An Open Letter To GASC

Hello GASC

I am Nogger, Prince Noggger of Nairobi, son of the King of Nigera. Him very good man, but King he die last week in plane crash. Before he die he tell me, Nogger my son, I want you to take some wheat to Egypt for me.

So that is why I am being writing this letter to you my most loyal and trusted friends. King, he always say, Egypt man good man. Some Nigerian man bad men, they want to steal King's wheat, they come for me with guns. But I keep your wheat safe for you Mr GASC, like King ask me to do.

Please be sure that I ask you for no money, all I wish to do is carry out my father's dying wish to send his wheat to you. I have 60,000 MT of it, we grow it in Gobi Desert in north of my country. It is special place where nobody but King and me know for you isn't it. We grow lots of wheat there, it is good wheat like you good man.

I want to now send wheat to you so you make lots of bread, but I need to get boat, big boat. Remember I am giving you wheat for free, my very close friend and ally who I never meet. All I ask from you my men is small favour. Very small favour then I send you 60,000 MT free wheat is yours to keep. No money does not be sent, so you no worry need. We must keep secret from bad men who look for me with guns in internet cafe where I now must live.

Shhhh, my friends do not thank me, I do this dangerous thing for you. I risk my life for you, but I do not want money, no no, so stop saying I give you money, I not need money. Wheat is free for you my closest mucker and matey boys.

I want to send you wheat, but I cannot send without boat. Big boat, huge bloody great thing, big enough for fitting 60,000 MT of free wheat inside.

Is lucky for me, my uncle have boat, him good man too like you. He say he will lend me boat for free. No payee, payee. Buckshee, gratis, on the house me old China. So you see no money need change hands you get free wheat on free boat, is good deal for you yes? And you not get Russian or Kazakh wheat full of dog pooh pooh. This good clean Nigerian wheat on GAFTA terms.

OK, look you play hard ball, you nice man, if free too expensive I pay you. Is good deal yes? I pay you USD10,000,000 to take the stinking wheat, you happy now Mr Bigshot. Yes I pay, you no pay, I pay.

Please now, no thank me, no no. Just send me your bankcard details and I pay. Don't forget to include the three digits on the back.

I know that you will not let the King down.

Prince Nogger

Egypt Buys Russian/Kazakh Wheat At Throw Away Prices

Egypt's state-owned wheat buyer GASC seemingly continue to have the global wheat trade fawning all over them, picking up some ludicrously cheap offers.

They've just bought Russian and Kazakh wheat in their tender results announced today, taking one 60,000 MT cargo of each at the knock-down price of just USD166/tonne plus freight.

To put into context of just how cheap that is, it's the equivalent of only GBP112/tonne FOB.

At prices that low who wants a slice of that business? Let Russia and Kazakhstan have it I say. That seems to be the conclusion that others are coming to as well, as there weren't too many other origins put up. The cheapest French wheat was USD12/tonne adrift on price. Don't bother wasting the stamp next time lads.

You are sure that's proper milling wheat aren't you Egypt? You might be in for a nasty surprise when it gets delivered in a skip with an old settee and last year's Christmas tree poking out of the top of it.

It's just an idea, but it may be worth giving it more than a casual glance when it arrives. I'm sure it will be fine, but just to put your minds at rest, we don't want any nasty surprises do we?

Russian wheat waiting to unload at Alexandria Docks

Three Lions On The Shirt

All of them pussy cats it would seem after last night's toothless performance. The FA are complaining to FIFA I hear this morning after a fan breezed past security and into the England dressing room. I can only assume that he then proceeded to get changed into the full Lampard kit and subsequently enjoyed a 90 minute stroll around the pitch?

Not that I'm just blaming him of course, the same could be said for most of them, Rooney included. If it was a horse race I'd swear that the favourite had been nobbled by being given a couple of kebabs, three pork pies, a KFC bargain bucket and two litres of 7 Up just before the off.

The pigeon knew where the safest place to perch was though didn't he, in the back of the Algeria net, nobody was going to bother him in there were they?

Still, the squad did manage to take a few hours off from training this morning, to visit a local orphanage for underprivileged children and play a bit of football with the kids, which was nice.

"It's good to put a smile on a few faces, even if it's only for a couple of hours. These people have nothing, no hope, their lives are just one big struggle against one thing after another. It was very humbling really," said one of the residents, Jalal Umboto, aged 6.

"We were very unlucky, and their goal was miles offside," said a disappointed Fabio Capello after the game.

Local police are still search for Shaun Wright-Phillips who they say "got lost" during the visit. Emile Heskey's coveted barn door and banjo though are thought to be safe, and are likely to feature again against Solvenia.

Spanish Armada

What's going on in Spain? Nobody seems to know. No country has ever won the World Cup after losing their first game, and suddenly many people's favourites to win the tournament look like they could be heading home.

Nobody seems to know what is going on with their wheat crop either. Even though harvesting is underway, estimates on the size of the crop vary quite alarmingly. A bit like some of the Spanish passing the other day.

According to the leading farmers' union, Asaja, soft wheat production there will come in at 3.5 MMT this season, only marginally higher than last years crop of 3.4 MMT.

The government are predicting a crop of just over 4 MMT. Yet Accoe, the Spanish grain merchants' association, this week estimated soft wheat production at almost 5 MMT. Are Accoe just being wildly optimistic, just like they were about their teams chances of lifting the coveted World Cup?

Certainly Spain, traditionally the UK's biggest wheat export home, has had plenty of rain this season, with flash flooding occurring in several regions of the country including the main wheat producing areas. Whether that rain has done more harm than good seems to be a bone of contention.

It seems that it isn't just the size of the crop estimates that are varying quite widely, reports of early harvested wheat suggest that quality is all over the shop too. A bit like the Spanish defence against Switzerland.

Durum wheat production meanwhile is expected to fall quite sharply this year to around 800,000 MT from 1.3 MMT in 2009, as Spanish farmers cut back on plantings due to the volume of unsold durum still kicking around from last season's harvest.

CBOT Closing Comments


July soybeans closed at USD9.61, up 9 cents; July soybean Meal at USD289.40, up USD3.40; July soybean oil is at 37.92, down 13 points. Support came from news of a sale of 35,000 MT of soybean oil to China for the 2009/10 marketing year, and a sale of120,000 MT of soybeans to "unknown" for 2010/11. Also supportive was crude oil rallying to close 58c higher at USD77.37/barrel after trading lower earlier in the day. Lingering concerns over lower rapeseed production in Canada was also a bullish factor. Informa increased their 2010 US soybean planting estimate to 78.845 million acres from 78.5 million last month.


July corn closed at USD3.60 3/4, up 3 1/4 cents; Dec corn ended at USD3.80 1/2, up 2 1/4 cents. The Buenos Aires exchange raised its Argentine corn production estimate to 22.7 MMT from last months 21 MMT, and increase of more than 50% on last season. Argentina is the world's second largest exporter of corn after the US. Informa Economics surprised the trade by cutting its estimate for US 2010 corn plantings by almost 300,000 acres to 89.3 million. Although that is still half a million higher than last month's USDA projection, with corn having gone into the ground in a timely manner this season it was generally expected that US farmers would have taken the opportunity to increase their area by more than that.


July CBOT wheat closed at USD4.61 3/4, down 1 cents; July KCBT wheat at USD4.97 1/4, up 1 3/4 cents; July MGEX wheat at USD5.38 1/4, up 1/4 cent. The gap between CBOT soft wheat and the hard wheats of Kansas and Minneapolis continues to widen. CBOT wheat gained 21 cents for the week. Kansas wheat was up 30 cents for the week, and Minneapolis wheat rose 37 cents for the week. Informa pegged the 2010 US spring wheat area at 13.456 million acres, 400,000 lower than the USDA. Concerns over a sharply reduced acreage in Canada continue to underpin the wheat market. Traders are hoping the US wheat will feature in Saudi Arabia's huge 990,000 MT wheat tender, the results of which are expected over the weekend.

EU Wheat Closing Comments

November London wheat closed Friday GBP1 higher at GBP105.50/tonne and November Paris wheat was up EUR1.75 at EUR141.75/tonne.

News that Brussels granted export licences for 628,000 MT of wheat this week was supportive as that is a pretty big number, especially for this time of year. That takes cumulative exports to 17.5 MMT with two weeks left to go in this marketing year, better than expectations.

UK exports are also holding up, with 279,000 MT shipped out in April and a 55,000 MT vessel currently loading for Vietnam, seeing us on target to at least match Defra's forecasts for the current marketing year.

Saudi Arabia is tendering for a whopping 990,000 MT of high protein wheat with the results expected sometime over the weekend. It seems that German wheat might get a look in, although the trade considers that French wheat is out of the equation.

US firm Informa Economics surprised the market by cutting its estimate on US corn plantings this year to 89.3 million acres from 89.6 million previously. With spring planting having been concluded earlier than normal due to beneficial weather most analysts had expected a small acreage increase.

Informa also pegged US spring wheat plantings at 13.5 million acres, which is 400,000 lower than the USDA's latest estimate.

Wet Week Ahead For Eastern Europe

It's another soggy week in store for eastern European farmers, with widespread tears, sorry rain, stretching east from southern Germany after a surprise 1-0 defeat at the hands of Serbia.

The Poles and Hungarians will be glad they aren't at the World Cup, they'll be needed at home filling sand bags. Here's the forecast for the next seven days from the fantastic Martell Crop Projections (rainfall amounts in inches):

Early Call On CBOT

The overnight markets closed mixed with beans around 1-2 cents higher, wheat 1-2 cents lower and corn around unchanged levels.

The dollar has recovered somewhat from weakness earlier in the morning to be around unchanged. Crude oil is weaker at around USD76/barrel.

The EPA said it is delaying its decision on the ethanol blend limit until later in the year, saying more tests are needed.

The window for filing crop insurance claims in Canada will be closed by Sunday at the latest.

The USDA have today confirmed a sale of 35,000 MT of soyoil to China for 2009/10 as the latter continue to snub Argentina. They also confirmed a sale of 120,000 of soybeans to unknown for new crop.

Oilseed plantings in India are curiously running 50% down on last season according to the government, even though sowing was delayed last year by the late arrival of the monsoon. Rice planting is also behind schedule.

The gap between Kansas/Minneapolis wheat and CBOT continues to widen.

Informa are out mid-session with their 2010 planting estimates.

Early calls are mixed on corn and wheat and 1-3 cents higher on beans. I wouldn't be surprised to see corn and wheat slide a little lower as the session wears on.


Oil World say that weather conditions and rapeseed crop prospects have improved in Germany and France. Rains have improved growing conditions in France, which had still been very dry until mid-May, they say.

Meanwhile, having appreciated rapid, Canadian canola prices are now vulnerable to a setback as they are currently overvalued relative to European rapeseed, they add.

Front month July Canadian canola started the month at CAD373.50/tonne but has soared to a high of CAD431.25/tonne this week on reports of huge areas of crops going unplanted, or drowning in flooded Canadian fields. July is currently more than CAD10 lower today at CAD418/tonne.

Environment Canada has issued further rainfall warnings for central and southwestern Saskatchewan, west-central Manitoba and southern Alberta this weekend as farmers attempt to get their soggy fields sown before Sunday's crop insurance deadline expires.

Dyslexic Welsh Farmers Face Badger-Related Charges

Police in Pontypridd are investigating claims that a local dyslexic farmers' group, upon hearing that there was a cull on, thought that they'd help out with a spot of badger baiting.

Crop Circle Predicts Lampard To Score Tonight

Yes, I'm not having you on, as if I would. A newly appeared 250-foot crop circle in Devizes foretells that England number eight Frank Lampard will score in tonight's World Cup game against Algeria, according to this report in the Telegraph.

Mind you, I've got a mushroom at the bottom of my garden that is telling me to have a bet on John Terry.

Meanwhile England super striker Emile Heskey has been getting in some secret training to give him some extra lift against the Algerians.

Fancy A Bacon-Free Bacon Butty?

"It's bacon Jim, but not as we know it"


Protein Wheat Differentials Widening By The Day

Demand for higher protein hard wheats continue to widen the differentials between Kansas City and Minneapolis wheat contracts compared with Chicago.

At the beginning of the year front month CBOT wheat was trading at a 7 cent premium to Kansas City wheat and a discount of just 3 cents to Minneapolis wheat.

Based on last night's closes Kansas City wheat is now running at a premium of more than 30 cents over CBOT, with Minneapolis commanding a premium of more than 75 cents.

A return to warm and dry weather in the Southern Plains should see the wheat harvest resume in northern Oklahoma and push into southern Kansas this weekend. Texas and Oklahoma yields have been good but protein levels have been a bit disappointing, what lies ahead in Kansas? With stripe rust having been a real problem in the largest wheat state in the US, it's possible that both yields and proteins will disappoint.

And then of course there's Canada...

A Quick Look Around This Morning

Brussels issued soft wheat export licences of 628,000 MT this past week. That's a pretty robust number and well up on last week's 394,000 MT. The weak euro is obviously continuing to help exports. To date the EU has now issued export permits for 17.5 MMT with two weeks left to go in this marketing year, that's 3.5 MMT down on last year but better than what was expected a few month ago. Wheat imports currently stand at 3 MMT, almost half the 5.8 MMT imported this time last year.

The US Environmental Protection Agency have once again failed to bow to pressure from ethanol producers, delaying a decision on an increase in the ethanol mandate until the autumn. More testing is needed they say. The tarts. I think what really has them spooked is the number of potential lawsuits waiting in the wings from litigation happy motorists who fancy a new engine in their car or boat.

The Baltic Dry Index closed at 2784 last night, 109 points down, extending recent losses. The BDI, sounds like "beady eye" that doesn't it, has now fallen by a whopping 1425 points, or more than a third, in little more than three weeks.

Russia exported 5.8 MMT of wheat in the first four months of 2010, up more than 11% on the same period in 2009 according to Rosstat. They didn't issue an figures on weevil exports.

Kazakhstan say that they've exported 7.8 MMT of grain so far this marketing year, including a record 1 MMT in May alone. The shop is still open as their grain stocks still stand at 9 MMT, they say. Farmers there have planted 16.35 million hectares of spring grains, a 2% reduction on last season, as growers switch to potentially more lucrative soybeans, sunflower and rapeseed.

Saskatchewan farmers have seeded only 73 per cent of the 2010 crop, according to Saskatchewan Agriculture's weekly Crop Report. "Excess moisture and flooding in many areas have left fields unable to support equipment. More rain is forecast for the end of the week, which will reduce the chances of seeding progressing any further," it says. What has managed to get sown is immature, with 77 per cent of the spring-seeded cereals, 78 per cent of the oilseeds and 67 per cent of the pulses behind normal in development, they add. You can read the full report here if you have a couple of days to spare. Click the link and go and get yourself a cup of tea, it should be downloaded by the time you get back.

West Australian farms have reportedly received a welcome 5mm-10mm of rain in most areas, although the far eastern wheat-belt received little rain again with likelihood of some areas remaining unplanted becoming a real possibility, according to media reports.

CBOT Closing Comments


July soybeans closed at USD9.52, down 5 3/4 cents; November Soybeans were at USD9.25, up ½ cent; July soybean meal was at USD286.00, down USD1.00; July soybean oil is at 38.05, down 8 points. Soybean export sales were negative for old crop at -136,300 MT, sales of 452,100 MT for delivery in 2010/11 were mainly for China (350,000 MT). Expectations were for sales of 350-550,000 MT.


July corn settled 1 1/4 cents higher at USD3.57 1/2; December corn ended 1 cent higher at USD3.78 1/4 a bushel. Weekly export sales were 1.09 MMT for 2009/10 delivery, up 21% from the four week average. Net sales for 2010/11 delivery were 136,500 MT. Shipments were 1.073 MMT. Eastern Nebraska, Iowa and southern Michigan show rain amounts from 1.5 to 4.1 inches over the next few days.


July CBOT wheat ended at USD4.62 3/4, up 1 1/2 cents; July KCBT wheat is at USD4.95 1/2, up 5 cents; July MGEX Wheat at USD5.38, up 5 3/4 cents. Japan bought 126,500 MT of mostly US wheat in a tender today. HRW areas will get a break from the big rains over the next five days with precipitation light and mostly in the western half of Kansas and the Texas/Oklahoma panhandle.

EU Wheat Closing Comments

EU grain futures closed mostly higher Thursday with November London feed wheat up GBP1.50 at GBP104.50/tonne, and November Paris milling wheat unchanged at EUR140/tonne.

Uncertainty remains over the size of EU crops, and those elsewhere around the globe for that matter. French analysts Strategie Grains today cut their EU-27 grain production estimate for 2010/11 by 1.7 MMT to 287.8 MMT.

Soft wheat output was increased a fraction to 133.1 MMT, although production estimates in France and the UK were reduced by May dryness. Barley output was cut by 800,000 MT to 55.6 MMT, a reduction of 10% on last season.

Heavy rains and flooding continue to hamper Canadian farmers best efforts to get their spring crops seeded. Output is likely to be sharply reduced, although opinions as to how sharply vary quite markedly.

Quality wheat looks like it could be in short supply in 2010/11, reports of early harvested wheat in the US suggest that protein levels are lower than had been hoped for.

Yesterday's Saudi tender for almost a million tonnes of 12-14% protein wheat will take a bit more off the high-end material off the market.

News that a 55,000 MT vessel is currently loading UK wheat in Southampton for Vietnam added support. That is the third such sized cargo in recent months to make inroads into "unusual" destinations, as opposed to the normal homes in near Europe.

Canadian Cropland

Posted today on Twitter:

Share photos on twitter with Twitpic

Ah, that'll soon dry out!

Early Call On CBOT/Weekly Export Sales

The overnight grains closed a little higher, with beans and wheat around 2-3 cents firmer and corn up 1-2 cents.

Crude oil is weaker after yesterday’s EIA energy inventory report showed crude oil stocks rose by 1.7 million barrels last week, a fall of 1.5-2.0 million had been expected.

US first-time jobless claims have unexpectedly risen today, up 12,000 to 472,000 in the latest week. A fall of 6,000 was expected.

Wet weather in Canada remains a huge concern, with more rain in the forecasts for the next few days likely to close the planting window once and for all. Deadlines for crop insurance will have expired by the end of the weekend, some have passed already.

Hot and dry weather is on the cards for Kansas and the Southern Plains, which will enable the stalled winter wheat harvesting to resume. Early reports all seem to be suggesting slightly disappointing protein levels.

There are plenty of question marks hanging over quality issues in Europe too, where some countries have had either far too much or too little spring rain. Maybe Saudi Arabia will find it a little more difficult than it imagines to casually pick up a million tonnes of wheat "just like that" - given the stringent quality criteria that their recently announced tender comes with.

Japan bought 126,500 MT of mostly US wheat in a tender today. South Korea purchased 55,000 MT of US corn and 55,000 MT of any origin feed wheat overnight too.

The USDA today reported weekly export sales for wheat of 959,500 MT - well in excess of trade estimates ranging from 300-350,000 MT. Corn sales were 1,090,400 MT for old crop and 136,500 MT - also exceeding forecasts for sales of 600-900,000 MT. Soybean sales were negative for old crop at -136,300 MT, sales of 452,100 MT for delivery in 2010/11 were mainly for China (350,000 MT). Expectations were for sales of 350-550,000 MT.

Early calls for this afternoon's CBOT session: Corn called 2 to 3 higher; soybeans called 2 to 4 higher; Wheat called 2 to 4 higher.

Nervous wheat shorts might be tempted to put some cover onboard today, given these weather uncertainties, quality issues and strong export sales, that might see the market trade higher than the opening call.

How Much Longer Can This Go On?

Imagine being able to get USD9/bushel for wheat, double the going rate - the equivalent of around GBP165/tonne. Guaranteed, no strings for as much wheat as you want to sell. And if by some magic, wheat prices move above that then you can simply sell your wheat elsewhere and bank the extra profit. Nirvana, eh?

Well not quite Nirvana, Parana actually, the largest wheat producing state in Brazil. The government there have set the minimum price at which they are prepared to pay for the best grades of wheat at around USD9-9.25/bushel, and not surprisingly there are plenty of takers.

So many takers in fact that there isn't enough storage to handle all this wheat, especially not since the government silos are already choc-full of corn, which they are also buying at a substantial premium to cash prices.

Of course all this is putting a massive hole into government coffers, so much so that moves are now afoot to lower the minimum levels back into line with cash prices. Farm groups of course are saying that farmers need these prices if they are going to stay in business.

Regardless of what the farmers want, it is clearly unlikely that support levels set at a time of booming commodity prices can be held where they presently are indefinitely. That could have a negative impact on plantings, and certainly inputs for 2011.

Wynnstay Half Year Operating Profit Up 8 Percent

Wynnstay Group Plc have announced interim results for six months to 30th April 2010 showing operating profit up 8% to GBP3.74 million on revenue up 2% to GBP120.34 million. Pre-tax profits are up 12% to GBP3.55 million. More info here.

NWF Trading Update

NWF Group plc say that trading in the financial year ended 31 May 2010 "has been ahead of market expectations and the Board now anticipates another record year for the Group." More info here.


Frontier are currently loading a 55,000 MT vessel in Southampton with UK wheat destined for Vietnam. That should be another step towards hitting Defra's export target for 2009/10. More info here.

Strategie Grains have cut their EU-27 grain production estimate for 2010/11 by 1.7 MMT to 287.8 MMT. Soft wheat output was increased a fraction to 133.1 MMT, although production estimates in France and the UK were reduced by May dryness. Central European yield potential has been reduced by heavy rains and flooding, but that is compensated for by increases to yield expectations in Eastern Europe. Barley output was cut by 800,000 MT to 55.6 MMT, a reduction of 10% on last season.

The Baltic Dry Index extended it's recent slump yesterday closing 127 points lower at 2893 points. That's 31% down since May 26th.

Syria will need to import wheat again this year after a season of drought and disease will potentially cut soft wheat yields in half. More info here.

Harvesting is underway in Southern Bulgaria, with grain production likely to match or slightly better last season, according to the Ag Ministry there. They see wheat production coming in at around 4 MMT, with barley output at around 900,000 MT.

Cold and wet weather is seen delaying the Spanish cereal harvest which is around two weeks behind schedule in Andalusia.

Congestion at Chinese ports is seen becoming a major problem with an estimated 6 MMT of soybeans due to arrive this month. More info here.

A day after the Saudi Ag Minister announced that the Arab Kingdom would hold wheat imports unchanged from 2009 at 2 MMT, they promptly tendered for almost half that amount in one go.

Meanwhile thirty per cent of Saskatchewan cropland and 15 per cent in Manitoba are apparently not yet seeded. Saskatchewan Premier Brad Wall says: "Many farmers won't get crops in the ground this year, while others have seeded acres now under water. This situation is going to have a serious impact on farm incomes this year."

An estimated 150-200,000 hectares of grains and 40-50,000 ha of rapeseed was lost to the recent floods in Poland, according to the Polish Grain Chamber.

CBOT Closing Comments


July soybeans closed at USD9.57 3/4, up 8 1/4 cents; July soymeal at USD287, up USD1.30; July soybean oil at 38.13, up 32 points. Rumours of Chinese soybean purchases from both the US and South America, plus recent heavy rains in the Midwest, supported beans. It seems a little strange that China might be buying beans, as other reports suggest cancellations are more likely given the recent torrid pace of imports. Estimates for tomorrow's weekly export sales report range from 350-550,000 MT.


July corn closed at USD3.56 1/4, up 2 1/2 cents; Dec corn finished at USD3.77 1/4, up 2 1/4 cents. Above normal temperatures in the 6 to 10 forecast should benefit corn production. Weekly export sales estimates for tomorrow range from 600-900,000 MT. Crude oil closed at a six week high, even though the US Energy Dept said that inventories rose 1.7 million barrels last week. There was some talk the the EPA might increase the ethanol mandate any day now from the existing 10% limit to 12-13%.


July CBOT wheat closed at USD4.61 1/4, up 9 1/2 cents; July KCBT wheat was at USD4.90 1/2, up 12 1/4 cents; July MGEX wheat ended at USD5.32 1/4, up 9 1/4 cents. Canadian rains and flooding continue to support the market, sparking short covering. The US has also seen plenty of rain disrupting the winter wheat harvest, although the forecast is now turning hot and dry in the Southern Great Plains. A large tender by Saudi Arabia to buy almost 1 MMT of wheat is seen as a sign that current prices are finally attracting buyers. Trade estimates for tomorrow's weekly export sales report range from 300-350,000 MT.

EU Wheat Closing Comments

November London feed wheat closed GBP1.25 higher at GBP103.00/tonne, with November Paris milling wheat up EUR1.25 at EUR140.00/tonne.

Reports suggest that early winter barley harvesting has now begun in Ukraine, but suddenly it's not all doom and gloom.

In the UK wheat exports were robust again in April, according to figures released today, with 279,000 MT departing for mostly EU-27 destinations. That leaves us well on target to match or even exceed Defra's export target of 2.3 MMT for the current 2009/10 marketing year.

The association of German farming cooperatives, DRV, pegged the 2010 German wheat crop at 24.98 MMT, with rapeseed production seen at 5.8 MMT and barley output 10.6 MMT. Production in 2009 was 25.2 MMT, 6.3 MMT and 12.2 MMT respectively.

Saudi Arabia entered the market with a tender to buy almost a million tonnes of wheat today. No matter who wins it, at the very least that will potentially absorb some of the weighty surplus that has been depressing prices of late.

Heavy rains have stalled the US winter wheat harvest just as it was attempting to get going in Kansas. What has been harvested further south is generally low in protein. Premiums for high protein wheats have leapt from a norm of 10-15 cents/bushel to 50 cents plus over 11% samples.

EU rapeseed futures have been moving steadily higher for most of the year, aided by strong demand and a weak euro. Canadian futures have also moved sharply higher in the past week or so on reports of large enforced reductions in acreage. That has fuelled further considerable price rises here in Europe.

Late Call On CBOT

Are the Canadian problems now fully priced into the market? It looks like farmers have run out of time in some areas already as far as crop insurance is concerned in Western Canada. Those in Eastern Saskatchewan have until Sunday to beat the insurance deadline.

The forecast isn't in their favour: "The outlook for Saskatchewan is extremely wet with strong thunderstorms today and Thursday. The GFS model indicates rainfall up to 4 inches will develop. Flooding a very serious concern, since fields are already saturated from very heavy May rainfall....the same wet pattern continues in June," says Gail Martell of Martell Crop Projections.

Other news is thin on the ground ahead of tomorrow's export sales report from the USDA. The US Energy Dept will report on crude oil stocks as CBOT opens. The API yesterday reported a surprising crude oil stock increase of 579,000 barrels, the trade is/was expecting a decrease of 1.5-2.0 million.

ABARE came out with only relatively minor adjustments to their previous forecasts for Australian wheat and rapeseed production.

Late calls on CBOT this afternoon: Corn called flat to 2 higher; Soybeans called 2 to 4 higher; Wheat called 1 to 3 higher

Freight Rates Slump

The recent sharp drop in freight rates continued yesterday with the Baltic Dry Index falling to close at 3020 points. That's a 28% slump since as recently as May 26th.

A slowdown in Chinese iron ore demand is being blamed for the weakness. A three day public holiday in China this week has kept interest to a minimum, brokers report.

A reduction in Chinese demand for coal and soybeans is also behind a fall in rates from the US Gulf, they added.

The 2010 low for the BDI was 2566 set in February.

UK Wheat Exports

As was expected April was another decent month for UK wheat exports with 279,000 MT leaving our shores for mostly EU destinations. Spain was the largest home taking more than 50% of that.

That brings cumulative 2009/10 marketing year (July/June) exports to 2.01 MMT, leaving us on course to attain, or maybe even slightly exceed Defra's export target for the current season.

April barley exports were 95,000 MT, bringing total marketing year to date shipments to 913,000 MT against a Defra target of 1.2 MMT.

Australian Crop Estimates

ABARE have tweaked their 2010/11 Australian crop production estimates slightly overnight. They now peg this season's wheat crop at 22.1 MMT, up 200,000 on their previous estimate and 400,000 MT higher than output last year.

They've reduced their barley production estimate by 700,000 MT from last time to 7.3 MMT, a significant 12% decrease on 2009.

Rapeseed production will total 1.96 MMT this year, they say. That's only marginally higher than last season and probably a bit on the low side. The Australian Oilseeds Federation yesterday pegged the crop at 2.2 MMT.

Overall early crop conditions look good in the east. "Rainfall between March and May was the most widespread above-average rainfall to be recorded over the eastern states since 2003," ABARE said. Although they did note the potential for locust damage later in the season.

Western Australia continues to have dryness in many areas, and rainfall in the coming months will be "crucial" here, they noted.

CBOT Closing Comments


July soybeans closed at USD9.49 1/2, down 2 cents; July soybean meal at USD285.70, down USD4.30; July soybean oil at 37.81, up 42 points. The soybean market slipped into negative territory late in the day, unable to hold onto early price strength. Around 9% of the soybean crop is left to get planted, according to the USDA, hampered by continued wet weather.


July corn closed at USD3.53 3/4, unchanged; Dec corn was at USD3.75, also unchanged. Good to excellent condition ratings improved one point from last week, to 77%, close to the record 78% for this time of year. Crude oil closed up near USD77/barrel, which was supportive, and the US dollar was also weaker which helped today.


July CBOT wheat closed at USD4.51 3/4, up 1/4 cent; July KCBT Wheat at USD4.78 1/4, down 1 1/2 cents; July MGEX wheat at USD5.23, down 1/4 cent. Nationally the winter wheat harvest is 2 points ahead of last year, but 3 points behind the five year average. Concerns about the wheat crop in Canada are limiting the downside in Minneapolis wheat.

EU Wheat Closing Comments

EU wheat futures closed mixed Tuesday with November London wheat ending down GBP1.10 at GBP101.76/tonne and November Paris wheat up EUR0.50 at EUR138.75/tonne.

Now that the market has absorbed the Canadian situation it's all about currency once again.

The pound was up, hence the weakness in London wheat. The euro was weaker again, hence the firmness is Paris wheat.

US spring wheat crop conditions were rated as being 86% good/excellent compared to 84% last week, by the USDA last night.

Argentina says that it may double wheat production in 2010, albeit from historically very low levels, to 12-15 MMT.

My spies tell me that Ely railway station opens as a grain terminal in July, with large volumes of wheat going up into Ensus shortly after that.

CBOT Early Call

The overnight grains closed mixed with beans up 1-2 cents, and wheat & corn down 1-2 cents.

The dollar is a little weaker and crude a bit higher. The US Energy Dept are expected to say that US crude oil stocks fell by 1.5-2.0 million barrels last week, when they come out with their inventory numbers tomorrow.

The USDA increased their good/excellent ratings for corn by one point to 77% last night, close to the record 78% for this time of year. Around 9% of the soybean crop is left to get planted, hampered by continued wet weather.

Excessive wetness is the problem north of the border in Canada, with many deadlines for crop insurance there due to expire this week.

Japan are shopping for 126,500 MT of wheat in their regular weekly tender due to be concluded on Thursday, of which 91,000 MT will be US origin. Bangladesh is also looking for 100,000 MT of wheat.

Saudi Arabia’s agriculture minister says that the country is looking to scrap wheat production entirely by 2016 to conserve water reserves. The country is expected to import around 2 MMT of wheat this year.

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

Intensive Farming Is Slowing Climate Change

According to this article in the Farmers' Weekly.

Cool. Or is it hot? What's next? Crude oil aids birds' natural waterproofing system - BP exec?

Angry Farmer Breaks Up Nude Photo Shoot

Spoilsport, great headline that one though isn't it?

Here you go "The group and their 20-year-old model fled after being thrashed with a stick....": Get off my land!

News Snippets

Another aggressive marketing campaign under their belts sees Ukraine's grain stocks as at June 1st standing at 6 MMT, according to the local statistics office. That's a 28% decline on year ago levels. Wheat reserves accounted for 3.1 MMT of that, with barley 1.1 MMT and corn 1.0 MMT.

Kazakhstan meanwhile had grain reserves of almost 9 MMT on hand at June 1st, over 8 MMT of which was wheat.

Japan are shopping for 126,500 MT of wheat in their regular weekly tender due to be concluded on Thursday, of which 91,000 MT will be US origin.

The ongoing oil spill saga in the Gulf might lead US regulators to push through an increase on the maximum permitted levels of ethanol in gasoline from the existing 10% ceiling. The environmental disaster also lends weight to the proposal to reintroduce the biodiesel blenders tax credit in the US, both would be supportive for the grains sector.

The Baltic Dry Freight Index slumped heavily yesterday to close at 3115 points, its lowest in seven weeks, on weak demand.

CBOT oats, which rose the exchange imposed maximum 20 cent limit yesterday, currently see front month July up a further 15 cents in overnight trade. The US imports more than half the oats it consumes, mostly from Canada where production is seen sharply lower this year.

Wheat: Taking China Out Of The Equation

In 2008 global wheat supplies fell to a dramatic low sparking food rioting and the sharp spike in prices that we all remember so well. World supplies fell to below 2 1/2 months worth of consumption, and the ensuing panic pushed global prices to unprecedented highs.

Things have sure changed a lot since then, suddenly we are awash with wheat that nobody wants, we can hardly give the stuff away. World supplies have risen to a much more comfortable nigh on four months worth of demand, and global prices have fallen back accordingly.

Phew, what a relief that was then eh? We can all put our feet up and relax, the world isn't going to run out of wheat after all.

Just before I put the kids to bed to nod off in comfortable bliss, safe in the knowledge that Mrs N#3 isn't going to have to queue all night outside Tesco's to ensure we have a generous supply of extra thick sliced Warburtons for our breakkie in the morning. Where is all this wheat, I mean it is all there isn't it? We can get our hands on it, if we want it like? Just for our peace of mind.

We aren't doing anything daft like turning it all into biofuel because we think that we have so much of the blinking stuff, only to turn around and find that when push comes to shove and Mother Nature chucks us a googlie that toast is surprisingly indefinitely off then menu?

Just double check those numbers again for me will you old chap?

Right, look, here's the numbers. We'll use the USDA, they're pretty reliable aren't they?:

World Consumption(MMT) World Stocks(MMT) Stocks/Usage %
2006/07 615.77 130.64 21.22
2007/08 617.46 124.41 20.15
2008/09 642.52 165.05 25.69
2009/10 652.18 192.90 29.58
2010/11 667.49 193.93 29.05

There you go, little wobble around 2007/08, normal service resumed, job sorted night night sleep tight. Look if you're still worried I'll leave the landing light on, how's that?

What? You want me to take China out of the equation, just to put your mind at rest? Bloody hell, right here goes then, and don't ask me to do anything else, it's way past your bedtime now.

Chinese consumption has been very flat during this period at around 105 MMT, according to the USDA. China's share of world stocks however, has risen from 38.45 MMT in 2006/07 to a projected 62.89 MMT in 2010/11.

So although Chinese consumption is static, rest of the world consumption has grown steadily from 513.77 MMT in 2006/07 to a projected 562.69 MMT in 2010/11.

That means that world stocks to usage excluding China in 2010/11 is set to come in at 23.29%, or around 2 3/4 months supply. OK, that's tightish, but stop crying will you it's not that bad, we're not going back to the dark old worrisome days of 2007/08 here my lad.

What? I can't tell what you're saying why you cry like that, calm down lad, what is it? You've read on the Blog that world wheat production in 2010/11 might be significantly lower than what the USDA reckon? Surely not.

Right listen, I will do the sums one more time just to put your mind at rest. If we assume that the USDA are wrong, an absurd notion I know, but lets just assume it for now. They do still have Canada down to produce 24.5 MMT of wheat this year after all.

If Nogger's projections are correct and the world will only produce 646.9 MMT of wheat in 2010/11, where does that leave us? Well, even allowing for the fact that 4 MMT of the USDA's potential overstate is in China itself, that cuts the rest of the world stocks to usage to 20.16%.

Yikes! That's right back to where we were in 2007/08. Get your dressing gown on son, we're off to Tesco's....

The Canadian Situation: Talking Telephone Numbers

Was it only a fortnight ago that my Canadian correspondent Brad Eggum emailed me to flag up the planting problems they were experiencing over there? Yes, indeed it was, "the story that nobody seems to be speaking about right now" was how Brad put it.

Well, they're certainly talking about it now that's for sure. Nobody knows at this stage how much land will go unplanted, or indeed what the production implications are for what does get sown under these conditions.

It seems that as far as the former is concerned, we could be talking telephone numbers after the Canadian Wheat Board's estimate Friday that as much as 12.5 million acres of cropland could go unsown this year.

That's a huge area in a country that the USDA has down to tie with Russia as the world's third largest exporter of wheat in 2010/11, after the US and EU-27. They are of course also very significant players in the export market for oats and rapeseed - being the world's largest exporter of both.

The oats market in Chicago jumped limit up last night. The US consumes around 3 MMT of oats per year, but only produces around 1.3 MMT, making them easily the largest oat importer in the world. Almost all of their requirement comes from Canada.

The Canadians also vie with China as being the world's largest rapeseed producer, they are easily the global leader in exports. Despite a firm Canadian dollar Winnipeg rapeseed futures were also sharply higher last night, settling at their highest levels since January.

Whatever acreage does manage to ultimately get sown in Canada faces an uphill struggle. Late planted crops will have a shortened growing cycle before the first frosts arrive in the autumn. In addition there are yield, disease and quality issues from crops sown under extremely wet conditions.

This is certainly a situation that wants watching closely across the summer months.

CBOT Closing Comments


July soybeans closed at USD9.51 1/2, up 5 1/4 cents; July soybean meal at USD290.00, up USD0.30; July soybean oil is at 37.39, up 49 points. A weaker US dollar and firmer crude oil were supportive. Widespread and heavy rains are seen hampering getting the remainder of the US crop planted. After the close, USDA said that 91% of the US crop is planted, versus 84% the previous week and 90% for the 5 year average. Crop condition ratings fell two points to 73% good/excellent.


July corn closed at USD3.53 3/4, up 4 1/4 cents; Dec corn at USD3.75, up 4 cents. Whilst wet weather is seen as bullish for soybeans it is currently being viewed as beneficial for US corn. The USDA appear to agree, pegging crop condition ratings at77% good/excellent, up one point from last week. China was confirmed as buying another two cargoes of old crop US corn, and rumoured to have bought more. The ongoing BP oil spill saga is seen as potentially aiding an increase in the maximum blending limit for ethanol in gasoline, which would help corn demand.


July CBOT wheat closed at USD4.51 1/2, up 10 3/4 cents; July KCBT wheat at USD4.79 1/2, up 12 1/2 cents; July MGEX wheat at USD5.23 1/4, up 21 1/2 cents. Minneapolis spring wheat led the way after the Canadian Wheat Board said that heavy flooding there will cause farmers to leave between 8.25 million and 12.5 million acres unplanted this year. After the close the USDA pegged 9% of the winter wheat crop as harvested, trailing the 12% average for this time of year as wet weather there also hampers progress. Even so spring wheat crop ratings improved to 86% good/excellent compared to 84% last week.

EU Wheat Closing Comments

EU wheat futures closed flat to mostly firmer Monday with November London feed wheat ending GBP1.85 higher at GBP102.85/tonne and November Paris milling wheat closing up EUR1.75 at EUR138.25/tonne.

US wheat futures closed firmer Friday and that strength followed through into Monday's trading session, which added support to EU futures too.

Talk of sharp acreage reductions in Canada due to incessant rainfall and flooding ignited the move higher. Wheat acreage in western Canada may be the lowest since 1971, according to the Canadian Wheat Board (CWB). Barley plantings could be even worse with the lowest acreage since 1965. The CWB referred to the current situation as an "unprecedented event".

It was also a pretty wet weekend in the US too, delaying the winter wheat harvest from getting going in the top producing state of Kansas.

Quality concerns are also an issue, with many reports citing lower proteins than had been expected in wheat that has been cut further south in Texas and Oklahoma.

Over here growers are also reluctant sellers, as there are still concerns that the dry spring may have already caused some yield problems before the arrival of recent rains.

Brussels last week granted export licenses for 394,000 MT of wheat, bringing the total awarded this season to 16.8 MMT, which is better than expectations. The number would appear to confirm the competitiveness of EU wheat on the international scene aided by the weak euro.

Illinois Corn And Soybeans

No sign of a problem in this part of Illinois:

Early Call On Chicago

The overnight grains closed mostly higher with beans up mostly around 4-5 cents, wheat was 5-6 cents higher and corn narrowly mixed either side.

The dollar is weaker and crude oil up the best part of two dollars.

Heavy weekend rains are seen supporting wheat by delaying harvesting in Kansas and potentially causing further flooding in Canada.

There is now widespread talk of millions of acres going unseeded in Canada, and what has managed to get sown drowning in sodden fields.

Rain in the Midwest isn't likely to do any harm to newly planted corn, but may have hindered farmers' attempts to get the remainder of the soybean crop sown.

The USDA will report on soybean planting progress after the close tonight, along with winter wheat harvest progress and crop conditions.

NOPA report that the May US soybean crush was 127.815 million bushels, towards the low end of expectations, almost 4 million down on last month and well below May last year.

The Argy soybean harvest is now just about over at 98% complete.

Bangladesh has bought 100,000 MT of option origin wheat.

China is shut for three days because of a public holiday, but that hasn't stopped them being confirmed as a buyer of more US corn this morning. The USDA have confirmed that two cargoes (120,000 MT) of old crop corn have been sold to China by private exporters.

Argentine port workers have reportedly called off plans to strike today.

Early calls for this afternoon's CBOT session: corn called 1 to 2 higher; soybeans called 3 to 5 higher; wheat called 4 to 6 higher.

Oi Capello!

He took my advice by leaving Theo at home, so let's hope that Fabio has got his WiFi dongle on him out in South Africa.

Let's start with Rob Green, what were you thinking, he's not exactly unknown for this sort of thing is he? No, in fact he IS known for doing exactly this sort of thing.

"He can't bring him off now, what would that do for his confidence?" the TV pundits et al said. Well what will leaving him on do for our confidence I ask? Indeed, judging by the panicked clearances of our centre halves subsequently, they didn't have too much confidence in him either.

Then he manges to fudge a weak shot against the post in the second half and the TV shower are positively staging a cumulative hand shandy over his efforts. What is going on? "That will do him the world of good." Will it, well it hasn't done me anything but harm so get him off.

When his confidence is back to where it should be then I might pick him again. If Tommy Lawrence "the flying pig" isn't free that is.

And please do not replace him with "Calamity" either. Joe Hart is the best of the bunch, you brought him out here so give him a go.

SWP: what can I say, the sad little disabled lad with rickets on the wing. Clearly not up to the job. Never pick him again. Ever.

Heskey: well there is a conundrum. If that is the best we have then it's a sad day for us all. But then again, he wasn't really that bad. I can hear the pundit chatter in my ears now: he sets up loads of goals for others, he frees open the space, he does loads of unseen things we mere mortals don't understand. He is rubbish though so let's get rid.

Lampard/Gerrard: the Chuckle Bros. To me, to you. It doesn't work, they hate each other and continually want to outdo one another.

But apart from that it's going well!