I Bet You Didn't Know That

23/07/11 -- Friday night's London wheat close of GBP161.00/tonne was the lowest end of week close for a front month since October 1st 2010.

It's been twenty four straight trading sessions since front month Paris wheat closed above EUR200.00/tonne.

Front month Chicago wheat has only closed above USD7.00/bu once in the last 26 trading sessions, USD7.02/bu on 13th July.

Chicago Close

22/07/11 -- Soybeans: Aug 11 soybeans closed unchanged at USD13.80 1/4; Nov 11 soybeans closed at USD13.88 1/4, up 1/4 cent; Aug 11 soybean meal closed at USD363.00, up USD0.30; Aug 11 soybean oil closed at 56.51, up 3 points. Beans were hardly changed on the week with August down 5 1/2 cents and Nov up 1 1/4 cents. Aug meal was up USD2.70 and Aug oil up 16 points. The market was quiet ahead of the weekend. Having chopped this way and that all week as weather forecasts changed, we could maybe expect some fireworks on Monday morning when the Globex market opens armed with renewed weather forecasts. Large funds almost doubled their bean long position for the week ending July 19, adding almost 38,000 contracts to stand just over 78,000 net long whilst index funds are sitting on a net long of 167,000. Combined that's the equivalent of more than 33 MMT.

Corn: Sep 11 corn closed at USD6.90, up 10 3/4 cents; Dec 11 corn closed at USD6.85 1/2, up 12 1/2 cents. Despite a higher close Sep corn was 11 1/4 cents lower on the week, Dec was up a half. Some moderation in the weather outlook for next week took the shine off some off the bull's enthusiasm. "Around 65% of Midwest corn and soybeans should receive 1 inch of rain or more in the upcoming week," say Martell Crop Projections. "High pressure over eastern Canada will drive a cold front into the Midwest over the weekend which will bring some showers and thunderstorms across the Midwest with 50-60% coverage of 0.15 to 1.25," say WxRisk. What rain has fallen and Sunday night's revised forecasts for next week will decide the initial market direction on Monday. The commitment of traders report showed Large funds net long of 187,500 contracts and index funds 368,000 long, equivalent to 70.5 MMT.

Wheat: Sep 11 CBOT wheat closed at USD6.92 1/4, up 15 cents; Sep 11 KCBT wheat closed at USD7.80, up 5 3/4 cents; Sep 11 MGEX wheat closed at USD8.38 1/2, up 4 3/4 cents. CBOT wheat was down 2 1/2 cents on the week, with Kansas wheat up 15 1/2 cents and Minneapolis up 14 3/4 cents. Wheat got dragged higher by firming corn late in the day even though the market is conscious of rapidly rising export prospects coming out of the Black Sea. Russia may export anywhere from 15-20 MMT of wheat in 2011/12 according to an assortment of forecasts from various analysts (including the Russian Ministry), all of them much higher than the USDA's current 12 MMT assessment. If so, the most likely place that they will be stealing much of that business from is the US, with Europe's export prospects already trimmed by a third for 2011/12. The USDA's current projection that the US will export 31.5 MMT this season is therefore probably too high.

EU Wheat Close

22/07/11 -- EU grains finished mostly lower with Nov London wheat GBP2.00/tonne easier at GBP161.00/tonne and Nov Paris wheat down EUR1.25/tonne to EUR193.00/tonne.

On the week as a whole Nov London wheat was down GBP4.00/tonne and Nov Paris wheat fell EUR7.00/tonne.

Brussels granted export licences for 236,000 MT of soft wheat and 140,000 MT of barley this past week. Not a bad performance considering the competitiveness of Black Sea grain at the moment.

Russian wheat export potential just keeps growing. The USDA have them down to export 12 MMT this season, up 200% on last season. The local Ministry have them down to increase exports by 300% and the Russian Grain Union by 350-400% to 18-20 MMT.

We are clearly talking production telephone numbers here, and regardless of weather problems in the US or quality issues in the EU, increases in volume of this sort of magnitude are clearly going to put a cap on price appreciation potential.

Using an exchange rate of 1.1350 for the pound against the euro London feed wheat for Nov is only around 10 euros cheaper than French milling wheat, two months ago that gap was around 22.50 euros. That appears to overvalue London wheat.

EU producers are reluctant sellers whilst the harvest remains stalled, that may change somewhat once we finally get going. We shall see.

Very Early Call On Chicago

22/07/11 -- The overnight grains aren't doing much, easing off earlier modest highs to look like settling in neutral to slightly negative territory.

Crude is also off early highs to around unchanged.

Overnight rain in eastern and southern Iowa may have literally dampened bullish enthusiasm slightly, although that may change later in the day when the midday weather forecasts come out.

Beans are virtually unchanged on the week, with corn 12c or so down and wheat 17 1/2c easier on front month September. Dec corn hit USD7.03/bu on Tuesday, but currently stands more than 30c lower than that.

There are no official early calls out yet, but these are likely to be in the region of one or two cents firmer to one or two cents lower before the off.

I have a feeling in my water that we may see the afternoon session ultimately trade weaker than that going into the weekend, pending a change of heart in the midday weather forecasts.

The Week So Far

22/07/11 -- In lieu of nothing much else to blog about today, here's a quick resumé of where we are on the week so far including overnight/daytime action this morning:

Nov London wheat down GBP2.25; Nov Paris wheat down EUR6.50; Nov Paris rapeseed down EUR9.25; Nov CBOT soybeans up 3/4c; Dec CBOT corn down 12c; Dec CBOT wheat down 6c; Sept NYMEX crude oil up USD2.11/barrel.

What that tells us seems to be that despite all the bullish rhetoric out there for US corn it can't seem to gather the momentum together to stage a serious move higher.

Despite a faltering EU harvest, and some voiced concerns about this week's rains leading to quality issues, French wheat is also struggling to hold faced with strong opposition from the Black Sea.

London wheat also looks too dear but isn't finding sellers with enough conviction to press the market significantly lower. Maybe this will only come once the wheat harvest is in, or at least well advanced.

Interestingly out of an entire open interest of around 15,000 contracts in London wheat almost 12,000, or 80%, are in front month Nov.

After a wet and unsettled week weather-wise things should improve over the weekend for many of us, although the east coast and East Anglia are likely to pick up any remaining showers in the offing.

Next week could be half decent for most of us which may get the combines rolling again in earnest, fingers crossed.

The Early Vibe

22/07/11 -- There isn't a lot to get your teeth into so far this morning. The overnight Globex market is a bit steadier, around 4-5c higher on wheat, beans and corn.

The market is still studying the details of the latest Greek bailout. It seems that the restructuring of the debt will still be termed a default by the ratings agencies. It was also interesting to see Sarkozy say on the TV last night that this was a one-off deal for Greece and not one that would be repeated for any other country within the eurozone.

So where does that leave us? Waiting for the next car crash it seems to me, and there are plenty of them still careering around Europe.

At home, the domestic wheatfeed market is showing signs of cracking. Oct/Apr pellets ex the South East/Midlands having been hovering around the low GBP140's now for some time, but business was reported yesterday at GBP139/tonne with sellers over.

It seems that it isn't just Black Sea grain that is telling us that UK wheat is still too dear despite recent price falls.

After a very wet spring crop conditions in Canada appear to have improved. "Canada weather very favourable for small grains and oilseeds in Alberta, western and central Saskatchewan; recurring showers and moderate temperatures have boosted development of small grains and canola; showers increased the past 2-3 weeks just in time for heading and grain filling; high yields may offset a reduced planted area, not much bigger than last year's depressed crop area; Manitoba and southeast Saskatchewan have been dry and hot in July; heavy rainfall would be welcome; generous rain is predicted in all 3 provinces," say Martell Crop Projections.

Down Under things are switching around from the too dry in the West and abundant moisture in the east. "Disturbing dry weather has lingered in the Eastern Australia this winter season; pockets of Victoria and southwest New South Wales received only half of normal rainfall in the past 60 days; cool night temperatures also have limited wheat growth, lows in the 30s F; Western Australia has fared much better with rainfall in July; above-normal amounts were received the past month; there still is a long way to go to resolve subsoil drought; the forecast continues unsettled in WA, but dry the Eastern Australia wheat states," they add.

I have a feeling that this is going to be a very boring day.

Chicago Close

21/07/11 -- Soybeans: Aug 11 soybeans closed at USD13.80 1/4, up 2 cents; Nov 11 soybeans closed at USD13.88, up 4 cents; Aug 11 soybean meal closed at USD362.70, up USD0.80; Aug 11 soybean oil closed at 56.48, down 29 points. Forecasts of a return to more normal temperatures and rainfall once we get into August took some of the heat out of the market. Export sales of 257,019 MT for old crop and 188,913 MT for new crop were in line with trade estimates. Firmer crude oil was supportive although weak corn capped potential rises.

Corn: Sep 11 corn closed at USD6.79 1/4, down 8 3/4 cents; Dec 11 corn closed at USD6.73, down 4 3/4 cents. Revised weather forecasts were bearish, although the market finsished well off session lows. "Welcome cooling is coming to the Upper Midwest along with recurring showers. The Mid South should also receive some generous rain," say Martell Crop Projections. Weekly export sales were OK at 428,700 MT for 2010/11 delivery and 472,800 MT for 2011/12 delivery. Funds were said to have sold 7,000 contracts on the day.

Wheat: Sep 11 CBOT wheat closed at USD6.77 1/4, down 19 3/4 cents; Sep 11 KCBT wheat closed at USD7.74 1/4, down 19 3/4 cents; Sep 11 MGEX wheat closed at USD8.33 3/4, down 19 cents. Wheat was under pressure from further upward increases in production prospects out of the Black Sea, with traders armed with the knowledge that FOB prices there are well below US Gulf levels. That said, export sales were fair at 344,427 MT for 2011/12 and 59,101 MT for 2012/13. Iraq and Jordan are back in the market tendering for optional origin wheat.

EU Grains Close

21/07/11 -- EU grains finished with Nov London wheat GBP2.65/tonne lower at GBP163.00/tonne and Nov Paris wheat EUR5.00/tonne weaker at EUR194.25/tonne.

Markets were modestly lower for much of the day but found fresh impetus later in the session after US markets came in sharply down on the back of revised less threatening weather forecasts for the Midwest.

Rain delaying harvesting in northern France, Germany and the UK is seen moving away this weekend, with some optimism that next week could be largely warm and dry. Things are a little sketchy yet but at least one weather service used the word "heatwave" to describe the outlook for the last week of the month.

Production and export forecasts coming out of the Black Sea keep increasing, regardless of what is happening in Europe and the US. Prices there are still significantly cheaper than elsewhere as Russia and Ukraine continue to mop up most of the decent tenders kicking around.

Morning reports suggested that France and Germany have reached some sort of provisional accord regarding Greek debt. The euro was relatively unmoved by the rumours and is maybe waiting for some more concrete evidence to emerge overnight.

It is of course in the interests of these two nations to persuade others to agree to another Greek bailout as they are the ones with the most exposure. At a reputed USD56.7 billion for France and USD33.9 billion for Germany they are way ahead of the next closest eurozone nation in the exposure table, Italy, who has "just" USD4.0 billion at stake.

This crisis continues to throw up more questions than answers. Will the rest of the eurozone continue to keep throwing good money after bad when many themselves are teetering on the brink? And who's next and what happens then?

Ukraine Harvest

21/07/11 -- Harvesting in Ukraine is past halfway at 59% done producing 19.3 MMT of grain, according to the Ministry.

The harvest has produced 13.5 MMT of wheat so far, with yields up 20% to an average 3.18 MT/ha. Barley yields are up 15% to 2.48 MT/ha, they add.

Across the border Russia has increased it's 2011/12 grain export forecast from 15 MMT to 18 MMT today.

Unconfirmed Gossip

21/07/11 -- Unconfirmed gossip flying around cyberspace suggests that the "deal" thrashed out by France and Germany last night is not a Greek rescue plan at all and that some form of default is on the cards.

The Brussels "crisis summit" is due to start at noon apparently.

It could be a volatile afternoon.

EU Rapemeal Prices

21/07/11 -- Guide prices for EU rapemeal, basis FOB Lower Rhine in euros/metric tonne, with change from previous day:


Should Have Gone To Specsavers

21/07/11 -- Jedward's UK tour has been tragically cut short after the singing duo were shot through the head at point blank range by what police are describing as "an over eager farmer" the minute their tour bus entered Devon. Relatives have been informed.


The lovable dancing vocalists, John and Edward, imaginatively came up with the stage name Jedward. My mate once said: "I wish their parents had called them Pete and Rick..." Haha! Gets me every time. Rete. Classic.

Cold Turkey

21/07/11 -- Around 25,000 Ukraine turkeys have gone belly up after being fed toxic feed, according to this report in World Poultry Magazine.

The fact that it happened on the very day that I was in Ukraine last week is entirely coincidental. It was probably down to British Unfairways I reckon. I'd steer clear of the in flight turkey dinner next time you fly with them if I was you.

The Morning Line

21/07/11 -- Talk is that Germany and France have found some common ground going into today's crisis summit in Brussels. Germany are going to have mainland Greece and France will pick up all the little islands. Except for Lesbos, nobody wants that. More here: Deal Or No Deal?

The overnight Globex market is mostly a tad firmer without getting too excited.

The UK rapeseed harvest is underway with early yields and quality coming in much better than expected my spies are telling me.

It's a similar situation in France where Agritel report that "sellers are numerous as yields are better than expected."

Not so in second time unlucky Germany, where the German Farmers Association (DBV) say early rapeseed yields are 15-20% lower and winter barley yields reduced by 10-30%.

Jordan bought 50,000 MT of hard wheat overnight at a price equivalent of around GBP188/EUR206 including freight, no surprise that Russia or Ukraine is the most likely origin for that. Iraq is tendering for 100,000 MT of optional origin wheat.

Russia has increased its 2011/12 grain export forecast to 18 MMT.

Chinese customs data shows June soybean imports at 4.3 MMT, down 31% on June 2010. This brings the year-to-date total to 23.71 MMT, 8% down on Jan/Jun imports in 2010.

Chicago Close

20/07/11 -- Soybeans: Aug 11 Soybeans closed at USD13.78 1/4, down 1 cent; Nov 11 Soybeans closed at USD13.84, up 2 cents; Aug 11 soybean meal closed at USD361.90, up USD1.80; Aug 11 soybean oil closed at 56.77, up 8 points. Midday weather forecasts were a little less threatening, literally taking some heat out of the market. "Weakening of the heat dome will encourage rainfall and cooler temperatures in the Upper Midwest," said Martell Crop Projections. The market looks set to chop this way and that according to the latest forecasts. China bought 220,000 MT of new crop soybeans.

Corn: Sep 11 corn closed at USD6.88, down 10 cents; Dec 11 corn closed at USD6.77 3/4, down 9 1/2 cents. Once again the bulls were incredulous that their little darling corn couldn't hold onto early gains. A sure sign of a market bouncing on the ceiling maybe? Funds were said to have dumped 10,000 lots, the equivalent of around 1.25 million tonnes, on a "noon swoon" after some weather models showed cooler and wetter conditions for the upper and eastern Midwest. The outlook for the west though remains hot and dry. Weekly export sales estimates for tomorrow range from 900 thousand to 1.4 million MT.

Wheat: Sep 11 CBOT wheat closed at USD6.97, up 3 1/2 cents; Sep 11 KCBT wheat closed at USD7.94, up 16 cents; Sep 11 MGEX wheat closed at USD8.52 3/4, up 19 3/4 cents. Short-covering has dragged wheat higher the past couple of sessions even though the bullish weather story is really more about corn. Widespread rains in Europe have stalled the harvest and may lead to quality issues with wheat some are thinking. US wheat remains too expensive to make inroads into North Africa and the Middle East at the moment though. Jordan bought 50,000 MT of likely Black Sea wheat in a tender today. Trade estimates for tomorrows weekly export sales report range from 300 to 500 thousand MT.

EU Grains Close

20/07/11 -- EU grains finished modestly lower with Nov London wheat down GBP0.25 at GBP165.65/tonne and with May also falling GBP0.25/tonne to GBP172.60/tonne. Nov Paris wheat was down EUR2.25/tonne to EUR199.25/tonne whilst May12 declined EUR1.75/tonne to EUR203.50/tonne.

Chicago grains were higher, but Europe now seems to be attempting to divorce itself from events the other side of the pond.

Closer to home we have a major resurgence in grains availability from the Black Sea with prices around USD40-50/tonne cheaper than they are in Europe.

Ukraine's Ag Ministry increased their forecast for the 2011/12 grain crop today by 2 MMT to 47 MMT, up 20% on last season. Exports are seen almost doubling to 23 MMT.

Rains across the UK and northern/western Europe are slowing harvest activity for the time being, although drier weather is in the forecast next week.

Early UK barley and OSR yields are reported to be much better than anticipated, and although the wheat harvest is still a couple of weeks away optimism is high that output here will also prove to exceed expectations.

Consumer interest remains subdued at best, the feeling is that once producers have the harvest wrapped up then they will finally turn their attention to making some new crop sales.

Intriguingly, open interest in both London and French wheat is heavily stacked towards front end Nov11. In the case of thinly traded London it's over 1 MMT and in the case of Paris nearly 7.5 MMT.

Early Call On Chicago

20/07/11 -- The overnight Globex market saw wheat end around 8-10c higher, with corn up 5-7c and soybeans 7-9c firmer. Crude oil is a dollar and a bit higher and the USD a little weaker. The USDA have confirmed 220,000 MT of new crop soybeans sold to China.

There's something interesting happening today, the US markets appear to be saying "hey guys it's scorching over here, lets add some more weather premium" yet the rest of the world is going "you can do what you like mate we want to make some sales."

Ukraine's Ministry have upped their grain production forecast for 2011 to 47 MMT, in line with the general mood at last week's Kiev conference. Exports are now estimated at 23 MMT, again in line with ideas I heard last week of anything up to 25 MMT.

Both Ministry numbers are well ahead of what the USDA currently say.

You may also recall that the USDA's estimates on grain production and exports coming out of Russia are currently also significantly lower than those from local independent analysts based over there.

You could take those forecasts with a pinch of salt and assume that they are being overstated for whatever reason. The exporting nations in question however certainly aren't acting like they haven't got the volume to sell though are they?

It is also worth considering that several of the people I spoke to were of the opinion that Russia's 2010 harvest was probably in reality nearer 70 MMT, not the 60.9 MMT stated.

The French wheat market is lower today, concerned it seems that it had almost forgotten what it was like to have substantially cheaper competitors rampaging around it's own backyard.

So, for today at least, it looks like each wheat market is going to paddle it's own canoe and not all of them are going in the same direction.

We have all become preoccupied in recent years with "what's Chicago doing?" mentality. It is worth remembering that whilst the US account for around 40% of global corn production it's the rest of us, not America, who produce 92% of the world's wheat.

Early calls for this afternoon's CBOT session: corn up 4-6c, beans up 7-10c, wheat up 6-8c.

Morning Markets

20/07/11 -- The overnight Globex markets are firmer, albeit off earlier highs with wheat up 8-10c, corn 4-5c higher and beans gaining 6-7c. Interestingly Europe isn't following suit for once opening mostly a tad lower.

Russia isn't following the American markets either with wheat prices there continuing to fall.

In Ukraine the harvest is ongoing, with wheat yields highly variable from 2.8 MT/ha in the south south east to as high as 7 MT/ha in the west, according to my agronomist chum over there Mike Lee.

The Ukraine Ministry say that 15.6 MMT of grains have been harvested so far of which 10.6 MMT is wheat with yields averaging 3.14 MT/ha, an increase of almost 17% on last year. Barley yields are up 15%. Rapeseed yields are down 4%, they add.

I imagine that it won't be very long before Egypt tenders for wheat again with the intention of playing Russia off against the newly welcomed back into the fold Ukraine. We could easily see Black Sea wheat nudging USD50/tonne cheaper than US/EU origin grain by then.

China's apparent move to start importing corn in meaningful volumes may only provide a short-lived window of opportunity for America, with Argentina eager to continue to mend relations between the two nations by striking a trade deal with the world's largest corn consumer outside of the US.

The Argie Ag Minister says that the country will harvest 30 MMT of corn in 2012, an increase of more than a third, and will be looking to export 18-20 MMT of the stuff next season.

If the weather plays ball then there's little doubt that the Argies will have little trouble undercutting the US, just as Russia are now doing on wheat into Egypt.

An interesting day lies ahead for the euro tomorrow as European leaders meet to once again try and thrash out another Greek bailout. Feisty (and no doubt hairy armpitted) German chancellor Angela Merkel however is already quoted as saying that there won't be "just one spectacular event which solves everything".

Seven of nine members of the Bank of England's Monetary Policy Committee voted to leave interest rates on hold here, according to the minutes of their last meeting released this morning.

That suggests that an interest rate rise isn't likely any time soon. Only one member voted for further QE.

Chicago Close

19/07/11 -- Soybeans: Aug 11 soybeans closed at USD13.79 1/4, down 6 1/4 cents; Nov 11 soybeans closed at USD13.82, down 4 1/4 cents; Aug 11 soybean meal closed at USD360.10, up USD0.80; Aug 11 soybean oil closed at 56.69, down 23 points. Having traded sharply higher early in the session this was probably quite a weak technical close. Weather forecasts look a bit less non-threatening a week from now although the crop is still still a few weeks away from its critical yield development stage. The USDA confirmed the sale of 110,000 of soybeans to unknown.

Corn: Sep 11 corn closed at USD6.98, up 1 3/4 cents; Dec 11 corn closed at USD6.87 1/4, up 10 1/4 cents. Corn crop ratings dropped 3 points good/excellent last night, but the market couldn't hold onto sharply higher early gains. Worries over European and US debt are keeping players extremely cautious despite weather concerns. A much more threatening US weather market seems to be needed than the one that currently exists to push prices back towards recent highs. Bulls keep talking about tight old crop stocks, the weather, anything that might keep the bullish flame flickering it would seem but they appear to be having difficulty convincing everybody else.

Wheat: Sep 11 CBOT wheat closed at USD6.93 1/2, up 4 cents; Sep 11 KCBT wheat closed at USD7.78, up 17 cents; Sep 11 MGEX wheat closed at USD8.33, up 10 1/2 cents. Wheat was well off session highs despite a weaker dollar as afternoon weather forecasts turned a little less threatening. It seems strange that wheat was leading the entire complex higher in early trade as US grain is now massively over-priced in relation to Russian material. Egypt agreed to add Ukraine back onto it's list of approved wheat suppliers, further reducing the chances of US wheat making inroads into the world's largest buyer.

EU Grains Close

19/07/11 -- EU grains finished with Nov London wheat GBP3.90/tonne higher at GBP165.90/tonne and Nov Paris wheat EUR6.00/tonne firmer at EUR201.50/tonne following US markets higher.

Heat and dryness concerns in the US Midwest and Plains sent Chicago higher, with EU markets following suit.

The USDA reported a fall in US corn and soybean crop conditions overnight, with spring wheat good/excellent unchanged. Spring wheat crop development is however way behind normal with only 60% of the crop headed compared with 88% on average.

Customs data shows that UK wheat exports fell to a marketing year low of 75,200 MT in May, although the strong pace of early exports means that we've still shipped out 2.5 MMT in 2010/11.

Egypt have agreed to add Ukraine back onto it's list of approved wheat suppliers, further diminishing the prospects of EU or US wheat getting a look in with any tenders there for the foreseeable future.

The Chicago markets are concentrating on America's weather problems, rather than focusing on the bigger picture to my mind, and for now EU wheat is following what is happening across the pond.

The big picture shows that US and EU wheat was already well over-priced relative to that coming out of the Black Sea, so today's rises are hardly going to improve the situation any.

Every compounder in the UK that I am talking too is bemoaning how slack demand for feed is and how wheat just seems to be pricing itself out of the ration. That's all well and good if there's strong export demand for it, but there isn't, UK/EU wheat is priced out of that market too.

Whilst producers busy themselves with harvesting then I guess that they can ignore these issues for now.

Elsewhere alarm bells are ringing, EU and US debt problems haven't gone away. On a separate note Goldman Sachs reported a slump of 18% on Q2 revenues and the Bank of America reported a Q2 net loss of USD8.83 billion versus a profit of USD3.12 billion a year previously - the largest quarterly loss in the bank's history.

Early Call On Chicago

19/07/11 -- The overnight grains were all higher, reversing yesterday's losses in a typical Turnaround Tuesday. Wheat was 20-25c higher nearby, with corn up around 18-20c and soybeans 10-12c firmer.

Crude is a dollar and a half firmer and the USD a touch weaker. Gold has hit a new record high of USD1,609.51 an ounce.

The market is getting excited about corn ratings dropping 3 points good/excellent and soybeans by two in last night's USDA conditions report. The bulls are banging on about damage caused by this week's "heat dome" although some see that hanging around a bit longer than anticipated, others still see that breaking down by the end of the week.

The USDA have confirmed the sale of 110,000 of soybeans to unknown.

Why wheat should be up 25 cents when it is already way overpriced compared to offers out of the Black Sea is beyond me.

Also, in the case of wheat, it seems that the current USDA numbers are likely understated for many of the major producing nations now including Europe, Russia, Ukraine and India. US export potential, raised 2.5 MMT last month, also looks questionable based on current premiums over the Black Sea.

European and US debt concerns remain and still potentially hold the key to long-term market direction combined with a fund willingness, or lack of it, to keep their money in ag commodities.

Early calls for this afternoon's CBOT session: corn up 18-20c, wheat up 20-25c, beans up 10-12c.

British UnfAirways #2

19/07/11 -- "I hope I can assure you we will be in touch with you again in the very near future," said their incoming email acknowledgement of my complaint/claim.

Clearly we aren't talking in terms of hours, I was kind of hoping though that we might be talking in terms of days. It seems that we weren't sadly. As nobody was ringing me, as promised, I've had to ring them.

Well BA tell me that if I was to book a round the world flight with them, starting say in Newcastle then onto Heathrow, then Kiev, Hong Kong, Kuala Lumpur, Perth, Syndey, Buenos Aires, Sao Paulo, Havana, Miami, New York, Johanesburg, Dubai, Rome, Paris, London and then back to Newcastle and then if I was to decide that I'd travel direct to Heathrow and skip the initial domestic Newcastle/Heathrow bit then they'd view that as a no show and cancel all my flights and keep the money!

Or in my particular case, as I made my own way to London due to the short time between the Newcastle flight landing and the Kiev flight taking off (stupidly prudent I know), they may actually let me fly to Kiev first before "pulling the plug" leaving me stranded - cheers BA you strike monkeys.

Of course their principals wouldn't get in the way of taking my money off me one more time to fly me home again, and earner is an earner isn't it?

Hindsight is a wonderful thing. My international globetrotting Romanian correspondent advises "Welcome to the joys of travel for work. BA are bastards and I avoid like the plague."

How succinct.

Still, on the plus side I will obviously be taking this further, and as I will never fly with them again I will never have to look one of their Quintin Crisp lookalike flight attendants in his mincing little eye again either will I?

India Lifts Wheat Export Ban On Record Production

19/07/11 -- Four record wheat crops in successive years have seen India finally lift it's ban on wheat export over the weekend.

The Ministry have raised their estimate for this year's already harvested crop to a fraction under 86 MMT, an increase of over 6% on last season. That's around 2 MMT more than the USDA currently say.

The Rapemeal Market

19/07/11 -- The domestic rapemeal market seems to have sprung into life during the last week or so from what I am hearing. Maybe the crushers haven't got a particularly high percentage of sales on for new crop with August only round the corner? Or maybe they are conscious of extra crush capacity coming onto the market in Germany during the second half of 2011 will mean that there's more meal about?

Extra capacity will be added with the reopening of Bunge's 1.1 MMT/year Mannheim plant which was badly damaged by fire in April 2010, and is scheduled to begin production again as early as next month.

A second plant in the north of Germany is set to double it's capacity by the autumn, according to this report: Read all about it.

Twitter Trivia

19/07/11 -- An interesting and totally unsubstantiated piece of Twitter trivia I have stumbled across this morning:

"Fact of the day: A square metre of mud in the Humber Estuary has the about the same number of calories as 16 chocolate bars."

Lets just hope that MrsN#1 doesn't get to hear about that or she'll be up there with a spade like a shot digging for Twix's.

I mean I'm not saying she's fat, but if I had to name the top 5 fattest people in the country, she'd be 3 of them.

Still, fair play to her, she did give me two wonderful children. The other six were bloody awful though...

Romania Latest

19/07/11 -- A brief but bang up-to-date report from our man in Romania:

"We have now done approx 750ha of rape. We lost 1 day with rain of 15mm last week. Temps are very hot and wheat is ripening in front of our eyes. Reports of decent wheat yields are everywhere. We will start next week."

Rapeseed Harvesting

19/07/11 -- There are some widely mixed reports coming in from across Europe with regards to the rapeseed harvest. Better than expected yields are being reported in France, which may see them harvest a crop of around 4.6 MMT this year, a drop of around 4% on last season but still a considerable improvement on what many were forecasting a couple of months ago.

The Germans haven't been quite so fortunate, output here is expected to be in the region of 4.3-4.5 MMT, some 20-25% lower than last year as spring rains arrived a little too late to help much of the crop.

In Romania overall production is also expected to be down on last year. My Romanian correspondent reported last week: "A hot spell of weather the last few days with high temps mixed with some thunderstorms meant we finally started rape on Monday. Yields are an encouraging for us 3.1 tonne/ha which is 0.6 tonne up on budget. We are in not our best rape but we also have some lower yielding stuff to do. Progress is slow but steady and we have completed almost 100ha of 320ha we have ready. Only problem appears to be an excess of late growing cleavers which is keeping the riddles and cleaner very busy. The rest is still a few days off yet. Reports from the south of Romania talk about rape at 1.7 tonnes per ha. We are 2-3 weeks off wheat but they are running on this in the west."

Overall EU-27 production is seen falling around 2 MMT on last season, which means t hat we will have to rely on imports again for 2011/12. Unfortunately output from our cheap and cheerful neighbour Ukraine is also seen falling this year as heavy June rains were thought to have caused significant crop losses.

Europe's 2 MMT shortfall is however expected to largely be made up for on a global scale by sharp increases in output from Canada and Australia. Canadian production is expected to rise to anywhere between 12.6 MMT and 13.4 MMT in 2011, depending on who's estimate you fancy.

Australia is now expecting a record crop of just under 2.6 MMT in 2011, much of which will be exported to Europe, according to yesterday's estimate from the Australian Oilseeds Federation.

Here's a summary of what is expected from where on the rapeseed front in 2011/12:

Czech Rep
Total EU-27 
Rest of the
Total Rest of the World
Total World

Interesting Development

19/07/11 -- My friends at the APK-Inform Information Agency are reporting that Ukraine has been added back onto Egypt's list of approved wheat suppliers.

That looks like a pretty canny move to me. In the past couple of tenders Russia (Matalan) has only had itself to compete with for the Egyptian business. Now that Ukraine (Primark) has been invited to join the party it's got to make sure it keeps those prices nice and low.

Meanwhile France (Marks & Spencer) and the US (Next) are just going to have to sit around and content themselves with the odd bit of passing trade unless they fancy holding a fire sale.

Chicago Close

18/07/11 -- Soybeans: Nov soybeans ended down 3/4c at USD13.86 1/4/bushel; December soymeal ended down USD1.30 at USD364.60; Dec soyoil dropped 44 points to 57.82. A firmer US dollar and weaker crude were negative influences. Weather forecasts are conflicting. Export inspections of 28.95 million bushels were a bit flat at 9 million bushels behind last year's pace. The USDA Crop Progress report gave a 2 point fall in good/excellent conditions to 64%, in line with expectations.

Corn: Sep 11 corn closed at USD6.96 1/4, down 5 cents; Dec 11 corn closed at USD6.77, down 8 cents. Export inspections were a bit disappointing at 28.95 million bushels. Funds sold an estimated 8,000 contracts on tha day as weather forecasts turned a little less threatening. Calls have the "heat dome" moving away west later in the week. After the close the USDA gave a 3 point drop in good/excellent conditions to 66%. That was probably in line with expectations.

Wheat: Sep 11 CBOT wheat closed at USD6.89 1/2, down 5 1/4 cents; Sep 11 KCBT wheat closed at USD7.61, down 3 1/2 cents; Sep 11 MGEX wheat closed at USD8.22 1/2, down 1 1/4 cents. Wheat was lower but well of session lows. Weekly export inspections came in at 18.726 million bushels, lower than anticipated. The USDA pegged winter wheat harvested at 68% done, a tad down on last year and the 5 year average. Spring wheat good/excellent conditions are 73%.

EU Grains Close

18/07/11 -- Nov London wheat was lower, down GBP3.00/tonne to GBP162.00/tonne with Nov Paris wheat falling EUR4.50/tonne to EUR195.50/tonne.

The ramifications of the European debt crisis, and those of the potential raising of US debt ceiling have got the market very cautious.

Crude oil was lower on the back of nervousness regarding those two issues.

In addition reports coming out of the Black Sea of reasonably plentiful supplies of cheap grains and decent harvest prospects also weighed on the market.

Latest crop production estimates for the EU are nowhere near as pessimistic as those from a month or two ago, whilst wheat continues to enter the bloc at a faster rate than it is leaving it.

May/June rains appear to have arrived just in time to stave off the kind of losses that were being predicted back then, whilst providing a welcome boost for spring sown grain production.

Meanwhile Russian milling wheat is out-pricing French wheat at around USD40/tonne and Ukraine look like having an abundance of cheap feed wheat to saturate the European/North African market with in 2011/12.

Jordan is tendering for 100,000 MT each of optional origin wheat and barley, and Iraq for 100,000 MT of wheat. There isn't much chance of Europe winning any of those orders.

Early Call On Chicago

18/07/11 -- The overnight grains finished lower with wheat down 10-15 cents, corn falling 13-15 cents and beans down 8-10 cents.

Crude is a over a dollar and a half lower and the USD is up a tad. Gold has hit record highs and global stocks lower on continued EU/US debt worries.

Reports suggest that the weekend weather in the US was maybe a bit better than anticipated and there are also hopes for the "heat dome" to move away west later in the week.

"Scattered showers are in the Midwest forecast, beginning in the northern Midwest, but also affecting parts of parts of Nebraska, Iowa and Illinois by Thursday and Friday," say Martell Crop Projections.

"A collapse of the high-pressure ridge is possible early next week in the Midwest, when the dome of hot air retreats into Western United States. Cool Canadian air would make deep penetration into the Midwest especially east of the Mississippi River. Whether this is temporary or a fundamental change in the weather pattern is unclear," they add

Black Sea wheat and barley remain the driving force as far as export competitiveness is concerned.

European stock markets are lower and the Dow is likely to follow suit. EU grains are also a negative influence as they struggle to get anywhere near the prices being offered out of the FSU.

Early calls for this afternoon's CBOT session: corn down 12-14 cents, soybeans down 8-10 cents, wheat down 10-15 cents.

Nogger On Tour

18/07/11 -- Continuing my whirlwind tour of Europe (the tour t-shirts are on order and I'm thinking of having some limited edition embroidered flat caps made), for those who are interested I'm making a one-off appearance at the Killeshin Hotel, Portlaoise in southern Ireland next Monday 25th July early evening.

Here I will be giving my thoughts on:

  • The long term direction of the wheat market

  • The main drivers of the EU and Irish wheat market

  • Volatility in the wheat markets

  • And there may also be a couple of token jibes at the ex-wives. They'll never know so where's the harm, eh?

    In addition to that it's totally FREE!

    You can book a place here: Nogger On Tour With Delta Index

British Unfairways

18/07/11 -- A highly pleasurable but whirlwind trip to Kiev was badly marred by severe difficulty getting home. Upon arriving at the front of the queue at check-in at Kiev airport on Friday I was confronted by a surly British Airways employee telling me that "computer says niet!"

Think of a heavily lipsticked Arthur Mullard in a BA blouse and you are somewhere close. I was reliably informed that "all Ukraine women are absolutely gorgeous" and so they were. Except for this one. In fact I would go as far as to say that she made MrsN#1 look like Keira Knightley.

"So what am I supposed to do?" I asked.

"Wait. Maybe your name will be on the list in five minutes, ten minutes, I don't know," she unhelpfully replied twiddling her moustache. Only now actually do I consider that maybe she wasn't a she at all. I'm sure that there are some ugly post-op transexual shemales kicking around Eastern Europe just as there are in Royston Vasey. Just my luck then to have landed up in this queue I thought.

Still, there's an hour and a half yet until the plane leaves, surely my name is going to appear on the list by then isn't it? I tell you what I'll do, I'll look for a BA desk. There isn't one. OK then, I'll queue up all over again in that queue over there, the one for the attractive blonde lady who is smiling and ruffling little kids hair, she'll let me in won't she.

"Computer says niet!"

Jesus wept. There's only half an hour to go to departure now. Look I've got my booking reference and printout and everything. Yes I know it's not an actual ticket, I haven't needed and actual ticket when I've flown anywhere since about 1995.

"The only way you can get on this plane sir is if you buy another ticket. My colleague says, I don't know, some problem back in UK, I don't understand." You and me both sister.

"You go here to ticket desk, it not far, run, run. Plane leave in 25 minutes."

Bugger, bugger, bugger.....

At the ticket desk: "You cannot leave Ukraine unless you buy ticket, this ticket not valid."

"Right then so how much is that?"

"4,750 Grivnas" (They don't spell it like that but that's what it sounds like).

At this exact moment in time I neither know nor care how much 4,750 Grivnas is, I just want out. 4,750 Grivnas turns out to be more than I paid for my entire round trip, so no surprises there then.

"Thank you sir, have a nice day..."

I'm the last one on the plane narrowly avoiding the slow handclap.

Needless to say BA have had a stiff memo over the weekend. Needless to say they haven't yet got back to me. Needless to say their switchboard number is experiencing a high volume of traffic and maybe I would like to try again later. Needless to say that is due to hundreds of other similarly stranded passengers getting fleeced around the globe.

The ball's in your court, BAstardos.

Snippets And I Think I'll Just Have The Salad

18/07/11 -- The Australian Oilseeds Federation is forecasting a record 2.59 MMT rapeseed crop Down Under in 2011, 21% up on last year, helped by recent rains in Western Australia. Exports will also be a record high, with most of that heading to Europe, they add.

Germany's DRV peg this season's grain crop 6% lower this year at 41.2 MMT, although that's better than they reckoned in their last estimate in May due to plentiful June rains. The German Farmer's Association, confusingly abbreviated to DBV meanwhile say that June rains mean that corn there has "experienced a tremendous growth spurt" after difficult initial conditions.

Jordan is tendering for 100,000 MT each of optional origin wheat and barley. I wonder who is likely to win that order? They might as well not bother asking European trading houses to participate in that one.

Reviewing the bids at last week's Egyptian wheat tender reveals that the winning Russian bids were priced at the equivalent of around EUR176-176/tonne (or GBP153-154/tonne - and this is milling wheat not feed wheat we are talking about). Not only that but freight from Russia is cheaper than from France.

The Argies are at it again I hear, with workers at the national food and animal health inspection service, Senasa, striking over pay. That could cause a few minor disruptions to grain shipments.

Safe havens like gold and the Swiss Franc have hit record highs this morning as eurozone meltdown fears remain. Reuters are reporting that although "only" eight banks failed the recent EU stress tests, sixteen more were close to failing.

China's CNGOIC say that soybean imports in 2001 will fall for the first time year-on-year since 2004 to 51 MMT. The fall is due to high levels of government sales of state-owned reserves they say. Trade gossip suggests that the government are about to unload 4 MMT of beans at discounted prices to selected local crushers in exchange for them capping soyoil prices.

Stay off that waygu beef. Meat from cattle that ate nuclear-contaminated feed has been sold in and around the Tokyo area according to Japan's second largest retailer. A Ministry spokesman dressed in a radiation suit clutching a one-way ticket out of there said that there was definitely no threat to public heath.


18/07/11 -- UK weather for the fortnight ahead from the very interesting Weather Schools Channel on YouTube. A wet week ahead for most of northern and central Europe, but there is then the possibility of four or five days of warm and settled weather.

Morning Vibe/Kiev Gossip

18/07/11 -- It looks like a shaky week lies ahead for the euro with the pound rising to 1.1460 against the single currency in early trade. It seems that the results of Friday's stress tests on EU banks showed eight out of ninety failing, which was apparently less than the market had expected. However it appears that the devil is in the detail.

From what I read over the weekend although all the relatively big banks passed, it seems that many only just managed to scrape over the imaginary hurdle in front of them. Further analysis this week may show that many of the larger banks would have failed faced with slightly more stringent criteria.

As well as the European debt crisis we also have the US debt ceiling issue hanging over the market. I find it hard to envisage grains pushing significantly higher this week with these problems in the limelight.

Russia's First Deputy Prime Minister Viktor Zubkov said on Friday that the country will produce 90 MMT of grains this year, an increase of 48% on the 60.9 MMT officially produced last year.

Gossip on the sidelines of the forum I attended in Kiev last week suggests that last season's grain crop, whilst still a disaster, wasn't as big a disaster as the official figures suggest and maybe was more likely to have been in the 68-70 MMT region.

Zubkov seemingly didn't give a specific forecast on the wheat harvest but did peg barley production at 16-18 MMT, a rebound of 92-116% on last season (USDA currently 15.5 MMT).

At the same conference Agritel estimated Russian wheat exports at 15 MMT this season, a 275% increase on 2010/11 and 3 MMT more than the USDA's latest number. Exports out of Ukraine will reach 9 MMT this season they said, a 143% increase on 2010/11 and 1.5 MMT more than the USDA currently forecast.

APK Inform forecast a Ukraine wheat crop of 19.3 MMT, 1.3 MMT higher than the USDA, with barley production there at 8 MMT (USDA: 7.5 MMT) and corn output at 15.0 MMT (USDA: 15.5 MMT).

Despite having been told to pack a raincoat it was very warm and dry, although heavy rains in May and June are likely to have cut the percentage of the wheat crop suitable for milling from the 45% official estimate to more like only 20-30% it was felt. These same rains are likely to have led to significant losses in rapeseed production was also the general vibe.

So there we have it. Russia seems likely to have plenty of cheap wheat to sell, and isn't wasting any time on mopping up orders at levels way below EU and US offers. Carryover stocks from last season were likely to have been significantly higher than official figures show.

Ukraine has plenty of cheap feed wheat to sell and is looking for buyers. Out of interest traders there now seem more or less resigned to the fact that the VAT the government are supposed to repay them on exports is simply never going to turn up. Unfortunately for growers there that is likely to be reflected in the prices on offer.

Production and exports out of both countries are probably higher than the current USDA numbers.

Kazakhstan was also represented, and they too seemed confident of better crops this year without giving any specific numbers.

Armed with the news that Egypt has just bought another three cargoes of Russian wheat at USD2 million per shipment cheaper than French it's clear that the balance of power is switching back to the Black Sea for 2011/12.

I have to say that there was some bemusement as to why Russian wheat is USD30-40/tonne cheaper than French wheat at the moment, and some discussion as to whether that gap could and would narrow. And of course if that would entail the price of Russian wheat moving up, French wheat moving down or both.

With the EU currently importing more wheat on a weekly basis than it is exporting, upside for the time being must surely be limited?