Overnight grains

Lets simply say up probably isn't a word that is going to get used much today.

Wheat is down 5c, corn down 5-6c and soybeans anywhere from 9-18c lower.

As I'm short of time because I'm going to the Hull Corn Trade Dinner tonight, you can make up your own report today by picking from any of the following key words:

Global, crisis, meltdown, financial, downtrend, economic, stocks, crude, banking, acreage, production.

I Feel A Bit Like Bruce Forsyth Today

On that show on the telly....

"London wheat closed at £90/tonne last night, do you think it's going to open higher or lower than £90 today?"

"HIGHER," urge the audience, of feed compounders, merchants & shippers.

"I'll give you a bit of help," says Brucey.

"Stocks are sharply lower, eCBOT is sharply lower, crude is sharply lower."

"Erm, I think I'll go with the audience, Brucey, HIGHER!"

"What, higher than £90, you say? Oh......it's an eighty nine."


Russia To Build New Black Sea Grain Terminal

With a grain harvest in excess of 100 million tonnes under its belt, and the capacity to further increase that substantially in the coming years, the main problem Russia has got is the logistics of getting it's grain to market. So, perhaps in the light of its recent spat with Ukraine, they've decided to build a new export facility on the Black Sea.

Russian companies Efko and Solnechnye Produkty plan to build a deepwater grain terminal on the Black Sea at a cost of $220 million, Moscow-based newspaper Vedomosti reported Oct. 15. The new port in Taman is expected to handle five million tonnes of grain a year, the report says.

The companies will jointly own the grain terminal, and are currently meeting with banks on financing, Vedomosti reported.

Maybe they're going to borrow some of their own money back from Iceland at preferential rates?

EU Stocks Open Sharply lower

EU stocks have started the day sharply lower Thursday, taking their lead from Asia and the US.

The Nikkei 225 Average dropped as much as 10.4% in mid-morning Tokyo trading, before recovering slightly, as shares across the board were slammed after Wall Street stocks dived overnight.

In Hong Kong, the Hang Seng Index dropped 7.6% to 14,787.35, whilst Australia's S&P/ASX 200 index lost 6.9% to 4,004.80.

At 8.15am the U.K. FTSE 100 index was down 5.25% at 3,865.35, the German DAX 30 index down 4.9% at 4,623.57 and the French CAC-40 index down 5.0% at 3,210.91.

As is becoming the norm, banks were amongst the biggest losers. In Germany Deutsche Bank down 8.3%, whilst in France Credit Suisse sank 6.4 percent to 42.96 francs after reporting a loss of 1.3 billion francs in the three months ending Sept. 30.

Crude Down On Recession Fears

Crude oil is down again this morning, and has now fallen by more than 50 percent from its early July record high of $147/barrel, after a global stock plunge heightened concern bank bailouts won't prevent a recession.

Asian stocks slumped overnight following after Standard & Poor's 500 Index had its biggest loss since 1987 yesterday.

OPEC cut its 2009 demand forecast because of "dramatically worsening" financial market conditions. OPEC, supplier of more than 40 percent of the world's oil, cut its forecast yesterday for oil demand next year by 450,000 barrels a day, or 0.5 percent, to 87.21 million barrels a day.

A government report due later today is expected to show that U.S. crude-oil and gasoline inventories rose last week.

November crude was at $72.30/barrel, down $2.24 at 07.45am London time. The November contract expires today.

UK Government Adopts More Cautious Aprroach To Biofuels

Plans for a more cautious approach to biofuels, were outlined by the UK Transport Minister Andrew Adonis yesterday. In the light of the Gallagher Review this includes the proposal that the rate of increase of the Renewable Transport Fuel Obligation (RTFO) be slowed to reach 5% in 2013-14 rather than in 2010-11.

"Everyone agrees that to tackle climate change we must develop new and cleaner fuels", said Adonis. "But we are clear that biofuels will only have a role to play in this if they are sustainably produced."

There will also be a greater emphasis on sustainability and second generation biofuels, accelerating the development of two advanced technologies; pyrolysis-based conversion and algae as a sustainable feedstock.

EU Wheat Back Into Downwards Groove

EU wheat futures closed lower Wednesday as the market renewed its downwards trend following a couple of days of brief respite at the start of the week.

Paris November milling wheat closed down EUR4.75 at EUR142.25/tonne and London November feed wheat ended down GBP3.0 at GBP90/tonne.

Buyers remain on the sidelines, licking their wounds on any purchases already made. With the market firmly entrenched in a downwards trend there is little encouragement for them to return to the fray.

In the UK compound feed demand remains slow, which is also adding some downwards pressure.

Data released today by the HGCA shows that U.K. wheat exports for July and August are almost half what they were for the same period the previous year.

The figures show that 168,392 metric tonnes were exported throughout the two-month period, compared with 291,347 metric tonnes the previous year.

The traditionally No1 export home, Spain, only took 32,880 tonnes during this period, compared with 125,128 tonnes last year.

Meanwhile a bumper European corn harvest is in full swing. EU-27 estimates put the bloc's maize crop this year at around 60.2 million tonnes, dramatically up from last year's 48.2 million tonnes following higher plantings and better weather.

November Paris corn closed down EUR2.50 at EUR127.50/tonne.

CBOT Closing Comments


Corn futures traded sharply lower on another red� day across most commodity boards. It was estimated that Index funds were net sellers of 7,000 CBOT contracts Wednesday. Pressure from outside markets weighed in on most commodities, with bearish economic outlooks lingering. The Dow Jones was about 300 points lower when grain trading and most commodities closed, but dived further with losses exceeding 700 points at the close. Crude oil is currently about $5 lower at $73/barrel, which is at the lowest price level since August of 2007. Wet weather is limiting harvest in some regions throughout the Corn Belt but weather should clear up ahead of the weekend and allow harvest to carry on. USDA pegged corn harvest 21% complete yesterday afternoon. Dec -23 c at 3.88.


Soybeans finished Wednesday with steep losses but backed off of lows posted earlier in the day. Funds were quoted selling 4,000 bean contracts, 1,000 meal, and 3,000 bean oil contracts. Soybeans continue on a downward trend and may continue that way until stability is established in the financial sector. Rains are also delaying soybean harvest thus far in the week, but with weather permitting bean harvest should pick back up this weekend. Basis remains steady with a sufficient volume of beans in the supply chain. Nov -38 at 8.58; Dec Meal -3.00 at 244.50; Dec BO -2.47 at 35.53.


Wheat futures closed lower when they were unable to shrug off pressure from other grains and economic conditions. Japan has resumed their normal weekly buying after reportedly purchasing 71,000 MT of US wheat. Wheat futures continue to be pressured by the fact that the world should harvest a record crop for 2008/09. USDA reported winter wheat plantings 73% complete, on par with the 5 year average. Winter wheat emerging is also ahead of last years pace at 46% vs. 39%. Funds were net sellers of an estimated 3,000 CBOT contracts. Dec CHI -17 c at 5.55; KC -23 at 5.90; MLPS -15 c at 6.38.

JP Morgan Q3 Profits Take A Pasting

JP Morgan Chase & Co. says its profit tumbled 84 percent in the third quarter after it took big hits from souring mortgage investments, leveraged loans and home loans.

The company earned $527 million, or 11 cents per share, compared with $3.4 billion, or 97 cents per share, a year earlier.

Astonishingly, the figures are better than anticipated. Analysts had been expecting a loss of 21 cents per share.

Only in the current economic climate can an 84% fall in profits be greeted with relief.

Europe Busy Harvesting Bumper Corn Crop

EU country's are busy harvesting a bumper corn crop in 2008. Government forecasts put Germany's maize crop this autumn at 4.9 million tonnes, up from 3.7 million tonnes last season.

Harvesting is now in full swing in much of the country and is expected to be completed around the end of October, analysts said.

Government figures say Germany's harvest of grains of all types this summer has risen by around nine million tonnes on the year to 49.9 million tonnes.

The French harvest is nearing completion and output there is anticipated top be around 15.1 million tonnes, compared to 14.5 million tonnes in 2007.

Meanwhile, EU-27 estimates put the bloc's maize crop this year at around 60.2 million tonnes, dramatically up from last year's 48.2 million tonnes following better weather.

Hungary, Austria, Romania and Bulgaria all also seem to have excellent crops and are aggressively looking to export. Hungary's crop is forecast to produce 8.7 million tonnes, up from 4.7 million tonnes last year.

EU corn prices could even reach intervention levels of around 100 euros a tonne, traders said.

This is likely to mean a sharp cut in maize imports from Brazil in coming months.

Brazil and the U.S. together sold 20.1 million tonnes of corn and sorghum to the EU in 2007/08, up from only 6.2 million tonnes the previous season as EU farmers and animal feed makers turned to imports after Europe's poor 2007 grains crop raised domestic prices.

EU Wheat Back On The Defensive, UK Wheat Exports Dip

EU wheat futures are back on the slide Wednesday, as outside influences from stocks and crude take control again.

November Paris milling wheat is down EUR2.25 at EUR144.75/tonne. London November feed wheat is GBP2.50 lower at GBP90.50/tonne.

Data released today by the HGCA shows that U.K. wheat exports for July and August are almost half what they were for the same period the previous year.

The figures show that 168,392 metric tonnes were exported throughout the two-month period, compared with 291,347 metric tonnes the previous year.

The traditionally No1 export home, Spain, only took 32,880 tonnes during this period, compared with 125,128 tonnes last year.

Shock News From DEFRA

They've had a quick look round the office and are happy to confirm that they haven't lost anything else yet today.

"It's usually after lunch, once people have had a few beers, that stuff starts to go AWOL," said DEFRA spokesman Mr A Tealeaf.

"Laptops, 42" Plasma TV's, antique Victorian desks, 21,000 cows are all easily misplaced once you've had a few sherbets."

A DERFA Spokesman

A DEFRA spokesman on his way home last night

eCBOT Close, Early Call

eCBOT grains futures failed to hold onto early gains closing modestly lower Wednesday on concern that a U.S government plan to invest $250 billion in banks won't be enough to spur economic growth.

Wheat and corn closed around 2c easier, with soybeans down 1-2c. Only soymeal managed to finish in positive territory, closing around $3 higher.

Department of Agriculture data released Tuesday showed wheat inspections were at 22.056 million bushels, at the low end of the trade expectations range of 22-28 million bushels. This is about 10 million below last week's levels.

Oil prices continued their decline after topping the $85 a barrel mark Tuesday December crude fell as low as $77.10/barrel.

Traders awaited the Energy Information Administration's inventory data on Thursday. The report has been pushed back a day this week because of the Columbus Day holiday.

Early calls for this afternoon's CBOT session: corn, soybeans and wheat all called 2 cents lower.

Palm Oil Hits 2-Year Low

Palm oil fell to its lowest level in two years Wednesday on fallin crude lowering export potential, and fears that the U.S government plan to invest $250 billion in banks won't be enough to spur economic growth.

Palm oil for December delivery fell to 1,738 ringgit/tonne ($495) on the Malaysian Derivatives Exchange and Chinese futures on the Dalian dropped their exchange-imposed limit.

Crude oil was $1/barrel lower at $77.63, which is curbing export demand for palm oil. Malaysian exports fell 9.1 percent to 560,210 tonnes in the first half of October compared with the same period in September.

Crude oil prices have almost halved since the beginning of July.

Lloyds TSB Takeover Of HBOS In Jeopardy

Analysts said that Lloyds TSB shareholders were taking on a huge risk by buying HBOS and it would not be surprising if it once again tried to renegotiated better terms for the proposed takeover.

Monday's dramatic £37 billion cash injection into the banking system, orchestrated by Gordon Brown, has imposed "penal" terms on all the banks, especially Lloyds TSB.

Its shareholders have, for years, become accustomed to receiving generous dividends from the company. However, one of the conditions of receiving taxpayer money is that the banks cannot pay out dividends to their shareholders until the Government money has been repaid.

Those shareholders have every reason to feel they are getting a very unattractive deal.

The Treasury denied reports that it was making plans, behind the scenes, to step in and nationalise HBOS if Lloyds TSB walked away from the deal.

Your Money's Safe With Lloyds TSB

Crisis, what crisis? Lloyds TSB aren't aware of any problems judged on their extravagance at throwing a reputedly £2m private party recently at various venues across London.

According to the Sun (so it must be true), 1000 members of staff and their partners stayed in four of the capital's finest hotels and were treated with trips to Harrods and the London Eye.

They even hired aging pop quartet Duran Duran to play for them.

An organiser described the celebration as a “disgusting spectacle”. I'm not sure if he's referring to Simon Le Bon's performance, or the opulence and expense incurred.

“It’s the most extravagant corporate event I’ve ever seen,” said one. “There was little mention of the credit crunch as they filled their boots."

A Bit Of Bubbly

OK, the Currant Bun is probably exaggerating a bit here, but this sort of thing seems to summarise how out of touch with reality the management at these banks are.

And if Lloyds TSB have the money to buy HBOS what are they doing taking a handout from the government anyway?

Shop Local, Support Local Business, Invest In Iceland

It appears that local councils all over Britain have been following Kerry Katona’s lead and going to Iceland. Unfortunately so have large wads of your money.

Had anyone taken any notice of the lessons of history, this might have been avoided. However, as no one studies history any more, preferring to get degrees in media studies, that didn’t happen. As recently as 1994, the municipality of Orange County, California went bankrupt after its treasurer ‘invested’ in derivatives. This was an object lesson in not letting people of somewhat limited intelligence get their hands on large sums of money, particularly when it’s your money.

Local authorities tend not to attract the brightest minds of their generation and sooner or later someone will come along with a whizzer scheme for ‘investing’ municipal funds at an unbelievably high rate of interest. This always ends in tears. So it turns out that all these councils who never tire of telling the rest of us to 'shop local, support local businesses', have been depositing lots of your council taxes in Bjork’s local bank.

Gordon Brown leapt into action and froze Icelandic assets using anti-terrorism laws. Yet another lesson in why politicians should not be allowed to pass 'terror' laws that cancel out all the normal conventions – because they will use them whenever they feel like it. Ok, all the local councils involved were terrifyingly stupid but that’s as close as it gets.

Still, extraordinary times call for extraordinary measures, and what could be more extraordinary than bringing back Peter Mandelson to the cabinet? Admittedly he may be able to solve the mortgage crisis as he’s a chap that knows a thing or two about borrowing money to buy a house. Though, regrettably, most of us will probably be unable to raise a loan from Geoffrey Robinson. And if we could, and didn’t declare it on our mortgage applications, unlike Peter we’d be prosecuted for fraud.

But the news of Mandy’s return to Blighty was manna to many. Gay bars all over London were putting out the bunting and satirists everywhere wept openly. A clearly emotional Rory Bremner sobbed, “It’s no secret that things have been tough since Tony was replaced by someone so bland as to be beyond parody, but this is great news.”

So, crisis, what crisis? With men like these at the helm and plans already afoot to lend billions of pounds of your money to the banks so that they can lend it back to you at high rates of interest, we can all rest easy in our beds.

FTSE Retreats As Reality Kicks In

World stock markets have lost ground following two days of dramatic rises.

Investors fear that government action to strengthen the financial system will not prevent a worldwide recession.

The UK's FTSE 100 index was down 2.7% and France's Cac 40 fell 2.1% in early trade. Hong Kong, Indian and Australian stocks all fell.

Asian countries joined the global rescue effort, agreeing to set up a multi-billion dollar fund to buy banks' bad debt and support banks.

The FTSE 100 index of the UK's top shares was down 122 points at 4,271.55. France's Cac 40 lost 76.77 points to 3,551.75 points.

Australian stocks ended 0.8% lower and Indian shares were down 4.3%, falling below 11,000 points shortly after noon in Mumbai.

In Hong Kong, the Hang Seng index was down almost 3%.

However, Japan's Nikkei 225 index ended the day up 1.1% at 9,547.47 points despite falling in earlier trade. On Tuesday, it recorded its biggest ever gain.

"The rebound is over and the risk of recession as high as ever," said Patrick Shum, strategist with Karl Thomson Securities in Hong Kong.

"Governments across the world are cutting welfare spending and issuing more debt to help the financial system. But these measures will create a bigger problem of an economic slowdown."

Queensland Grain Crop "Best For 50 Years"

Grain growers say recent rain across Southern Queensland will help the winter crop, with some farmers claiming it's the best in half a century.

Farmer Bill Gallagher reported 15 mm in his rain gauge last night, and despite strong winds, his crops have held up well.

He says local growers are waiting nervously as the first barley starts trickling in to depots.

"We've got probably the best crop we've ever had since we started growing wheat back 50 years ago, and in light of the problems that everyone has had over the last few years with prices and droughts through one thing or another, it's looking very good," he says.

UK: Aldi's Sales Growth Outstrips Rivals

German-owned low-cost supermarket chain Aldi has achieved its best ever share of the UK grocery market as budget-focused groups continue to outpace rivals in the consumer dowturn, a survey showed on Tuesday.

Aldi's sales rose by 22.1 percent in the 12 weeks to Oct 5 researcher TNS Worldpanel said.

Of the country's four biggest supermarket chains, Morrison and Asda had sales growth of 9.6 percent and 9 percent respectively, outpacing market leader Tesco , which had growth of 5.5 percent.

The Locusts Are Coming

Australian farmers in northern Victoria are on alert for what could be the worst locust plague in more than five years.

Locusts have started hatching in central New South Wales, after large-scale egg laying occurred over summer and autumn.

Victoria's Plague Locust Commissioner, Doctor Andrew Tomkins, is expecting reports of locust hatchings in Victoria as soon as the weather warm up.

He says this season's plague could be worse than the one in 2004/2005 when some grain crops were destroyed by locusts.

"I would say give us three or four weeks and by that stage the bulk of their hatching will have occurred, and then we will have an idea of just how many sites the hatchings have turned up at," he said.

South-eastern Australia is predicted to have its worst locust plague in more than five years.

Overnight Grains

The overnight eCBOT market is mostly firmer in early trade with wheat around 3-4c higher, corn up 2-3c and soybeans 10c firmer.

Soybeans advanced from a 13-month low on speculation Brazilian production may fall next year and that a 44 percent plunge in prices may sustain food demand even as the global financial crisis erodes earnings.

The 2009 soybean crop in Brazil, the world's second-biggest producer, will be smaller because of reduced fertilizer use and dry weather, Oil World said.

The US harvest continues to lag with just 21 percent of corn collected by Oct. 12, compared with 14 percent a week ago, 50 percent a year earlier.

Soybean harvesting was 51 percent completed, compared with 31 percent a week ago, 61 percent a year earlier.

EU Wheat: Is The Party Over Already?

EU wheat futures closed mixed around unchanged Tuesday despite early euphoria surrounding central banks' intervention into world economic markets.

November Paris milling wheat closed up EUR1.50 to EUR147.00/tonne and London November feed wheat ended down GBP1.25 at GBP93/tonne.

The markets closed higher Monday, which spilled over into early trade Tuesday, on borrowed strength from outside markets.

However, by late afternoon, prices were drifting lower again as Chicago ran out of steam and traders refocused their attentions on market fundamentals.

Unfortunately, market fundamentals are not bright, against a backdrop of increased supply and poor export demand.

Whilst the economic rescue plan may well stave off the worst, it seems highly unlikely that it will prevent the global economy from slipping into recession. And that does not augur well for demand.

CBOT Closing Comments


Corn futures closed mixed with nearby contracts slightly lower and deferred contracts slightly higher. USDA inspected 29.132 MB for export sales which were below the average trade estimated of 32 to 37 MB. The nearby December CBOT corn contract RSI is 25, anything below 30 is considered being in oversold territory. USDA also released their crop condition ratings this afternoon after being delayed by the Government holiday yesterday; corn maturity still lags last year at 86% mature vs. 97%. Harvest did jump 7 points to be 21% complete. Crude oil was lower today, dropping below $80/barrel adding pressure to corn futures and limited gains in some contracts. Dec - 1/3 at 4.11 1/4c.


Soybeans finished sharply lower Tuesday giving back almost all gains achieved during Monday�s trade. Bean futures did not receive any support this morning when NOPA crush data was released. NOPA reported that 120.376 MB were crushed during the month of September which was below the trade estimate of 122 MB. USDA inspected 13.237 million bushels for exports which was slightly above some trade estimates. Soybean harvest improved to 51% complete up from last week�s status of only 31% but harvest still lags the 5 yr average harvest rate of 61%. Scattered rains that fell over much of the CB this weekend and early this week may delay harvest even further. Both Oct meal and soybean oil contracts expired today, the December contract will now move into the front spot. Nov -32 at 8.96; Oct Meal +2.40 at 254.50; Oct BO -50 at 38.40.


Wheat futures skidded lower at all three exchanged when the final bell rang on Tuesday. Wheat futures continue to be pressured by the fact that the world should harvest a record crop for 2008/09. USDA reported export inspections for last week at 22.056 million bushels and was inside trade estimates. Argentina has caught some beneficial rains over the past couple of days but Australia remains dry and in dire need of some moisture to harvest a trend line crop. USDA reported winter wheat plantings 73% complete with is ahead of 2007 and on par with the 5 year average. Winter wheat emerging is also ahead of last years pace at 46% vs. 39%. Dec CHI -15 1/2c at 5.73; KC -14 1/4c at 6.13; MLPS -9 1/4c at 6.53 3/4c.

Russian Grain Exports Running At Double Last Season

Russian grain exports are running at around twice last season's pace, according to Aleksey Gordeyev, the Minister of Agriculture of Russia.

Russia exported 6.815 million metric tonnes of grain, almost all of it (6.041 million tonnes) wheat between the beginning of the current marketing year July 1 and Oct. 7, the Minister announced Tuesday.

The Ministry said it now expects this year's grain harvest total 105 million tonnes in clean weight, which would be about 23 million tonnes more than in 2007.

eCBOT Close, Early Call

eCBOT grains closed firmer Tuesday garnering strength from outside markets.

Soybeans closed the overnight session 22-23c firmer, with wheat up around 12-13c and corn 11-13c higher.

Asian and European stock markets were sharply higher, as was crude oil which posted gains of around $3.50/barrel.

There is also speculation that a declining dollar and slumping shipping costs will spur demand for U.S. supplies from overseas importers.

The Baltic Dry Freight Index fell 11 percent yesterday to 1,976 points, according to the Baltic Exchange in London. That's the lowest since August 2005.

Meanwhile central banks' moves to ease credit may spur demand for commodities according to some speculators.

Early calls for this afternoons CBOT session: Corn futures are expected to open 10 to 13 higher; soybeans 20 to 25 higher; wheat 12 to 15 higher.

EU Wheat Gains For Second Day

EU wheat futures are higher for the second day in succession Tuesday with November Paris milling wheat +EUR3.50/tonne at EUR149/tonne. November London feed wheat is £1.75/tonne higher at £96/tonne.

Futures are gaining support from a generally firmer commodity market, buoyed by outside influences from stocks and oil.

US markets closed firmer overnight and that is also adding some support. Still, the fundamentals for wheat are bearish and a downwards trend is still firmly in place.

"World stocks have been replenished thanks to sharply higher production numbers almost everywhere. There are still one or two question marks over Australia and Argentina, but that's about it," said one trader.

Icelandic Stocks Plummet 76 Pct As Trading Resumes

Iceland's benchmark stock index plunged 76 percent in the first day of trading after a three-day suspension following the collapse of the country's banking industry.

The OMX Iceland 15 Index fell 2,287.53, or 76 percent, to 717.09 as of 10:15 a.m. local time. Trading was halted since Oct. 9 after the index lost 30 percent in nine days.

Iceland has become one of the highest-profile victims of the credit crunch.

Last week, authorities took control of the operations of three major banks, Kaupthing, Landsbanki and Glitnir, in which hundreds of thousands of Britons have savings.

Trading in six financial stocks - Kaupthing, Landsbanki, Glitnir, Straumur-Burdaras, Reykjavik Savings Bank (SPRON) and Exista - remains suspended.

FTSE100 Up 6 Pct

Leading shares were sharply higher by midday with the FTSE 100 clocking up gains of almost 6% in the wake of the momentous day's trading Stateside.

Having seen the Dow Jones Industrial Average climb by a record amount yesterday, UK blue chips were up 252.2 points at 4,509.8 by noon, while the FTSE 250 was also storming higher, up 4.3% at 7,328.92.

Meanwhile, over in Europe the Dax rose 5.3% to 5,330.67, while the FTSE Eurofirst 300 gained 5.5% to 989 points.

Shares shrugged off soaring inflation, which has climbed to 5.2% according to the latest reading, as well as the lowest housing transaction figures for 30 years, to make gains as the global banking rescue plans continued to boost sentiment.

Investors appeared particularly optimistic about the US, which is to announce details of its bailout plan today, while rising oil - which jumped almost $3 a barrel for Brent crude futures to $80.4 - also helped energy companies.

One big riser was Barclays, the top performing bank, which was up 12.5% as it rebounded from recent sharp falls having revealed it will not need to borrow capital from the government to secure its capital ratios.

There were few fallers, among them Lloyds TSB and HBOS, down 4.9% and 2.8% respectively.

Has DEFRA Lost The Plot?

They've lost pretty much everything else by the sound of it. Following on from yesterdays revelations of nearly 21,000 cows going missing, here is the full list of items lost and stolen from DEFRA in the last ten years:

• 20,979 cows

• 122 laptops

• 36 processors

• 23 PDAs

• 15 projectors

• 14 mobile phones

• 13 PCs

• 12 rolls of gaffer tape

• 6 monitors

• 5 digital cameras

• 4 printers

• 4 power adaptors

• 3 docking stations

• 3 PSION (digital organisers)

• 3 software packages

• 2 answering machines

• 2 sat navs

• 2 VCR machines

• 1 telephone

• 1 fax machine

• 1 Camcorder and accessories

• 1 set of laboratory equipment

• 1 toaster and electric fans

• 1 dictaphone

• 1 charger

• 1 set of field equipment

• 1 keyboard

• Various car parts from official DEFRA vehicle

• 1 42 inch plasma screen TV

• Desk top Microphones

• 1 Victorian desk

• 1 modem

• 1 Memory box

So if you see any cows with laptops sat behind a victorian desk watching a 42" plasma TV, give them a call on: 08459 33 55 77.

UK pig feed production down by 15 Pct

UK retail production of pig feed was down 15 percent in August this year, compared to August 2007. Average price of pig feed was £218 a tonne, from April to June 2008.

In all animal feed, use of wheat in retail production was down 13 percent over the course of the year (August 2008 compared with August 2007). Barley was down 5.7 percent. Total raw material use is down 9.9 percent.

Sterling Leaps Despite Inflation Data

Sterling leapt Tuesday unhindered by a much bigger-than expected rise in UK inflation. British CPI hit a 16-year high of 5.2 percent in September, forecasts had been for annualised CPI to come in at 5.0 percent.

The September BoE Inflation Report indicated that inflation would rise above 5% in the coming months, so this release is not too surprising, although the ONS said that the BoE MPC did not have access to these figures when making its decision to cut rates last week. However, given the financial market conditions and the increased risk of a sharp and protracted slowdown in growth it's likely that inflationary concerns are less significant than they once were.

At 11.50am BST the pound was around a cent and a half above last nights close at $1.7590.

Auf Wiedersehen Debt?

The market is already starting to react as if the worst financial fire in history is over. Up until now, more effort has been expended on arguing who is to blame, rather than trying to find the extinguishers.

Lets hope that the worst if over. Let's hope that we never again have to witness a Chancellor's vacant stare whenever asked a simple financial question, even as his eyebrows squirmed like engorged caterpillars in their death throes betraying his ignorance.

I feel almost embarrassed to say it, but maybe Gordon Frown has played this one as well as could be expected, under the circumstances?

It feels like we may now get away with a 45 degree slide into recession, rather than the full-blown Alton Towers 90 degrees downwards into Oblivion version.

I was going to call this article Bailout Winners And Losers, but swiftly decided that there were probably really only degrees of loss. It is interesting to speculate who may come off the worst out of all this.

The Irish were the first to leap to their feet with their (initially much-criticised, but inevitably swiftly-followed) blanket guarantee of all bank depositor's money. The fact that this "guarantee" in fact calculated out at nearly three times gross domestic product should not be overlooked. If these guarantees had been called, they could never have all been paid.

The subsequent rapid inflow of cash to the safest haven there was, may soon now turn into a mass exodus. Those depositors who acted like startled rabbits will soon work out they are better off and better covered in government controlled banks back home.

As the new rules bite runs may develop on smaller groups such as building societies that have not been invited to play with the big boys. Government guarantees do not and cannot extend to such groups. Banks like Santander and Commerzbank will probably end up absorbing dozens of these local mutuals.

Most major industrial countries therefore will end up with a handful of large semi state banks which will dominate the domestic deposit markets.

Many of the current problems have been caused by lets call it "creative accounting," some might call it over-optimism, some might call it other things. Institutions with much of their capital "invested" in unlisted property, private equity and other opaque vehicles, may be forced via legislation to be more realistic in the valuations of their portfolios. I've never been a big fan of pension funds and I certainly aren't warming to them now.

There isn't going to be enough money in the pension kitty for people to retire when they had planned due to the fact that many pensions have been mismanaged for years.

Welfare is another area that wants looking at. In the UK unemployment has sank from well over two million to under a million. Meanwhile, those of working age but permanently incapacitated soared from under a million to well over two million! Well it looks like unemployment is going to start rising again busting the budget even further. So this is an area where we need to toughen up.

It is worth recalling that in absolute terms European institutions own more of America's mistructured and bankrupt sub-prime debt than the Americans themselves! Where is it? Too much, many believe, is in Italy.

There there are a huge number of highly-geared cross holding companies, mystery nominee companies etc. In short another house of cards just waiting to collapse.

A post-Olympic China also looks a certainty to be forced to reluctantly join the world recession party. The collapse in commodity imports, from copper to steel, oil to iron, already shows that a slowdown is already under way.

The west is in a recession. We don't want, or more precisely can't afford, their plasma TVs, Nintendo Wii's and fridge freezers that can also bake you a cake.

If we want a new car and we can't borrow the money to buy it then we are going to have to save. Thus the impact on retail economic activity is dire, as governments tax more and cut expenditure, and the consumer is forced to save.

It is worth noting that in the 1970s and early 1990s recessions, savings rates in advanced countries rose dramatically.

Whilst liquidity and lending will gradually improve, governments will want to rebuild 'their' banks' balance sheets as fast as possible. Globally, official interest rates will be slashed; the unusually co-ordinated cuts last week by six major central banks is but the start.

Credit Crisis Implications For The Grain Trade

This story recently appeared in The Financial Post of Canada:

"The credit crisis is spilling over into the grain industry as international buyers find themselves unable to come up with payment, forcing sellers to shoulder often substantial losses.

"Before cargoes can be loaded at port, buyers typically must produce proof they are good for the money. But more deals are falling through as sellers decide they don't trust the financial institution named in the buyer's letter of credit, analysts said.

"'There are all kinds of stuff stacked up on docks right now that can't be shipped because people can't get letters of credit,' said Bill Gary, president of Commodity Information Systems in Oklahoma City. 'The problem is not demand, and it's not supply because we have plenty of supply. It's finding anyone who can come up with the credit to buy.'

"So far the problem is mostly being felt in U.S. and South American ports, but observers say it is only a matter of time before it hits Canada. 'We've got a nightmare in front of us and a lot of people are concerned it's going to get a lot worse,' said Anthony Temple, a grain marketing expert based in Vancouver.

"Access to credit is key to the survival of maritime trade and insiders now say the supply is being severely restricted. More than 90% of the world's trade by volume goes by ship. 'The credit crisis has made banks nervous and the last thing on their minds is making fresh loans,' Omar Nokta, an analyst at investment bank Dahlman Rose, said in an interview with Reuters.

"While shipping has always been a cyclical industry whose fortunes rise and fall with the global economy, analysts said the current crisis over the drying up of credit is something they have never seen before."

There's another way of looking at this story too. Say you were a Chinese grain importer. You have one cargo of wheat bought back in the spring for shipment in November. One vessel of wheat requires you to provide a letter of credit for maybe $22m. However you could buy the wheat on today's market for $15m. Isn't going to suit you right down to the ground to provide a letter of credit that the supplier isn't happy with? And remember this is for just ONE cargo of wheat.

UK: House Sales Hit 30-Year low

The slump in the property market is becoming even worse, according to a survey from the Royal Institution of Chartered Surveyors (Rics).

Estate agents sold on average under one property per week each in September.

The number of properties being sold across the UK was the lowest since the Rics survey started in 1978 and was 52% lower than in September last year.

London was the region with fewest sales per estate agent, at an average of just eight in the previous three months.

Cargill Q1 Earnings Up 62 Pct

Cargill Inc said Monday that it's first quarter 2008 earnings posted a 62 percent rise, led largely by its industrial business. Earnings rose to $1.49 billion in the first quarter ended Aug. 31 from $917 million a year earlier, they said.

Cargill said the company's earnings received a substantial boost from its investment in the fertilizer industry through it's majority stake in Mosaic Co., in which Cargill holds a 65 percent share.

First-quarter earnings were down in Cargill's three other business segments: agricultural services, food ingredients and applications, and risk management and financial.

Overnight Grains Firmer

Overnight grains on the eCBOT market are firmer this morning, following through from last nights steadier theme, on speculation that central banks' moves to ease credit will spur demand for commodities.

At 8.15am BST soybean futures were up around 20c, with wheat 15-16c higher and corn up 8-10c.

Asian stocks were sharply higher overnight, with Japan's Nikkei index gaining a record 14 percent.

Crude has also bucked its downwards trend the last two days which is adding support to grains.

Crude Up On Concerted Rescue Package

Crude is higher overnight as governments in the U.S. and Europe acted in tandem to stem the worst financial crisis since the 1930s.

Crude oil for November delivery rose as much as $2.49, or 3.1 percent, to $83.68 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $83.49 a barrel at 08:09 a.m. BST.

President Bush is poised to speak before US markets open this afternoon. He will announce a plan to rescue frozen credit markets that includes spending about half of a total of $250 billion for preferred shares of nine major banks, insiders say.

The banks are said to include Citigroup Inc., Merrill Lynch, JPMorgan Chase, Bank of America Corp., Goldman Sachs and Morgan Stanley.

Still, US oil and gasoline inventories probably rose last week as production increased and refineries opened units that were shut last month because of Hurricanes Gustav and Ike.

As and when the market gets back to trading fundamentals, the demand picture is likely to continue lower.

Asian Stocks Surge Following Wall St

Financial markets in Asia have risen sharply overnight Tuesday, with Japan's Nikkei index gaining a record 14%. The gains came after Wall Street shares rocketed 11% on Monday as investors welcomed fresh moves to deal with the worldwide financial crisis.

Investors were encouraged by news the US government wanted to put in place its $700bn (£400m) bank bail-out quickly.

Australian Prime Minister Kevin Rudd has also announced a A$10.4bn ($7.3bn) economic stimulus package. It will allow for one-off payments to the country's low-wage earners and pensioners and follows earlier announcements of guarantees of bank deposits for three years.

According to Mr Rudd, the strategy "will strengthen the national economy and support Australian households".

Australia's main share index ended the day up 3.7%.

In Japan, the Nikkei 225 stock average soared 1,171.14 points, or 14.15% at 9,447.57 - its biggest ever percentage gain. The Japanese stock exchange was closed on Monday.

In Hong Kong, the Hang Seng index was up 715.67 points, or 4.4%, at 17,027.83 by the mid-session break. South Korea's index finished the day 6.14% higher.

In the US, President George W Bush is due to make a statement shortly before markets open there later on Tuesday.

CBOT Closing Comments


Corn futures were trading with expanded limits of 45 cents Monday as a result from limit losses in several contracts Friday. Optimistic enthusiasm that the stock market may be bottoming and turning upward after severe losses pushed grains and their commodities higher throughout the day. Weekend weather aided harvest but forecasts of scattered showers for the first part of this week may delay some progress. Crude oil was also higher back above $80 per barrel, the US Dollar Index was also weaker. Dec +3 1/4c at 4.11 1/2.


The entire soy complex had expanded trading limits after prices tumbled on Friday after the release of a bearish crop production report and sharp declines in several outside markets. Oct meal and soybean oil contracts are set to expire tomorrow, but 271 deliveries were posted against Oct meal and 122 against Oct bean oil last Friday. Weather was ideal for soybean harvest last week and USDA should indicate harvest being close to 50% done tomorrow. Nov +18 at 9.28; Oct Meal +0.90 at 252.10; Oct BO +240 at 38.90.


Wheat futures posting 20 plus cent gains as short covering as well as profit taking boosting prices. Egypt bought 120,000 MT of US SRW and Jordan has purchased 100,000 MT of hard wheat. Wheat received some bearish news Friday when USDA increased ending stocks, but might have some bullish outlook as several foreign countries lower 08/09 production estimates. Dec CHI +25 at 5.88 1/2.

EU Wheat Closes Sharply Higher

Now there's a headline you haven't seen for a while! EU wheat futures closed sharply higher Monday as the markets breathed a sigh of relief that the EU-wide banking bailouts announced over the weekend might have just gone far enough to rescue the market.

Paris November milling wheat ended up EUR2.75 at EUR145.50/tonne, whilst London November feed wheat closed GBP4.75 higher at GBP94.25/tonne.

Still, the markets remain very unsure, and one up day isn't going to make the strong downwards trend go away.

Even so, there was a little bit more of an element of the markets trading the fundamentals for a change today, rather than simply mimicking outside influences.

CBOT wheat was higher throughout most of the day, helped by news of Egypt buying mixed origin, but including US, wheat across the weekend.

The French soft wheat crop was also revised marginally down today, albeit by just 200,000mt to 36.1mmt, by the French Ministry of Agriculture.

I think that the bottom line today was that we've had some huge falls over recent months amidst a tsunami of bad news. The market was overdue a bounce, and the more positive news emerging from stocks, banking and crude oil was sufficient to help that happen.

The Current Market Explained

One day a Chinese businessman arrives at a small island in the South Pacific and says he will buy all the monkeys the locals can supply at $1 each.

The island is overrun with monkeys and $1 is a decent price, so the islanders readily agree.

After the initial influx of monkeys life gets back to normal, $1 is a fair price but not outrageous, so supply gradually dips off.

In order to attract a bit more interest, the businessman ups his offer to $2/monkey. This creates a fresh surge of supplies and suddenly the businessman has a huge cage of monkeys waiting to be shipped home.

Within a week there are hardly any monkeys left roaming free on the island so the locals start bringing monkeys in from neighbouring islands, eventually exhausting supplies there as well.

The businessman announces that he is going away to arrange a boat to take all the monkeys to China. To make sure that there are enough monkeys to fill the ship, he will pay $10/monkey on his return for every monkey the islanders can provide.

The islanders are cock-a-hoop, $10 for one monkey is a phenomenal price, but where are they going to get any more monkeys? The entire local supply has all but vanished.

Whilst the businessman is away fixing his boat, his deputy offers to open the cage and sell the islanders as many monkeys as they want for $5/head. Whilst in captivity they have been breeding like mad and there are thousands of them. They can then re-catch them and supply them to the businessman at $10/each upon his return.

The islanders are thrilled, and quickly hand over as much money as they can raise plus cash borrowed from all the other islands in the region.

They never saw the Chinese businessman or his deputy ever again, just bloody monkeys everywhere.

EU Wheat Bounces Of Lows Following CBOT

EU wheat futures are higher Monday, bouncing from recent lows set Friday as government measures to shore up banks sent stocks and crude oil higher.

Nov London feed wheat is £3.50/tonne firmer at £93/tonne and Nov Paris milling wheat EUR3.25/tonne higher at EUR146/tonne.

On Friday November London wheat closing below £90/tonne for the first time for a front-month since September 2006, whilst November Paris wheat hitt levels last seen in Jan 2007.

CBOT prices were boosted by news of Egypt's purchase of U.S. wheat. On Saturday, Egypt's main government wheat buyer GASC said it had bought a combination of 265,000 tonnes of Russian and U.S. wheat.

Jordan is also tendering for 100,000 tonnes of optional-origin hard wheat, traders said, following its purchase of 150,000 tonnes of Black Sea hard wheat on Oct. 9.

Also supportive was news that Argentina's 2008/09 wheat harvest is expected to shrink 28 percent from last year due mainly to prolonged drought, the Buenos Aires Grain Exchange said on Friday.

eCBOT Close/Early Call

Grains closed a volatile overnight eCBOT session mostly firmer on hopes that the weekend's rescue packages announced by assorted governments and central banks all over the world will stem the global economic slowdown.

Grains were boosted by crude oil after being battered Friday by bearish crop estimates and mounting concerns that the financial crisis may drag the global economy into a recession.

Crude was around $3 higher at $80.93/barrel at 12.45pm BST.

eCBOT soybeans closed around 15c higher, with corn up around 6c and wheat 16-18c higher.

"Prices have come down a long way from their highs, and I guess the market was also long overdue a technical rebound," one trader said.

Nov soybeans lost 8.3 percent last week and are down 44 percent from a record $16.3675 on July 3. In early eCBOT trade they set a fresh 13-month low.

Nov corn fell 10 percent last week and is 49 percent lower than the record $7.9925 on June 27. Nov wheat dipped as low as $5.5775 on Friday, the lowest since June 12, 2007. The price dropped 12 percent last week and is down 57 percent from a record $13.495 on Feb. 27.

Early calls for this afternoon's session are: Corn futures are expected to open 5 to 8 higher; soybeans 14 to 16 higher; wheat 15 to 18 higher.

Another Brilliant Idea From The EU

A study released today by the European Centre for Agricultural, Regional and Environmental Policy Research (EuroCARE) concludes that new legislation being tabled in Brussels will have a profound upward effect on the prices European consumers pay for food. The legislation will drastically reduce the pest management options available to European farmers and consequently yields will drop steeply, driving up prices.

According to the research, should MEPs push ahead with the new legislation set to replace Directive 91/414/EEC*, so many critical pest management tools will be removed from use that prices for all agricultural produce are likely to increase, building on expert assessments for likely yield losses. In the worst case scenario, prices for cereals and vegetables could rise by 73% and 104% respectively. Even the most conservative product-loss scenario examined by the researchers will to lead to price increases of at least 20% for key staples such as wheat and potatoes.

With such major impacts anticipated, researchers predict that much of European agricultural production could be lost to other countries, jeopardizing the position of the European Union as a net exporter of key crops. For example, wheat production is likely to increase in USA, Mexico, Russia, Belarus and Ukraine as well as South Africa, China or Australia - as it drops in Europe.

Friedhelm Schmider, Director General, of the European Crop Protection Association, comments: "All crops need protection from disease and pests. If you remove the tools farmers use to protect their crops, yields will go down - and prices will go up. This research proves that banning pest management options will, in the end, hit consumers in the pocket."

* For the last two decades, the Authorisation Directive 91/414/EEC of 15th July 1991 has regulated the agrochemical substances that farmers use in the EU. This legislation is currently being revised in Brussels, including proposals to ban many substances currently in use.

Russian Grain Harvest Sets 15-Year Record

In 2008, Russia harvested 110.5 mln tonnes of grains (off 96% of planted area), which is a record during last 15 years, declared Aleksey Gordeyev, the Minister of Agriculture of Russia, on October 9.

According to the Minister, the yield was over 2.49 tons a hectare, which is also a record for Russia.

Krasnodar Krai (over 11 mln tonnes) and Rostov oblast (9 mln tonnes) are the main leaders of grain harvest. Overall the wheat crop in Russia totals 65 mln tonnes so far, 13.7 million tonnes more than on the same date last year. Of which the food grade wheat totals 34 mln tonnes, an increase of 6 mln tonnes compared to the previous year, the Ministry said.

The Ministry said it now expects this year's grain harvest total 105 million tonnes in clean weight, which would be about 23 million tonnes more than in 2007.

To date, Russian farmers have planted 12.5 mln ha of winter crops, the Ministry added. Gordeyev said the area planted with winter crops would be 10% higher than it was last year. Winter crops, which mainly consist of food grain, account for 40% of the grain grown in the country, he said.

EU Oilseed Crush Up 5 Pct Jul/Aug

According to Oil World, oilseed crush in the EU-27 reached 5.8mmt in the first two months of marketing year 2008/09 (which runs July/June) and was thus 5% above the 5.7mmt crushed in the year-ago period.

Rapeseed crush rose almost 8% to 2.8mmt (2.6mmt), soybean crush was 4% higher at 2.5mmt (2.4mmt), while sunseed crush decreased to 479,000mt (542,000).

UK: Bank Shares Volatile

There were mixed fortunes for London's financial stocks Monday after it emerged the government will take sizeable stakes in Royal Bank of Scotland and merger partners Lloyds TSB and HBOS.

HBOS was the biggest faller, down 26 per cent or 32.7p to 91.5p, after Lloyds TSB revised the terms of its takeover and the mortgage giant reported a deterioration in trading conditions.

Lloyds was also lower after a drop of 4 per cent, down 8.8p to 180.6p after earlier rising 11 per cent.

Royal Bank of Scotland shares were volatile as traders digested the possibility that around 60 per cent of the company could soon be in government hands, resulting in a major dilution of existing interests.

Dividend payments have also been ruled out for the foreseeable future.

RBS shares fluctuated between positive and negative territories but are currently 16 per cent lower or 11.2p at 62.2p.

Barclays, which plans to boost its capital position through its own means, was 5 per cent higher, showing a gain of 11p to 218.5p.

HSBC rose 67p to 857p as it is not part of today's bail-out announcement.

An excellent summary of how the bailout will work is on the Guardian's website here

Pound Up On Bailout Plan

The Pound has pushed back above $1.7200 after hitting a five year low of $1.6779 last week on the news that the U.K. government will bailout RBS, HBOS and Lloyds with 37 billion pounds. The continued nationalization of the country’s largest lenders comes after the G7 meeting this past Friday where leaders of the world’s richest nations vowed to do whatever it takes to stem the current crisis.

Meanwhile, producer prices in the country continued to ease for a second month, falling 0.3% in September following Augusts’ 0.7% drop on lower oil prices, leaving the door open for more rate cuts from the BoE which may cap the Sterling gains going forward.

At 11.45am BST sterling was $1.7237.

Britain Imports Record Quantities Of Milk

The BBC is reporting that British milk retailers and processors have been forced to buy in a million litres every day from Northern Ireland, Holland and Belgium.

The shortfall is because so many dairy farmers are going out of business, with two a day leaving the industry due to low prices and high costs, they say.

In addition, a poor summer has also reduced cows' ability to produce high levels of milk. These two factors combined mean British milk production is at its lowest for more than 30 years.

Last year, the number of cattle in Britain fell by 200,000.

That should please the anti-methane brigade then? And another thing, how do they know that the number of cattle fell by that amount? There could be 21,000 of them in hiding according to DEFRA.

What's 21,000 Cows, Government Laptops And Prison Officers Addresses Got In Common?

They've all gone missing, that's what.

Officials at the Department for Environment, Food and Rural Affairs (Defra) admitted in Parliamentary questions that 20,979 British animals had been mislaid.

According to The Telegraph, the livestock should have been logged on Defra's Cattle Tracing System, devised to protect public and animal health after the BSE and foot and mouth epidemics.

However the cattle have disappeared from the system, while another 1039 are believed to have been loaded onto cattle trucks and never heard of again, according to the another newspaper.

Jonathan Shaw, Defra minister, was forced to admit the embarrassing blunder in response to a Parliamentary question, reports The Telegraph.

Australian Wheat, Canola Output Cut

Rabobank Australia has cut it's 2008 wheat and canola production forecasts citing dryness and frost.

Wheat output this year will total 20.5mmt, down half a million tonnes from its last forecast, they say.

A late September frost caused some significant crop damage in Western Australia, as did dryness in parts of NWS, Victoria and Southern Australia, it says.

If realised, this years crop will still be around 7.5mmt more than produced in 2007.

Meanwhile the Australian Oilseeds Federation cut it's forecast for 2008 canola production to 1.51mmt from 1.65mmt. Again, this still shows a significant increase on last season's crop of 1.07mmt.

Overnight Grains Volatile

Grains markets on the overnight eCBOT session have already seen some wild swings this morning, with Nov soybeans trading in a range of 28 1/2c lower to 22 1/4c higher by 9am BST.

Soybeans and corn plunged in early trade on follow-through momentum from Friday nights limit down close and uncertainty over the global credit crisis.

However, as the European market started to open, ideas that the widespread rescue packages announced by governments and central banks across the weekend would stave off the worst, saw futures recover into positive territory.

The USDA came out with some very bearish numbers for corn, soybeans and wheat Friday. Add that to the world economic woes and it's hardly surprising prices were well down Friday and early Monday.

However, some confidence returned as Asian stocks rebounded from the worst week since at least 1987 after Australia guaranteed bank deposits and European leaders agreed to support lenders in a global effort to end the credit crisis.

Egypt said it had bought 265,000 metric tons of wheat at a tender on Oct. 11. Of the total, the country purchased 120,000 tons from the U.S. and the rest from Russia, said GASC.

At 9am BST soybeans were 18-22c higher, with corn up around a cent and wheat 6-12c firmer. November crude was nearly $4 higher at $81.43/barrel.

Iceland Could Run Out Of Food In A Fortnight

Icelandic shoppers are flooding supermarkets to stock up on whatever food items they can get their hands on, as the financial crisis there worsens.

One grocery store manager said, "We have had crazy days for a week now. Sales have doubled."

Bonus, a nationwide chain, has stock at its warehouse for about two weeks. After that, the shelves will start emptying unless it can get access to foreign currency.

Wholesalers are demanding that importers pay before any goods are shipped. Under normal circumstances, wholesalers abroad would extend credit for 30 to 90 days

Store owners say that they can't get any foreign currency to pay for incoming shipments and, even if they could, the exchange rate would be prohibitively high.

Stocks Rally In Early Trade

Most Far Eastern markets have reacted positively to efforts by world leaders to end the recent financial turmoil.

Shares in Australia, Hong Kong, South Korea, Singapore and India were up in morning trading but the main markets in Shanghai and Taiwan lost ground.

Major central banks also made extra funds available and said they would take "whatever measures necessary".

World governments had been racing to throw financial institutions a lifeline before the major markets re-opened.

Japan's stock market is closed for a public holiday.

At the weekend, finance ministers from the main industrial nations - the G7 - approved a five-point plan to unfreeze credit markets, and a number of countries announced individual rescue packages.

Australia's Prime Minister Kevin Rudd said his government would guarantee all bank deposits, however large, for the next three years.

Correspondents say that type of move raised confidence as markets opened, and Australia's central bank on Monday pumped $2bn into the banking system to facilitate improve lending between banks.

Australia's benchmark index ended 5.6% higher and South Korea's main Kospi index finished up 3.8%.

At 8.30am BST the FTSE100 was 5% higher at 4137.22 points, with Barclays one of the biggest gainers after it announced plans to raise £6.5bn without government help. HBOS and RBS were amongst the main losers.

The British government has said it is to inject up to £37bn of new capital into Royal Bank of Scotland, Lloyds TSB and HBOS.

Royal Bank of Scotland (RBS) is to raise £20bn, with chief executive Sir Fred Goodwin quitting the firm. A further £17bn of taxpayer cash will be injected into HBOS and Lloyds TSB. The plans mean taxpayers will own about 60% of RBS and 40% of the merged Lloyds TSB and HBOS.