Nogger's Blog

Pound Hits 13-Month High

01/03/11 -- The pound is up above 1.63 against the US dollar for the first time since mid-January 2010 this morning as pundits price in an interest rate rise sooner rather than later.

May or June seems to be a lot of people's favourite once we have an anticipated inflation rate of around 5% plus, from the current 4.7%. Soaring food and fuel prices are seen forcing the BoE's MPC to up base rates from the existing all-time low of 0.5%.

UBS said in a survey that food prices in the UK are rising far more quickly than in other leading global economies. Meanwhile petrol prices are now even higher then when oil reached USD147/barrel in 2008, with now diesel averaging 134.9ppl locally to me (the highest price I recall paying back then was 132.9ppl).

In February the MPC voted 6-3 in favour of leaving rates on hold, more of a split decision than previously, we get to find out the outcome of their March vote next Thursday.

Meanwhile even ABF-owned High Street discount clothing retailer Primark is starting to feel the pinch, saying that the VAT increase had led to a "noticeable" slowing of demand since the turn of the year.

Nationwide say that the housing market is "treading water" with prices up slightly in February, but still fractionally lower than twelve months ago.

On the continemt euro-zone inflation is also up this month, but at 2.4% it's only half of that in the UK.

Chicago Close

28/02/11 -- Soybeans: Mar beans closed 8 1/4c lower at USD13.57 1/4; Mar soymeal ended down USD3.30 at USD356.40, Mar soyoil closed 18 points lower at 56.77. Rain is delaying the Brazilian harvest, but once it comes in it looks like being a record 70-72 MMT. The outlook in Argentina has also improved significantly from early in the season. Chinese buying is seen switching to South America, and also falling from above 5 MMT/month to closer to 3 MMT this month. Export inspections were however strong at 48.6 million bushels.

Corn: Corn rebounded from early losses to close with Mar up 10 1/2c at USD7.22 1/2; Dec was up 5c at USD6.06 3/4. Export inspections weren't very bright at only 24 million bushels, versus 39 million last week. Even so corn managed to shrug off early losses with front month Mar posting its highest close for a nearby contract since early July 2008. Funds were estimated to have bought around 5,000 contracts on the day.

Wheat: CBOT March wheat was up 6c to USD7.82 1/2 per bushel; MGEX wheat climbed 15 cents to USD9.30 3/4; KCBT wheat ended up 15 cents to USD9.02 1/2. A strong showing in Saudi Arabia's weekend tender lent support as did a weaker dollar. Export inspections however were on the low side at 19.5 million bushels compared to 31 million last week. China's wheat crop got some much needed rain over the weekend.

World Crop Weather Highlights

28/02/11 -- World agri-weather highlights from Martell Crop Projections:

• Heavy rain hit Eastern Midwest Sunday, second major storm in a week: flooding occurring; forecast calling for more heavy rain; still very cold northern US, subzero F nights; snow persisting Upper Midwest, northern spring wheat


• Brazil Mato Grosso soybeans heavy rainfall yesterday; way above normal rain past 2 weeks; South Brazil relatively dry since mid February; same weather pattern to prevail this week


• Warm days, cool nights Argentina grain belt; soil moisture favourable Cordoba, Santa Fe, Entre Rios; too dry and warm in the southwest Argentina, La Pampa and western Buenos Aires


• Europe warm west, cold east; dominant Feb weather pattern; recent rain helpful in France but still way too dry; 2-4 inch moisture deficits Jan-Feb; severe dryness also in Slovakia, Hungary, Balkans; dry forecast, no relief


• Western Australia very hot 98 to 103 F; rain is predicted; spotty showers yesterday in northern New South Wales, February has been dry; forecast continues wet north Australia tropics


• China showers Sunday in winter wheat, up to 0.80 inch, drought easing; cool temperatures slowing wheat growth; forecast becoming favourably wet in Central-East China rapeseed; rain badly needed, also too dry


• Cool, showery weather Pakistan, Northwest India favours winter wheat development; unsettled conditions to continue with below-normal temps; wheat yield potential good and improving


• Russia winter wheat stuck in cold wintry pattern; cold high pressure prevails; very dry and cold February in Ukraine, Russia, Black Sea winter wheat; more of the same this week in forecast

EU Wheat Close

28/02/11 -- EU wheat closed lower with Mar London wheat down GBP0.50 to GBP201.00/tonne and new crop Nov GBP2.25 easier at GBP164.50/tonne. Mar Paris wheat fell EUR1.50 to EUR257.50/tonne, with Nov EUR3.25 lower at EUR219.25/tonne.

Weekend rains/snow in China reduced the area there affected by drought to 2.52 million hectares, according to the Ministry of Water Resources, that's two thirds down on where we were at the height of the problem.

Saudi Arabia bought 275,000 MT of wheat over the weekend, one cargo coming from a surprise source - Brazil. The remainder was made up of US wheat.

EU soft wheat export licences were 439,000 MT last week, but we need to keep up that pace for the remainder of the marketing year to hit the USDA's target of 21.5 MMT in the 2010/11 season. We've only managed to better that total once so far this year.

Crude oil was flat after last week's excitement, with few changes to the Middle Eastern situation over the weekend.

The pound rose against both the dollar and the euro, depressing UK values.

Weaker US markets following Friday's strong gains were probably influenced by profit-taking and poor weekly US export inspections of less than 20 million bushels compared to 31.2 million last week.

BradburyWatch

28/02/11 -- Libya and the Middle East contagion have lost centre stage today on the shock news that BBC's Countryfile sex goddess Julia Bradbury is pregnant. It's a 'miracle' she says. It certainly is Julia because I had a vasectomy in 1993, and don't go giving me the "toilet seat" excuse because it just won't wash.

I'm going to have to dismantle my bedroom "shrine to Julia" now as well, it took me ages to make that. Well that's it baby, we're his-tor-y. I've never been so let down since I found out that Peter Purves had been tupping Valerie Singleton all those years I salivated into my sticky-backed plastic. I really wish I hadn't deleted all those begging text messages from Kylie now too. Bugger.

EU Rapemeal Prices

28/02/11 -- Rapemeal prices are up today following Friday's strong gains in Chicago.

Here's the latest guide prices for EU rapemeal, basis FOB Lower Rhine in euros/metric tonne, with change from previous trading session:

Early Thoughts

28/02/11 -- Fresh news is a little thin on the ground this morning. China got some decent rain/snow over the weekend, which may have improved the outlook for winter wheat there Weekend falls ease drought.

Saudi Arabia bought 275,000 MT of wheat over the weekend, mostly from the US.

Argentina will be dry for the next ten days whilst Brazil remains overly wet, say QT Weather.

The pound is up against both the dollar and euro, but nobody seems to know why. London and Paris wheat open a little easier.

Australia's wheat stocks at the end of January are 30% up on a year ago at 22 MMT, according to the Bureau of Statistics there. After the bumper harvest in the east, NSW has the highest stocks holding 35% of the nation's wheat.

ABF say that its interim results will be in line with market expectations.

Glencore are said to be considering the largest ever London stock market flotation, according to the Times.