CBOT Closing Comments


May Soybeans closed at USD9.61 ¾, up 2 ¼ cents; May Soybean Meal at USD270.20, up USD0.30/tonne; May Soybean Oil at 39.30, up 5 points. Informa raised their acreage estimate for 2010 US soybean plantings to 78.6 million from the January estimate of 77.9 million acres. That equates to an increase of 1.5% on last year's 77.5 million acres. Allendale peg the figure higher still at 79.1 million, which gives a potential crop of 3.338 billion bushels using trendline yields, second only to last season's 3.359 billion bushel output.


May Corn futures closed at USD3.74 ½, down 1 ½ cents; December Corn futures at USD4.03 ½, down 1 ¾ cents. Informa forecasts corn acres at 88.4 million for 2010 plantings, Allendale say 90.2 million. Last season was 86.5 million, according to the USDA, so either way it looks like a lot more corn is going into the ground this spring. That is if Mother Nature cooperates of course, so far she has been anything but amenable. Allendale's figures project a potential record corn crop of 13.243 billion bushels, even allowing for yields dropping back to a "more normal" 160.42 bu/acre.


May CBOT Wheat finished at USD4.83 ¾, down 5 ½ cents; May KCBT Wheat at USD4.92, down 3 cents; May MGEX Wheat at USD5.09 ¼, down 5 ¼ cents. Informa peg all wheat plantings for 2010/11 at 53.7 million acres, compared to 59.1 million acres estimated by the USDA for 2009/10. The USDA will release the 2010/11 estimates on March 31st. Allendale say that wheat acres will total 53.5 million, producing a crop of just under 2 billion bushels, or around 54 MMT, more than 10% down on last year's 60.3 MMT crop.

EU Wheat Closing Comments

EU wheat closed higher Friday, London wheat ending with Mar GBP1.55 higher at GBP94.55/tonne, and Paris May wheat up EUR1.25 at EUR126.25/tonne.

A strong dollar helped EU wheat close in positive territory for the week, with March London wheat finishing with gains of GBP2.25 and May Paris wheat EUR4.50 higher than last Friday.

Soft wheat export licences were issued for almost 500,000 MT in the past week, bringing totals for the current marketing year to 12.7 MMT, 18% down on year ago levels of 15.5 MMT.

Crop conditions in Ukraine and Russia are behind recent years, after the harsh winter appears to have taken it's toll. It's still early days yet, but reduced field work due to either underfoot conditions or credit restrictions may also knock a fair bit more off final yields yet.

That said, it seems highly unlikely that prices are going to roar away upwards. A modest correction might be about as good as it gets.

Around 4.2 MMT of mostly barley currently resides in EU intervention stores, that figure may rise to around 7 MMT before the support program ceases in the summer, some traders are saying.

In the UK only around 100,000 MT has been accepted into intervention so far this year, whereas in France it is closer to 1 MMT. That grain clearly has to come back onto the market at some point.

CBOT Early Call

The overnight grains closed mixed, with beans a cent or so higher, wheat down two and corn down 2-3 cents.

The dollar is higher and crude oil is down.

The USDA have today announced a sale of 106,000 MT of new crop soybeans to unknown.

The trade is gearing up for the March 31st planting intentions report with private forecasters now starting to emerge. Most pundits expect a sizable increase in corn acres as demand is expected to remain strong from the ethanol sector.

Hopes are fairly high that the maximum inclusion rate in gasoline will be increased from the existing 10% limit sometime this summer.

The jury is still out on soybean acres though, some calling for a drop due to a switch into corn, and others forecasting an increase there too, due to lower wheat acres.

Allendale say corn acres will increase by 3.7 million, with beans up 1.7 million and wheat down 5.7 million. Informa are out mid session today, last month they pegged corn up 3.1 million and beans up 400,000 acres.

I'd tend to side more with Allendale, and think that we will see a fairly sharp increase in soybean area as well as corn.

Of course these are only intentions, and there is a long way to go yet before we have the final numbers. Planting of corn is underway in Delta states like Arkansas, Louisiana and Mississippi, with estimates of around 5-10% complete.

Also out on March 31st are the quarterly stocks numbers. If there is to be a bullish surprise in those then it is maybe most likely to be for beans given the torrid pace of exports over the last few months.

A few little niggles are starting to appear for wheat as winter plantings start to emerge from dormancy. Crop conditions in Ukraine look less than ideal, with similarities in Poland, the Czech Republic and Germany.

In the US, the weather is far from co-operating either. The no longer dormant wheat crop will see 1-8 inches of snow in Kansas and parts of Oklahoma, along with 30-40mph northerly winds today and tomorrow, says QT Weather's Allen Motew.

That might get a few bottoms twitching amongst the large spec shorts this afternoon.

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

Ukraine Grain Stocks Dwindling

The combination of lower 2009 production and maintaining exports at a furious pace leaves grain stocks in Ukraine sharply lower year-on-year.

As of March 1st the country's grain stockpile stood at 12.8 MMT, according to the State Committee of Statistics, 21% down on the same date a year previously.

Wheat reserves were 5.8 MMT, barley 3.1 MMT, corn 2.4 MMT and rye 0.6 MMT, they say.

Given that the country consumes around 1 MMT of wheat a month itself, according to the USDA, and we still have four months of the current marketing year to go, that potentially leaves wheat ending stocks rather tight.

Especially so when you consider that we are entering a new marketing year, where production is set to be lower again due to a combination of a hard winter and reduced inputs whether enforced by soil conditions and/or lack of credit.

Kazakhstan To Increase Grain Area In 2010

New kid on the block, Kazakhstan, is set to increase it's grain planted area by around 4.5% to 16.7 million hectares for the 2010/11 season, according to UkrAgroConsult.

The Kazakhs have been quick to latch onto this "you grow wheat and people give you money for it, brilliant" malarkey recently, and are busy forging export relationships with anybody with a cheque book.

Wheat dominates the scene in Kazakhstan at the moment, although they are also looking to develop other crops, having recently noticed that their new bezzie chums China import quite a lot of soybeans from time to time.

Wheat area is seen rising almost 3% to 14.3 million hectares from 13.9 million in 2009.

Russian/Ukraine Crop Conditions

UkrAgroConsult say that around 1.45-1.75 million hectares of winter grains in Russia are in poor condition. That represents around 8-10% of the total planted area of just over 18 million hectares. That's around double the previous three year average of 3-5% rated as poor.

In Ukraine around 11-13% of winter grains are rated as in poor condition, with some reports suggesting winterkill losses of as high as 15%. The late arrival of spring may aggravate the adverse effects of the widespread ice crust which remains across large parts of the country, they say. In 2003 5.5 million hectares of winter grains was destroyed under similar conditions, they warn.

Spring planting and field work meanwhile remains severely restricted, with only the Crimea region seeing good progress with seeding activity, according to the Deputy Ag Minister.

One media report suggests that USD3 billion is required to fund spring planting and field work in Ukraine, with around half that needing to come from the government or in the form of bank loans. There won't be too many farmers wanting to borrow money at the 34% interest being quoted to fund that activity.

EU Rapemeal Prices

Basis FOB Lower Rhine in euros/tonne:

Mch 155,00 unch
Apr 141,00 +1,00
May 131,00 +1,00
May/1st h Jly 127,00 +2,00
Aug/Oct 10 115,00 unch
Nov/Jan 11 124,00 +0,50
Nov/Apr 11 125,00 unch

Reading Between The Lines

Australian export figures reveal that more than 400,000 MT of wheat has been shipped to China since the start of their marketing year in November. That's the highest level of sales in at least the past five years.

Yet officially China has huge wheat stocks of it's own, this wheat is simply being used to blend into what they already have, traders say.

Certainly whatever they have got in store has probably been there for some considerable time, several years probably.

Recent revelations from the USDA's attache in China that last season's crop was probably overstated to the tune of 8.5 MMT appear to have been largely ignored. They certainly were by the USDA themselves in the March 10 WASDE report, which left Chinese production last year unchanged at 114.5 MMT.

And if they're prepared to ignore 2009's overestimate then there's really no point rocking the boat and looking even further back than that is there?

India meanwhile, the world's second largest producer and consumer of wheat after China also continue to send out confusing signals.

Talk of large scale exports to make room for this season's impending new crop have largely failed to materialise.

They too are supposed to have huge government reserves, yet despite spiraling food price inflation the authorities have been extremely reticent to release these stocks onto the market at anything like a sensible price.

Today Indian ministers have agreed to extend a tax-free import window for wheat beyond the end of the month when it was due to expire.

Whilst they've also agreed to permit the export of 650,000 MT of "wheat products" at the kind of prices they've been asking of late they will be comfortable in the knowledge that they won't find many takers.

To sum it up, we have absolutely no idea really what stocks are being held by the two largest consumers of wheat in the world. Nor can we be sure what condition those stocks are in.

You probably don't need to be Poirot to figure out that they probably haven't got anything like the combined 77 MMT ending stocks that the USDA are predicting, that's 39% of all the wheat in the world incidentally. Neither do you require the services of David Suchet to guess that much of what they have got isn't fit for feeding to the cat.

CBOT Closing Comments


May Soybeans ended at USD9.59 ½, up ½ cents; May Soybean Meal at USD269.90, up USD2.50/tonne; May Soybean Oil at 39.25, down 58 points. Soybean export sales came in at 214,100 MT for delivery in 2009/10 and 525,000 MT for delivery in 2010/11, much better than expectations for combined sales of 150-250,000 MT. The dollar was up and crude oil down. Concern over the demise of the euro following reports that Greece might be about to go to the IMF for financial assistance, may harm US export hopes weighed.


May Corn futures closed at USD3.76, up 2 cents; December Corn futures at USD4.05 ¼, up 1 ¼ cents. The USDA report weekly export sales for corn were of 747,600 MT for delivery in 2009/10, higher than expectations of sales of 400-600,000 MT. US weather forecasts continue to suggest spring corn planting delays. A firmer US dollar and weaker crude oil kept a lid on prices today.


May CBOT Wheat ended at USD4.89 ¼, down 6 ¾ cents; May KCBT Wheat at USD4.95, down 7 ¼ cents; May MGEX Wheat at USD5.14 ½, down 5 ¾ cents. Wheat export sales were 325,300 MT for old crop and 114,000 MT for new crop, towards the top end of expectations of 300-425,000 MT. Snow is in the forecast for Kansas this weekend, wet weather in the spring wheat planting areas may also support prices.

EU Wheat Mixed

It was another mixed and subdued day in Europe with March London wheat ending down GBP0.95 at GBP93.00/tonne, and May Paris wheat closing EUR1.00 higher at EUR125.00/tonne.

Algeria bought 300,000 MT of EU origin wheat, which seems to be most likely French material. Tunisia also bought a small 25,000 MT of probably French wheat.

French analysts Strategie Grains reduced their estimate of EU-27 2010 soft wheat production by 600,000 MT to 134.1 MMT from last time, even so that is still a rise of 4.2 MMT on last year.

UK wheat production will come in at 16.02 MMT they say, a fall of 180,000 MT on what they estimated last month, but still more than 11% higher on last year. Output in Ireland was also cut 140,000 MT from last month.

The EU-27 reduction reflects the "probability of winterkill losses" in Eastern Europe, they say.

Also on the cards is a sharp increase in demand from the bioethanol sector, for 2010/11 demand here is seen up 1.8 MMT from 2009/10 at 6.6 MMT, an increase of over a third.

All that might read quite bullish, but it is maybe really only a little bit of light at the end of the tunnel in reality.

Stocks are still too high, and EU production is still seen increasing. Prices may rise modestly from where they are but I can't see it being any more than that, a modest increase.

If you plant it they won't (necessarily) come. To paraphrase a Kevin Costner film.

That said, you want to try buying the stuff beyond the next few months. For all the "we are awash with wheat and can't give it away brigade" give me a sexy price that isn't linked to futures for an Oct10/Mar12 run please. You are saddled with burdensome stocks after all, I will help you into the unsaddling enclosure.

EU Rapemeal Prices

Basis FOB Lower Rhine in euros/tonne:

Mch 155,00 +3,00
Apr 140,00 +6,00
May 130,00 +2,00
May/1st h Jly 125,00 +2,00
Aug/Oct 10 115,00 +3,00
Nov/Jan 11 123,50 +4,50
Nov/Apr 11 125,00 +4,00

CBOT Early Call, USDA Export Sales

The overnight grains closed lower, reversing most of last night's gains - I thought Tuesday was supposed to be turnaround day not Thursday? Beans closed around 10c easier, with wheat down around 7c and corn 5c or so weaker.

The dollar is up and crude oil is down. Concern over the demise of the euro following reports that Greece might be about to go to the IMF for financial assistance, might harm US export hopes.

The USDA report weekly export sales for corn of 747,600 MT for delivery in 2009/10, higher than expectations of sales of 400-600,000 MT.

Soybean sales came in at 214,100 MT for delivery in 2009/10 and 525,000 MT for delivery in 2010/11, against expectations for combined sales of 150-250,000 MT. China booked 390,000 MT of the new crop sales.

Wheat sales were 325,300 MT for old crop and 114,000 MT for new crop, towards the top end of expectations of 300-425,000 MT.

Actual shipments were 955,300 MT for corn, 913,500 MT for beans and 257,400 MT for wheat.

Sandbags are selling well in the Upper Midwest, with more rain and snowmelt on the way.

The trade is now starting to focus intently on what the USDA will say for planting intentions on March 31st. Recent gossip suggests that spring wheat area may also be reduced, as well as winter wheat plantings. The idea that that might be on the cards should be enough to encourage some more short-covering between now and then.

The jury is still out on corn plantings too, with most pundits predicting a rise of 3-4 million acres if Mother Nature plays ball. Whether or not all those extra acres get in will obviously also have a direct influence on the final soybean area too.

As well as rain in the Upper Midwest, snow is also potentially back on the cards for the top producing winter wheat state of Kansas. Temperatures are forecast to dip well below normal in the southern wheat states of Kansas, Oklahoma and Texas over the coming week.

Early calls for this afternoon's CBOT session: corn called 4 to 6 lower; soybeans called 8 to 12 lower; wheat called 6 to 8 lower.

The Blind Leading The Blind?

Is it just me or is there a subtle change of "vibe" going on? Spring is finally just about here it seems after a very long wait. The warmest day of the year so far is expected across some parts of the UK today, according to Metcheck. "We are looking for somewhere like the North Norfolk Coast to record the day's high - around 17C (63F)," they say.

Easter is only a couple of weeks away, which usually means it's turnout time. Yipee, get the buckets and spades out #3, and find me my skin tight lycra posing pouch. Feed demand will fall off a cliff, Ensus will be churning out more DDGS that they know what to do with, our UK wheat stocks will become even more burdensome than they already are. You won't be able to give stuff away, that much is obvious to a blind man.

So obvious in fact that just about every compounder in the country seems to have organised his book so that he doesn't get caught out this year, no Siree. There's massive record crops on the way from South America, haven't you heard? Ensus, did I mention them? They'll be desperate, they won't be able to give the stuff away apparently.

Them naughty lads the shippers are in for a right royal spanking this summer, they'll have so much stuff round their necks that they can't get shot of. All you have to do is sit and wait for them to come begging at your door, tee hee. Bring it on, bargains aplenty. Discounts R Us. Lordy, lordy don't you just love it when those bad lads take a pasting.


They don't bring it in in the first place, hardly cricket old boy I'll grant you, but it's an option. Surely they know that the compounders are going to want it really? Surely they're going to have sheds full of unsold expensive raw materials just waiting for the buying orders to come flooding in?

What, they're not? Bugger. One shipper told me yesterday that they had a boat waiting to load in Brazil that had been there for 2 1/2 weeks, and they weren't expecting it to sail for another 10 days yet. Bugger. Many boats are also now being chartered to load part of their cargo in Argentina, and part in Brazil. If they don't get delayed in one, they'll get delayed in the other. Unless they get delayed in both of course. Bugger.

A glance down a random shipper's soya price list yesterday shows mid April hipro priced a tenner blow early April, May 1st priced a further twelve quid below that, mid May a further six quid cheaper and June/Oct fifteen notes cheaper still.

A different one today, asa April twenty quid cheaper than asa March, with asa May a further THIRTY quid less and asa June fifteen quid less again. A sixty five pound price differential between asa March and asa June, three months.

You'd have to be criminally insane to be shipping large quantities of unsold raw materials in on the off chance that a buyer might pop up, given rapid and substantial price differences like that. So you ship the bare minimum to cover your existing sales. In fact you ship less than the bare minimum and hope to "wing it" and be able to get away with it, replacing with cheaper soya later on. Surely they aren't ALL going to want it in the first half are they? Guess what, not only does everybody want it first half, they all want to buy more on the spot market when we get there as well. Bugger.

Not only have you not got enough to fulfil existing sales, but you're having to turn away sexy little spot orders because you're already oversold anyway. Double bugger. If you really get caught then you're going to have to go cap in hand to another shipper and buy some spot off him. If he's got it, and isn't playing the same game as you. And if he's willing to sell it to you at all of course.

Imagine this scenario, Ensus run at only 50% capacity whilst they make tweaks to the production process. Those tweaks take longer than anticipated, most of the summer in fact. Bugger. They've got existing winter sales carried over that they still have to fulfil out of this reduced tonnage, leaving them not the distressed seller you thought. Bugger. Cargill have a summer shutdown. ADM have a breakdown and/or you find have suddenly sold all their stuff for export to Ireland because you told them you didn't want it. Nobody has shipped imported rapemeal in because it was folly as those two were offering rape out at more or less the same price as it's quoted at on the Continent. If you want a load to go to Scotland you have to road it up from Teignmouth as that's where the only spot stuff is in the entire country. Petrol prices hit a record high. Everyone's a spot buyer, compounders, merchants and even the shippers themselves. Bugger, bugger, bugger.

Nah, it couldn't happen. Could it?

Euro Drops As Greece Wants More Than Eggs This Easter

The euro is down across the board today as Greece indicates that it might have to approach the IMF for aid as soon as the Easter weekend.

Piling the pressure on the EU to agree to launch some sort of fiscal rescue package at an EU summit a week today, March 25th, rumours are abounding that a failure to do so will force Greek Prime Minister George Papandreou to approach the IMF for help.

A Dow Jones News article, quoting a senior Greek official, suggests that the rift between the administration in Athens and that of Germany is widening. A report in the Wall Street Journal says that Greece's minister of economy, competitiveness and shipping, Louka Katseli, says that the chance of going to the IMF is now some 70%.

It's an interesting situation developing and a difficult one to call. Whilst German Chancellor Angela Merkel plays hardball, ECB President Jean-Claude Trichet and French President Nicolas Sarkozy appear more in favour of an aid package.

Sarkozy's keenness to help Greece out might have something to do with the fact that the IMF head, Dominique Strauss-Kahn, is an old political adversary of his.

Looks like more euro volatility lies ahead over the coming weeks.

EU Wheat Crop Estimates Trimmed

French analysts Strategie Grains have cut their EU-27 soft wheat production estimate by 600,000 MT to 134.1 MMT, although that still represents a 4.2 MMT or 3.2% increase on lat year.

Barley output is seen by them at 57 MMT, which is 200,000 MT down on last month and 4.8 MMT down on the 61.8 MMT they say was produced last year.

Corn output is seen up 200,000 MT from last month and 900,000 MT higher than last year at 57.9 MMT.

Meanwhile, the association of German farming cooperatives say that the coming season's grain harvest will fall to 46 MMT from 49.9 MMT in 2009. Wheat production will come in at 24.6 MMT, winter barley 8.6 MMT and spring barley 1.8 MMT they say.

Argimoney.com attribute part of the reason behind the lower wheat production number to German farmers planting more higher quality, but lower yielding, wheats. A trend that seems to be being replicated here in the UK with farmers growing wheat for Ranks and the likes. I'm not sure that this significant volume of lower yielding wheat is being accurately reflected in overall production estimates yet.

The cold and wet conditions witnessed across all of Europe this winter looks like it may also have restricted fieldwork, which could also take the shine of final yields.

"Fields are still frozen following a very cold winter. In Ukraine, a massive snow melt is under way, where soggy fields are apt to delay spring planting. Winter precipitation was twice normal on many of these farms. Germany, Poland and the Czech Republic are also having trouble warming up, after one of the harshest winters in decades," says Gail Martell of Martell Crop Projections:

CBOT Closing Comments


CBOT May soybeans settled 14 cents higher at USD.59 a bushel. It was the same old story for beans. A weaker dollar, firmer crude oil and technical problems in South America helped push price higher. Weather concerns in Southern Brazil might take some of the shine off yields.


May corn ended up 7 1/4 cents at USD3.74 per bushel and July corn closed up 7 1/2 cents at USD3.85 1/4. Corn gained from continued worries over spring plantings and a weaker dollar and firm crude oil.


CBOT May wheat finished up 9 cents at USD4.96; KCBT May wheat ended 7 1/2 cents higher at USD5.02 1/4, and MGE May wheat was up 6 3/4 cents at USD5.20 1/4. Large spec shorts are maybe the main factor why wheat futures can close sharply higher for little apparent reason.

EU Wheat Closing Comments

London March wheat closed GBP0.10 higher at GBP93.95/tonne, May Paris wheat ended up EUR1.75 at EUR124.00/tonne.

Yet again there was little change in fundamentals, the US dollar was sharply lower, yet EU prices managed to finish the day with marginally higher closes.

There is a little bit of a feeling that maybe, just maybe, the overall weight of bearish news can't get much worse. There are perhaps one or two slight glimmers of hope for EU wheat growers emerging.

It seems like slowly emerging EU crops may not have done quite so well over what has been a largely depressing and very cold winter.

Certainly farmers are reluctant sellers at current levels that is for sure.

That said, demand is hardly outrageous. The UK shipped just 210,782 MT of wheat in January, according to the latest statistics from the HGCA. That's a 40% reduction on what was shipped in January 2009.

CBOT Early Call

The overnight grains closed modestly steadier, with beans and corn 1-2 cents higher and wheat up fractions.

The dollar is weaker, and crude oil 87c higher at USD82.57/barrel.

Argy strike rumours are still just Argy strike rumours, but let's face it if you were a militant Argy dock worker then you'd be stupid to strike in January of February before the harvest licks off and there's nothing left of old crop to export.

Is there any smoke without fire?

Tensions and mistrust between the farmers and government are still in evidence. Argentine Agrarian Federation Eduardo Buzzi continued to criticise the government this week over their plans to restrict meat exports.

Regardless of strike action, many Argy and Brazilian farmers will only be looking to sell on the spot market if they absolutely have to, record crop or not.

I don't think that it is beyond the realms of possibility that South American shippers saw monster crops coming and, thinking that they had local growers by the short & curlies, sold the market short either do you?

Oil World warn that US domestic stocks are "unusually thin" after months of largely having the export market to themselves.

With US farmers seemingly already facing another struggle to get corn and soybeans into the ground this spring amidst saturated soils, we could be in for some nervousness.

The National Oceanic Atmospheric Administration (NOAA) announced yesterday that a huge snowpack from a fierce winter will cause massive flooding this spring in the Upper Midwest and in the major corn-producing state of Iowa.

I still foresee front-end premiums throughout the summer months. A quick glance down UK shipper price-lists today reveals more poa's, asa's and last halves than you can shake a stick at.

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

EU Rapemeal Prices

Basis FOB Lower Rhine in euros/tonne:

Mch 152,00
Apr 134,00
May 128,00
May/1st h Jly 123,00
Aug/Oct 10 112,00
Nov/Jan 11 119,00
Nov/Apr 11 121,00

USDA Planting Intentions

The next set of eagerly awaited data from the USDA is the prospective plantings report due for release on 31st March.

At a Reuters Food and Agriculture Summit in Chicago yesterday, analysts compared notes to come up with some ideas as to what US farmers are currently looking at planting this spring.

They pegged prospective corn plantings at 89.3-91.0 million acres and soybean sowings at 76.5-78.7 million acres. Let's take the middle ground and use 90.15 million for corn and 77.6 million for soybeans.

That equates to a 3.65 million acre, or 4.2%, increase in corn and a marginal 100,000 acre increase for soybeans.

That's around a million acres more corn and half a million more soybeans than February's USDA Outlook Forum estimated. That pegged the 2010 US corn acreage at 89 million acres, whilst the soybean area was seen falling half a million to 77 million acres.

It is also worth remembering that the Outlook Forum predicted a return to "normal" yields, with corn producing 160.9 bu/acre (2.4% down from 164.9 bu/acre in 2009) and soybean yields coming in at 42.9 bu/acre (2.5% down from 44 bu/acre in 2009).

Making adjustments for unharvested acres, the bare bones of those averages seems to suggest a small increase in US corn production for 2010 and a modest decrease in soybean output.

Of course it's very early days yet, and even when we have the March 31st numbers they are only the USDA's perception of what US farmers intend to plant.

If the current extreme wetness in many parts of the Upper Midwest continues then the obvious conclusion is that maybe all of those intended corn acres won't get in, and most of those lost acres will end up as soybeans.

Pound Up, Dollar Down

The pound is up to it's best levels in almost three weeks against the dollar this morning, hitting 1.5360 against the greenback.

Sterling pushed higher against the euro too, hitting 1.1144, it's best since the first day of the month, after UK unemployment data came in much better than expected. Unemployment claims fell by the biggest amount since November 1997 last month data revealed. Claims fell by over 32,000 against expectations of an increase of 6,000.

Support also came from the release of the minutes from this month's BoE MPC meeting, which showed that the vote to leave rates on hold and not increase QE was passed unanimously.

The dollar is also weaker across the board today, after the Fed last night said that US interest rates would stay "exceptionally low" for an "extended period" of time.

CBOT Closing Comments


May Soybeans finished the day at USD9.45, up 15 cents; May Soybean Meal at USD261.5, up USD3.90/tonne; May Soybean Oil at 39.37, up 62 points. A sharply lower dollar and firmer crude oil late in the session helped support the entire complex today. already lengthy vessel line-ups in Brazil and talk of a possible dock workers strike in Argentina added a bit of nearby support too.


May Corn futures settled at USD3.66 ¾, up 3 ½ cents; December Corn futures at USD3.96 ¾, up 3 ¾ cents. Forecasts for continued wet and cool weather is also friendly to corn prices. Although temperatures are seen warming up this next few days, that may not be entirely conducive to corn planting as it may encourage rapid snowmelt and flooding. In addition snow is back in the forecasts for next week, seemingly indicating that winter hasn't gone away just yet.


May CBOT Wheat closed at USD4.87, up 7 ¾ cents; May KCBT Wheat at USD4.94 ¾, up 6 ½ cents; May MGEX Wheat at USD5.13 ½, up 6 ¼ cents. The weather seems to be conspiring to threaten winter wheat output, and diminish spring wheat plantings too. Given the heavy spec shorts in the market, wheat remains vulnerable to a sharp upwards correction. Despite Thursday forecasts in the 60's and low 70's for the top winter wheat producing state of Kansas, snow is back on the radar for the weekend.

EU Wheat Ends Mostly Flat To Higher

EU wheat futures ended another uninspiring day mostly unchanged to slightly higher, London March feed wheat closed GBP0.35 higher at GBP93.85/tonne, with May Paris milling wheat up EUR0.50 at EUR122.25/tonne.

Not exactly what you would call a significant turnaround, but maybe a very modest step in the right direction.

A sharply weaker dollar late in the day maybe wasn't adequately reflected in EU closing prices today however, if that trend continues in the morning then we can easily expect EU wheat to give up today's gain and then some.

Increased talk of possible significant winterkill in Ukraine is helping to underpin futures somewhat.

Talk that US farmers maybe won't up spring wheat acres to at least partially compensate for a sharp drop in winter plantings may also add some longer term support.

Neither of these factors however alter the short-term supply and demand imbalance.

CBOT Early Call

The overnight grains closed slightly firmer helped by a weaker dollar and modestly higher crude oil. Beans finished with gains of 4-5 cents, whist wheat was 1-2 cents firmer and corn up fractions of a cent.

With last week's stocks and WASDE reports from the USDA out of the way, there's a distinct lack of direction ahead of the March 31st planting intentions report.

US weather is improving, with Chicago having a shot at reaching 70F at the end of the week, that's a big step forward on a high of just 48F on Monday. With this rapid warm up also comes the risk of snowmelt and flooding further west.

"Flooding will reach just below record levels in the Red River Basin of North Dakota late this week," say QT Weather.

Japan is shopping for 136,000 MT of wheat again this week, with 90,000 MT of that US origin. Apart from these routine orders however then US is struggling to pick up many "surprise" orders. Yesterday's export inspections report was less than half the previous weeks 21 million bushels.

Crops prospects in Ukraine seem to be declining although the full picture is far from clear yet. Grain stocks are around 20% down on a year ago, and exports are starting to fall away quite rapidly.

Not that that will be bothering the likes of Russia and Kazakhstan. The former being the likely favourite to fill most of Iraq's current wheat tender. The Kazakhs meanwhile are busy forging new relationships with Asia.

With the Brazilian soybean harvest now past halfway, and Argentina just coming onto tap, logistical problems are the best hope the US has of picking up some extra business. With truckers reportedly queuing for up to 25km to get to rail terminals in Brazil, and vessel loading delays already emerging, there might be a small window of opportunity. Especially if strike rumours in Argentina's Rosario port prove to be accurate.

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

EU Soymeal Prices

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

Brazil pellets 48%

Spot Fob 360.00
Afloat 355.00
Apr 338.00
May 326.00
Jun/Sep 317.00
Oct/Dec 318.00

Dutch Hipro 49% profat FOB

Apr 382.00
May 356.00
Jun/Jul 329.00
Aug/Oct 326.00
Nov/Jan 335.00

Argentine Hipro 49% profat

Afloat 383.00-378.00
March 350.00
Apr 344.00
May 330.00
Jun/Sep 321.00
Oct/Dec 322.00

Ukraine Grain Exports Latest

Ukraine has exported 17 MMT of grains in the marketing year that started on July 1st as of March 11th, according to the Ag Ministry.

Of that total 7.86 MMT (down 9% on a year ago) was wheat, 4.7 MMT barley (down 11%) and 4.3 MMT corn (up 54%).

So far this month wheat exports are running at 260,000 MT, barley at 270,000 MT and corn at 300,000 MT.

Wheat shipments have slowed up significantly in the past six weeks, having been running slightly ahead of even last season's record pace during the first half of the marketing year.

Ukraine Crop Conditions Continue To Decline

As of March 11, winter grains in Ukraine were rated 13.5% in 'unsatisfactory' condition, up from 10.8% a week ago, according to the Ag Ministry there. That's the equivalent of an area of 1.1 million hectares.

They say that 1.6% of planted area had perished entirely.

Winter rapeseed is the worst affected crop, with 22.4% now unsatisfactory, up from 20.8% a week ago, only 36% of the crop is now rated as being in good condition.

They say that 9.1% of winter grains remain under ice.

There are two ways of looking at this information, are they exaggerating losses to get prices up and earn some extra much-needed dollars, or underestimating them to avoid spooking the market? Who knows?

One thing I can tell you is that a couple of weeks ago, when they issued a statement saying that 7.2% of the grain crop was under ice, I received an email from a agronomist over there saying that the true figure was probably more like 72% not 7.2%.

US Winter Wheat Crop Conditions

Field conditions might be cold and soggy in the Upper Midwest ahead of spring wheat plantings, but the outlook in winter wheat states further south is improving.

The USDA last night said that 63% of winter wheat in Kansas is rated good to excellent, up three points from a week ago. Conditions in Oklahoma saw a similar improvement, also up three points to 68% good/excellent.

Further south still Texas wheat jumped from 45% rated in the top two categories to 55%.

Topsoil temperatures are much warmer in these southerly states on the Great Plains than further north, where a thin layer of snow is still present in South Dakota and Minnesota, keeping fields cold and holding soil temperatures down in the 30's F.

Image courtesy of Martell Crop Projections:

CBOT Closing Comments


May Soybeans closed at USD9.30, up 4 ½ cents; May Soybean Meal at USD257.60, up USD6.30/tonne; May Soybean Oil at 38.75, down 80 points. The February NOPA crush figure was better than expected at 148.35 million bushels, and much higher than last year's 128.7 million. Harvesting in Brazil is about halfway done, logistics are already causing a problem. As the harvest progresses south, Rio Grande Sul got only spotty showers on the weekend, not nearly enough to relieve drought. A 3 inch rainfall deficit has built up over the past 3 weeks while soybeans were filling pods, says Gail Martell of Martell Crop Projections. In Paraguay harvesting is around 75% complete, and a record 7.2 MMT crop is on the cards, more than double what the country managed to produce last year.


May Corn futures were at USD3.63 ¼, down 1 cent; December Corn futures at USD3.93, down ¾ cents. Export inspections for corn were below what is needed to meet the USDA export forecast for the 2009/10 marketing year, but above trade estimates at 36.5 million bushels. South Korea bought 275,000 MT of corn in a tender. Separately, the USDA also said that previous sales of 176,000 MT of corn to unknown destinations had been switched to South Korea. South Korea clearly have their buying boots on, saying that it's January and February corn imports were up 25% on year ago levels. Wet weather and saturated part frozen soils in the Upper Midwest is seen delaying corn planting for a second year running.


May CBOT Wheat closed at USD4.79 ¼, down 6 cents; May KCBT Wheat at USD4.88 ¼, down 6 ½ cents; May MGEX Wheat at USD5.07 ¼, down 6 ¼ cents. Algeria is tendering for milling wheat and Iraq issued tenders for at least 100,000 MT. Export inspections were dismal at 9,167,000 bushels compared to last weeks 21,091,000 bushels, and expectations of 14-19 million. Snowmelt on top of already saturated soils in the Upper Midwest is seen potentially cutting spring wheat acreage. "Hard red winter wheat in the Great Plains got a boost from generous showers last week. Northwest Kansas received over an inch of rain along with western Nebraska and northeast Colorado. Wheat growth will accelerate with highs in the 50s F this week and favourable field moisture," says Gail Martell of Martell Crop Projections.

EU Wheat Closing Comments

EU wheat futures closed with London mostly higher and Paris generally unchanged. March London wheat ended GBP1.25 higher at GBP93.50/tonne, whilst March Paris wheat was unchanged at EUR121.75/tonne.

The pound and euro both lost around 0.75% against the dollar today, which steadied the sinking ship somewhat.

Even though US wheat is generally uncompetitive to the export markets that European wheat is looking at anyway, other origins are of course also priced in dollars.

The supply and demand fundamentals are still stacked heavily against the world's wheat growers for the time being, with every export order being fiercely fought over.

Iraq are shopping for wheat this next few weeks, having bought Russian and Canadian grain in their most recent tender.

North Dakota farmers are suffering from deja vu, with heavy flooding likely to hit Red River area for the second year in a row. The state is easily the largest producer of spring wheat in the US.

Further south, increased rains over the past couple of weeks have improved winter wheat prospects in the top producing state of Kansas.

CBOT Early Call

The overnight grains closed with beans, wheat and corn all mostly around 1-2 cents lower.

The dollar is slightly firmer and crude oil a bit weaker, adding a little bit of pressure to the grains.

Although the Brazilian soybean harvest is only at the halfway point, there is already talk of vessels lining up at the ports and it taking up to three weeks to load a boat. That may create a little bit of extra interest for US beans although harvesting is also now just getting underway in Argentina.

Argy farmers aren't overly happy with prices at little more than USD200/tonne before the 35% export tax is knocked off, and may elect to sit and wait for better prices if they can afford to do so. Sales of "big bags" for on-farm storage are apparently buoyant.

The February NOPA crush figures have just been released showing 148.35 million bushels of soybeans were processed last month, a fair bit higher than the 144.5 million that had been expected.

Excessive Midwest wetness is still a potential worry for early corn planting.

South Korea says that it's January and February corn imports were up 25% on year ago levels. Today the USDA have just announced an additional 275,000 MT of old crop corn sold to them.

Iraq says it is looking for 100,000 MT of wheat in a tender. They usually buy more than the tender amount, with Russian and Canadian wheat fitting the bill last time round.

Some reports suggest that US farmers will plant less spring wheat acres than the USDA seem to think. Having already cut winter wheat acres to the lowest since 1913, many pundits expect a partial correction of that in the spring. However some are now suggesting that the further subsequent erosion in wheat values, and continuing heavy soils may see spring acres also reduced.

Early calls for this afternoon's CBOT session: corn called steady to 2 lower; soybeans called flat; wheat called steady to 2 lower.

ADM UK Plant To Close

ADM's UK cocoa plant in Hull is being put to bed once and for all, according to media reports. The facility, which was acquired in 1997 from British Cocoa Mills, and employs 86 people, produces cocoa butter, cocoa powder and cocoa liquor.

The company say that the move is "based on overcapacity in the cocoa processing market" and that the Cleveland Street plant will shut on July 1st.

Are They Trying To Tell Us Something....?

"Snow is actually more common at Easter than at Christmas," says the BBC's website.

Although falling short of forecasting snow as they haven't got a clear signal yet, they do say that an increased risk of frost is on the cards after the Easter weekend.

I think I'll leave the BBQ in the shed a while longer yet then.

Can't we blame the BBC for the weather? We pay our licence fees don't we, why can't we have a warm and sunny Easter hot enough to melt the kids eggs? That will teach the buggers.

Yesterday in the car: "I'm not religious, but I do believe in Easter 'cos we get lots of eggs and stuff." A career in the clergy clearly awaits young George.

Did You Know...?

...in the last twelve months the pound has only closed below 1.10 against the euro on thirty nine trading days, and that twelve of those were last March?

And that on the weekly chart over the last five years the pound has only closed below 1.10 twelve times?

Fascinating stuff trivia.

UK Crop Development

Those nice boys at Farming Online have put together an interesting summary of the latest crop conditions up and down the country here.

Winter rapeseed seems to be generally looking "a bit sad", displaying few signs of new growth and suffering from fairly extensive pigeon damage, they say.

The recent drier slightly warmer weather seems to have generally improved ground conditions significantly however.

Winter wheat in the eastern counties is described as "actively growing" although not much growth is being reported in the west and the north.

Winter barley is looking "fully tillered, but some very yellow and need some warmer drier weather...before they will pick-up," they add.

Pound Back Under Pressure On Beckham Injury Blow

The pound is back under pressure this morning, falling below 1.10 against the euro, and within half a cent or so of slipping back under 1.50 against the US dollar.

News filtering through late last night that an injury to David Beckham would rule him out of the summer World Cup is to blame according to experts, like me.

Some people that don't know what they are talking about are implying another warning from Moody's that the UK is in danger of losing it's AAA credit rating is really responsible.

It's already shaping up like another volatile week for sterling, with the minutes of this month's BoE MPC meeting out on Wednesday and UK public spending data due out on Thursday, not that that's got anything to do with it you understand.

Neither has data out today showing that UK house price growth appears to have run out of steam after asking prices rose by just 0.1% this month, according to Rightmove.

Another raft of opinion polls out over the weekend suggested that the upcoming election might be a closer run thing than last week's poll by Angus Reid which suggested an outright Conservative victory.

I'm thoroughly sick of the whole thing already and they haven't even given us a firm date yet. And why oh why do we have the endure what the leading protagonists wives have got to say on the issue? I'm not interested in Colleen's opinion on the merits of England employing a five man midfield in South Africa am I? So why should I give two hoots about what David Cameron's or Gordon Brown's wives have got to say? I don't want to know about "Dave's irritating habits", or whether Gordon picks his nose and eats it in bed do I?

I took drugs when I was student. Did you, yeah well I used to drink seventeen pints of Special Brew every night so there, you can't be more ordinary than me, mate. If they're electing people on ordinary-ness then I'm the man for the job, the noo. Well, we can't put your missus up next to Sarkozy's looking like something the cat dragged in can we, eh Cyclops? Come on then, sod an election, let's have a drinking competition, the first to neck twenty tequila slammers wins, puff pants.

They could stage it on prime time TV on a Saturday night, hosted by Jim Bowen, wives semi naked in the background. Shove h'apenny, darts, arm wrestling, binge drinking and bar billiards winner takes all.

Hang on, what about Wannabe PM's Skating on Thin Ice. The wives can be included in that one as well, throw in a couple of duets with Robbie Williams, and maybe leave them in the jungle for a fortnight eating worms and stuff. I think I'm onto something here, get me Simon Cowell on line two.

Argy Soy Harvest Underway

Harvesting of what is roundly expected to be a record soybean crop in Argentina this year is just about underway, although heavy rain is dogging early progress, according to the Ag Ministry.

The corn harvest which began a week or two ago is currently around 11% complete, with the sunflower harvest 40% done, the Ministry added.

The typically cagey Ministry haven't issued a soybean crop production estimate, but say that the planted area is 18.2 million hectares. The corn crop will come in at 19-21 MMT and the sunflower harvest at 2.2-2.7 MMT, they say.

A corn crop of 20 MMT would be a 59% increase on last season's 12.6 MMT and a sunflower crop of 2.5 MMT would represent a 14% reduction on last year's output of 2.9 MMT.

The USDA currently peg the soybean harvest at 53 MMT, 66% higher than the drought-ravaged 32 MMT produced in 2009. They say that the planted area was 18.8 million hectares, a clear record, and 17.5% more than the 16 million hectares planted for 2008/09. Soybean area has been increasing steadily in recent years: