CBOT Closing Comments


March Soybeans closed at USD9.26, up ½ cent; March Soybean Meal at USD251.20, up USD1.60/tonne; March Soybean Oil at 39.05, down 77 points. The USDA announced the sale of 220,000 MT for 2010/11 delivery, correcting an earlier announcement stating the sale was for 2009/10. It seems increasingly likely that China have packed their buying boots and flow them to South America for the remainder of 2009/10. That shouldn't surprise too many, and the US have enjoyed a very good run of sales in that direction recently. It will be interesting now to see if South America can cope with the logistics of delivery. Some reports already suggest that it is taking up to three weeks to load a boat down there. The Large Spec increased their CBOT net short position from 14,119 contracts to 27,373 contracts compared to the previous week as of Tuesday, data shows.


March Corn futures closed at USD3.54, down 1 ½ cents; May Corn futures at USD3.64 ¼, down 1 cent. It might be tenuous, but corn is about the only one of the three main grains that you can make out any kind of bullish case for at the moment. The USDA decreased the corn yield for 2009/10 to 164.9 bushels to the acre, which reduced the crop to 13.131 billion bushels. Record US ethanol production in Dec highlights the continued increased corn demand. Excessive wetness across large areas of the Midwest may reduce planted area this spring, or at the very least mean another year of a late planted crop struggling to mature before a winter freeze sets in. "Dryness is less threatening for corn planting than the prospect of muddy fields that seriously delay seeding. Northern corn in Iowa, Minnesota and South Dakota would benefit most from early seeding," says Gail Martell of Martell Crop Projections.


May CBOT Wheat finished at USD4.85 ¼, up 6 ½ cents; May KCBT Wheat at USD4.94 ¾, up ¼ cents; May MGEX Wheat at USD5.13 ½, up 9 cents. A weak dollar and decent weekly export sales reported Thursday helped wheat today. Perhaps most of the reason behind wheat being the strongest leg of the complex today has to do with the huge spec fund short position. Some of today's buying may well have been simply short-covering ahead of the weekend. Increased rainfall this week in the top US producing state of Kansas will have improved wheat conditions there. "Heavy March rainfall promotes higher yields in Kansas due to excellent tillering conditions. This is the stage when wheat gets bushy producing many grain bearing stems, in 80% of years having a wet March, the Kansas wheat yield has finished above trend," says Gail Martell of martell Crop Projections.

EU Wheat Closes Mixed

London wheat ended mixed Friday, with March down GBP0.25 at GBP92.25/tonne and May up GBP0.85 at GBP94.60/tonne. Paris wheat closed between EUR0.50 higher and EUR0.25 lower, with May EUR0.50 higher at EUR121.75/tonne.

May London wheat was down GBP2.75/tonne on the week and May Paris wheat ended with losses of EUR1.50 overall. Both the pound and euro finished marginally higher against the dollar on the week.

Export interest remains light against a background of rising EU, US and global wheat stocks.

The EU issued export licences for 330,000 MT of soft wheat last week, that brings total exports so far this marketing year to 12.2 MMT, 18% down on at the same time a year ago.

In the UK a further 8,766 MT of barley was offered into intervention in the past week, bringing total accepted offers to date to just over 92,000 MT. This month's intervention price is GBP92.49/tonne.

Farmer selling is light with spot ex-farm levels now under GBP90/tonne in many areas, with many growers busy tending next season's 11.4% increase in wheat planted area.

Which all kind of puts me in mind of that Monty Python sketch (here) where John Cleese is recounting getting "hit straight smack plumb between the eyes, never a chance to move" off successive balls in a cricket match.

"Early 2007 it was, sold all my wheat for ninety quid, next thing it was £200/tonne, we were all gonna starve to death so I rented some extra land and planted loads of it, bought my fertiliser at the top of the market, sold the lot for ninety quid. The next year they promised us Ensus, said we were gonna make a killing, so I rented more land and planted loads of it, sold the lot for ninety quid. Next time round they said Vivergo's gonna save the day, so I rented even more land and planted loads of it, sold the lot for ninety quid. 'Course I was getting used to it by then."

Pound Rises On Poll Result

The pound is up this morning on the back of an opinion poll showing that the Tories would have an outright majority at the next election.

The poll, by Angus Reid, pegs the Conservatives on 39% some thirteen points ahead of Labour on 26%.

Sterling is subsequently up to the dizzy heights of 1.5160 against the dollar.

With more polls undoubtedly out in the Sunday papers this weekend things could easily have a different complexion on them again Monday morning. Perhaps the only thing we can say with a fair degree of certainty is that more volatility is likely to be in store for the pound between now and May.

In some ways there are similarities to be drawn between sterling and the wheat market. Whilst rallies are quickly sold into and the overall trend is undeniably downwards, every man and his dog has managed to spot that and are subsequently short.

This leaves both wheat and the pound vulnerable to a sudden surge of short-covering for little apparent fundamental reason. Gordon Brown wears a new tie and kisses a baby, whoosh we are back to 1.55 before you know it as buy stops kick in.

In Chicago, spec money is close to having the largest open short position on record. May wheat set a fresh five-month low of USD4.75 1/2 yesterday, within spitting distance of the lifetime low of USD4.72 set in October. Once we break through that into "uncharted territory" then the market could be susceptible to a corrective rally with very little excuse. Who wants to short it at the bottom of the market?

Terra Firmer

Shares in US-based Terra industries have jumped as love rivals Yara and CF Industries vie for Terra's hand in marriage. Shares which were worth just USD31.36 as recently as the beginning of February closed at USD46.90 in New York last night.

Norwegian Yara agreed to stump up USD4.1 billion for Terra, but just as the blushing bride was about to say "I do" in stepped rival CF Industries with a USD4.68 billion "lawful impediment".

Christ, how I wish somebody had done that when I foolishly married Mrs N#1. I should have suspected something was up when she insisted on walking down the aisle to the theme tune from Ski Sunday. It was indeed all downhill from there.

Any road up, Yara appear to have flounced and told Terra that there is no more cash on the table, according to media reports. That leaves Yara free to pick up a bonus USD123 million "break-up fee" for the privilege of Terra throwing Yara's ring back at them.

Count yourself lucky Yara, that's a somewhat better result than a Dyson, a set of drawers and portable telly that won't pick up channel 4 methinks.

CBOT Closing Comments


May Soybeans closed at USD9.30 1/2, down 27 1/2 cents; May Soybean Meal was at USD252.60, down USD6.60/tonne; May Soybean Oil was at 40.11, down 91 points. Weekly export sales were negative for beans after China cancelled a couple of cargoes, although they did buy something for 2010/11. Actual shipments of 933,000 MT were still pretty impressive however, with China once again the main home taking 648,800 MT. The Buenos Aires Grain Exchange upped it's estimate for Argy soybean production to 53.5 MMT from 52 MMT.


March Corn futures closed at USD3.55 ½, unchanged; December corn futures were at USD3.95 ¼, up ½ cent. Export sales for 2009/10 delivery were poor at 338,800 MT, down 53% from the four week average. Shipments of 964,800 MT were down 9 percent from the previous week, but up 9 percent from the prior 4-week average. Warming temperatures in the Midwest will bring snowmelt and further flooding to many areas, that may well delay spring corn plantings.


May CBOT Wheat closed at USD4.78 ¾, down 2 ¾ cents; May KCBT Wheat at USD4.89 ½, down 1 ½ cents; May MGEX Wheat at USD5.04 ½, down 2 cents. Weekly export sales were pretty good at 407,900 MT for 2009/10 delivery and 40,500 MT for 2010/11 delivery. Actual shipments of 541,000 MT were up 15 percent from the previous week and 24 percent from the prior 4-week average. This now puts the US slightly ahead of the USDA's export target for the current marketing year.

EU Wheat Ends Lower Again

EU wheat futures closed lower yet again, just by way of a change, with March London wheat down GBP2.00 at GBP92.50/tonne, and Paris May wheat EUR1.25 down at EUR121.25/tonne.

It's starting to look pretty ugly for EU wheat, with London March finishing within GBP0.50 of the life of contract low, and Paris May wheat setting a new lifetime low in it's first day as the front trading month.

Defra today said that UK winter wheat plantings are up 11.4% to 1.9 million hectares.

The French Ministry yesterday upped their 2010 soft wheat production estimate to 36.54 MMT and increased 2009/10 ending stocks to a smidgen under 4 MMT.

Also yesterday the USDA pegged US ending stocks at the highest since 1987/88, and upped global ending stocks at 196.77 MMT in 2009-10, up almost 1 MMT from last month and 31.2 MMT higher than 165.57 MMT in 2008-09.

I've tried pretty hard to throw in a glimmer of hope somewhere but simply can't find anything significant right now.

Downwards remains the path of least resistance.

CBOT Early Call

The overnight grains closed lower, with beans down 3-4 cents, wheat down 1-2 cents and corn around a cent or so easier.

The USDA's weekly export sales report was bearish for beans and corn and neutral for wheat. Export sales were actually negative for soybeans due to Chinese cancellations and poor for corn too at 338,900 MT, wheat sales were respectable at 448,400 MT.

Actual shipments were pretty decent for all three however.

The dollar and crude oil are both a little bit weaker.

Japan bought 85,000 MT of US wheat overnight, plus a smaller quantity of Canadian and Australian wheat as well.

Kazakhstan continue to flex their muscles on the grain export front, saying that they are close to doing a deal to supply South Korea with 600,000 MT of wheat which will be delivered by rail via China. The Kazakhs also say that their grain area will be up again for the 2010 harvest.

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

USDA Weekly Export Sales

For the period February 26-March 4 the USDA today report the following weekly export sales;

Wheat, net sales of 407,900 MT for delivery in 2009/10, plus a further 40,500 MT for delivery in 2010/11. The main old crop buyers were Nigeria (130,900 MT), Japan (46,400 MT), Venezuela (45,200 MT), Taiwan (41,000 MT) and Mexico (33,700 MT). Actual shipments of 541,000 MT were up 15 percent from the previous week and 24 percent from the prior 4-week average. The primary destinations were South Korea (73,200 MT), Indonesia (58,600 MT), Nigeria (51,800 MT), Iraq (50,200 MT), the Philippines (48,900 MT) and Thailand (44,600 MT).

Soybeans, old crop sales were negative to the tune of 115,800 MT for delivery in 2009/10 and sales of just 65,100 MT for delivery in 2010/11. Old crop saw decreases for China of 192,400 MT and unknown destinations of 75,000 MT. Still, actual shipments of 933,000 MT were still pretty impressive with China once again the main home taking 648,800 MT.

Corn, net sales of 338,600 MT for delivery in 2009/10 and just 300 MT for delivery in 2010/11 were disappointing. Exports of 964,800 MT were down 9 percent from the previous week, but up 9 percent from the prior 4-week average. The primary destinations were Japan (330,100 MT), South Korea (164,700 MT), Mexico (157,000 MT) and Egypt (91,700 MT).

Defra Report UK Winter Wheat Area Up 11.4 Percent

Defra say that UK farmers planted 1.9 million hectares of winter wheat for the 2010 harvest, an increase of 11.4% on last season.

Winter barley plantings were down 3.3% (is that all?) to 410,000 hectares, whilst rapeseed plantings are seen 9.8% higher at 628,000 hectares, they say.

If UK wheat production were to increase by 11.4% then we'd be looking at a crop of around 17 MMT this year, potentially the second highest output on record.

Of course it's not quite as straightforward as that. If the Rank Hovis advertising campaign is correct, and one in eight British fields is growing wheat on contract for them this year, then that means that 1/8th of the UK crop will only be yielding half of what it would normally produce.

And aren't Warburtons, the second biggest grocery brand in the country after Coca-Cola, also supposed to be launching an all British loaf later this year? Presumably that will also be made from similar low-yielding wheat?

Also, keen not to be left behind, I read recently that Sainsbury's said that they are "on course" to also switch to using flour made from 100% British wheat across it's entire in-store baked range.

EU Soymeal Prices

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

Brasil pellets 48%

Spot Fob 370.00
Afloat 379.00
March 364.00
Apr 336.00
May/Sep 317.00
Oct/Dec 315.00

Argentine pellets 44/45%

May/Sep 313.00
Oct/Dec 312.00

Dutch Hipro 49% profat

Apr 373.00
May 351.00
Jun/Jul 325.00
Aug/Oct 327.00
Nov/Jan 329.00

Argentine Hipro 49% profat

Afloat 379.00-373.00
March 350.00
Apr 340.00
May/Sep 320.00
Oct/Dec 316.00

USDA Report - The Bottom Line, And Looking Ahead

The bottom line from yesterday's USDA reports are that world production of corn, wheat and soybeans is all seen higher this month than last. Ending stocks for all three are also seen increasing. Indeed, world ending stocks for wheat and soybeans are seen increasing sharply, with only corn seeing a slight decrease.

If you want the scores on the doors, here they are:

Global 2009-10 wheat production was projected at 678.01 MMT, up 570,000 tonnes from February. World wheat ending stocks were projected at 196.77 MMT in 2009-10, up 910,000 MT from 195.86 MMT in February and up 31.2 MMT, or 19%, from 165.57 MMT in 2008-09.

World corn production in 2009-10 was projected at 803.69 MMT, up 5.86 million tonnes from 797.83 MMT in February. Global corn ending stocks were projected at 140.15 MMT for 2009-10, up 6.11 MMT, or 5%, from 134.04 MMT in February but down 6.25 MMT, or 4%, from 146.4 MMT in 2008-09.

Global soybean production in 2009-10 was projected at 255.91 MMT, up 890,000 MT from 255.02 MMT in February. Ending stocks were projected at 60.67 MMT in 2009-10, up 940,000 MT from February and up 18.65 MMT, or 44%, from 42.02 MMT the previous year.

It looks like we can safely say that we aren't going to starve in 2010 then. Is that all the bearish news out of the way, or is there more to come?

The next set of figures from the USDA will be planting intentions on March 31st. With corn the only one of the three likely to see lower ending stocks in 2009/10 then it looks a pretty good bet that we will see US farmers plant more corn this spring.

They've already reduced winter wheat acres, and spring wheat plantings are only likely to partially make up for that. Soybean planted area will hold steady, or maybe also increase slightly I feel, in the wake of strong demand. Especially as the restoration of the dollar a gallon biodiesel tax credit for 2010 that had expired at the end of last year has now been approved by the Senate.

US farmers might also feel that a repeat performance of bumper crops from South America again next season is unlikely. There are already rumblings of dissatisfaction amongst Brazilian growers that they will be unwilling to produce soybeans to sell at a loss again in 2011.

Corners are likely to be cut, with possibly a small reduction in planted area, but more likely reduced inputs. Lower quality seed, less fertiliser and lack spraying against Asian Rust and pests by many are highly likely I'd have thought.

Thursday Morning Snippets

March Australian wheat futures fell close to a six month low overnight breaking through the psychologically important A$200 mark to hit A$199, before rebounding to close at A$202.50/tonne. Interest rates are now 4% Down Under, which is keeping the Ozzie dollar very strong reducing the competitiveness of Australian wheat on the export market.

Egypt bought 120,000 MT of wheat in yesterday's tender booking 60,000 MT each of Russian and French wheat for May shipment. The French wheat was USD4/tonne cheaper than the Russian wheat at USD164.55/tonne.

French wheat futures matched a three year low yesterday, with March hitting EUR115.25/tonne. The French Ministry peg 2010 soft wheat production at 36.54 MMT and 2009/10 ending stocks at a smidgen under 4 MMT.

Kazakhstan says it will plant 16.7 million hectares of grains for the 2010 harvest, up 4.4% on last season. Of that wheat will make up 14.3 million hectares, or more than 85% of planted area.

Drought in South West China has affected more than 4 million acres of farmland, according to the Chinese Ministry of Agriculture. Bloomberg say it's 5.3 million acres, no surprises that the Ministry throw in a low number there then. The worst affected areas are Guangxi Zhuang, Yunnan, Guizhou and Sichuan provinces. These regions are where most of China's southern corn is grown, with planting underway now, for harvesting in July/August. The meteorological stations in Yunnan and Guizhou provinces say that they don't expect any widespread rains until May.

Japan have bought 152,000 MT of wheat overnight of which 85,000 MT was US origin, with the remainder split between Australian and Canadian wheat.

CBOT Closing Comments


March Soybeans closed at USD9.52, up 10 ½ cents; March Soybean Meal at USD258.70, down USD0.30/tonne; March Soybean Oil at 40.69, up 72 points. The USDA decreased ending stocks to 190 million bushels from 210 on last months report, and below what was expected by the trade. Brazilian soybean production was forecast higher however at 67 MMT, up 1 million from last month. China bought 110,000 MT of beans for new crop delivery today. Crude oil stocks were bullish which helped drag soybeans higher. Unconfirmed reports that four cargoes of US beans heading for China had been told to turn back took some of the shine off midsession gains however.


March Corn futures finished at USD3.55 ½, down 3 ¼ cents; May Corn futures closed at USD3.65 ¼, down 3 ½ cents. The USDA decreased yields and production but increased ending stocks with a decline in U.S. exports of 100 million bushels. World corn production for 2009/10 was raised 5.9 MMT with Argentina production increased 3.8 MMT and South Africa production increased by 2.0 MMT. Corn exports were also raised by 2.5 MMT for Argentina and 1.0 MMT for South Africa. Corn planting delays may develop this spring in areas where cumulative fall and winter precipitation was exceptionally heavy, say Martell Crop Projections. The risky areas for planting delays include Iowa, Minnesota, South Dakota and northeast Nebraska. Western Illinois and eastern Missouri are also very wet, they add.


May CBOT Wheat closed at USD4.81 ½, down 8 cents; May KCBT Wheat at USD4.91, down 6 ½ cents; May MGEX Wheat at USD5.06 ½, down 4 ¾ cents. USDA raised U.S. wheat ending stocks by 20 million bushels pushing the number to just above a billion bushels. That is the first time that ending stocks have been that high since 1987. Global wheat supplies also increased with higher beginning stocks for Russian and an increase in Argentine production. World stocks are up 60% from the recent low in 2007/08. Egypt passed on US wheat in today's tender, booking one 60,000 MT cargo each of Russian and French wheat.

EU Wheat Closing Comments

May London wheat ended GBP0.35 lower Wednesday at GBP95.00/tonne, May Paris wheat closed unchanged at EUR122.50/tonne.

The much-awaited USDA numbers were bearish for wheat and corn, with US wheat ending stocks pegged at their highest since 1987. Global wheat production and 2009/10 ending stocks were also revised higher.

Egypt bought two 60,000 MT cargoes of wheat today, one from Russia and one of French origin. The French wheat was priced at just USD164.55/tonne according to media reports.

Russian wheat exports continue to go well, with the country exporting 12.33 MMT in the marketing year so far (to the end of Feb), only marginally less than the 12.5 MMT exported during the same period in 2008/09.

FranceAgrimer indicated that all is going well with wheat production there, predicting a soft wheat crop of 36.54 MMT in 2010.

UK wheat is also emerging from winter dormancy in pretty good condition.

Elsewhere, cold damp weather will occur the next several days in Eastern Europe with periods of cold rain and snow, say Martell Crop Projections. Daily maximum temperatures will be mostly in the upper 30s F in Germany, Poland, the Czech Republic, and across all of Southeast Europe. If wet weather keeps up spring planting will be delayed, they add.

CBOT Midsession

Crude oil inventories came in 1.4 million barrels higher - against the 2.1 million increase that the market was expecting, gasoline stocks fell by more than anticipated, by 2.9 million barrels.

That sent crude higher dragging the grains complex off initial lows.

Beans are leading the way higher currently, up around 15 cents after the USDA pegged ending stocks lower than expected at 190 million bushels, the 5th tightest of the past 40 years in terms of "days of supply".

China bought 110,000 MT of 2010/11 crop beans today, the USDA announced.

Corn and wheat are around 1-2 cents lower, not too bad considering that there was nothing much bullish anywhere in either report for those two.

Egypt passed on US wheat in today's tender, booking one 60,000 MT cargo each of Russian and French wheat.

US ending wheat stocks are now seen above one billion bushels for the first time since 1987.

CBOT Early Call

The USDA production numbers came in towards the top end of expectations. Ending stocks were higher than expected for corn and wheat, and only marginally lower for beans. Counteracting the slightly lower bean stocks figure was an production increase of a million tonnes in Brazil to 67 MMT.

US wheat ending stocks were pegged above a billion bushels for the first time since 1987. Global ending stocks were also raised 2.1 MMT.

All in all I'd say that the report is bearish corn and wheat and neutral to bearish soybeans.

Predictably the USDA couldn't bring themselves to concur with their Chinese attache, leaving last year's corn and wheat production numbers there unchanged.

The API say that US crude oil stocks rose by a hefty 6.5 million barrels last week, the Energy Dept are out with their estimate on the opening bell of CBOT.

OPEC, talking their own book, say that they expect global oil demand to rise by 900,000 barrels per day in 2010, up 100,000 barrels from their previous estimate.

Egypt are tendering for wheat again today, Russia/Kazakhstan are the likely winners.

Early calls for this afternoon's CBOT session: corn called 7 to 10 lower; soybeans called 5 to 7 lower; wheat called 5 to 7 lower.


The USDA's world agricultural supply and demand numbers highlights:

Argy wheat crop raised 0.6 MMT to 9.6 MMT
EU wheat production dropped a tad from 138.22 MMT to 138.14 MMT
Chinese wheat left unchanged at 114.5 MMT (the bottlers)
Chinese corn left unchanged at 155 MMT (big girl's blouses)
South Africa corn raised 2 MMT to 13.5 MMT
Argentina corn raised 3.8 MMT to 21 MMT
Brazil soybeans raised 1 MMT to 67 MMT
Argentina soybeans left unchanged at 53 MMT
Global wheat ending stocks rise 2.1 MMT

USDA Production/Stocks Numbers

The USDA came out with a 2009 US corn production number of 13.131 billion bushels, towards the upper end of the range of analyst's estimates of 12.838 to 13.158 billion bushels, and only 20 million down from the January report and 50 million above the average trade guess. Corn ending stocks were pegged at 1.799 billion bushels, somewhat higher than the average trade guess of 1.716 billion.

Soybean production came in at 3.359 billion bushels, again towards the top end of pre-report estimates ranging from 3.219 to 3.365 billion bushels, only 2 million down from January and 10 million above the average trade guess. US soybean ending stocks were reduced to 190 million bushels, 5 million below the average trade estimate.

Wheat ending stocks came in at 1.001 billion bushels, 20 million up on last time and also towards the top end of the range of 876 to 1,012 million bushels. The average guess was 971 million.

EU Rapemeal Prices

Basis FOB Lower Rhine in euros/tonne:

Mch 157,00
Apr 140,00
May 126,00
May/1st h Jly 120,00
Aug/Oct 10 109,00
Nov/Jan 11 119,00
Nov/Apr 11 120,00

Dim Sum With Fried Lies?

The deeply dark and mysterious Chinese National Grain and Oils Information Centre, or CNGOIC, have proven yet again that they can't add up insisting that the 2009 wheat crop there was 114.9 MMT and that corn production was 163 MMT.

That's 8.9 MMT more wheat and 13 MMT more corn than the USDA attache reported late last week. And he was probably overestimating things at that.

CNGOIC went on to say that the moon is made of green cheese and that Liverpool's Premiership title ambitions are still alive.

German Ethanol Production Jumps

German ethanol production has jumped following the closure of the lucrative "splash and dash" window.

The scam, which undermined the production of biofuel in the EU, involved shipping biodiesel from Europe to the US where a "splash" of mineral-derived diesel was added, thereby rendering the entire consignment eligible for a US subsidy.

Invariably the fuel was then shipped back here and sold below European prices.

Latest figures now show that ethanol production in Germany reached 637,000 m³ in July 2009 to Jan. 2010, the first seven months of marketing year 2009/10, which is 17% more than the 544,000 m³ produced in the same period in 2008/09.

The main feedstocks used were 358,000 MT of wheat, 109,000 MT of corn, 307,000 MT of rye, and 117,000 MT of barley.

Pound Drops Below USD1.49

The pound fell below 1.49 against the dollar this morning after data showed that UK industrial output fell by 0.4% in January, contrary to expectation of an increase of 0.3%.

The data follows yesterday's bad news that the UK’s trade deficit widened to GBP8 billion from GBP7 billion the previous month, about GBP1 billion more than economists had predicted.

Fitch ratings joined the circling vultures, criticising the credibility of the Government's budget plans and warning again over the longevity of Britain's AAA credit status.

Meanwhile Labour and the Conservatives are "neck and neck" in their battle for marginal seats according to a poll in the Times yesterday.

An Opinium poll in the Daily Express suggests that even with a 7 point lead over Labour, the Tories would fall 18 seats short of an overall majority at the next election.

It looks like this one will go to the wire, the increasing uncertainty as time goes on is likely to see the pound fall further.

Interesting Piece Of Trivia #1

JM Barrie, the author of Peter Pan, was under 5ft tall and didn't shave till he was 24.

Sounds a bit like MrsN#1. Still, we always made a few bob when the circus was in town.

Ahead Of The USDA

In case you have been living an a cave for the past couple of weeks, you might like to know that the USDA are out later today with revised US crop production estimates for 2009 for soybeans and corn, plus ending stocks for beans, corn and wheat. In addition to that they are out with their latest world crop production estimates too.

The market is hoping for some direction, but what is the betting that the numbers end up being viewed as "predictable" and "unexciting" and we subsequently end up hanging on for the next set of tit-bits, the March 31st planting intentions report?

That's where my money is going already.

It isn't beyond the realms of possibility that the USDA might chuck in another curve ball and raise corn production rather than lower it either. That's what they did in January and corn has hardly stopped falling since.

If you want the pre-report estimates then soybean production ranges from 3.219 to 3.365 billion bushels and 161 to 217 million bushels for ending stocks. The average is around 3.349 billion bushels with an average carryout of around 195 million bushels.

For corn we are looking at a range from 12.838 to 13.158 billion bushels for production and 1.602 to 1.814 billion bushel for the 2009/10 carryout. The average corn crop estimate is 13.081 billion bushels. Ending stocks are projected at virtually unchanged from last month at 1.716 billion bushels.

For wheat ending stocks estimates range from 876 to 1,012 million bushels, with the average guess at 971 million, 10 million down on last month.

Last month they pegged Brazilian soybean production at 66 MMT, this week we've had estimates of 67.57 MMT from Conab and 66.9 MMT from the IBGE, so it appears that there could be some possibility in the USDA adding a further million to their estimate here. Even so, some private forecasters are saying that 64-65 MMT is likely to be nearer the mark.

Argy soybean production was pegged at 53 MMT last month, I can't see that changing today.

The only other numbers that I am interested in are what they say for Chinese wheat and corn production for 2009, after their attache came out with estimates of 106 MMT and 150 MMT late last week. Those figures are 8.5 MMT and 5 MMT respectively lower than the USDA's February numbers.

Will the USDA concur? Probably not, particularly on wheat as it might make them look a bit stupid. They haven't been anywhere near 106 MMT for the past year.

Ukraine Crop Estimates

The APK-Inform Agency say that Ukraine will harvest 19.8 MMT of wheat in 2010, 4 MMT of winter barley, 7.5 MMT of spring barley and 11.3 MMT of corn.

CBOT Closing Comments


March soybean futures closed at USD9.41 ½, up 1 cent; March soymeal futures at USD259.00, down USD0.50, and March soy oil futures at 39.97, up 2 points. The leading soybean provinces turned extremely wet in February receiving 150-200% of normal rainfall. Wetness and warmth produced an ideal environment for fungus disease in Santa Fe, Entre Rios and northern Buenos Aires, say Martell Crop Projections.


March corn futures closed at USD3.58 ¾, down 5 ¾ cents; May corn futures at USD3.69, down 6 cents, and Dec corn futures at USD3.97, down 6 cents. Conab, increased their 2009/10 Brazilian corn crop estimate to 51.38 MMT, matching the numbers out of the University of Missouri. Last trading day for March grains is Friday.


March CBOT wheat futures closed at USD4.78 ½, down 6 cents; March KCBT wheat futures finished at USD4.90 ¼, down 4 ¾ cents; March MGEX wheat futures were at USD5.02, down 3 ½ cents. Analysts are anticipating only a minor reduction in U.S. ending stocks from last months report.

EU Wheat Ends Mixed, Mostly Lower

EU wheat futures closed mixed, mostly lower Tuesday, with London wheat ending with March unch at GBP92.75/tonne, and Paris March wheat down EUR1 at EUR115.75/tonne.

Trade is very quiet ahead of tomorrow's USDA report, even thought no great surprises are anticipated.

Winter wheat crops across Europe are slowly emerging from dormancy, although the jury is still out as far as any potential crop damage is concerned.

Japan is expected to buy 85,000 MT of US wheat tomorrow out of a 152,000 MT tender.

With the pound hitting well below 1.50 against the dollar today, export prospects for UK wheat should look quite bright.

In theory. In reality they probably aren't

CBOT Early Call

The overnight grains closed lower with March soybeans ending 1 1/2 cents down at $9.39 a bushel, March corn was down 4 cents to $3.60 1/2 per bushel and May wheat fell 4 3/4 cents to $4.90 1/4.

The dollar is firmer yet again, and crude oil sharply lower. The American Petroleum Institute are out later today with their stocks estimate for crude, and are expected to show inventories rising for the sixth successive week.

Conab upped their Brazilian soybean crop estimate from 66.73 MMT to 67.57 MMT. The census bureau, the IBGE, now say 66.9 MMT. Harvesting there is around a third complete, with the top producing state of Mato Grosso now past halfway done, according to Celeres.

There are still huge logistical problems getting this record crop to the ports and freight terminals however. This will likely keep front-end positions at a premium throughout the summer I feel.

The freight market is also firming up. Unfortunately for the Brazilian grower these charges, and higher trucking costs caused by a shortage of lorries, are both being passed back onto him. That may colour his judgement when planting, spraying and fertilising next seasons crop comes around.

Regardless of that, for now we have a record crop on our hands both there and in Argentina.

China imported less soybeans in February, 3.03 MMT, than was originally thought according to the Ministry of Commerce.

Japan are tendering for 152,000 MT of wheat again this week, of that 85,000 MT will be US origin.

With the firmer dollar and weaker crude oil, plus pre-report positioning it would seem that a weaker close is on the cards tonight. Short-covering and profit-taking could however also feature, particularly for corn and wheat.

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

EU Rapemeal Prices

Basis FOB Lower Rhine in euros/tonne:

Mch 160,00
Apr 142,00
May 128,00
May/1st h Jly 123,00
Aug/Oct 10 111,00
Nov/Jan 11 119,00
Nov/Apr 11 121,00

Ukraine Crop Conditions Decline

As of March 4, winter grains in Ukraine were rated 10.8% in 'unsatisfactory' condition, up from 10.0% a week ago, according to the Ag Ministry there.

Winter wheat was rated unsatisfactory on 0.69 million hectares, or 10.4% of planted area, with 10.1% of winter barley and 20.8% of winter rapeseed rated likewise.

Despite a slight increase in total grains planted area (especially barley), most pundits are forecasting lower production in 2010 due to farmers cut corners by sowing low quality varieties, and reduced and poor application of inputs due to tight credit constraints.

Winter wheat area is seen down around 4.5% according to the State Statistics Committee at 6.67 million hectares. A harsher winter may well have increased the incidence of winterkill, relative to last season which was comparatively mild. The USDA attache in Ukraine estimates yields down by 6% in 2010, producing a wheat crop of 19.1 MMT, down 8.6% on 20.9 MMT in 2009.

Freight Rates Move Sharply Higher

Freight rates are sharply higher on rising crude oil, strong demand from China and an idling of overcapacity. The Baltic Dry Index - the benchmark guide to drybulk shipping rates on 40 routes across the world - closed at 3,259 last night up 27% since a recent Feb 15th low of 2,566.

Containerised shipping rates are also sharply high. Hapag-Lloyd and Maersk Line have both announced rate increases recently. A report on Dow Jones Newswires says that "the cost of shipping a standard 40-foot container of merchandise averaged about $2,500 globally in January, up nearly 50% in the past year and 62% from a trough of $1,540 in May."

Japan snubbed South America to purchase US corn over the weekend, citing that shipping costs were too expensive from Brazil or Argentina.

It seems that the super cheap discount rates of twelve months or so ago have finally dried up as ship owners idle vessels rather than operate them at a loss. Once again the world is shrinking.

Pound Back Below USD1.50

The pound is back below 1.50 against the dollar in early morning trade after a disappointing set of house price and retail sales figures. Sterling touched 1.4975 overnight, that's more than two cents down on Monday's high of 1.5195.

A story in the Wall Street Journal that Moody’s may downgrade the bonds of several UK banks added to the nervous mood.

A survey by the Royal Institution of Chartered Surveyors (RICS) said that only 17% of UK estate agents saw rising prices in February, that's the smallest rise in six months and much less than the 30% the market had been expecting.

UK Retail Sales rose by just 2.2% in the year to February according to a report from the British Retail Consortium (BRC), that is disappointing considering that it is in comparison to a very weak period twelve months ago the BRC said.

In the current political climate it doesn't seem like it will take a lot to get a run going on the pound, although some analysts consider it in oversold territory, the path of least resistance seems lower.

Developments with Greece over the weekend seem to have allayed the markets fears over the euro, at least for the time being. There seems to be an air of cautious optimism that they will attempt to sort their own problems out after the Greek parliament gave the green light to austerity measures.

Greek PM Papandreou is in Washington today for talks with US President Obama.

CBOT Closing Comments


March soybean futures closed at USD9.40 ½, up 5 ¾ cents; March soymeal futures at USD259.50, up USD1.60; March soy oil futures at 39.95, up 23 points. Traders continue to do a bit of tidying up ahead of Wednesday's USDA report. Analyst's estimates range from 3.219 to 3.365 billion bushels for soybean production and 161 to 217 million bushels for ending stocks. Dry conditions for 2 straight weeks in South Brazil causes excellent harvesting conditions in Parana, where soybeans are rapidly ripening, but causes moisture stress in Rio Grande do Sul, say Martell Crop Projections. Forty percent of the Rio Grande do Sul's beans were planted in December, later than normal due to November flooding. These soybeans would be setting and filling in March, requiring heavy rain for the best possible yield, they say.


Corn futures closed with only very minor changes with March at USD3.64 ½, down ¼ cent; May corn futures were at USD3.75, down ½ cent. Analysts estimates for Wednesday supply/demand report range from 12.838 to 13.158 billion bushels for corn production and 1.602 to 1.814 billion bushel for the 2009/10 carryout. The USDA may well raise production estimates for both Brazil and Argentina where crop conditions have been pretty much ideal. In the US Midwest warming temperatures in March are having a positive impact, shrinking the snow belt and thawing out fields, say Martell Crop Projections. Worries over spring planting delays are based on heavy cumulative precipitation since October 1. The leading US corn states and northern spring wheat states are extremely wet and prone to flooding if spring rains become heavy, they warn.


March CBOT wheat futures closed at USD4.84 ½, up 2 ¼ cents; March KCBT wheat futures at USD4.95, up 2 cents; March MGEX wheat futures at USD5.05 ½, up 1 ¾ cents. Analyst's guesses for wheat ending stocks on Wednesday range from 876 to 1,012 million bushels. the average guess is 971 million, 10 million down on last month. Kansas wheat will benefit from soaking rain this week that replenishes field moisture, sat Martell Crop Projections. The top US wheat state is expecting at least 0.50-0.75 inches of rain but locally 2 inches in locally strong thunderstorms. Kansas wheat had deteriorated sharply after a dry winter, falling to 53% good-excellent, 35% fair and 12% poor on the March 1 USDA report. Last November, the top US wheat state was 75% good-excellent and only 4% poor. Rainfall is arriving at an ideal time, as wheat begins breaking dormancy in the Central Great Plains, they add.

EU Wheat Ends Mixed

EU wheat futures closed mixed Monday with March London wheat ending GBP0.45 higher at GBP92.75/tonne and Paris March wheat EUR2.50 lower at EUR116.75/tonne.

In the UK, barley intervention offers were up 29k MT last week, bringing cumulative net offers to 88k MT this season so far.

The new Ensus refinery on Teesside is finally up and running, albeit at only 50 percent capacity currently, according to trade reports. At that rate they should have a requirement for around 1,500 MT of wheat per day.

With wheat prices having fallen sharply since the turn of the year consumers feel under little pressure to commit themselves for the time being.

Winter wheat is coming out of dormancy in many parts of Europe and although excessive rains might be a problem in southern areas like Spain, Italy and Portugal, things are looking pretty good in generally more productive countries like France, Germany and the UK.

The USDA are out on Wednesday with ending stocks estimates for US wheat, with a minor reduction expected in the region of 10 million bushels.

No major revisions are anticipated to the world production numbers, although it is possible that last seasons output from China could be downsized.

Ensus Overrun Cost GBP62 Million

The Indian-owned parent company of the contractor behind the delayed project to build the Ensus bioethanol refinery on Teesside, may have to write off GBP23.1 million in it's Q4 in respect of overruns on the contract, according to this report: Tears in my Pilau.

Those costs are in addition to some GBP39 million already incurred in Q2 and Q3 overruns, according to the report!

It looks like one or two sub-contractors could be getting a bill on the mat too. I wonder if that YouTube video of the girl playing hopscotch whilst boasting of being paid GBP12.80/hour is still online?

It is! Here

CBOT Early Call

The overnight grains closed mostly higher with beans up 3-4 cents, wheat up 2-3 cents and corn fractions of a cent firmer.

A weaker dollar to start the week and steady crude oil set the tone. despite bearish stocks data last week, crude again seems to be able to hold its own above USD80/barrel. The longer it stays there then the more that level will become one of support, some analysts are forecasting that USD80-100 will be the trading range for the bulk of the remainder of 2010. That would obviously be supportive for grains.

We seem likely to have a couple of relatively quiet sessions ahead of Wednesday's USDA report, with maybe some light short-covering taking place.

Trade estimates for the US soybean crop average around 3.349 billion bushels with an average carryout of around 195 million bushels.

The corn crop is estimated at 13.081 billion bushels. Ending stocks are projected at virtually unchanged from last month at 1.716 billion bushels.

Wheat ending stocks are pegged at around 971 million bushels, slightly lower than last months report.

The USDA will also issues revised production estimates for global crop production. I personally can't see them changing South American soybean production too much from last months 66 MMT for Brazil and 53 MMT for Argentina. They may well increase the corn numbers there though from the 51 MMT and 17.2 MMT respectively released in February.

Apart from that the main figures I will be looking at will be what they say for Chinese corn and wheat production in 2009. Will they reflect what their attache has said late last week when he pegged the wheat crop at 106 MMT (8.5 MMT below the last USDA estimate) and the corn crop at 150 MMT (5 MMT under the last USDA figure)?

News reports suggest that Japan will keep coming back to buy US corn given the current freight differentials between purchases from North and South America. They are said to have bought 200,000 MT of US corn in the past few days and will require a further 1.7 MMT for Apr/Jun shipment, according to media reports.

Early calls for this afternoon's CBOT session: corn called steady to 2 higher; soybeans called 2 to 4 higher; wheat called 1 to 3 higher.

Niche Markets

Finding and developing niche markets in the current cold agricultural climate can't be a bad idea. This punter up in Scotland is the latest to spot that selling little bottles of cold pressed virgin rapeseed oil for GBP4.95 each can't be the fastest way to the poor house.

OK, he's selling them to ASDA, so HE isn't going to be getting a Lady Godiva for each bottle sold, but even so you get my drift.

It ticks plenty of boxes this approach. From the health benefits, low in saturated fat and high in Omega 3, 6 & 9 etc, you name an Omega and this stuffs got it in it. To the carbon footprint, grown, crushed and bottled on site. The by-product is organic and you can feed it yourself or sell it for a decent premium over that nasty solvent extracted stuff. Mix in a liberal dash of PROFIT MARGIN, and it doesn't sound like a bad proposition.

It's a bit more complicated than simply waiting for the single farm payment scheme cheque to land on the mat I'll grant you. OK you have to go out and do some leg work to find and nurture your marketplace, but you can't exactly expect everything to fall simply and easily into your lap can you? What's that, that's exactly what you do expect? Next...

Full story here

Anyone For Peas?

Not a product that I regularly get involved with, but Nogger currently has a potential supply of a couple of loads of feed peas (passed over vining peas) ex farm North Lincs looking for a home. Any interest out there please email me on: info at nogger dot co dot uk subject to being unsold.

China Crisis?

News released late last week that the USDA's agricultural attache in China reckons that wheat and corn production numbers last year were artificially inflated appears to have been largely ignored by the market.

The notion that 8.5 MMT of the world's 'burdensome' wheat stocks never actually existing has been met with abject apathy in fact. Surely I can't be alone in thinking that it's highly unlikely that this was a one-off occurrence either?

With last years Chinese wheat crop apparently overstated by 7.4% (106 MMT not 114.5 MMT) what are the implications of similar "creative accounting" happening in previous years? A 7.4% overestimate for the past eight years equates to around 60 MMT, the size of China's supposed ending stocks for 2009/10 and almost a third of all the wheat stocks in the world.

It would also seem, unsurprisingly, that Chinese corn production estimates have also been similarly routinely exaggerated.

The fact of the matter seems to be that only the Chinese government know how much wheat and corn they really have in reserve, and they aren't likely to go telling anybody. Suffice to say that it is probably substantially less than official figures suggest.

Crop prospects for the season ahead then are likely to be particularly important as China ranks number one in the world as far as production and consumption of wheat is concerned. They are also number to for corn output and usage.

Around 90% of China's wheat is winter wheat, widely grown across much of the country, but centred around the central provinces of Shandong, Henan and Hebei. Spring wheat is about to start going into the ground in the northern provinces, with production concentrated in Heilongjiang, Inner Mongolia and Gansu.

Corn planting is underway in the southern provinces of Yunnan, Guzhou, Guangxi and Sichuan. They will begin planting northern corn next month where production concentrated around Jilin, Shandong, Heilongjiang.

The map below highlights the main growing areas, with corn on the left (major areas dark green) and wheat on the right (major winter wheat areas dark green, major spring wheat areas light green):

You can view these maps in more detail here: China corn; China wheat

The latest weather maps from the US CPC show showers during the past week falling mainly outside the corn and wheat production areas to the centre east:

An ongoing drought in China's south west has left at least 15 million people short of drinking water in the worst-hit regions of Guizhou, Yunnan, Sichuan and Guangxi according to media sources.

Villagers are pictured here queuing for drinking water at Ganhe village in Anshun where each household is restricted to just two buckets of drinking water every four days.

In Yunnan province in the south the average daily temperature between September and February was 2.2 C higher than normal, a record abnormality according to data going back to 1952. There have only been 31 days of rainfall in the past year in Yunnan.

Things aren't a whole lot better in the north. The drought here, that began last summer continued into the fall and winter, says Gail Martell of Martell Crop Projections. The winter climate in Northeast China is very dry so field moisture has not been replenished, a 6-inch rainfall deficit built up in Jilin, the top corn province, says Gail.

Is there more than meets the eye to the newly formed relationship with Kazakhstan? The development of improved rail links and the building of a joint venture grain store on the border of the two countries could be more than simply opening up a "gateway to the East". As far as China are concerned it could be a method of importing wheat (and even corn and soybeans too - which are crops the Kazaks hope to expand production of in the next few years) "off the radar".

Corn consumption in particular is expanding rapidly in China, up by more than 50% in the past ten years, whereas production has only increased by just over 30% during the same period. Meanwhile using the attache's production estimate for 2009, ending stocks in China have almost halved in the last ten years, and that is assuming that previous year's production estimates weren't overstated.