CBOT Closing Comments


March soybean futures closed at USD9.45, up 2 cents, March soymeal futures at USD280.00, up USD2.60, and March soy oil futures at 37.84, down 0.30 points. Soybeans managed to close up 32 cents on the week. Chinese demand for US soybeans made a possible shift today as they decreased their commitments for 2010/11 soybeans by 57,500 MT. Weekly export sales for soybeans were a marketing year low for the second week running, amounting to just 266,600 MT, below expectations for sales of 300-600,000 MT.


March corn futures finished at USD3.61 ½, down 1 ¾ cents, and May corn futures at USD3.73 ¼, down 1 ¾ cents. Futures closed around 10 cents higher for the week. Argentina announced that they will allow 10 MMT of corn to be exported in 2010 with excellent growing conditions allowing them to provide adequate stocks for their reserves. Crop production reports out of there are getting bigger by the week. Corn sales from the USDA were in line with expectations at 750,100 MT. US markets will be closed Monday in observance of President's Day.


March CBOT wheat futures closed at USD4.86 ½, down 7 cents, March KCBT wheat futures at USD4.94 ½, down 6 ¾ cents, and March MGEX wheat futures at USD5.04 ½, down 6 cents. Futures managed to close the week 2 to 13 cents higher on the various exchanges. Wheat export sales were 548,200 MT for delivery in 2009/10, plus 29,500 MT for delivery in 2010/11, a little above expectations for sales of 300-450,000 MT. China says it is to tighten monetary policy again as they look to slow their rapid growth to keep inflation in check. That could be bearish for commodities in general.

EU Wheat Closing Comments

EU wheat futures closed lower with London March feed wheat down GBP0.80, May down GBP0.95, and Paris milling wheat EUR0.25/0.50 lower.

London wheat set fresh life of contract lows across the board as the euro fell to 9-month lows against the dollar, making UK wheat even less competitive on the export arena.

The EU granted export licenses for 384,000 MT of soft wheat for the week ended Feb. 9th, according to customs data. That brings EU soft wheat exports to date to 10.7 MMT during the current marketing year, down 19% from the 13.2 MMT granted during the same period in 2008/09.

France AgriMer peg the French soft wheat area in 2010/11 at 4.93 million ha, up 3.9% from 2009/10. All wheat output this year looks like being close to 40 MMT, versus 38.7 MMT in 2009.

Overall, EU-27 all wheat production looks set to be around 142 MMT this time round, 2.75% up on last year.

Whilst EU farmers are unhappy with the price of wheat, they are completely demoralised with the price of barley. There may be some problems brewing in some parts of Eastern Europe with wheat production, but generally ample snow cover seems to have prevented too much damage being caused by recent very cold temperatures.

eCBOT Close, Early Call

The overnight grains closed lower, pressured by a strong dollar, with beans and wheat finishing around 9-10 cents easier and corn down around 3 cents.

Weekly export sales for soybeans were a marketing year low for the second week running, coming in at 312,900 MT for delivery in 2009/10, plus net sales reductions of 46,300 MT for delivery in 2010/11. That makes total sales of just 266,600 MT, below expectations for sales of 300-600,000 MT.

For the record China took 191,300 MT of the old crop sales, but decreased 57,500 MT of new crop. Exports came in at 1,199,000 MT, with the vast majority going to China (647,200 MT0.

Corn sales were 743,200 MT for delivery in 2009/10 plus a small 6,900 MT for delivery in 2010/11, in line with expectations of 700-850,000 MT. Exports of 603,800 MT were down 46 percent from the previous week and 23 percent from the prior 4-week average.

Wheat sales were 548,200 MT for delivery in 2009/10, plus 29,500 MT for delivery in 2010/11, a little above expectations for sales of 300-450,000 MT. Actual exports of 448,000 MT were unchanged from the previous week, but still fall a little way short of the required 500,000 MT to meet current USDA targets for the marketing year.

China says it is to tighten monetary policy again as they look to slow their rapid growth to keep inflation in check.

Crude oil inventories data is due for release around 15.30 GMT as Chicago opens, the report has been delayed due to the weather.

Early calls for this afternoon's CBOT session: corn called 2 to 4 lower; soybeans called 8 to 10 lower; wheat called 6 to 8 lower.

Early Predictions On EU-27 Wheat Production For 2010

Using a conglomerate of early forecasts on 2010 all wheat production in the EU from a variety of different sources I've managed to put the following table together:

(MMT) 2009 2010
France 38.7 39.9
Germany 25.2 25.6
Italy 7.0 6.7
Spain 5.8 6.2
UK 14.4 15.5
Czech Republic 4.4 4.3
Hungary 4.3 4.7
Poland 9.8 9.6
Romania 5.2 7.0
Bulgaria 3.6 3.4
Belgium/Lux 1.8 1.9
Denmark 6.0 5.5
Netherlands 1.4 1.3
Austria 1.3 1.4
Sweden 2.3 2.3
Lithuania 1.9 2.2
Slovakia 1.5 1.5
Others 3.6 3.0
Total EU-27 138.2 142.0

Fasten Your Seatbelts, We're Going Sharply Higher

At least that's according to Professor Harald von Witzke of Humbolt University. He says that assuming that oil will be back up above USD100/barrel by 2017 (which seems perfectly reasonable), then we could see wheat prices 70% higher by then, with corn up over 100%.

It is an interesting theory, and not one that I would argue ferociously against. That said, when asked why prices currently don't reflect this, the professor said that the sharply higher levels we saw a few years ago had stimulated increases in production.

Won't that happen again then if wheat goes back to GBP200/tonne?

Maybe we are in for a decade of extreme volatility, where we get these mad price spikes more frequently, followed by deep troughs of despondency as everybody jumps on and off the various bandwagons all at the same time? That wouldn't surprise me in the slightest.

Pig farming I think they call it.

Prof von Witzke's ray of hope

That's Very Naughty

Word is reaching Nogger Towers of a farmer taking a UK feed manufacturer to court, and winning, after claiming that the price he was given for a load of feed was, he thought, a price for the entire load not a per tonne price.

"I'm looking for a price for a 29MT load of 18% dairy nuts please"

"We can do that for £187 sir"

"Booked, send it in"

USDA Baseline Projections

The USDA came out yesterday with their long-term so-called "baseline" projections for crop production and supply & demand. Here's what they had to say for US corn and wheat:

CORN 09/10 10/11 11/12 12/13 13/14 14/15
Acres 86.4 88.0 90.0 89.5 89.5 89.5
Yield (bu/acre) 162.9 160.4 162.4 164.4 166.4 168.4
Production 12.92 12.96 13.45 13.53 13.70 13.86
Domestic Usage 10.88 10.97 11.13 11.32 11.48 11.61
Of which..
Ethanol for fuel 4.20 4.40 4.55 4.70 4.83 4.88
Exports 2.10 2.15 2.20 2.25 2.28 2.30
Ending Stocks 1.63 1.48 1.61 1.59 1.55 1.52
Stocks/usage % 12.5 11.3 12.1 11.7 11.3 10.9
Acres 59.1 55.0 56.0 55.0 53.5 54.0
Yield (bu/acre) 44.4 42.7 43.9 44.2 44.6 44.9
Production 2.22 2.00 2.09 2.07 2.03 2.06
Domestic Usage 1.22 1.25 1.28 1.30 1.31 1.32
Exports 0.88 0.88 0.90 0.90 0.90 0.90
Ending Stocks 0.89 0.87 0.90 0.87 0.81 0.78
Stocks/usage % 42.2 41.2 41.1 39.6 36.8 35.1

CBOT Closing Comments


March soybean futures closed at USD9.43, up 5 ½ cents, March soymeal futures at USD277.40, up USD1.00, and March soy oil futures at 38.14, down 0.13 points. The USDA say that 2010 soybean plantings are forecast at 76.5 million acres, one million lower than in 2009. The delayed USDA soybean export sales report, now scheduled for release tomorrow, are estimated by analysts to be between 300,000 to 600,000 MT. Will Chinese buying still be in evidence? Potential South American output keeps getting bigger, surely China will be changing horses very soon?


March corn futures ended USD3.61 ¼, up 1 ½ cents, and May corn futures at USD3.75, up 1 ¾ cents. The USDA now projects 2010 US corn plantings at 88 million acres, with a crop of 12.96 billion bushels. That is 1.5 million acres more than was planted in 2009, with potential demand from the ethanol fairly and squarely behind the move. Acreage will rise further to 90 million in 2011, they said. The Buenos Aires Grain Exchange raised it's corn production estimate for Argentina to 19.3 MMT from 18.4 MMT. That is now well above the USDA's revised projection of 17.2 MMT released on Tuesday. Export sales estimates for tomorrow range from 700,000 to 850,000 MT.


March CBOT wheat futures closed at USD4.93 ½, down 3 ¼ cents, March KCBT wheat futures were at USD5.01 ¼, down 4 ½ cents, and March MGEX wheat futures at USD5.10 ½, down 4 ¾ cents. The USDA baseline projections now peg the 2010 all wheat area at 55 million acres, with production of 2 billion bushels, that's 54.4 MMT - almost 6 MMT, or 10%, lower than the output of 2009. Despite this reduction US stocks are still very large - indeed they could probably just about manage to feed their own domestic consumption requirements without producing any wheat at all in 2010. Trade guesses for tomorrow's delayed USDA export sales report range from 300,000 to 450,000 MT.

EU Wheat Closing Comments

EU wheat futures closed mixed with London wheat ending with March down GBP1.10 at GBP96.05/tonne, Paris march wheat closed EUR0.50 higher at EUR126.00/tonne.

The market was heavily influenced by the fortunes of the euro today, which fell out of bed falling below 1.36 against the dollar at one point, on news that an EU deal for Greece did not include any financial assistance.

The pound gained close to 1.15, which weighed on London wheat as it obviously makes UK wheat less competitive on the export front against EU grain.

Some reports of winterkill in Ukraine might be supportive, once the crop emerges from winter dormancy and we have a better idea of what magnitude of production losses may have occurred.

A lack of farmer selling at current level is noted, with EUR125/tonne a psychologically difficult barrier for Paris wheat to break.

In the UK, ex farm levels sub-GBP90/tonne are also failing to tempt too many producers into parting with wheat.

Withdrawing from selling is about the only weapon left in farmers' armoury at the moment, with an increased EU acreage already in the ground. The French government yesterday raised their 2010 grain acreage estimate to 7.137 million hectares from 6.976 million last year.

India has agreed to export wheat to Nepal, that appears to indicate that the government there are confident that this season's harvest, which begins next month, will yield the 82 MMT that they have been aiming for.

eCBOT Close, Early Call

The overnights closed with beans 7-8 cents higher, corn up a couple and wheat down around 3 cents.

The euro grinds lower as EU ministers say a deal has been done to help Greece, but it's not a financial one. Here's the daily chart vs the USD:

bye bye

First time US jobs claims fell by 43,000 last week, that's more than the 15,000 the market had been anticipating.

Crude oil is flat around USD74-75/barrel. Inventories data is delayed by the weather, as too is the USDA's usual weekly export sales report.

India have agreed to allow wheat to be exported to Nepal. That is being taken as a sign that the government there are happy with winter wheat development, and are confident of another bumper crop March/April.

Indeed, there is some talk that they might be looking, or indeed need, to find some more buyers before new crop comes in. They supposedly had 23 MMT of state-owned reserves on Jan 1st, and estimate that they will have almost 15 MMT of that left on April 1st when they will begin buying new crop wheat at state-support prices.

The problem the Indian government have there is that they will need to take a loss to find buyers on the open global export market.

It would be ironic if they managed to sell some to neighbouring Pakistan, as their wheat crop is in trouble after India diverted all the water to irrigate it's own crops, leaving Pakistani wheat growers literally high and dry.

China keep importing soybeans at a startling rate, they took in 4.08 MMT in January, according to customs data, a 35% increase on a year ago.

They will also start taking in Kazakhstan wheat as early as next month too, according to media reports.

Early calls for this afternoon's CBOT session: corn called 1 to 2 higher; soybeans called 6 to 8 higher; wheat called 1 to 3 lower.

It's All Greek To Me

EU President Herman Van Rompuy has told reporters in Brussels, in what seems to be a carefully worded statement, that Euro Zone members are prepared to take "coordinated measures" to help Greece if necessary, without giving any specifics.

A vague Van Rompuy said that a deal had been reached to assist Greece, but that no firm offer of financial help had been given or asked for.

Seeing as it usually takes years to get Europe to agree on what shape cucumbers can be sold in the shops, then it's hardly surprising to find them dithering over this hot potato is it?

Lamb Chop

A headteacher at a school in Kent has quit after being "bullied and victimised" after allowing a one of three lambs reared by the children at the school to go to slaughter.

I have to say that I wonder how many of the kids "traumatised" by the incident were hitherto perfectly happy to eat lamb? Certainly I'm sure that the vast majority were no stranger to McDonald's or KFC. But I guess if it comes in a box with a plastic Pocahontas or coated in breadcrumbs and shaped like popcorn then it's not 'really' meat?

The idea to then subsequently raffle off cuts of Marcus was probably inherently flawed, however. As was allowing him to previously attend school assemblies. He did do very well in his SATS though, and was top of the class at eating grass.

Rosemary will miss him

What Do you Call A PIG With Three Eyes

It's a PIIIG of course. A three-eyed pig would come in handy today, as it could keep one eye on Greece, one on Brussels where EU leaders are meeting and the other on the euro.

Currently of course we only have two-eyed pigs: Portugal, Italy, Ireland, Greece and Spain.

The Greek porker is the most unwell, will today's meeting offer any help, that is the sixty billion euro question.

Although Germany and France seem to be coming round to the notion of proffering a strings-attached bailout, Germany's Free Democratic Party are wittily quoted in the press as saying that doing so was like offering an alcoholic another bottle of schnapps.

The euro has been buoyed this past few days by talk of a rescue package, indeed the pound is currently little more than one euro cent higher against the single currency since the turn of the year.

Personally, I think that this owes more to funds banking profits with all the current uncertainty in the air. If a rescue bailout is launched we might see the euro temporarily push a bit higher. Although I can't see any upswing lasting too long before the reality of what is it all really going to cost kicks in.

If Greece is left to fall on it's own sword then the implications for the single currency are pretty obvious.

Either way, the euro is going lower. The next questions is is the pound going down the toilet with it?

Ukraine Crop Conditions Worsen

According to the Ukraine Ministry of Agriculture winter crop conditions in the country have deteriorated in the second half of January.

In the last ten days of the month temperatures fell 6-8 degrees below normal, with air temperatures down to -24/-28, even down to -30/-34 in parts of Western Ukraine.

Fortunately adequate snow cover in most regions prevented heavy crop losses, but places with only limited snow cover suffered "extensive damage" the Ministry said.

As of January 28, winter grains were rated 46% in good condition, 43.6% satisfactory and 10.4% in poor condition.

Winter wheat was rated 46.8% good, 43.1% satisfactory and 10.1% poor. Winter barley was pegged at 40.7% good, 47% satisfactory and 12.3% poor. Winter rapeseed was rated 39% good, 405 satisfactory and 21% poor.

It's All Kicking Off In Ukraine

Ukraine's Jan 1st wheat stocks stood at 7.6 MMT, down 2.6 MMT, or 25.4 percent on Jan 1st 2009, according to the State Statistics Committee. The USDA currently have them consuming 1 MMT/month domestically, that would leave them just 1.6 MMT to export in the entire first half of 2010 before they run out.

The cash-strapped country have, as you can see, been exporting grain like there's no tomorrow.

And for Prime Minister Yulia Tymoshenko, maybe there is no tomorrow.

The country has been locked in a bitter power struggle for years, with the pro-West Ms Tymoshenko fighting head-to-head against the pro-Russian Viktor Yanukovych. The latter got the nod by a tight 3.48% margin in a cliff-hanging vote, the final results of which were only announced yesterday.

But Tymoshenko is refusing to go, she's a woman, that's all the information you require. She's demanding a recount and accusing Yanukovych's camp of rigging the vote, whilst refusing to let anyone pack so much as a pair of shoes.

Pickford's Ukraine branch will be clocking up some demurrage on this one.

Russian Grain Exports To Near Double by 2018

Russian grain exports will nearly double by 2018 to 40 MMT, according to the Ministry of Agriculture there. Exports in the current marketing year will total 21.5 MMT, they say.

Russia's share of the global grain export market has been growing steadily over the last ten years. In 2001 they were responsible for just 2% of world trade in grain, by 2009 that had risen to 9%, and by 2018 Russia will account for 15% of global grain exports, say the Ministry.

Official Ministry forecasts in MMT:

2008/09 2009/10 2010/11
Grain Production 108.1 97.0 95.0
Consumption 76.2 79.1 80.1
Exports 22.5 21.5 22.0
Ending Stocks 23.7 21.1 15.0

CBOT Closing Comments


March soybean futures closed at USD9.37 ½, up 13 cents, March soymeal futures at USD276.40, USD5.80 higher, and March soy oil futures at 38.27, down 11 points. Crude oil was higher and the dollar a tad weaker, which aided a recovery from yesterday's losses. Soybean stocks at selected terminals and elevators were down 1.027 million bushels from the previous week at 27.434 million bushels.


March corn futures closed at USD3.61 ¾, up 3 ¼ cents, and May corn futures at USD3.73 ¼, up 3 cents. Corn stocks for export at selected terminals and elevators were at 93.411 million bushels, down 2.5 million bushels from last week. Higher usage for corn from the US ethanol sector, revealed in yesterday's USDA report, helped underpin the market today. Increased production from Argentina, raised by by 2.2 MMT from last month's report, is seen capping any price rises.


March CBOT wheat futures finished the day at USD4.96 ¾, up 14 ½ cents, March KCBT wheat futures at USD5.05 ¾, up 15 ¾ cents, and March MGEX wheat futures at USD5.15 ¼, up 9 ¼ cents. The recent rise in the dollar relative to the Euro makes French wheat more attractive to wheat importers, drawing down French stocks according to the French farm office. Stocks at selected US elevators and terminals were at 190.12 million bushels down from last week by 2.8 million bushels.

EU Wheat Closing Comments

EU wheat futures closed mixed with London feed wheat ending generally down GBP0.35/tonne to GBP0.35/tonne higher. Paris wheat was similarly afflicted EUR0.25 lower to EUR0.25 higher.

Now that yesterday's USDA report is out in the open there was a distinct lack of fresh fundamental news today. Exactly when we are now going to get the next set of new impetus seems unclear. We basically seem to have reached a plateau period in prices.

Growers in the UK and on the continent seem less than eager to sell at current levels, end-users on the other hand are far from falling over themselves to buy at the moment either. It's a classic impasse.

It may well take until the spring, when winter wheat emerges from dormancy and we get a clearer idea of 2010 crop production, before we get some new direction into the market.

Until then we may be largely treading water, with markets moving only slightly this way and that. It may be that currency movements will have the largest influence on prices up until then.

Unfortunately they are no easier to predict than grain market fluctuations. Will EU finance minister mount a bailout mission for Greece? If they do who is next? And what are the prospects for the pound in the fallout of all of this, and in the run-up to a general election?

Bank of England Lowers Growth Forecast

The Bank of England today lowered it's assessment of the economic outlook in the UK and forecast inflation to exceed 3% in January.

The BoE now appears more cautious in it's outlook than in it's previous November Quarterly Report, saying that economic growth is set to reach only around 3.2% by the second quarter of next year - considerably smaller than their previous estimate of 4%.

The bank also said that the outlook for inflation was that it will peak at around 3.3% before slowing to 0.9%, warning that things looked "unusually uncertain".

Sterling Latest

Whilst the euro remains everybody's favourite whipping boy at the moment, attention has been deflected away from the pound somewhat. Standing nervously on the sidelines waiting to be asked to dance, the British currency is hardly looking dazzling itself at the moment.

Despite the battering that the euro has taken of late, the pound currently only stands a very modest 1.3% higher against the single currency since the start of the year.

News yesterday that the UK trade deficit widened from GBP6.8 billion to GBP7.28 billion in December almost passed by unnoticed, in the furore surrounding the euro and Greek debt.

That widening was the biggest jump for almost a year, and came contrary to analysts' expectations for the gap to decrease. This is particularly crushing, since a weak pound is supposed to help UK exports, indeed BoE governor Merv The Swerve is on record several times recently saying that he's positively chuffed when the pound takes a tumble - it's good for the economy, don't you know?

The notion that the UK government and the BoE are so relaxed about a fall in sterling, appears to imply that they'd not be inclined to step in to attempt to stop it depreciating further.

With hedge fund managers apparently now starting to bank some profits on short bets on the euro, in the light of a possible Greek bailout, they might now be looking around for their next easy victim.

Step forward the pound. The UK's main export home is Europe, weighed down by the financial cost of supporting it's weaker members. The powers that be here are relaxed, bordering on enthusiastic, about the prospects of the currency taking a further hit. Interest rates aren't going up any time soon. Oh, and did I mention that there's a general election coming up? That's always a good reason to have a bit of a run on a currency. Add a bit of heavy fund selling to that and it sounds like you're simply buying money doesn't it?

Euro Latest

All of a sudden the word on the streets is that EU finance minsters might have had a bit of a rethink and a bailout for Greece might be on the cards after all. And it seems to be a German-led attempt to put some sort of a hastily arranged package together, ahead of tomorrow's meeting of EU leaders.

Now call me an old cynic, but might it just be that the nice German finance minister has suddenly realised that it's German banks who are sitting on the largest proportion of Greek debt in Europe?

Talk of a rescue being mounted was enough to prompt some euro short-covering yesterday, but the single currency could easily be back under pressure by the end of the week unless EU leaders come up with something credible.

Even if a deal gets done, the wider implications for the euro are that this would potentially pave the way for Portugal to be next (but not last) to come knocking on the door.

This saga is far from over yet, about the only thing that looks certain is that more volatility lies ahead. Ultimately though, I'd say that the euro is going lower in the medium term, although a collective sigh of relief and further short covering should a bailout be launched could see it correct a little higher in the short-term.

CBOT Closing Comments


March soybean futures closed at USD9.24 ½, down 5 cents, March soymeal futures at USD270.60, down USD3.80, and March soy oil futures at 38.38, up 43 points. USDA lowered US soybean ending stocks by more than expected to 210 million bushels from last month's 245 million bushels. Output in Brazil this year was raised by 1 MMt to a record 66 MMT however. "Although a record South American harvest is expected to reach the market in coming weeks, tight old-crop South American supplies resulting from last year's historic drought in Argentina continue to support U.S. exports," they said.


March corn futures closed at USD3.58 ½, up 2 ½ cents, and May corn futures at USD3.70 ¼, up 2 ¾ cents. The USDA lowered corn ending stocks by 95 million bushels by increasing feed, seed and industrial usage. "Corn used for ethanol is projected 100 million bushels higher reflecting the latest ethanol production data from the Energy Information Agency," they said. Corn exports for 2009/10 were projected 50 million bushels lower on increased competition from Argentina, where production was raised from 15 MMT to 17.2 MMT.


March CBOT wheat futures finished the day at USD4.82 ¼, down 1 ¾ cents, March KCBT wheat futures at USD4.90, down 5 ½ cents, and March MGEX wheat futures at USD5.05 ¾, down 6 cents. US wheat ending stocks increased 5 million bushels from last month to 981 million, whereas a small reduction had been expected. Global wheat supplies for 2009/10 were projected 1.4 MMT higher, reflecting production increases for Argentina and Ukraine. Global wheat consumption for 2009/10 was raised 1.1 MMT, higher consumption offset most of this month’s increase in world production, with projected global ending stocks rising 0.3 MMT.

EU Wheat Closing Comments

EU wheat futures ended mixed Tuesday, Paris March milling wheat futures closing down EUR0.50 at EUR125.50/tonne, and London May feed wheat trading GBP0.25 lower at GBP100.00/tonne. Other odd months closed unchanged or with nominal gains.

The much-awaited USDA numbers came in bullish for corn, neutral for beans and a bit bearish for wheat.

They dropped EU 2009 wheat production slightly from 138.34 MMT to 138.22 MMT, but output in Argentina was raised by 1 MMT to 9 MMT, as "abundant, late-season rains raised harvested area and yields in key eastern growing areas." Production in the Ukraine was also increased by 400,000 MT to 20.9 MMT.

World wheat ending stocks increased by 300,000 MT, US ending stocks were also slightly increased when a small decrease had been generally anticipated.

The reason given for the increase in US wheat ending stocks was an increase in imports. "Imports are raised based on expected shipments of South American and European feed quality wheat into the southeastern US market", they said.

The euro rallied late in the day as talk began to surface of a softening of Europe's stance in relation to a bailout of Greece. Although that would cost the Euro Zone members financially, it may well not cost as much as a refusal to help in the long run.

A reversal in the fortunes of corn might also ultimately help wheat. The USDA reduced ending stocks by more than anticipated by increasing demand from the ethanol sector. "Recently lower corn prices continue to support profitability for ethanol producers," they said.

The USDA Report - The Nitty Gritty

Here's the scores on the doors boys & girls:

US Ending Stocks (billion bushels)
USDA Avg Guess Range Jan Nogger
Corn 1.719 1.748 1.602-1.815 1.764 1.770
Soybeans 0.210 0.219 0.170-0.245 0.245 0.225
Wheat 0.981 0.973 0.876-1.001 0.976 0.985

Other highlights are that they raised Brazilian soybean production by a million to 66 MMT, but left Argy output unchanged at 53 MMT. Argy corn output was upped from 15 MMT to 17.2 MMT.

World corn ending stocks dropped to 134 MT, or 60.4 days of supply - the 3rd tightest in the past 34 years. World wheat production was upped 1.4 MMT, although consumption was also raised, up by 1.1 MMT, leaving ending stocks up 0.3 MMT.

Huge Brazilian Soybean Crop Estimates 'Pie In The Sky'

Some crop estimates pegging this season's Brazilian soybean crop as high as 68 MMT are "pie in the sky", according to respected private consultant Kory Melby's blog (here).

He says that 64 MMT is nearer the mark with Asian Rust and recent searing temperatures taking the top off yields, with some fields "seriously hurt".

Even so, 64 MMT is still a pretty hefty 12% increase on last year's 57 MMT, and comfortably sets a new record production number.

His blog is another that also reports of severe logistical problems in Mato Grosso, with trucks lined up for 25 miles attempting to get into rail terminals destined to take beans to Santos.

The situation has depressed local ex farm cash prices, pushing levels below the cost of production, he says.

One of the reasons behind the logistical problems is the large volume of last season's government-owned corn still sitting in the silos of Mato Grosso. This means that winter corn growers without storage are now having to take whatever they can get for corn, said to be only around 50% of the state-set minimum price of R$13.20 per 60kg sack.

Other reports talk of grain elevators in the region having to store winter corn on the ground for the second year running. It's early days yet, but already there is talk of this situation having a negative impact on both corn and soybean plantings for next season.

Conab have today released their latest estimate on Brazilian soybean production, pegging the crop at 66.7 MMT, the IBGE now say 66.1 MMT and Celeres 65 MMT.

In Mato Grosso, Brazil's top producing state, the soybean harvest is now 25% done, according to Celeres, whilst in Parana, the second biggest producer, the harvest has advanced to 8% complete.

Russia Opens New Grain Terminal

A newly built Russian grain terminal with an annual capacity up to 2.5 MMT of grain was opened yesterday by Viktor Zubkov, the First Vice Prime Minister, at Tuapse Commercial Sea Port on the Black Sea, according to the official news agency ITAR TASS.

The facility houses a silo complex with a storage capacity of 102,000 MT, and was the result of a 1.82 billion ruble investment, according to reports.

The development, the largest in Russia South region, is part of a plan to increase Russia's export capacity from the existing 23 MMT per year, which is "evidently not enough", said Zubkov.

Russia exported 1.54 MMT of grain in January, up by a huge 52.5% from the same period last year, according to media reports. That brings Russian grain exports for the marketing year to date to 13.1 MMT, fractionally down on the 13.3 MMT exported during the first eight months of 2008/09.

The new terminal at Tuapse might enable the country to beat last year's record grain exports of 20 MMT, officials say.

Kissing A Greek

Is the euro set for the knacker's yard? Certainly everybody seems to think so, according to the FT, traders and hedge fund managers have built up more than GBP5 billion in short bets that the single currency will continue to go down the pan.

Of course, that leaves a heavily oversold euro possibly overdue for a sharp rebound at some point. If only we could figure out when that will be.

It is unlikely to come whilst all the current uncertainty is around, that's for sure.

Personally I don't think that ultimately Euro Zone finance ministers resisting a bailout and allowing a Greek default will happen, because the financial and political repercussions for the rest of Europe are simply too great.

A Greek default immediately devalues an estimated 250-300 billion euros of Greek debt held by banks, and bond and pension funds. Mostly already under capitalised European and international banks. It would be another subprime domino effect all around the world (and particularly in Europe) all over again.

So whilst the rest of Europe, and the world, paces the floor hoping that the Greek patient will take it's bitter medicine and slowly get better, surely Trichet and the rest of his crew are secretly prepared to administer a mouth to mouth bailout if absolutely necessary?

If a bailout does happen, then there will need to be some very serious "riders" indeed, as mounting one would be futile without clear and tangible deficit reductions by the Greek government. Whilst that might make them unpopular at home, they're hardly flavour of the month right now anyway.

If they defaulted instead, that would ultimately bring about the same Greek recession as the one brought about by what the media are calling the current "austerity measures" - PLUS they'd never be able to borrow money at anything other than crippling rates ever again.

Media reports today are saying that Trichet is to leave a meeting in Sydney unexpectedly early and fly back to Europe for an EU leaders' summit on Thursday. I wonder if he's bringing some heavy duty mouthwash with him?

USDA Expectations

If they can make it in through the heavy snow that fell over the weekend the USDA will release their latest stocks and world supply and demand numbers at 13.30 GMT. Monday's export inspections report was not issued due to the snow, that is now rescheduled for release this afternoon too. Here's a note of what the trade is expecting from the stocks report, plus my estimate:

US Ending Stocks (billion bushels)
Avg Guess Range Jan Nogger
Corn 1.748 1.602-1.815 1.764 1.770
Soybeans 0.219 0.170-0.245 0.245 0.225
Wheat 0.973 0.876-1.001 0.976 0.985

And here is a note of what the USDA had to say on world production/stocks last month, along with my guess on what they might say today:

World Ending Stocks (MMT) USDA Jan Nogger
Corn 136.19 138.0
Wheat 195.60 197.0
Soybeans 59.80 60.5
World Production (MMT)
Brazil soybeans 65.0 65.0
Argy soybeans 53.0 53.0
Brazil corn 51.0 52.0
Argy corn 15.0 17.0
Australia wheat 22.5 22.2
Canada wheat 26.5 26.5
Russia wheat 61.7 61.7

CBOT Closing Comments


March corn futures closed at USD3.56, up 4 ½ cents, and May corn futures at USD3.67 ½, also up 4 ½ cents. Futures recovered from recent heavy losses on short covering ahead of tomorrow's USDA report. For corn 2009/10 ending stocks are seen falling from 1.764 billion to 1.748 billion bushels.


March soybean futures closed at USD9.29 ½, up 16 cents, March soymeal futures at USD274.40, up USD3.40, and March soy oil futures at 37.95, up 0.95 points. In tomorrow's USDA report soybean stocks for 2009/10 are seen declining from 245 million to 219 million bushels.


March CBOT wheat futures finished at USD4.84, up 10 ¾ cents, March KCBT wheat futures at USD4.95 ½, up 11 cents, and March MGEX wheat futures at USD5.11 ¾, up 9 ¼ cents. Analyst's estimates for tomorrow's USDA report average 9.73 million bushels for ending stocks in the US and 195.95 MMT for world ending stocks.

EU Wheat Closing Comments

EU wheat closed mixed, but mostly a little higher Monday, as futures repositioned themselves ahead of Tuesday's USDA stocks and global production report.

London March wheat closed just GBP0.05 higher at GBP97.50/tonne, and March Paris wheat ended EUR1 higher at EUR126/tonne. It was hardly a stunning key reversal.

EU futures tracked Chicago wheat higher, ahead of tomorrow's USDA report, which may show 2009/10 US ending stocks declining a little, according to trade analysts.

Trying to second guess what the USDA will say is a bit like attempting to fathom out the mind of a woman however. Let's just be thankful that the USDA don't have to reverse a car into a parking space as well tomorrow. If they did we'd be there all day.

Indeed, with the weather in Washington taking a turn for the worst today, it's entirely possible that the USDA won't even bother issuing their WASDE and stock report at all tomorrow.

Does my bum look big in this?

eCBOT Close, Early Call

The overnights closed firmer in what was probably a bit of consolidation from recent losses, and pre-report positioning. Beans closed around 13-14 cents higher, with corn up 3-4 cents and wheat 3-5 cents firmer.

The USDA are out tomorrow with their revised stocks numbers and possibly a few tweaks to global production too.

For corn 2009/10 ending stocks are seen falling from 1.764 billion to 1.748 billion bushels, soybeans are seen declining from 245 million to 219 million and wheat stocks are expected to drop from 976 million last month to 973 million this time round.

At least that is what the average trade guess reckons.

Some are forecasting that corn and wheat ending stocks could actually increase. As the USDA aren't expected to make any revision to this season's production numbers this month then any change to ending stocks will have to come from increase usage or exports.

Whilst we all know that US soybean exports have been running along at a great old pace, the same isn't quite true for corn or wheat.

Taking the shine off any reduction in the US soybean ending stocks number, will be a possible increase in global ending stocks, and maybe even slightly increased output again from South America.

World wheat ending stocks rose by almost 5.7 MMT last month to 195.6 MMT, a further increase there would put wheat under more pressure even with the US winter wheat acreage for next harvest being to lowest since 1913.

Global corn ending stocks also rose by almost 4 MMT last month, and soybean carryout by 2.7 MMT.

Last month's USDA report didn't appear to accurately reflect this season's problems with the corn harvest, an abundance of low quality corn will surely impact upon wheat demand from the feed sector? US wheat exports have picked up somewhat in recent weeks, but are still running behind schedule to hit the USDA's target of 22.5 MMT this marketing year.

Today's normal weekly export inspections report from the USDA has been delayed until Tuesday due to a large winter storm over the weekend in Washington.

Crude oil is around USD71.50/barrel and the dollar appears poised for another strong week boosted by risk aversion. That could temper any gains tonight, although the market will be wary of the USDA throwing in another curveball.

Early calls for this afternoon's CBOT session: corn called 2 to 4 higher; soybeans called 8 to 12 higher; wheat called 3 to 5 higher.

EU Soymeal Prices

Basis CIF Rotterdam/Amsterdam unless otherwise stated in USD/tonne:

Brazil pellets 48%

Spot Fob 415.00
Afloat 399.00
Feb 399.00
March 370.00
Apr 327.00
May/Sep 312.00
Oct/Dec 317.00

Argentine pellets 44/45%

Spot Fob 400.00

Apr 322.00
May/Sep 302.00
Oct/Dec 306.00

Dutch Hipro 49% profat FOB

Feb 416.00
March 420.00
Apr 394.00
May 358.00
Jun/Jul 336.00
Aug/Oct 341.00
Nov/Jan 341.00

Argentine Hipro 49% profat

Afloat 416.00-412.00
Feb 412,00
March 390.00
Apr 340.00
May/Sep 320.00
Oct/Dec 324.00

EU Rapemeal Prices

Basis FOB Lower Rhine in euros/tonne:

Feb 181,00 unq
Mch 167,00 -2,00
Apr 155,00 unch
May 140,00 unch
May/1st h Jly 130,00 +1,00
Aug/Oct 10 120,00 +3,00
Nov/Jan 11 129,00 unch
Nov/Apr 11 131,00 +1,00

Monday Morning Markets

Asian stocks have the jitters again, with Japan's Nikkei setting a two month closing low on continued worries over economic recovery in Europe, despite assurances that Greece will stick to it's part of the bargain.

The euro is consequently under pressure again, at around 1.37 against the dollar, not too far away from the 8 ½ month low just under 1.36 hit on Friday.

Crude oil is up around 75 cents on tensions between Iran and the West, and optimism that another widespread cold snap across large parts of the US will get consumption up and stocks down. Even so crude oil is still below USD72/barrel, more than USD7 or 10% below where it was at the end of 2009.

The overnight grains are taking some solace from a slightly weaker dollar and firmer crude oil, with eCBOT wheat around 6 cents higher, with corn up 4-5 cents and soybeans up around 12 cents.

The USDA are expected to cut their 2009/10 ending stocks projections for all three tomorrow. Traders are probably taking a bit of cover and booking some profits ahead of this report, as the USDA have tended to throw in the odd unforeseen surprise recently.

This report, and the fortunes of the currency markets, seem likely to shape which direction prices will take this week.

Of the three main commodities the one I'd be least confident about getting the forecast stock reduction is wheat. Soybean sales and exports have been holding up exceptionally well so they should get their reduction all right, but the market knows that their are record crops waiting in the wings in South America, which may temper any price rise potential.

Corn possibly has the best possibility of putting in some sort of rally over the coming month in my opinion, for reasons outlined below. We won't have any word from the USDA on planting intentions until March 31st, and whilst I don't exactly see corn roaring away the recent decline may have been overdone, especially as it was largely brought about by some questionable accounting from the USDA.

Meanwhile whatever corn is still left in the fields has just had another 2 feet of snow dumped on it over the weekend. Five percent of US corn was still in the field December 22 when snow began piling up, preventing harvesting from finishing, according to Gail Martell of Martell Crop Projections.

Buy On Locust Dinner Day...

Is the old adage about buying on Locust Dinner Day and selling on Gafta Dinner Day likely to come true again this year?

The Locust Dinner was held on Friday in Liverpool, as many of you will know, so does that mean that we should see current prices as a buying opportunity?

As you may recall, I wrote last week that there is a strong seasonal trend for both corn and soybeans to put in a bottom in February. With a particularly enormous soybean crop on the way from South America, it may be that corn possibly is more likely to be able to find a way up from current levels than beans.

The US EPA last week potentially opened the door for more corn demand from the ethanol sector, saying that the use of corn ethanol does indeed reduce greenhouse gas emissions by 20%. They are now expected to go one stage further and authorise the use of the so-called E15 ethanol blend sometime later this year. That will increase the maximum inclusion rate for corn ethanol in fuel sold at the US pumps from the existing 10% now to 15%.

Now that the market has settled following a spectacular January decline following the USDA's Jan 12 crop report, it may be a case of all the bad news being out in the open for corn.

Even with the USDA's shock increase to American corn production in 2009/10, the world corn crop was still only pegged 0.6% higher than last year. In addition, although production estimates in South America are seen rising, output there is still well below where it was two years ago. In 2007/08 Brazilian corn production was 58.6 MMT and in Argentina it was 22.5 MMT. The USDA may well be underestimating things with their current estimates of 51 MMT and 15 MMT respectively for this season, but even so we clearly aren't going to return to the levels of 2007/08.

In contrast to that, 2009/10 global soybean production is currently seen rising by 20% on last year with record output from all three of the major exporters: the US, Brazil and Argentina.

World corn consumption meanwhile is seen at a record 806 MMT this year, 31 MMT or 4% higher than a year ago, reducing ending stocks by almost 10 MMT.

There is also the possibility that the USDA did indeed overstate US corn production numbers last month. Throw that into the mix too, and it's not that difficult to make out a modestly bullish case for corn, even if US farmers do plant a few more acres this year.


My mate is a scaffolder. And my mate's mate right, by some strange quirk of spooky fate that only happens once in a billion years, you'll never guess what he does for a living. Go on, have a go, it's only a bit of fun.

Yes, you're right he's a scaffolder too, how crazy is that? My mate, and his mate, are both scaffolders, it must be a million to one shot mustn't it?

Well, here's the interesting bit, right. My mate's mate, we'll call him Dave, it will save me typing my mate's mate over and over when I'm tired. Right were are we, ah yes, right I'm back on track, go with it...

"Dave" (real name withheld for legal reasons), was a scaffolder on the Ensus job, which of course has now ended. He's only gone and got himself another different, but ever so slightly similar, job. And you'll never guess where that job is, go on, give it a go, where's the harm eh?

Blimey you're right again, that's two out of two, I can see I'm going to have to keep an eye on you. "Dave" has only gone and got himself a scaffolding job at Vivergo.

Now Dave's new scaffolding job runs until October (cue drum bit from EastEnders duh, duh, DUH, DUH, DUH), past the official scheduled opening date of "summer 2010". Wow.

I hope they aren't planning a Christmas Party at Vivergo, 'cos I've got a funny feeling that Dave will still be up his scaffolding looking through the window whilst Tracey from Accounts is photocopying her wotsits.

Still, Ensus might be up and running by then.

Next week: My other mate's mate gets a job making bacon butties at Vireoffandonagain.

Fact Or Fiction?

Exploding underpants are just so yesterday darling, Al Qaeda are now reportedly recruiting women operatives willing to have bombs implanted into their breasts, according to this report: 36DD? That'll do nicely.

Similar surgery has been done on male suicide bombers who've had explosives inserted into their appendix area or even their bum cheeks, it says.

I don't see what's so revolutionary about that. Having just enjoyed a weekend on the pop in Steeple Bumpstead, and the prospect of a delivered-in curry to look forward to this evening, I reckon I could take down a 747 tomorrow morning myself quite easily.

And I've had a weapon of mass destruction hidden down my kecks for years, and I've never had even the slightest problem at Malaga airport.

Steeple Bumpstead News

Greetings from the cold and chilly north to the good people of Steeple Bumpstead, where Mrs Nogger#3 and I spent a very enjoyable weekend being wined & dined by the local farm discussion group. I can honestly say that I have never seen so many Essex girls with their clothes on all at the same time before.

Hopefully they weren't too shocked by what passes for humour in the Nogger household. I do recall skipping over one or two of my side-splittingly funny jokes at the last minute on account of suddenly considering them a tad too risque, especially the one about the lady with a flatulence problem trying to buy a fishing rod from a blind sales assistant.

This lot certainly dispelled the urban myth of farmers being a load of skinflint old moaning buggers. They even bought Mrs N#3 a huge bouquet of flowers, although I hope she doesn't start getting used to that malarkey.

And I thought that all farmers' wives were supposed to look like a Russian shot-putter chained to an Aga? Somebody has clearly been lying to me.

Free beer, free food, foxy women and a smattering of grain-related small talk, put my name down for next year boys, I'll even pay for myself!