline.

In India, state-owned oil companies are losing more than $100 billion per year because gasoline is sold to every citizen about $2.00 per gallon under the average market price in the world. It is breaking the government's budgets and they announced this week that gasoline prices will be increased by 10%. It was not an unexpected move, but diesel also was raised by 9.5%, after most had expected just a 5% increase. India is often grouped with China as the developing world's engines of growth, however, an increase of this magnitude could cut consumption by 25%, according to some analysts.

In China however, the situation is a little different, largely due to the upcoming Bejing Olympics. The Chinese government, already reeling from the recent earthquake and bad publicity regarding its reaction to group of mothers protesting badly designed and constructed schools that cost the lives of thousands of students, cannot afford a major public disruption if they raised gasoline prices. Yet.

However, Sinopec, China's main refiner, loses an estimated $430 on each ton of product it sells, according to published reports. And that's after they received a reported $1 billion compensation from the government last month, which was more compensation than it received in all of 2007.

Get the Olympics out of the way and let the dust settle, after that anything can happen.

I always find it interesting how OPEC manipulates markets. In times of weakening prices, OPEC members come out in public and make all kinds of statements regarding prices, supplies and demand. Most of it is utter nonsense, simply designed to boost prices so they don't have to actually do anything about surpluses in the market.

However, with all the protests and even riots around the world due to rising fuel prices, OPEC has been conspicuously absent from the world stage. Content to sit back and collect revenues on a monthly basis that exceed semi-annual revenues from just a few years ago, even though crude oil is overflowing, there is no reason for OPEC rhetoric right now.

However, just wait until prices slide below $120 per barrel, on the way to perhaps $100 per barrel. The hawks will be first to react, including Venezuela, Iran and Algeria, and maybe even Nigeria. They will start beating the drum of how supplies will tighten because they will reduce output.

Given that these producers are well aware of how sensitive markets are to hype and threats, they assume it will be enough to slow down a sell-off. I think they are wrong this time. I think that the CFTC probe caught even OPEC off guard. They have had a great thing going as they observed Goldman Sachs and others making predictions that built the cartel's wealth, even if there is very little basis in fact with respect to the projections. Who needs facts? OPEC has always operated under the assumption that anything they say is a fact to the market, even though they know that it is pure fabrication.

The fact is OPEC never lives up to output cuts, unless of course it's just Saudi Arabia that's doing the cutting. Most of the OPEC members assume if Saudi Arabia cuts production, they don't have to live up to their obligations.

But the rhetoric will come. It's a guarantee once the obscene revenues are threatened.

As we noted recently, June 1 was the official start to the hurricane season, and it began with the first named storm (Arthur), little more than a Caribbean tropical disturbance that never threatened Gulf production, either Mexican or U.S., but it served as a reminder that this is the season to escalate gasoline prices. The escalation in gasoline, also know as the "spring hype" is about two months late as high U.S. inventories kept the hype to a minimum. Diesel has been the "talk of the market," and of course the Goldman rallies in crude oil kept gasoline in the background. Certainly prices have risen along with the other market components, but gasoline usually leads the market at this time of year. That is of course until about mid-July when traders discover:

1. We have always had enough gasoline, and
2. Demand has not lived up to its potential

Now let the sky fall and all oil prices come down. The sooner I can blast Goldman Sachs for its inaccurate and immoral projections, the better.

Pakistan 2008 wheat output 21.8MMT, 1MMT less than consumption

ISLAMABAD -- Total grains production in Pakistan has been recorded at 31.1 million tons against its requirement of 27 million tons, said Dr Qadir Bukhsh Baloch, Agricultural Development Commissioner, while talking to Business Recorder here on Wednesday.

"The climate changes have deep effect on the production of the agricultural commodities", he said, adding that production of wheat for 2007-08 remained 21.8 million tons, rice 5.56 million tons, maize 3.31 million tons, bajra 0.31 million tons, sorghum 0.17 million tons, and barley 0.09 million tons.

He that total share of the crops in agriculture sector is 48.3 percent with 36.6 percent major crops and 11.7 percent minor crops. Forestry contributes 1 percent, livestock 49 percent and fisheries 1.1 percent, he added. He said, "We are behind the target fixed for wheat crop, but we are importing 2.5 million tons, while the private sector has been encouraged to import 1 million tons, on its own".

He said: "Our local consumption of wheat is 22.88 million tons while the production achieved is 21.8 million tons. So, we have a shortfall of almost 1 million tons, but this shortage will be bridged after import of the commodity. The crop production in Punjab remained 16.31 million tons, against its requirement of 12.50 million tons. In Sindh, it is recorded at 3.45 million tons against the consumption of 4.80 million tons. In NWFP, the production is accounted to be 1.16 against the consumption of 3.38 million tons and in Balochistan it is 0.86 million tons against 1.20 million tons of total local consumption.

Freight market has gone mental

Dry bulk rates have doubled, halved and doubled again to hit new highs - all in just 12 months - as Asia's demand for iron ore and coal continues to take shipowners on a rollercoaster ride, Michelle Wiese Bockmann of Lloyd's List reports.

The first signs of May's record-breaking rally in dry bulk rates emerged six weeks ago in London, when a routine chartering deal swiftly escalated into a frenzied bidding war.

On April 21, brokers at London-based Clarksons went to fix a capesize vessel to carry iron ore from Brazil to European steel mills.

The vessel's owner initially agreed the going daily rate, a healthy $140,000. But there appeared to be few other ships available and the owner changed his mind. Twice. Within 24 hours, the vessel had fixed and failed three times. The deal closed at $192,500, a staggering 25% more than the first price.

"I've never seen a jump like that in one day," said a veteran broker on the trading desk. "Then we all started thinking: 'Oh my god, where are all the ships?' It was only then everybody started realising that nobody was hiding them; there just weren't any available."

The market took several days to digest the tonnage shortage among the fleet of 750 capesize vessels ndash; and then rates began to rocket.

Capesize charters for ships trading in the Atlantic swiftly rose and by early May had broken $200,000 per day and continued to head north.

The rest, as they say, is history.

"It's not a question of: 'I'll have this ship, or that ship'. It's: 'where's a bloody ship?'," said Nick Collins, a director at Clarksons. "Shipowners can name their price."

These "astounding" prices reflected "the mother and the father of all [shipping] cycles", he said.

Supermarkets 'ripping off customers on eggs', claim farmers

Daily Telegraph -- Farmers have accused supermarkets of ripping off customers by putting up egg prices much more than they need to.

Supermarkets and packers have taken 71p of a 83p rise in the price of a dozen eggs since May last year, according to the Egg Producers' Association (EPA).

Meanwhile farmers have only seen the price paid for their eggs rise by 12p to 77p a dozen, David Spackman of the EPA said.

That is barely enough to cover the increased cost of production, he claimed.

He said: "They are squeezing the prices paid to producers while increasing their own profits on every box of eggs.

"Producers have faced very large increases in their costs. Feed alone, which is mainly cereals, is up by 62 per cent in a year.

"If the supermarkets were really protecting shoppers, they would have reduced the amount of money they are taking and still be able to pay farmers more."

Monsanto says its seeds will double yield of corn, soybeans and cotton by 2030

CREVE COEUR, Missouri (AP) - Monsanto Co. Chief Executive Hugh Grant set a bold goal for the company on Wednesday, promising to develop by 2030 new strains of corn, soybeans and cotton that can yield twice as much grain and fiber per-acre while consuming just two-thirds the water.

Grant announced the initiative during a company meeting without laying out specific strategies or initiatives Monsanto would employ to reach the goal. He said afterward that Monsanto will rely on its current research and development team that is developing crops resistant to drought and pests.

"If we succeed in doubling yields, it absolutely changes the opportunity for food availability," Grant said.

That last sentence roughly translates as "if we pull this baby off then we're going to have so much money we can buy the planet."

I'm not the only one who's bearish everything then?

It is of note that the big bull run started a little earlier on wheat than it did on corn & soybeans. Wheat started it's rally in June 2006, with beans and corn getting going round October 2006. Maybe its a coincidence that wheat appears started its retracement a few months earlier as well?

Ray Grabanski: Is the grain bull market ending?

The grain bull market has had a strong 20 month run higher, taking corn from $2.50 futures to $6.50, soybeans from $5 to $15, and wheat from $4 to $13.

This was a amazing feat to propel grains to 3x their value in less than 2 years. Today, no one can seem to see any reason for a bear market to develop, so perhaps that makes it even more likely to be true! The contrarian view of the markets, in fact, would suggest this is exactly the time that commodity prices can top - when virtually everyone who wanted to buy them already has!

Let's look at some signs that may be suggesting that the grain markets (and perhaps even oil/energy markets) have accomplished what they needed to by taking prices 3x higher than they were less than 2 years ago:

Full article here

McGuinness takes early retirement

John McGuinness suffered his second retirement at the 2008 Isle of Man TT races when he was forced to pull out of Wednesday's Supersport 600cc race. The Morecambe ace, riding the Padgett's Manx Gas Racing Honda, was holding on to third place in the early stages but an oil leak halted his charge and he pulled into the pits at the end of the first lap.

Who did you think I meant?

Overnight developments - eCBOT nudges higher, crude lower

News that Korea may have bought another five to six cargoes of corn and could buy more plus ongoing US weather uncertainties see corn up around 2c this morning.

Korea have also been in the market for wheat overnight purchasing two cargoes from the US (165,000mt) and Japan is tendering for 178,000mt today. This is business that the US would traditionally expect to get at this time of year. This sees eCBOT wheat 4-5d higher this morning.

Beans are around 8c firmer as there is no sign of the Argy farmers dispute ending anytime soon.

Crude is down to $121.75/barrel on continued evidence that even gas-guzzling US consumers have had enough and have actually had the temerity to cut back their usage.

The pound is down to $1.9515, having briefly dipped below $1.95 on the general economic malaise. The BOE is widely expected to leave interest rates unchanged at noon today.

Retailers offer German dairy farmers a pay hike

A leading German supermarket chain said Wednesday it would boost the retail price of milk, eight days after German farmers cut off milk supplies in a protest at falling incomes.

The decision was the first sign of success for the farmers involved in the conflict, which has spilled over into other European nations as well.

Lidl, a discount grocer, said it would increase the sale price of milk by 10 euro cents per litre from Monday. Another leading grocer, Rewe, said it expected to follow suit.

Romuald Schaber, president of the BDM association of German dairy farmers, said the refusal to supply milk to dairy factories would continue while farmers waited to see the result of talks with the milk-processing industry on a new pricing system.

The BDM said thousands of farmers from Germany, Belgium and the Netherlands would gather Thursday at Berlin's Brandenburg Gate for a protest rally.

On Wednesday, dairy farmers had shifted their demonstrations from milk-processing plants to the offices of the grocery chains, which they blame for low milk prices in Europe's biggest economy.

Protesters picketed the headquarters of Lidl and Aldi, the leading discount grocers, as well as the head office of Edeka, Germany's biggest regular-price grocer.

The German Cartel Office began an inquiry that may end in a huge fine for the BDM for breaking a German law that outlaws economic boycotts.

After legal advice, the BDM had to advise radical farmers on Tuesday to end several days of picketing which had prevented milk supplies from non-striking farms being taken to factories for processing.

The HDE national retail federation said milk and yoghurt were once again moving out to shops, despite claims by farm leaders that 70 to 80 per cent of milk from Germany's

Work Begins on Warburtons' GBP 45 Mln Bristol Bakery

UK baker Warburtons has announced that work has begun on a massive GBP 45 million bakery in the outskirts of Bristol.

The new facility is expected to create 175 jobs when opened in September this year. The company expects that another 300 positions will be created over time, totalling 450 jobs.

The Bristol plant, which will produce its first bread in December, is expected to make 1 million products per week.

Chicago closing comments, soy and corn up, wheat mixed, rice limit down

Soggy weather in the U.S. corn belt pushed CBOT cornfutures higher Wednesday, although gains were limited by outside markets,traders said. Heavy rains have caused flooding and will require farmers to replant throughout the southern corn belt, particularly central Illinois, analysts say. Weakness in crude oil limited corn's gains, traders said. July corn finished up6 1/2 cents to $6.14 1/2

U.S. wheat prices closed mostly higher on spillover strength from firm CBOT corn and soybeans. Fundamentals for wheat look bearish amid expectations for a record world crop in 2008-09, reports of solid early harvest results in the U.S, and rains in Australia. July wheat rose 2 1/2 cents to$7.53 per bushel, KCBT July wheat jumped 2 cents to $7.90, and MGE July wheat tumbled 35 cents to $9.40.

CBOT soybean futures rallied Wednesday, climbing to multi-week highs on bullish demand outlooks, planting and emergence concerns and technical momentum. Prices rose steadily throughout the day, with no drastic movements except for a little boost at the end of the day, analysts said. However, soybeans rode technical momentum past some recent highs, andwere supported by rainy weather and forecasts for more rain, analysts added. Meanwhile, the market still remains under the spectre of Argentina, as the strike in Argentina continues to be supportive. The strike has caused "very firm" Brazil export prices, which is adding to the strike's effect on prices, aCBOT floor broker said.

New crop futures spiked on planting concerns, as Midwest rains push back the seeding of the final 18 to 20 million acres of U.S. soybeans that are already behind there average pace for this time of year, traders added. July soybeans settled 29 1/2 cents higher at $13.89, and Nov soybeans ended 26 cents higher at $13.79 3/4 a bushel.

CBOT rice futures ended limit down on speuclative selling and improved supply prospects, an analyst said. Price Futures VicePresident Jack Scoville said falling Thai rice prices pressured CBOT rice. Hea dded that the world supply situation does not seem as urgent as it once did. "For the minute, it seems like things are a little better," Scoville said. "I'm not too sure that will last for the long term." A trader said the selling started in Nov and spilled over into July. July rice closed down 50 cents to $18.61 per hundredweight, while Sep and Nov both ended down 50 cents to $18.08.

Japan Suspends Imports Of British Poultry Due To Bird Flu

TOKYO (AFP)--Japan said Wednesday it was suspending imports of poultry from Britain after a bird flu outbreak on a farm there.

The Ministry of Agriculture, Forestry and Fisheries said in a statement that the suspension was expected to be a temporary measure aimed at reducing the risk of fresh bird flu outbreaks in Japan.

The move came a day after the British authorities confirmed that avian influenza had been discovered in chickens in southern England, although it was not the virulent H5N1 strain that sometimes claims human lives.

Preliminary tests were positive for the H7 strain, which poses a low risk to humans, the British Department for Environment, Food and Rural Affairs said in a statement posted on its Web site.

All birds on the premises where the virus was detected will be slaughtered, it added.

It is not the first time Japan has suspended imports of British poultry due to concerns about bird flu. The last time was in November. That suspension was only lifted last month.

NWF shares fall 10% Tues

Shares in NWF Group plc dropped more than 10% yesterday from 145p/share to 130p/share. Although the feed side of the operation has done well, the distribution and garden centres area of the business have fared less well the company said in an interim statement February.

LIFFE wheat grinds lower

London feed wheat futures are continuing to grind lower this morning with most actively traded July and Nov both £1.50/tonne easier. Recent rains are seen as largely beneficial and with warm, dry weather forecast for the next 7-10 days things are in great shape to produce a bumper crop.

MATIF milling wheat is EUR2 lower for the most active Nov with sellers a little more cautious until the impact of recent rains on quality is clearer.

US wheat futures fell hard last night as Monday's rally was seen as overdone and simply a selling opportunity. Harvest activity is advancing and seems likely to weigh on prices for the time being.

The CFTC probe into fund activities and lower crude oil is also weighing on prices. Crude was $123.62/barrel at 10.30am, over $11/barrel below it's recent record high.

Bird Flu Back in Britain

The Chief Veterinary Officer, Nigel Gibbens, has today confirmed Avian Influenza in chickens on premises near Banbury in Oxfordshire after preliminary tests were positive for the H7 strain. All birds on the premises will be slaughtered as a precautionary measure.

Laboratory testing continues and results which will allow confirmation of whether the strain is high or low pathogenicity will follow. A detailed epidemiological investigation to better understand the origin and development of the disease is underway.

A Temporary Control Zone with a 3km inner zone and a 10km outer zone is being established around the Infected Premises. A number of measures apply. All birds must be housed or otherwise isolated from contact with wild birds in the inner zone. Bird gatherings are banned and all other movements of birds and some products are banned in the whole of the Temporary Control Zone. Defra is urgently considering whether any wider measures may be needed.

Poultry keepers are urged to be extremely vigilant, practice the highest levels of biosecurity and report any suspicions of disease to their local Animal Health Office immediately.

Iran Pres: Unnamed Powers Profiteering From Food Via Subsidies

ROME (AP)--Iran's president has accused unnamed "powers" of profiteering from high food prices through subsidies and market manipulations.

President Mahmoud Ahmadinejad was speaking at a U.N. summit in Rome where aimed at finding solutions to high food prices and global hunger.

Ahmadinejad gave the speech at a podium flanked by armed guards Tuesday.

Who could he mean?

Lloyd Maunder are hiring

UK poultry processing company Lloyd Maunder plans to create 100 jobs this summer, just months after the company announced redundancies, local media report.

Lloyd Maunder recently cut 32 jobs, mainly in administrative and engineering areas, in a bid to avoid duplication following the company’s acquisition by the 2 Sisters food group in January.

The new production and supervisory positions are necessary if Lloyd Maunder’s plans to increase production from 530,000 chicken per week to more than 710,000 by the end of the year are to be fulfilled. The chickens are processed at Lloyd Maunder's Willand plant, which employs 600 staff.

Lloyd Maunder’s sales of Freedom Food-labeled chicken were boosted by a campaign for higher welfare standards led by two UK celebrity chefs earlier this year. Production of chicken under Freedom Food is expected to account for 39% of the company's total output by August this year, up 330% on January 2008, Lloyd Maunder said in a statement.

UK food rationing is back

The first apparent case of rice rationing has hit the UK this week after supermarket chain Netto imposed a “restriction” on the amount of rice customers can buy after its suppliers said they were experiencing shortages.

The Danish-owned low-cost chain said its customers were now only allowed to buy one 10kg bag of basmati rice per person in each of its 184 stores across the UK. A Netto spokesman said: “The 10-kilogram bags are a very good price and people are perhaps selling them on. Rationing is a strong term - we prefer to use the term restricting. Our suppliers are experiencing some difficulty at the moment."

I reckon this a cunning ploy by Gordon Frown to get us all to pull together in a bit of wartime type camaraderie to deflect away from his leadership inadequacies.

Shall I do the Tears on my Pilau joke again? Brothers in Naans? Dansak on the Ceiling? Poppadum Preach? Bhuna Round The World But I Can't Find My Bhaji? She Drives Me Jalfreizi?

Early call on chicago

Corn futures are expected to open 3 to 5 lower; soybeans unchanged to 2 higher; wheat 2 to 5 lower. Trading activity was slow in the overnight trade. The corn-crop rating was better than expected; wheat too. Rainy weather will support prices somewhat.

Midwest weather outlook

Freese Notis -- Significant rains over the weekend were confined to areas east of the Mississippi River where some spots picked up more than 2 inches. It was mostly in the 80s for highs (70s far north) on Saturday while Sunday's highs ranged from the 70s in MI to generally the 80s elsewhere.

The warmer temperatures are aiding the newly planted corn. The one thing that is certain over the next 10-15 days is that temperatures will remain on the warm side of normal for the majority of the Cornbelt. The only exception may be in the far northwest where temperatures will probably be close to normal on most days.

The warm temperatures will be helping the corn to catch up in its early growing cycle after the slow planting progress and the unseasonably cool weather. There will be plenty of rain the next several days across especially the northern half of the Cornbelt.

Later in the week and during the 6-10 day period, the emphasis of the big rains will be over the western Cornbelt. The reason for this is that a dome of high pressure aloft will be building over the southern and southeastern U.S. Therefore, the battle of air masses will be over the western Cornbelt and northern Plains. The southern Plains will see a lot of heat and drier than normal weather with this scenario. However, after the great rains in recent weeks, this warm weather will, if anything, be of benefit to the crop. It will help to mature it more rapidly. The soft-red winter wheat crop is also in excellent shape at this time.

Getting back to the Cornbelt, there will be some heat evolving for especially the southern and southwestern Cornbelt for the 6-10. Highs will likely reach to well up into the 90s on at least a few days. However, this is of no concern at this time after a very wet and cool spring. Besides, indications point to this heat abating during the 11-15 day period.

EU food chief: Lift BSE ban to cut grain prices

Times Online -- The EU ban on the use of animal remains to feed pigs and chickens should be lifted so that grain can be diverted to millions of starving people, one of Europe’s top food safety advisers has told The Times.
Patrick Wall, chairman of the European Food Safety Authority, questioned whether it was “morally or ethically correct” to feed grain to animals in the midst of a global food crisis.

He said that there was no scientific reason to maintain the ban.

More than 40 heads of state meet at an emergency UN food summit today to draw up an action plan over soaring food prices, which have led to riots in Haiti, Egypt, Mexico, Tanzania and Morocco. Prices for staples such as rice, soya and wheat have risen 83 per cent in three years, making them unaffordable in the poorest countries.

Ban Ki Moon, the UN Secretary-General, said that governments were paying the price for failing to invest in agriculture. This had led to an “alarming juncture” that could trigger economic and political crises, he said.
The EU ban was imposed after the BSE crisis in Britain in 1996, when the disease was linked to livestock eating animal products. Professor Wall said that it was now safe to lift the ban.

The European Commission is considering a plan to allow pigs to be fed poultry trimmings and chickens to be given pig meat to save farmers from buying expensive grain and have asked for Professor Wall’s advice. He told The Times: “Soya meal and other grain prices are going through the roof. Is it morally and ethically correct to be destroying this food when people are starving? No one I know is worried about the science. There is only concern about consumer reaction.”

A spokesman for Defra said that it was awaiting formal advice from the European Food Standards Agency. “We would only support the proposal if we were satisfied that there was no risk to human health and that appropriate and effective testing had taken place to control the use of such proteins in pig and poultry feed,” it said.

We can't go on eating like this

It is all very awkward. China and India are getting richer. And it appears their new middle classes want all the things we want: cars, washing machines, even meat. Here in the west, we have to restrain ourselves from saying: “Stop. You can’t live like us. The planet can’t stand it. And our wallets can’t stand it. Have you seen the price of petrol?”

Global equity is the awkward issue lying behind the world food crisis. In the long run, it will also prove fundamental to discussions on energy and global warming.

World leaders will be urged today to cut EU and US biofuel targets immediately and divert more grain to tackle the global food crisis.

As more than 40 heads of state meet at the emergency food summit in Rome, aid organisations stepped up their demand for action on biofuels, which have contributed to an 83 per cent rise in food prices in the past three years.

Gordon Brown indicated yesterday that he would support a review of EU biofuel targets as he called for the food crisis to be placed at the top of the agenda at the G8 summit next month in Japan.

Speaking after a meeting with Yasuo Fukuda, the Japanese Prime Minister, Mr Brown said that he backed the need to expand aid and help for agricultural production. “We need to look at whether we have made the right decisions over time about the production of biofuels at the expense of food.”

Britain is now reviewing its own target, which is to ensure that 5 per cent of transport fuel is made up of biofuels by 2010. The European Commission is drawing up a compulsory target for all members of a 10 per cent minimum of biofuels by 2020.

Douglas Alexander, the International Development Secretary, who is representing Britain at the summit, is also expected to argue for urgent aid in the form of fertilisers and seeds. He will call on the US and Europe to reduce farm subsidies, but will face opposition from the Americans and some EU member states.

Both developing and developed countries will also be urged to review trade agreements and increase cash aid to the poorest nations. Yesterday Jacques Diouf, the Director-General of the United Nations Food and Agriculture Organisation, said that rich countries should increase aid tenfold to £15 billion to help to solve the crisis.

Oxfam has also estimated that an extra £8 billion is needed to scale up immediate assistance to at least 290 million people threatened by rising food prices. Longer-term changes included “the urgent review of compulsory biofuels targets in rich countries to stop their inflationary impact”, an Oxfam report out today says.

Recent estimates suggest that increased demand for biofuels accounts for 30 per cent of recent food price rises while mounting scientific evidence shows biofuels are having an overall negative impact on climate change, it said.

Soros sounds alarm on oil ‘bubble’

FT -- Billionaire investor George Soros is to tell US lawmakers on Tuesday that “a bubble in the making” is under way in oil and other commodities and that commodity indices are not a legitimate asset class for institutional investors.

He is expected to tell a congressional committee that rising oil prices are the result of a number of fundamental changes and factors in the market, but that the relatively recent ability of investment institutions to invest in the futures market through index funds is exaggerating price rises and creating an oil market bubble.

“I find commodity index buying eerily reminiscent of a similar craze for portfolio insurance which led to the stock market crash of 1987,” Mr Soros will tell the Senate commerce committee, according to a draft text seen by the Financial Times.

“In both cases, the institutions are piling in on one side of the market and they have sufficient weight to unbalance it. If the trend were reversed and the institutions as a group headed for the exit as they did in 1987 there would be a crash.”

Overnight developments in the grains market

Corn futures are around 2c lower this morning after the USDA's planting progress & crop development report failed to throw up any shocks. The figure of 63% of the crop rated good/excellent was within to slightly above expectations with estimates ranging from 55% to 65%. Planting progress was seen at 95% complete.

Wheat is 4-5c easier, with the US crop generally regarded to be in good shape and harvesting about to start in Europe.

Beans are 4-5c firmer, having been 10c down earlier in the session. Emergence was a little low at 32% and the on-going Argentine farmers strike is adding short-term support. With corn only managing 95% complete however that would suggest that at this late stage much of that remaining 5% may well go into beans.

Trade in the grain market was partly subdued yesterday following a government investigation of U.S. futures trading, which may encourage some investors and speculators to reduce bets on rising commodities, and this week's meeting of world leaders on food security.

The World Food Security summit started today in Rome to address surging food costs, attracting about 35 government leaders, including Brazilian President Luiz Inacio Lula da Silva and French President Nicolas Sarkozy.

The Commodity Futures Trading Commission said May 29 it was investigating oil prices, which have almost doubled in the past year. The agency is also probing erratic cotton futures trading. Hedge funds and other large speculators cut net-long positions by 2.2 percent in Chicago corn futures in the week ended May 27, while soybean net longs fell 1.7 percent.

Crude is little changed at $127.20 and the pound also shows little change at $1.9670.

B&B: Broke & Borrowing?

(Times Online) -- Three weeks ago Rod Kent felt able to breathe a cautious sigh of relief. The chairman of Bradford & Bingley had secured the signatures of UBS and Citigroup on the underwriting of a £300million rights issue.

His denial a month earlier, ruling out just such a capital-raising, was embarrassing, of course, but at least now he had placed the bank on a firmer footing. Whatever happened, B&B would get its money, beef up its balance sheet and keep increasingly nervous banking supervisors at bay. The reputation of Mr Kent, who led the investment bank Close Brothers for 25 years, was still just about intact.

The relief was not to last, however. The board - and the underwriters UBS and Citigroup - had made the terrible mistake of basing their decisions on six-week-old management accounts, going only to the end of March. Only last week did they see the April numbers. The figures made grim reading, with the numbers of borrowers three months or more in arrears soaring to 8,333, and £1.1 billion of loans under threat. The net interest margin was narrowing, too, and there was the little matter of a £15 million mortgage fraud. To cap it all, Steve Crawshaw, the chief executive of six years, was stricken by a serious heart problem.

Meanwhile, the B&B share price had been falling day after day.

blimey thats a bit steep!

Full story here

USDA crop progress/condition report highlights

The USDA said Monday night that 95% of the corn crop was now in the ground as of Sunday. Up 7 points from last week's 88% and in line with expectations.

Corn is 74% emerged, well up on last week's 52% but down on 92% a year ago and 89% on the five year average.

The USDA say that 63% of the crop is rated in good/excellent condition, bang on expectations of 60-65% and well below last year's 78% figure.

Beans are pegged at 69% planted, slightly lower than the 70-75% range anticipated by the trade, and well down on 86% a year ago and 81% on average.

Beans emerged are 32%, half of this time a year ago.

Winter wheat crop condition is 47% good/excellent, unchanged on last week.

The report pretty much confirms opinion that this years crops are late into the ground, but will the trade view this as old news that is already factored into the market? We shall know in the morning.

Early call on Chicago

Corn futures are expected to open mostly unchanged to 1 lower; soybeans 3 to 7 lower; wheat 5 to 6 higher. Wheat traded a bit higher overnight on new export demand from the Middle East. Corn and soybeans were lower on weather considerations.

You can't drink oil and you can't eat gold

Though state coffers bulge in Saudi Arabia, Abu Dhabi, Qatar, and other countries in the region after to months of sky-high oil prices, soaring food prices have made many people there poorer than a year ago.

These desert nations have been hit especially hard because they have to import more than 80 per cent of the food needed for their rapidly growing populations.

To brake the runaway inflation that is fuelled by high food costs, Gulf rulers have a new strategy: They are buying unused agricultural land in poor countries like Pakistan, Thailand, and Sudan, and becoming large-scale farmers.

In mid-May, Bahrain's minister of industry and commerce, Hassan Fakhro, travelled to Thailand for talks on setting up a plantation there to grow Jasmine rice as an alternative to Basmati rice, which is very popular in Bahrain.

The Dubai-based private equity firm Abraaj Capital aims to work with the government of the United Arab Emirates (UAE) in buying up large tracts of land in Pakistan for the creation of major agribusinesses.

With the state acting as both food producer and trader, the UAE hopes to help lower food prices by eliminating profits by middlemen.

Saudi Arabia and the rich Gulf emirate of Qatar are the countries most interested in Sudan's fertile soil, much of which is unused or used unproductively.

Egypt, with less capital to invest but traditionally having close ties to Khartoum, has already staked a claim in northern Sudan. Cairo has struck a deal with the Sudanese government under President Omar al-Bashir to grow two million acres of wheat annually near Wadi Halfa, not far from the Egyptian border.

The agreement will save Egypt the expense of having to buy wheat overseas, for which it spends a large amount of its foreign-exchange earnings every year.

Big wet spreads to northern NSW

The big inundation that has brought flash flooding to South-East Queensland and good falls to the State's west, has now spread into northern NSW.

A severe weather warning for flash flooding has been issued by the Bureau of Meteorology for the NSW Northern Rivers, Mid North Coast and Northern Tablelands.

The rain has come from a low pressure trough just to the north of Brisbane, which has generated some heavy rainfall this morning.

Since 9am the north coast agricultural areas have received good falls, with Casino recording 15mm and Lismore 17mm, while further west Moree has received 20mm, Mungindi 18mm and Collarenabri 19mm.

According to the Bureau the low will drift southwards and increasingly affect the north east of NSW on Tuesday, with areas of heavy rain expected.

A further southwards movement on Wednesday will see the band of heavy rain ease from the north and shift into central parts with further heavy falls, though there might be a slight overall easing trend.

Whilst the rain will be heaviest along the coast, the Bureau says some locally good rains are likely to extend westwards onto the ranges and adjacent slopes, with lighter falls further west.

The cloud feature approaching the Bight represents another upper level feature that is likely to reinforce the weather pattern later in the week maintaining the rainfall potential, at least over eastern parts, through into the weekend.

Overnight developments in the grains markets

Beans are around 10c lower this morning, dragged down by soyoil which is 30-50 points lower on weaker crude. The CFTC's investigation into speculative manipulation in the crude markets, has also spread to cotton (see Saturday's post on this blog).

This could bring further spec liquidation in crude this week pressuring soy & corn. In addition ideas that the CFTC may intorduce some new rules governing spec "investments" across a broad range of commodities including grains may also cap gains until the waters have cleared.

Corn is a couple of cents lower and wheat around unchanged. As well as planting progress, the USDA will issue it's first crop condition report of the season after the close tonight. Trade ideas are that corn good/excellent will be nowhere near the 70% average for this early in the season.

Crude is $126.95/barrel and the pound is down to $1.96 with the Bradford & Bingley woes rekindling concerns over the health of the housing and financial sectors.