CBOT Closing Comments


July soybeans finished at $11.30 ½, down 17 cents, the steady rise throughout the week led to the almost inevitable sell-off Friday. Still prices are up around 20 cents on the week. The widespread rains we have seen over the last few months are seen abating somewhat next week, which may finally aid rapid progress with US plantings. China keep coming back to the US trough to feed which is supportive for US beans. Old-crop ending stocks were projected at 130 million bushels by the USDA earlier in the week, as recently as January it was 225 million. There could be plenty more upside in this rally yet, although longer-term I'd have to say I'm bearish at these levels.


July corn closed at $4.17 ¼, down 11 cents. A drier outlook for next week, a firmer dollar and weak crude put corn under pressure from the off. Plantings are behind schedule and are expected to be something like 60-70% complete as of Sunday night (reported by the USDA Monday) compared with 85% normally. The CFTC Commitment of Traders report released after the close showed an increase in Large Spec net long positions of 56,331 contracts from last week. It seems that planting delays and the continued robust pace of US exports may be encouraging some fund buyers back into the corn market.


July CBOT wheat closed at $5.77 ½, down 15 ¾ cents. Wheat remains the weak leg of the three in the US. Spring planting is well behind schedule, but export pace is lagging badly behind. Another week of disappointing export data from the USDA confirmed this. There are potential problems down the line for wheat like lower US, EU, FSU production, and reduced plantings in Argentina for example, but these will not impact the wheat market just yet.

EU Wheat Ends Week Lower On Profit-Taking

EU wheat closed lower Friday with November Paris milling wheat down EUR2.00 at EUR154/tonne, and November London feed wheat down GBP1.75 at GBP128.75/tonne.

On the week as a whole prices showed little change with November Paris milling wheat down EUR2.00/tonne and November London feed wheat GBP0.25/tonne higher.

Prices were overdue a bit of profit-taking consolidation after recent rises. Decent rains across parts of France, Germany and the UK Thursday/Friday and more forecast over the weekend also encouraged some profit-taking.

In the UK however a £10.25 spread between July and November is exceptional, and will do little to encourage nearby selling. That differential has to narrow at some point, and there could be an element of that creeping in as we get closer ot harvest-time.

Strategie Grains lowered their forecast EU-27 soft wheat production to 128.9 MMT this week, from 130.6 MMT a month ago and 140.0 MMT in 2008.

Meanwhile total EU-27 grain production is seen at 289.7 MMT, down 4.5 MMT from last month and 20.3 MMT, or 7.2%, below last year's 310.0 MMT, they say.

eCBOT Close, Early Call

The overnight markets closed with little change for once, beans 1-2 cents higher, corn up a half and wheat 3-4 cents lower.

After another week of solid gains. with beans pushing to seven month highs, then I guess that some light profit-taking is due today. July beans are currently 37 1/2 cents higher than last Friday night (including the overnight session), and have risen more than 25% from a March 2nd low of $8.41.

Chinese demand, dwindling US stocks and sharply lower production in Argentina - plus the ongoing political uncertainty there - are the main stories for beans.

US plantings may well pick up a million or two acres from corn yet, but that is some way down the line.

Next week's forecast for much of the Midwest finally seems to be presenting a window of opportunity for US farmers to crack on with corn and soybean plantings in earnest. That might encourage traders to take some money off the table ahead of the weekend.

Corn demand also remains pretty robust, with another week of strong export sales under it's belt from the USDA yesterday.

Wheat remains the poor relation by comparison, although spring planting delays in North Dakota in particular are a concern.

Lower European and Black Sea production and sharply reduced plantings in Argentina may provide US producers with some more opportunities for increased wheat sales longer-term.

Crude oil is lower, 86 cents down at $57.76/barrel, and the dollar is a little higher which may add a bit of a bearish note. For crude, although stocks fell this week OPEC are pumping around a million barrels/day over quota and world demand keeps falling.

Early calls for this afternoon's CBOT session: Corn steady to 1 higher, Soybeans 1 to 2 higher, Wheat 3 to 5 lower.

EU Wheat Export Licences Up 244 Pct

Licenses to export EU a further 515,000 MT of soft wheat have been granted this week, pushing the total issued to 19.3 MMT so far this marketing year. That's an increase of 244% on the 7.9 MMT of export licenses issued at the same point a year ago, according to customs data. Total exports during the 2008/09 marketing year are expected to total around 21 MMT.

Argentina Weather Latest

Another dry weekend is on the cards for Argentina with temperatures forecast to fall as low as -2 degrees C tonight, with daily highs Saturday struggling up to 13-18 degrees C.

There are a few scattered light showers possible, but generally another dry week in store for much of the country, particularly the main wheat growing areas of southern Buenos Aires province. Forecasts for the week ahead for this region are to receive 25% or less of normal rainfall in the week ahead.

Farmers there must be wondering what they've done to upset the powers that be.

Wheat plantings won't be making any great progress this week that's for sure. There are better prospects of rain for the following week, in places that don't get it it's likely that some will give up hope of getting a wheat crop in the ground at all this year.

Planting intentions are already called almost 20% down on 2008 - the lowest acreage since records began in 1910 - on lack of cash and political disincentives, a continuation of the year-long drought will only make matters worse.

Strategie Grains Wheat Numbers

French analysts Strategie Grains have revised down their forecast EU-27 soft wheat production to 128.9 MMT, from 130.6 MMT a month ago and 140.0 MMT in 2008.

Most of the reductions come in Eastern Europe where dryness has reduced yield potential, they say.

Polish production is now seen at 8.5 MMT (-8.6%), Romanian at 4.6 MMT (-30.3%) and Hungarian at 4.7 MMT (-16.0%).

Total EU-27 grain production is seen at 289.7 MMT, down 4.5 MMT from last month and 20.3 MMT, or 7.2%, below last year's 310.0 MMT.

Ukraine Grain Exports At 21.5 MMT

Ukraine has exported 21.5 MMT of grains in the first ten months of the marketing year, according to Yuri Melnik, the Minister of Agrarian Policy.

According to the State Committee of Statistics, in 2008 Ukraine harvested 53.3 MMT of grain in clean weight, up 82% compared to 2007.

The Ministry of Agrarian Policy expects grain exports in the current MY (July 2008 - June 2009) will total 25.6 MMT.

The Ministry said that they will issue a revised estimate on grain production for 2009 next week. Their most recent estimate was for production of 48 MMT.

UkrAgroConsult currently projects Ukraine to produce 19.1 MMT of wheat, 9.8 MMT of barley and 7.2 MMT of corn in 2009.

Latest On Russian Wheat Impounded In Egypt

A report on Reuters this morning says that the 52,501 tonnes of Russian wheat seized by the Egyptian authorities at the Red Sea port of Safaga contained "dead bugs, impurities and seeds above the allowed limit".

A second Russian cargo is also being held until the analysis results of samples taken is known, according to Bloomberg.

Other media reports suggest that all Russian wheat remaining unmilled in Egypt has been seized, whether at Safaga port, or distributed to the provinces.

This season's Russian wheat crop has apparently contained a high incidence of the pest eurygaster integriceps, commonly known as the "Russian wheat bug" or sunn/suni/sunny pest. This little bugger emits an enzyme that dissolves gluten in wheat, as little as 2-3% of the grain in such a condition may render the whole grain lot unacceptable for baking, experts say.

Whilst the Russian and Brazilian governments are understood to be attempting to broker a wheat for pork deal between the two countries, Brazilian flour millers are understood to be reluctant to take Russian wheat for similar reasons.

CBOT Soybeans Couldn't Go To USD15+ Could They?


July soybeans closed at $11.47 ½, up 19 ½ cents. The main driving force in the current market is demand, nearby China are still buying way too many US beans for the supply/demand equation to be comfortable. The USDA cut US ending stocks from 165 million bushels to 130 million earlier this week, that is the tightest ending stocks since 2003. Yet already that looks optimistic, things are shaping up to get way more tighter than even that. Stocks to usage is 4.3%, that is the tightest since 1968, and China just keep coming back for more. They bought 132,300 MT old crop and 178,000 MT new crop according to the USDA today. Export sales for the last four weeks are double what they were a year ago. The US will run out of soybeans to sell at this rate long before the late-planted new-crop becomes available. Ending stocks are currently projected to be 130 million bushels, more than a third less than a year ago. And physical stocks got so tight then that the September contract moved up 274 cents on the last day of trade. Where prices will go then is anybodies guess. $15...$18...$20... come on now, you are taking the pi$$? No, I wouldn't be surprised. Forget how many new crop acres will be planted, it's irrelevant. If you want soybeans prior to next harvest you are going to have to pay. Handsomely IMHO. But what do I know?


July corn closed at $4.28 ¼, up 2 cents. Weekly export sales and actual export shipments were very strong for corn today. Physical exports were record large for the current marketing year at 1,272,300 MT. Wet weather is expected to continue for the next few days before things dry out Sunday, potentially for a full week of relatively dry conditions. The later the crop is planted though, the more it is at risk from lower yields and early frost potential.


July CBOT wheat finished at $5.93 ¼, up 4 ½ cents. Weekly export sales were poor, but the global outlook for production in 2009 is well behind a year ago. Crops in Europe, Ukraine, Russia, the US, Canada are all certain to be down. Plus the outlook for longer term production in Argentina and Australia is far from certain. These are the main wheat exporting nations of the world. Nobody is expecting significantly higher output in 2009, it's all going downhill.

EU Wheat Continues To Nudge Higher

EU wheat futures nudged a little higher yet again Thursday with November Paris milling wheat trading up EUR1.25 at EUR156.00/tonne, and London November feed wheat closing up GBP0.50 at GBP130.50/tonne.

Prices had been lower for much of the day, following weaker outside markets, but a report from Strategie Grains trimming EU soft wheat production for 2009/10 to 128.9 MMT, 1.7 MMT below their April estimate got the market thinking.

There is no doubt whatsoever that EU and global production will be sharply lower in 2009, it's just a question of by how much.

Much of the Strategie Grains' losses are due to dry conditions in Eastern Europe. There will also be some spillover losses in Ukraine and the Black Sea areas of Russia.

Meanwhile wet weather dogs plantings in the US for spring wheat, and drought is seen cutting Argentinean seedings substantially.

eCBOT Close, Early Call

the overnights closed lower with beans down 6-7 cents, corn down 2-3 cents and wheat off 7-8 cents.

A stronger dollar and weaker crude were largely behind the negative close. Crude is around $1 lower on ideas that the market might be getting a little carried away with hopes of a economic recovery anytime soon. US retail sales for April were down yesterday and OPEC revealed that they had been pumping crude at almost a million barrels/day in excess of their agreed quota. Exactly why that should surprise anyone is another matter.

Weekly export sales for corn were strong, with almost a million tonnes of old crop changing hands. Soybean sales were also fairly decent, with China gain booking both old and new crop. Wheat sales were poor.

Weekly export shipments for corn were a marketing year high.

Japan bought 86,000 MT of wheat in a routine tender, most of it US origin.

Reports that Egypt has impounded some Russian wheat saying that it is "unfit for human consumption" has caused a bit of a stir and may mean a bit more business going away from the Black Sea, but it's early days on that front yet. Russia said that they didn't realise that it was supposed to be fit for human consumption and that they thought it was just Egyptians that were gonna to eat it. Nah, they didn't I made that last bit up.

The dollar is firmer as US weekly jobs data showed 637,000 new claims.

US weather seems finally forecast to improve starting Sunday and continuing all next week. Eastern Corn Belt farmers need a week of drying to get back into their soggy fields for aggressive planting, says Allen Motew of QT Weather.

Early calls for this afternoon's CBOT session: Corn 2 to 4 lower, Soybeans 5 to 6 lower, Wheat 8 to 10 lower.

USDA Export Sales: China Have Not Left The Building

Today's USDA weekly export sales report confirms that China are still buying US soybeans, putting further pressure on already tight US soybean stocks.

For the period May 1-7, 2009 export sales came in as:

Soybeans: 401,900 MT old crop and 353,000 MT of new crop. China took 132,300 MT old and 178,000 MT new. Expectations were for sales of 650-750,000 MT old & new combined.

Corn: 936,800 MT old crop and 246,000 MT new crop against expectations of 800k-1 MMT combined.

Wheat: just 102,600 MT old crop and 131,500 MT new crop. Expectations were for 250-400,000 MT.

Actual exports for the week were 442,200 MT for soybeans, with 176,000 MT heading for China. Corn exports were record large for the current marketing year at 1,272,300 MT. Wheat exports were so-so at 311,100 MT.

The bean sales were solid, and the continued presence of China will undoubtedly add underlying support. Corn sales were robust yet again, wheat sales continue to disappoint. Record large corn exports are impressive at this stage in the campaign.

Strategie Grains Lowers EU Wheat Estimate

Strategie Grains have lowered their EU wheat (including durum) production estimate for the coming season by 2.1 MMT from April's estimate to 137.1 MMT, citing dryness in Eastern Europe.

Soft wheat production is now seen 1.7 MMT lower than last month at 128.9 MMT, a reduction of 8% on the 140 MMT produced a year ago. Durum wheat output is now seen 16% lower than last year at 8.2 MMT.

Barley output is now forecast at 61.2 MMT (down 7%) and corn production at 58.6 MMT (6% lower than a year ago).

Nogger's Thought For The Day....

This one came to me in the shower this morning. Yes, I really am that sad that instead of thinking of the incredibly foxy Sarah Beeny coming round to check out my hard hat, I was idly thinking about wheat. Our massive wheat crop of 17.5 MMT or whatever we think it was in 2008, was that 17.5 MMT off the combine?

If it was then we will have unwittingly exported a sizable quantity of that up the chimney. If the entire UK crop averaged, say 18% moisture, and there was stacks of it cut in the 20's, then that's half a million tonnes of wheat that doesn't exist any more. Just wondering, no doubt somebody will email me the answer during the course of the day.

Russian Grain Exports Latest

Russia will export a record amount of grain this agricultural year, the president of the Russian Grain Union said on Tuesday.

"We expect that before July 1 we'll export over 20 million metric tons of grain and maybe even 21 million," Arkady Zlochevsky said, adding that this would be a record for Russian grain exports.

Russia's previous grain exports record was reached in the 2002-2003 agricultural year when the country exported 15.8 million metric tons of grain. Last year, Russia exported 13.6 million metric tons of grain. As of Tuesday, Russia had exported over 17 million metric tons.

Russia is the world's fourth largest grain exporter after the United States, the European Union and Canada.

"Our aim is to reach at least second place in the coming years," Zlochevsky said, adding that this season Russia had started supplying grain to Japan and was holding negotiations on grain exports to Brazil.

Zlochevsky wasn't quite so cocky when it came to the issue of Russian wheat being impounded by the Egyptian authorities as "unfit for human consumption" dismissing the whole thing as "an attempt to play with prices".

"We expect to export as much as 21 million tons of wheat this year, much of it unfit for human consumption," doesn't have quite the same impact methinks.

Crude Oil Drops As OPEC Exceeds Quota

Crude oil fell late Wednesday after it was revealed that OPEC members exceeded production quota by almost a million barrels/day during April.

OPEC also forecast that global consumption will fall by 1.57 million barrels/day this year - 150,000 barrels/day more than predicted in April.

Crude fell to close at $58.02/barrel on the news, slightly more than $2 below the highs earlier in the week when crude hit $60.08, its highest level for six months.

Data from the US Energy Dept confirmed Tuesday's news from the API that crude inventories fell last week, by 4.63 million barrels, whilst gasoline stocks fell by 4.15 million barrels.

A US Commerce Department report said that retail sales fell 0.4% last month, denting hopes that an recovery is on the way which would aid demand for crude in the world's largest economy.

In early trade Thursday morning crude is 41 cents easier at $57.61/barrel.

CBOT Closing Comments


July soybeans finished at $11.28, up 10 ½ cents. Some of this could be attributed to spillover strength from Tuesday's USDA report with regard to tight old-crop stocks. Generally steady to firmer crude oil was also supportive. The Buenos Aires Grain Exchange reduced their estimate yet again for Argentine soybean output, this time by 1.2 MMT from last week to 32.8 MMT. Tomorrow’s export estimates for soybeans are for 650-750,000 MT. The US weather forecast is wet again for the next few days but drier next week, which should finally enable some fieldwork to take place.


July CBOT wheat closed at $5.92 ¾, up 2 cents, whilst July MGEX spring wheat ended at $7.04 ¾, up 7 ¼ cents. Spring wheat planting conditions are still far too wet in top producing state of North Dakota. With only 13% of the crop in the ground as of last Sunday, compared to 78% this time last year, time is running out and maybe up to a million acres of spring wheat won't even get into the ground according to some analysts. Yield potential is already starting to fall away, if it isn't in by the end of the month then there is no point planting at all is what many are saying. Meanwhile Argentine plantings are also being badly affected by drought. The crop there for late-2009 is now only seen at 8.7 MMT according to the Buenos Aires Grain Exchange, that is 2.3 MMT below the USDA's estimate yesterday and 6.3 MMT below what was anticipated just a couple of months ago. Export sales numbers for tomorrow’s USDA report are estimated at 200-450,000 MT.


July corn closed at $4.26 ½, down 1 cent. Wet weather continues to dog plantings, but a drier pattern may emerge next week which should help US farmers to advance fieldwork. Export sales estimates for corn for tomorrow’s report are 800,000-1.0 MMT. Crude oil added underlying support for corn today, as did yesterday's bullish ending stocks data from the USDA.

EU Wheat Closes Higher

EU wheat futures closed higher Wednesday with November Paris milling wheat up EUR1.25 at EUR154.75/tonne, and London November feed wheat up GBP1.00 at GBP130.00/tonne.

The London market has rallied steadily since mid-April as attention begins to focus on sharply lower production prospects in 2009.

Increased consumption from the bioethanol sector is also on farmers minds for new-crop months as many dig their heels in thinking that if they have carried old-crop this far then why not a little longer.

Certainly, with a spread of GBP10/tonne between July and November London wheat it looks like a no-brainer unless you need the cash or the space. I don't have the exact figures to hand, but I wouldn't mind betting that this is the first time in history that we have seen a carry of that magnitude between old and new-crops.

News that Egypt has problems with Russian wheat, having impounded a cargo as "unfit for human consumption" may also provide a little window of opportunity for EU wheat.

Weather problems in the Black Sea persist, with talk of lower yield potential in Ukraine & Russia.

The Argentine crop is going into extremely parched earth after a year-long drought. Plantings are called around 18-20% lower, and the Buenos Aires Grain Exchange now sees the end-2009 crop at just 8.7 MMT. Predictions just a couple of months ago were 15 MMT.

Egypt Quarantines Russian Wheat

Media reports suggest that the state-owned Egyptian wheat buyer GASC has ordered the seizure of all Russian wheat consignments in the country after a cargo at the Egyptian port of Safaga was said to be "unfit for human consumption".

More than half of Egypt's import requirements have been coming from Russia or Ukraine in 2008/09. Earlier in the marketing year there were also problems with Ukrainian wheat for failing to meet contractual standards.

Egypt is the joint largest wheat importer in the world along with Iran, and is expected to import around 8.5 MMT in the current marketing year.

Russia said that they didn't realise that it was supposed to be fit for human consumption and that they thought it was just Egyptians that were gonna to eat it!

eCBOT Close/Early Call

The overnight grains closed sharply higher following yesterday's bullishly construed stocks and crop production data from the USDA, with a weak dollar and firm crude oil also adding support.

Nearby beans closed around 15 cents firmer, with corn around 6 cents higher and wheat up 3-4 cents.

Old crop soybean ending stocks were cut from 165 million bushels last month to 130 million. That is the tightest stocks in the past five years, stocks to usage is now 4.3%, the tightest since 1968. That's a pretty scary number and shows how little room there is for a crop scare, weather delayed harvest or larger than anticipated Chinese buying. And all of those things look a distinct possibility.

The USDA also lopped a further 5 MMT off Argentine bean production to 34 MMT, some private forecasts have it as low as 31-33 MMT.

For new crop the ending stocks and stock to usage ratio will improve, we may also get another million or two acres of soybeans, but for now everything is about what will happen before we get there.

By contrast, yesterday's numbers show corn stocks tightening in new crop 2009/10, with stocks to use falling to 9.1%, the tightest since 1995/96. Any further weather delays could tighten this number further. Old crop ending stocks were also trimmed 100m bushels to 1.6 billion.

Tomorrow's weekly export sales report will be scrutinised to see how sales are holding up and if China are still buying US beans.

There's not much fresh in the news today for wheat, it's just riding on the coat-tails of beans and corn.

Crude oil is steady ahead of this afternoon's stocks data from the US Energy Dept. Yesterday the API surprisingly trimmed stocks by 3.1 million barrels last week. Analysts had been expecting a 1.4 million barrel increase.

The dollar is weaker following hopes of a recovery and a renewed appetite for risk. Comments in the FT that the US may lose it's triple-A credit rating also got the market a little spooked.

Early calls for this afternoon's CBOT session: beans up 10-15 cents; corn up 5-7 cents; wheat up 3-4 cents.

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Sainsbury's: Supporting British Agriculture (My Arse)

Following hot on the heels of record profits from Tesco, Sainsbury’s have weighed in with another shining example of exactly how hard they are trying to “help” British agriculture by absorbing costs themselves, unveiling an 11% increase in annual profits to £543 million.

The profits come on the back of a 5.7% rise in sales in the 12 months to the end of March to £20.4 billion.

That's right profits have doubled at the rate of sales as we all pull together in these difficult times.

Sainsbury's chief executive Justin King, bless his little “cheap and cheerful” socks, is in line for a £5 million bonus on the back of it.

I don’t suppose that Justin will be needing to pay a visit to the “Feed Your Family For a Fiver” aisle himself just yet then? Maybe he has his own special "Feed Your Family For Five Million" aisle:

Pass me another gold-plated nymph darling, this one's full

Dollar Declines On Renewed Risk Appetite

The dollar has slumped to multi-week lows against just about every major currency this morning as a renewed appetite for risk re-enters the market.

A story in the FT suggesting that the US could lose it’s AAA credit status hit the greenback, amidst optimism that the global slump might be easing.

The dollar fell to a seven week low of $1.3721 against the euro and a hovers around a cent below yesterday’s 17-week low of $1.5350 against the pound.

Crude Oil Hits USD60/Barrel

Crude oil hit $60.08 yesterday, it's highest level since November, before falling back slightly to settle at $58.85/barrel.

It's back up again this morning, 83 cents higher at $59.68/barrel, on a combination of a weak dollar and economic recovery optimism.

All eyes will be on the US Energy Dept's stocks data due out later this afternoon, after the American Petroleum Institute surprised the market yesterday by announcing that crude inventories fell 3.1 million barrels last week. Analysts had been expecting a 1.4 million barrel increase.

Could China Really Save The World?

Could This Be The Start Of Something Big? Or just another false dawn? It's an interesting one to call, but could China really save the world? They certainly appear to be giving it their best shot.

Their government's 4 trillion yuan ($586 billion) stimulus package is sparking signs of the green (bamboo) shoots of recovery in the world's third largest economy. China’s retail sales rose a surprise 14.8 percent in April from a year earlier, data out today reveals.

As well as re-building the country's entire infrastructure including bridges, roads, railways, oil pipelines, irrigation networks etc, they also plan to build up domestic soybean and corn reserves reserves.

By buying 7.5 MMT of soybeans (which incidentally is almost half of their entire national production) off local farmers, they are pumping cash into the rural economy. That leaves a lot less soybeans to go round for the domestic crushers who are busy importing beans like there is no tomorrow.

China will import 37.5 MMT of soybeans in 2008/09 (up from the 36 MMT estimated in April), rising to 38.1 MMT in 2009/10 the USDA said yesterday. In April alone they imported 3.71 MMT, and May in imports could reach an all-time record 4.2-4.6 MMT according to one local analyst.

And much of that volume is coming from the US, sales since Sept 1st to China are up 41% the USDA said yesterday.

Meanwhile global production is falling, down to 212.8 MMT say the USDA, from the 218.8 MMT forecast a month ago and the 221.1 MMT harvested last year, largely due to reduced output from Brazil and Argentina.

Argentine will produce just 34 MMT this year according to the USDA, and even that estimate may prove optimistic when all of the crop is finally harvested with some private estimates in the region of 31-33 MMT. A far cry from early season hopes of a 50 MMT record crop.

And in addition of course there are political problems aplenty in Argentina, with farmer strikes and blockades an ever present threat. That leaves Brazil and the US as very much preferred suppliers.

Consequently the USDA yesterday dropped their US old crop ending stocks estimate to 130m bushels from 165m last month, the tightest ending stocks since 2003. More importantly than that stocks to usage is 4.3%, that is the tightest since 1968.

I had one here a minute ago

I'd like to buy some soybeans please Mr US Shopkeeper. Certainly Sir....

CBOT Closing Comments


July soybeans closed at $11.17 ½, up 1 ½ cents. Old crop beans finished higher and new crop lower, that was no great surprise. The USDA dropped old crop ending stocks to 130m bushels from 165m last month. That is the tightest ending stocks since 2003, stocks to usage is 4.3%, that is the tightest since 1968. With China constantly lurking in the wings this season due to various Argentine problems, there is no margin for error in these numbers. If China maintains it's aggressive buying policy throughout May (which looks highly likely), and possibly into June, then there is a real danger that US soybean supplies could run out before new crop becomes available. This is especially of concern considering that plantings are running well behind schedule.


July corn closed at $4.27 ½, up 6 ¼ cents. Corn ending stocks are predicted to decline 29% from the 2008/2009 estimate, exports are expected to increase by 9% and ethanol usage is expected to increase by 8.6%. Stocks to use for new crop is the tightest since 1995. That's all pretty bullish. Late plantings due to wet weather are also a cause of concern. Last night's USDA crop progress shows that corn plantings are still lagging at 48% done compared to 71% normally.


July CBOT wheat closed at $5.92 ¾, up 2 cents. There wasn't a lot of fresh news for wheat in today's USDA report - as expected. US winter wheat production fell compared with last year maybe a tad more than expected. The survey-based forecast of winter wheat production is down 20 percent with sharply lower yields expected in the Southern Plains on extended dryness and early April freeze damage. They pegged EU-27 wheat production lower than previously at 138.24 MMT, and cut Argy wheat production in line with other trade estimates to 11 MMT.

EU Wheat Ends Mixed

EU wheat futures closed mixed Tuesday with November Paris milling wheat down EUR0.75 at EUR153.50/tonne, and London November feed wheat closing up GBP1.00 at GBP129/tonne.

The market was struggling for direction and relying on this afternoon's USDA report to supply it.

EU-27 wheat production was seen down at 138.24 MMT, a sharp drop on last season and one of the lowest official estimates yet.

US winter wheat production was also seen lower at 1.502 billion bushels, almost 20% down on 2008's 1.868 billion bushels.

Argentine 2009 production was pegged at 11 MMT, much lower than earlier estimates, although above 2008's drought-ravaged output of 8.3 MMT. This is still well below recent average production of 15-16 MMT.

A stronger euro and pound against the US dollar was negative.

USDA: US Soybean Production

Here's a quick resume of the salient points with regards to US soybean production and demand for the coming season:

Soybean production is projected at 3.2 billion bushels, up 236 million from 2008/09 reflecting a small increase in harvested area and a trend yield of 42.6 bushels per acre. Soybean supplies are projected at 3.3 billion bushels, up 5 percent from 2008/09 as smaller beginning stocks partly offset increased production.

Soybean crush for 2009/10 is projected to increase 2 percent to 1.675 billion bushels reflecting a small increase in domestic meal use and higher exports. Domestic soybean oil consumption is projected to increase 1 percent as biodiesel expansion is partly offset by a small decline in food use. Soybean oil used for biodiesel production is projected at 2.2 billion pounds, up 300 million from the revised 2008/09 estimate of 1.9 billion.

Reduced South American supplies, due to drought in Argentina, Paraguay, and southern Brazil, are projected to push U.S. soybean exports to a record 1.26 billion bushels. Ending stocks are projected at 230 million bushels, resulting in a relatively low stocks-to-use ratio at 7 percent.

USDA: US Corn Production

Here's the gist of what the USDA had to say today about US corn production and demand in the coming season:

Corn production for 2009/10 is projected at 12.1 billion bushels, down 11 million bushels from 2008/09 as lower plantings more than offset higher expected yields. Harvested area is projected at 77.8 million acres based on historical abandonment and derived demand for silage. The yield is projected at 155.4 bushels per acre, 1.5 bushels below the 1990-2008 trend based on the slow pace of planting in the eastern Corn Belt as reported in Crop Progress. The projected yield assumes a mid-May planting progress well below the 10-year average and just below last year’s delayed progress.

Corn supplies, projected at 13.7 billion bushels, are down 35 million from 2008/09. Lower 2009/10 beginning stocks reflect this month’s 50-million-bushel increases in both ethanol corn use and exports for 2008/09. Total U.S. corn use for 2009/10 is projected up 3 percent from the current year with higher expected food, seed, and industrial (FSI) use and exports more than offsetting a decline in projected feed and residual use. FSI use is projected 7 percent higher with a 350- million-bushel rise in ethanol corn use accounting for most of the increase.

Ethanol use, at 4.1 billion bushels, reflects the rising Federal biofuels mandate and improved blending incentives as higher gasoline prices increase demand for ethanol. Ethanol producer returns, however, will remain under pressure as excess production capacity weighs on producer margins. Exports are projected up 9 percent as world corn trade and feeding are expected to recover modestly in 2009/10, partly reflecting a reduction in global supplies of low-cost feed quality wheat. Domestic corn feed and residual use is projected down 2 percent with reduced animal numbers and increased availability of distiller’s grains. U.S. corn ending stocks for 2009/10 are projected down 28 percent to 1.1 billion bushels as use is expected to exceed production by 470 million bushels.

USDA: US Wheat Production

Here's the bones of today's USDA report in relation to US wheat production for the coming season:

Total production is projected at 2,026 million bushels, down 19 percent from last year on reduced area and lower expected yields. The survey-based forecast of winter wheat production is down 20 percent with sharply lower yields expected in the Southern Plains on extended dryness and early April freeze damage. Spring wheat production is also expected lower with less intended acreage as reported in the Prospective Plantings and significant planting delays, especially in North Dakota and Minnesota where yields are expected below trend levels. Durum and other spring wheat production is projected at 524 million bushels, down 17 percent from 2008/09, based on 10-year harvested-to-planted ratios and trend yields adjusted for late seeding in the Northern Plains.

USDA Report Reaction/Early Call

Old crop carryout was lower than trade expectations for corn & wheat and right on the money for soybeans.

New crop carryout was above expectations for corn, but below trade guesstimates for beans and wheat.

The winter wheat production number was below trade ideas too at 1.502 billion bushels, almost 20% down on 2008's 1.868 billion bushels.

Also of interest they pegged EU-27 wheat production lower than previously at 138.24 MMT, and cut Argy wheat production in line with other trade estimates to 11 MMT.

The Argy soybean crop was dropped to 34 MMT, again now in line with other trade ideas.

Early calls for this afternoon's CBOT session are: Corn called Up 6-8c; Wheat up 5-7c; Soybean up 10-15c.

USDA Snapshot

In today's eagerly awaited USDA S&D and crop production report here's what we got:

Wheat Production
USDA Avg Est Range
All Wheat 2.026 2.091 1.994-2.145
Winter Wheat 1.502 1.526 1.446-1.550
2008/09 End Stocks
Corn 1.600 1.711 1.645-1.879
Beans 0.130 0.130 0.086-0.148
Wheat 0.669 0.687 0.655-0.700
2009/10 End Stocks
Corn 1.145 1.383 1.129-1.720
Beans 0.230 0.239 0.148-0.528
Wheat 0.637 0.653 0.570-0.742

eCBOT Close

The overnights closed higher with beans around 10 cents firmer, with corn & wheat up around 3-4 cents.

Chinese markets closed firmer as the government there continues it's aggressive domestic purchasing policy. Yesterdays early sell-off on the back of the first confirmed mainland case of "swine flu" seems to be now being seen as a knee-jerk reaction.

Last night's USDA crop progress shows that corn plantings are still lagging at 48% done compared to 71% normally. The figure was however in line with expectations. Of the eighteen top producing states, only three, Iowa, Minnesota and Nebraska, are ahead of the respective five year averages.

Soybeans are now 14% planted as of Sunday night, pretty much bang in line with expectations, but also well behind the 25% normal pace.

Winter wheat conditions fell 1% to 46% good to excellent. Spring wheat planting is well in arrears at 35% done, compared with 78% normally at this time of year.

All eyes will be on the USDA at 13.30BST to see what they have to say re ending stocks and wheat production.

Old crop soybean carryout could be this afternoon's hot potato, with the average trade guess coming in at 130 million bushels, down from 165 million last month. Some punters are calling it lower than that though, the lowest of the trade estimates is just 86 million. A number like that would be seen as very supportive for old crop.

Perhaps the other main number that could spring a surprise would be winter wheat production. The average trade guess is 1.526 billion bushels, that's 18% lower than last year, although some peg it as much as 22.5% lower.

All will be revealed at 13.30, meanwhile here's a reminder of what is expected:

Wheat Production
Avg Est Range
All Wheat 2.091 1.994-2.145
Winter Wheat 1.526 1.446-1.550
2008/09 End Stocks
Corn 1.711 1.645-1.879
Beans 0.130 0.086-0.148
Wheat 0.687 0.655-0.700
2009/10 End Stocks
Corn 1.383 1.129-1.720
Beans 0.239 0.148-0.528
Wheat 0.653 0.570-0.742

German Dairy Farmers Threaten Strike

Of course it's not just over here that the dairy industry is having trouble, our Germanic chums are also in the same u-boat.

The Federation of German Dairy Farmers, or BDM, says that a third of the country's milk farmers could go under if prices continue to fall.

"We estimate that by the end of the year, 25 to 30 percent of the German milk farmers could disappear from the market," BDM president Romuald Schaber told Germany's Die Welt newspaper.

"We will fight (them on the beaches?). Stopping deliveries is an option for us," said Schaber, who is also president of the European Milk Board.

I wonder if he's thought of invading Poland as a possible solution?

UK Meat Retailer Crawshaw Group Reports Decent Year

UK meat retailer Crawshaw Group PLC, whose business comprises a chain of butchers shops situated throughout Yorkshire, Lincolnshire, Nottinghamshire and Humberside have turned in a decent set of figures despite the recession.

Sales for the year rose to just over £16m, up £1.5m (+10%) versus the comparable prior year period. Gross profit was up 41% to £6.8m. Trading was strong during the period under review, they say, as good quality food available locally at a value price remained popular with our customers.

Two fingers to Tesco, Wal-Mart et al says I.

Could The US Run Out Of Soybeans?

China continues to import soybeans at an astonishing rate with latest estimates showing that they imported almost 14 MMT in the first four month of 2009, 36% higher than a year ago, according to official customs data.

April imports alone were 55.2% higher than a year ago at 3.71 MMT, as the government continued to buy beans aggressively on the domestic market hoping to stimulate the economy and maintain growth. This keeps forcing Chinese crushers to look to import.

How long can they keep this up for remains the big question.

A little while longer yet seems to be the answer, as May imports could reach an all-time record 4.2-4.6 MMT according to one local analyst.

Buying at this kind of pace, particularly if much of the business keeps going America's way, looks like continuing to support the nearby market even if US plantings end up increasing by another 2-3 million acres.

They're not physical beans. If spot beans is what you want then you'll have to pay up. With US ending stocks already tight, we will know by how much later today, we could be in for a very interesting summer.

Could the US run out of soybeans? It's not that unthinkable, they very nearly did last year. As I put on the blog yesterday limitless and expiring September 2008 soybeans posted an astonishing gain of 274c on the last day of trading as delivery wasn't an option for short sellers getting squeezed by a lack of physical beans.

And China wasn't taking beans at anything like the current rate then, plus Argentina hadn't just had a crop disaster. Incidentally I read somewhere last night that Argy farmers have already got 50% of their crop sold according to the Rosario Grain Exchange. That would make sense as they probably desperately need the cash and are wary of any further government tinkerings after the June mid-term elections.

Interesting times, as ever.

World Rapeseed Production Lower In 2009/10

Oil World say that global rapeseed production for 2009/10 will fall to 55.0 MMT, from 58.3 MMT in 2008/09.

The fall comes mainly on the back of lower output from Canada at 11 MMT from 12.5 MMT and Ukraine at 1.5 MMT from 2.9 MMT.

EU-27 production is also seen down 0.5 MMT to 18.4 MMT.

World crush is projected sharply higher at 54.6 MMT, up from 51.8 MMT, resulting in lower ending stocks of 5.0 MMT from 7.7 MMT.

Nogger's World Wheat Outlook 2009/10

There is a table down towards the bottom right of this blog detailing world wheat production for the current marketing year and the next one. This table was produced about three months or so ago and needs updating a bit I thought.

So I've been doing a bit of research into what production for the coming season is looking like now, especially amongst the major exporters. Unfortunately the USDA's website seems to be down this morning (maybe this afternoon's figures are being uploaded?), so I can't get the exact details from there of which order this lot line up in currently, so here are today's runners & riders in no particular order:

USA. Produced 69 MMT of wheat in 2008/09. Potential output of HRW for 2009/10 has been affected by lower plantings when prices fell sharply out of bed, plus less than ideal growing conditions across the winter. Drought & a hard freeze at the beginning of April has likely cut yields, in some cases very sharply, on the southern Plains. Spring wheat struggling to get planted in top producing state of North Dakota (35% done, compared with 78% normally as reported by the USDA last night). The IGC say 58.7 MMT against my 57 MMT, I think that the most recent information suggests that even 57 MMT might be a tad high. Even so we are looking at a crop down 10-12 MMT.

Russia. Chipped in with an impressive 63.7 MMT of wheat last season, the highest in post-Soviet history. Planted a similar, if not slightly higher winter wheat area for the coming season, but Mother Nature has not been overly kind. Growing conditions have been drier than last year, especially in the Volgograd district, which boosted production last season with abundant rainfall. Spring wheat production accounts for around 40% or so of the crop here. The IGC recently pegged all wheat production at 52 MMT for 2009/10, 3 MMT less than my earlier estimate, that's another crop reduced by 10-12 MMT.

Ukraine. Huge crop of 25.9 MMT last year, but plantings significantly down for 2009/10 due to the credit crisis. Also had similar weather problems to Russia's Black Sea region with dry conditions and hard frosts potentially harming yields there. Credit problems may also lead to reduced inputs, further lowering yields. A crop of 18.9 MMT is what we can expect according to the IGC, fractionally under my estimate. A fall of 7 MMT for the Ukraine.

EU-27. Produced a bumper 151.7 MMT last year, sharply lower plantings in the UK and several of the Eastern European countries make a repeat performance impossible. Reduced inputs and dryness in some parts could also be a factor, making last season's yields also unlikely as much of the region then had more or less ideal growing conditions. The IGC say 140.7 MMT, against my 139.6 MMT. Either way a drop of 11-12 MMT.

Canada. Another bumper producer in 2008 with 28.6 MMT. Planting less this season in the wake of sharply lower prices and credit problems. Unlike most other places the weather hasn't been too much of a concern here. Spring plantings on track at 20% done. Flooding has affected parts of south-central Manitoba and northern Saskatchewan. The IGC raised their production estimate by 1 MMT to 25 MMT this month, lets go with that as their info is more recent than mine. A drop of 3.6 MMT.

Australia. Produced 21.5 MMT last time round and only just beginning to plant. Very dry conditions in Western Australia (easily the largest producing and exporting state) don't augur too well for a crop prone to drought. It's very early days here with some forecasts saying they might get 22 MMT if Mother Nature plays ball. I wouldn't like to bet much on that thought. I'll calling it unchanged at the best for the time being.

Argentina. As we all know, decimated by drought in 2008 to produce 8.3 MMT. Huge cloud of uncertainty here. Expected to plant around 20% LESS in 2009, and the drought still remains. Credit and political issues also cast a big question mark over what was the world's fifth largest exporter of wheat just two years back. Again, unchanged at best, and they need a 20% improvement in yields to hit that!

So there we have it ladies & gentlemen, a quick re-appraisal of how wheat production seems to be pegging out for the coming season amongst the top exporting nations. Overall a reduction of around 42-46 MMT, without any weather problems in Australia and Argentina.

USDA Crop Progress Report Summary

Monday night's important crop progress report revealed that planting progress for all three major crops continues to lag.

Just 48% of the corn crop has been planted as of Sunday night, they said. That is well behind the five year average of 71%, but in line with traders expectations. Of the eighteen top producing states, only three, Iowa, Minnesota and Nebraska, are ahead of the respective five year averages.

Soybeans are now 14% planted as of Sunday night, pretty much bang in line with expectations, but also well behind the 25% normal pace.

For spring wheat 35% has been planted, compared with 78% normally at this time. North Dakota, easily the largest of the spring wheat producing states, had just 13% of the crop planted, down from 78% last year and the five year average of 74%.

The USDA survey also said that winter wheat conditions fell 1% to 46% good to excellent. The progress report shows 40% of the winter wheat is headed compared to 48% for the five year average.

PANIC!!!!!!! (Again)

Oh my Gawd!

One person in every 1.3 billion of the population of China has been confirmed to have the misnamed disease of swine flu. How significant is that. He's not dead yet, but he looks a bit "peaky". Consumption of pork will plummet overnight.

Sell, sell, sell.

Hang on a minute, melamine poisoning kills more people than that there in your average day.

Buy, buy, buy.

CBOT Closing Comments


July corn closed at $4.21 ¼, up ¼ cents, with traders squaring up ahead of tomorrow's USDA reports. Old crop ending stocks aren't expected to show too much change from last month at 1.711 billion bushels. New crop ending stocks (estimated by the USDA for the first time) are seen at 1.383 billion.


July beans finished at $11.16, up 4 ½ cents on the day, despite having opened sharply lower. The catalyst for the lower opening was the shocking statistic that one student travelling back from the US had been diagnosed as positive for the misnamed disease was enough to spark fears of sharply reduced pork consumption on the Chinese mainland. Of far more import is the USDA's estimate of old crop ending stocks tomorrow. The average trade guess is 130 million bushels, down sharply from 165 million last month, but not as sharply as some would suggest. Figures under 100 million are being bandied about as possible. The usually ever-cautious USDA wouldn't go that low would they?


July CBOT wheat closed at $5.90 ¾, down ¼ cent. Wheat was a bit of a man on the sidelines today. The big news today was all about soybeans, and corn to a lesser degree. Tomorrow's USDA stocks data is nowhere near as important for wheat. For the record though all Wheat ending stocks on June 1 are 0.688 billion bushels for 2008/2009.

Tomorrow is all about old crop soybean ending stocks.

EU Wheat Futures End Lower After Recent Rally Seen Overdone

EU wheat futures closed lower Monday on ideas that the recent rally might have been overdone.

November Paris milling wheat closed down EUR1.75, at EUR154.25/tonne, and London November feed wheat ended down GBP0.50 at GBP128.00/tonne.

The outside markets were a little more cautious today, which seemed to spill over into the grains. Crude and equities were lower on a note of profit-taking and ideas that nobody wants to overstretch themselves and get too carried away.

Still, the outlook for a smaller EU wheat crop, particularly in the UK and many areas of Eastern Europe is underpinning the market.

Uncertainty certainly abounds in other parts of the world too. The US is nailed-on to see sharply lower production in 2009. The Argentine crop will see the smallest planted acreage in 100 years and there are already concerns about early plantings in Australia. Output in Canada is also expected sharply lower.

Throw lower production from Russia and Ukraine into the mix and that is just about all the top exporting nations covered, all expecting or potentially suffering lower output in 2009.

Meanwhile farmers remain reluctant sellers, and who can blame them, with carry premiums screaming "don't sell, sit on it".

eCBOT Close, Early Call

eCBOT grains closed lower with beans around 16-17 cents easier, and corn & wheat off around 3 cents or so.

The first confirmed case of swine flu in mainland China spooked the market a little this morning. The Chinese national travelled from St Louis to Tokyo, then to Beijing and finally landed in Chengdu on Saturday.

It seems that, having faced severe criticism in the past for failing to act quickly on health scares, the Chinese government were swift to pack the guy (a student - what a surprise) off to an infectious diseases hospital in Chengdu and quarantine the rest of the passengers on his flight.

It sparked fears of reduced pork consumption, according to some of the media newswires, prompting a market sell-off this morning.

Of far more pressing importance to my mind is tomorrows USDA production and S&D numbers. I think that at least some of this morning's decline can be attributed to profit-taking and book-squaring ahead of that.

The first number to look for tomorrow will be old crop 2008/09 bean ending stocks, with the average trade guess saying they will fall to 130 million bushels. In the wake of the recent very strong pace of Chinese exports some are saying that this figure could fall below 100 million. That would be very tight indeed, especially given the prospect of late plantings equalling a late harvest.

Remember how tight things got last September? Limitless and expiring September 2008soybeans posted an astonishing gain of 274c on the last day of trading as delivery wasn't an option for short sellers getting squeezed by a lack of physical beans.

Another number of interest will be the latest winter wheat production estimate in the light of last week's crop tour assessment of the Kansas crop. The average trade guess is 1.526 billion bushels, down sharply from 1.868 billion a year ago.

Before we get that information, tonight we will have the planting progress estimates with corn expected to be around 45-50% complete, up from 33% a week ago, but still well behind the five year average of 72% done. Soybeans are expected around 14-15% complete.

Of more interest than that may be spring wheat plantings, particularly in North Dakota which had only manged to get 3% of its planting done by last weekend, compared to 51% normally at this time of year.

Outside market influences are bearish today with crude oil $1.37 lower and Wall Street expected to open a little easier as investors turn cautious on recovery prospects.

Early calls for this afternoon's CBOT session: Corn futures expected to open 2 to 3 lower; soybeans 16 to 18 lower; wheat 3 to 5 lower.

USDA Report Expectations

We get the USDA's latest musings on production and supply & demand tomorrow at 13.30BST, here's what the trade is expecting:

Wheat Production
Avg Est Range
All Wheat 2.091 1.994-2.145

2008/09 End Stocks
Corn 1.711 1.645-1.879
Beans 0.130 0.086-0.148
Wheat 0.687 0.655-0.700

2009/10 End Stocks
Corn 1.383 1.129-1.720
Beans 0.239 0.148-0.528
Wheat 0.653 0.570-0.742

Irish Farmers Sue Boss Hogg Over Dioxin Scare

At least two Northen Irland farmers are suing the company at the centre of last year's dioxins in feed scare which led to Irish pork being removed from sale and banned from import by many countries.

Millstream Recycling, owner & boss Robert Hogg, face compensation claims potentially in excess of €1m for negligence and breach of contract, according to a report in the Sunday Times over the weekend.

A different bloke entirely

Argentina To Plant Smallest Wheat Crop In A Century

Argentine farmers will plant the country's smallest wheat crop in a hundred years this season, according to the Buenos Aires Grain Exchange.

How the mighty have fallen, the world's fifth largest wheat exporter just a couple of years ago, may be forced not only to import wheat but also corn and beef this year the country's largest farmer Gustavo Grobocopatel said in an interview recently.

Farmers there are caught in a "perfect storm" of falling incomes, exceptionally dry weather and political and economic disincentives to plant wheat.

Last season's wheat crop was decimated by drought falling to 8.3 MMT from 16 MMT in 2007. That production came off a seeded area of 4.5 million hectares. This season the exchange predicts farmers will plant just 3.7 million hectares with wheat in 2009. Some analysts are saying that even that is optimistic and that 3.5 million acres or less could get seeded.

"I’m pretty certain I won’t be sowing anything (this year)," said one farmer in the major producing area of Buenos Aires province. Adding that "I’ve never seen so many farmers decide not to sow, or to reduce planting so sharply."

Farmers have seen their incomes reduce sharply from not just a failing wheat crop, but also sharply reduced output of soybeans and corn this season. The corn harvest is expected down 42% this year, and the soybean crop 26% lower, according to the exchange. With a general lack of credit many farmers simply don't have the cash to plant, even if they wanted too.

It's a major concern also that those that do go ahead with seeding intentions will be forced to cut back on fertiliser and pesticide inputs.

"We are slowly going back to the era of the caveman," said the general manager of Granar SA, a Buenos Aires brokerage business in an interview with Bloomberg. "The greatest danger here is that we are going back to the times when farmers cut costs instead of thinking about productivity."

The Kirchner's administration's tinkering with limits on beef and wheat exports is also providing a reason for farmers not to plant. It's a kind of "why grow it when we know we won't be allowed to export it, or taxed heavily if we are" mentality.

It certainly seems likely that Argentina may well become a net importer of wheat by 2010 as at the beginning of the current 2008/09 season there were carryover stocks of around 2.5 MMT from 2007's bumper production. Ending stocks this time round look like being close to zero.

Australian Wheat Plantings Delayed By Dryness

It's becoming an all too familiar story down under, with lack of rainfall causing delays to planting this season's winter wheat crop across much of the country.

Western Australia state, which typically produces around 40-45% of the nation's total wheat output, has seen virtually no rain so far this month.

The warm, dry weather threatens to break records in Perth, where not a drop of rain has fallen for 18 days and temperatures are sitting 4.4C above the average 22.3C.

If forecasters are right and it doesn't rain this week, the capital will break the 21-day record on Friday for no rain, marking the driest start to May on record.

In fact the whole of southern Australia saw virtually no rain last week, the culprit is a very large and strong high pressure system that has lingered in the bight for nearly a week, says an Elders. The high will finally weaken early next week allowing cold fronts to bring showers and cooler weather to coastal areas of southeastern Australia by about Wednesday. Unfortunately, there remains no suggestion of any inland rainfall of note on the horizon, they warn.

It's a worrying start for farmers who have seen their wheat crops slashed by drought in two of the last three seasons.

One said that his farm, where he grows canola, wheat, barley and lupins, was "dry as chips". Adding that there had been no rain for months on his paddocks in Kunjin, 217km southeast of Perth.

"Without significant rain in the next few weeks we will have to look at changing our seeding program for the rest of the year," he said.

Chicago Wheat: Review Of The Week

May CBOT wheat closed at $5.80 ½ up 21 ½ cents on the day and 23 ¼ higher on the week, to finish at it's highest levels since late January.

Assorted weather problems in the US and elsewhere around the world, plus firmer outside markets and spillover strength from corn & beans all helped wheat push sharply higher. A broadly weaker dollar was also seen as supportive for the entire US grains complex.

The USDA will report Monday night on US spring wheat planting progress with all eyes on the largest producing state of North Dakota which had only manged to get 3% of its planting done by last weekend compared to 51% normally at this time of year. That's a pretty impressive delay by any standards, particularly for the state that normally accounts for 45% or more the the entire national production.

Meanwhile winter wheat also took a knock this week on news that a crop tour in the US said that production in Kansas, the largest producing HRW state, would come in at 333 million bushels, down from last year’s 356 million bushel crop. Yields were called at 40.8 bushels/acre compared to earlier expectations for 44-46 bu/acre.

That's a lot better than the situation in Oklahoma however with that state's Grain and Feed Association saying that the harvest there will produce only 77.5 million bushels of wheat this year, that is less than half of what the state produced in 2008. Yields will only average 21.24 bushels/acre according to them after the states crop was badly hit by early season drought coupled with a hard freeze at the beginning of April.

Much of the Texas winter wheat crop has been similarly afflicted with one report this week saying that abandonment rates there could be very high this year.

A watchful eye is being kept on developments in Argentina too where the year long drought and government/farmer dispute is seen cutting plantings 18-20%, with many analysts now calling for a Nov/Dec 2009 harvested crop of only around 11 MMT. That might be higher than the 2008 drought-ravaged crop of 8.3 MMT, but it is sharply lower already than earlier calls for a crop of 15 MMT.

Bear in mind of course that at this time last year the Argentine 2008 crop was expected to produce around 15-16 MMT, and look what happened to that!

Chicago Corn: Review Of The Week

May corn closed at $4.14, up 9 ¼ cents on the day and 7 ¾ higher on the week. Rising crude oil, a weak dollar and planting delays in the US were the main concerns for the corn market this week.

Crude oil closed at $58.46/barrel, it's highest weekly close since late November. Ethanol closed higher Friday at 167.5 up 2.2 cents. Meanwhile the dollar shed around 3 cents against the pound and 3 ½ against the dollar over the course of the week.

US planting progress from the USDA due Monday night is expected to show around 45-50% complete, up from 33% a week ago, but still well behind the five year average of 72% done.

The USDA is also out Tuesday with revised production & stocks estimates. Little or no change is expected for old crop corn ending stocks, but the existing weather problems are anticipated reducing 2009/10 stocks to 1.383 billion bushels, in a range of 1.129 - 1.720 billion, compared to 2008/09 ending stocks of around 1.7 billion.

The USDA confirmed 296,000 MT of US corn sold to "unknown" during the session Friday split 176,000 MT old crop and 120,000 MT new crop.

Corn prices have risen sharply in the past few weeks from mid-April lows, and seem to be re-attaching themselves to the energy complex:

Chicago Soybeans: Review Of The Week

July soybeans closed at $11.34 Friday, up 15 cents on the day and 32 higher on the week.

Demand has been the main driving force for beans this week, with weekly export sales of 775,400 MT slanted heavily in favour of old crop, where stocks are already tight, with China booking 197,900 MT of the 654,400 MT total. The remaining sales of 121,000 MT for 2009/10 delivery were mostly increases for unknown destinations (frequently China) at 124,000 MT.

The USDA are due out Tuesday with their revised production and stocks estimates, with the trade on average expecting old crop stocks reduced to around 130 million bushels, from 165 million last month, in the light of the continued weight of Chinese demand. Considering that the previous week's export sales came in at 834,600 MT for old crop alone (of which China took 468,400 MT), there are some who believe that the USDA could reduced old crop stocks below 100 million bushels this coming week.

The bears still keep talking of rumours of Chinese cancellations, maybe they are starting them - somebody must be, but every week they keep failing to appear. Meanwhile China's existing purchases keep floating out of the door. Actual total US exports this week were 386,400 MT - up 38% on a week ago - I wonder if you can guess where the vast majority (225,600 MT) of that was headed?

Normally China would be shopping in South America by now, but of course they have a whole set of their own problems down there in Argentina this year, and whilst the US dollar remains weak the Chinese keep coming back.

Further forward the outlook for beans isn't so ragingly bullish, any further corn planting delays in the US will mean more soybean acres, but we won't have a concrete idea of what those acres might be until the end of June.

Meanwhile, what's that old saying? The trend is your friend:

EU Wheat: Review Of The Week

EU wheat futures closed higher again Friday with Paris November milling wheat finishing up EUR3.00 at EUR156.00/tonne, and London November feed wheat closing up GBP2.50 at GBP128.50/tonne.

On the week Paris November future put on gains of EUR12/tonne and London November contract GBP4.50/tonne.

The gains are quite impressive coming in the wake of a weak dollar. The pound gained 3 cents on the week to close above $1.52, sterling's highest closing level against the greenback since December 17th 2008. The euro also added 3 1/2 cents against the dollar over the course of the week to hit one month highs.

In the UK the May/Nov spread currently offers an impressive GBP11/tonne carry premium, and in Paris a slightly more modest, but still significant, EUR10/tonne.

Dryness in parts of Europe, frost in the Ukraine and excessive wetness in much of the US and Argentina are all seen reducing the 2009 world wheat crop substantially from the bumper 2008 harvest.

In Chicago wheat, corn and soybeans all posted strong performances across the week, with a US crop tour saying that yields in Kansas will be lower than expected. Kansas is the largest producing state in the US, and the one that the trade had been hoping would bail out states like Oklahoma and Texas which seem set for disastrous production this year.

The Oklahoma Grain and Feed Association say that the harvest there will produce only 77.5 million bushels of wheat this year, that is less than half of what the state produced in 2008.

Meanwhile, early season flooding and continued wet and cold weather continues to hamper farmers' attempts to plant the spring wheat crop in North Dakota, the largest US producer, which was only 3% completed as of last Monday compared with 51% on average. There is clearly potential there for plenty of wheat not to get planted at all, and what does to produce lower than anticipated yields.