i see wheat hit £150 for next july yesterday

  yahoo!

Good news indeed. Have you seen the satellite pictures of Russia ? Looks like half the country is on fire. No wonder their wheat yield has crashed.

Happy days

Push for 160, you can always come down

Suppose this means it's going to cost more to feed our ewes this winter ? Good job lambs are selling well !

I would start to celebrate when you have your wheat in the bins and not before harvest hence don't count your chickens until the eggs have hatched.

and you poms say us scots are miserable!

Nobody knows what will happen, but the chatter I read on the internet here makes me think grain markets may have quite a bit more upward potential.  I guess the Canadian crop is dismal(Caveo, any input??), Kansas is a wheat growing powerhouse, from what I can tell in the areas that grow a lot of wheat(away from my farm to the west) yields were decent, but not enough to make up for lots of other problems elsewhere in the world.  This deal in Russia came out of nowhere for me, although you folks a little closer to Russia might have known about it.  Next driver in my opinion is going to be will hot dry weather settle into any part of our cornbelt, and will this extremely hot dry weather continue into the fall in our major wheat growing areas in the southern plains, or is this just a blip and we return to fairly wet decent weather.  We can easily get 100+ temps into the first half of September, if that happens as it well could this will be one dry dusty place, with poor prospects for wheat seedings.  However, our weather can turn on a dime and often does.  The main reason for me betting on us burning up in Kansas is because it has been such a long time since we have.

greetings kansas, what is the cbot doing today?

 I guess the Canadian crop is dismal

Yep, in the Canadian Prairies, much of which never got seeded and apart from northern Alberta and the Peace river area which has been dry, the rest is soaked. We are more like the tropics, with mist in the morning, hot hot humidity during the day and in the evening thunderstorms and hail. Sandy and hilly land (not much of that in the Prairies) looks fantastic but for the majority, although improving with the heat, is way below average yield. Canola (OSR) was expected overall to give about 17-18 million tonnes this year but more likely will be in the 10 million range and I believe this will a benchmark for all other crops. The big worry is that the crops are late ,due to lack of heat in the spring, and an early frost would really kill off what we do have!

 The only crops that looked good are the fall sown wheats and rye, which are now being harvested, should be in the 2 tonnes mark but giving half a tonne less than that and very diseased. So Canada is in nearly as big a mess as Russia but with too much moisture

Predicting grain prices is a mug’s game.

A month ago, I was predicting a “subdued trade in 2010/11” on my blog, despite new figures from the US department of agriculture pointing to lower wheat and maize plantings.

A week later, as the first hosepipe ban came in and wheat prices approached £110/t ex-farm, I then suggested cereal producers could be looking at “a sell opportunity” on the grounds that world stocks were still plentiful and price rises might not last.

Those comments look slightly ridiculous now that global wheat markets have posted the biggest monthly rise for almost four decades on the back of continuing drought in Russia, Ukraine and Kazakhstan. London futures prices have climbed 50% since the beginning of July and UK ex-farm wheat prices now stand at nearer £140/t spot.

But it’s not just us “amateur enthusiasts” who got it wrong. At the same time as I was making these comments (in mid-July), grain merchant Gleadell Agriculture was also pointing to the “burdensome” world wheat stocks and “long-term bearish sentiments”. These comments were echoed by Openfield, which quoted the old trading adage “up like a rocket, down like a stick”.

They’ve not entirely changed their minds now, suggesting the long-term view is still “less supportive” and predicting “continued volatility”.

But there is no doubt that grain prices are currently sky-high and are likely to eclipse the values seen in the past two seasons, which is positive news for cereal growers.

For me it is the old adage “up corn, down horn” which springs to mind – or “up wheat, down beak” for those in the poultry sector who will now be looking with great concern as the cost of their staple feed ingredient goes through the roof.

NFU economists suggest that, with chicken feed typically including 65% wheat, a £10/t price rise will add about 3p to the cost of rearing a broiler hen. A £40/t price rise, as we have just witnessed, represents a 12p per broiler cost increase – enough to jeopardise the profitability of many in the industry. 

Of course, most of the attention in the national media has been on what the grain price increase will mean for consumers, who may have to pay a bit more for their bread, milk or eggs.

The real issue, however, is what it will mean for poultry and livestock producers at the bottom of the food chain. They are the ones who will have to bear the brunt of these latest cost increases.

 

 At the moment the CBOT is down 12cents on wheat, all grains were down when I looked.  The internet sites I look at were saying last night there will be a correction, maybe of 50 cents, but they still believe in upward potential, like Phil points out it is a fools game to try to hit the top.  I sold 3 loads of November '10 soybeans for $9.09, $9.15,. and $9.19 and nearly broke my arm patting myself on the back for doing it, but now I look stupid, to some people.  But very few times in my life have I had the opportunity to sell beans for over $8 at harvest, let alone over $9, I can make money at $9(if I have anything to sell) so I am happy to have some sold, because this thing can crash at a moments notice too. 

Grain prices that are too high will kill demand, right now I think US livestock growers can live with the price of grain, but if it gets much higher there will be more breeding herd liquidation.

We haven't had a bad, large scale drouth in our major grain growing areas in years.  It seems to me we are due for one, and if that would hit on the back of this rally and continue on through next year, we could see some really amazing prices.  By the same token, there is no law that says we can't raise another couple of bumper US crops, or somewhere else in the world couldn't, and send prices into the tank.  Nobody knows.  I know if I was in the UK, and 150 was a good price for wheat, I think I would sell a little just to get a bottom price on my production(or top, whatever the case may be).

Caveo, am I correct that a really hot dry spell on your late planted spring crops would be a disaster?

 Oh, by the way Phil, the USDA reports are notorious for being nearly worthless in predicting prices.  It is a little like having corn cobs rather than toilet paper, better than nothing, but still not much to brag about.

phil, do you not think it is a coincidence that all the big grain buyers were talking the trade down? trying to depress us growers into selling before harvest for tupppence.

happens every year.

 

Caveo, am I correct that a really hot dry spell on your late planted spring crops would be a disaster

Can't see that happening now as we have an excess of moisture and the combines are starting to roll, if the taps had turned off a month ago, then yes. There is another storm on its way for tonight ontop of the 2.2inch received 24 hours ago.

Our great CWB, influenced by the great teachers of North Korea and with inefficiency that would make the old Soviets blush have put out a statement..

 

glasshouse:

phil, do you not think it is a coincidence that all the big grain buyers were talking the trade down? trying to depress us growers into selling before harvest for tupppence.

happens every year.

 

My first ever blog posting spoke of the innate gloominess of most grain traders and their tendency to talk the market down. The latest turnaround does feel like deja vu.

may wheat isup £16.50, now £174. USDA figures just out.

matif wheat for nov is £192 or 232 euros. up 23 euros

hold onto your hat!

I don't know how old you are Phil but I can remember '73 when the Russians went round to all the big grain traders in unison( but unknown to each other )and bought up all the wheat they could before it got out that they were short. The price soon went from around £20 mt (we were metric even then) to £40 and onwards and upwards to over £60.  £1 in those days would get you about 14 litres (3 imp galls) of 4 star petrol-I "pumped gas" in those days so can remember. So here comes the maths ,sell one tonne of wheat in 1973 you get £40 so you can then buy 40x14= 560 litres of petrol for your Cortina which today would cost about £655.Let's start celebrating when we can swap a tonne of wheat for 560 litres of fuel for whatever we drive today. As I write wheat is approaching £170 so it's not just the Russian crops on fire!

Things don't look too healthy in Canada for the wheat crop or any crop, not only was about 20% not seeded, but very little prairie crops looks good. Much too much rain has drowned the crop, but also farmers are starting to talk about high disease levels, especially fusarium, sprays having had little or no effect. Just travelling to Winnipeg, the usual view of fantastic crops in the Red River valley are not to be seen this year and northern MB and SK which normally produce bumper crops are asking the govt. for assistance. Can't see Canada producing much above 50% of normal output, it's that bad! Someone is going to have to wake up.

For £60 a tonne Opengate and others have been saying this is a market driven on speculation . For £60 a tonne this market is driven on fundamentals . Russia and others struggle in heat and floods closing the supply of cheap wheat and the world stocks talk about sit in countries that have prices way over these cheap sellers. UK wheat is one of the cheapest on the planet after export bans in Russia. If others have to follow the export ban to protect their own food inflation where will the world go for supply ??? Add this to the fact UK has near sold its surplus already before 5% of the crop is cut and that mill buyers like coops still havn`t woken to smell the coffee its leading to fun times. May be some at Opengate just like seeing their names in press ? but we cant wait to see your pool prices .... oh by the way the speculators have only just arrived ... take a look at the Chicago market !

Well don't I look silly.

Only a few weeks ago I was calling wheat prices to fall on the approach of harvest, calling the then high prices of £130/t unsustainable, now it's nearer to £160 and looks to be rising ever higher.

The only problem I see is that the market could overheat, if we see 2008 levels of pricing and we're getting close, we all know what happened to prices after that. If i was an arable farmer I would sell most of my wheat forward for Nov 2010 and enjoy some serious margins, as well all know, what comes up, must come down and while I think wheat prices should be higher than we have seen through most of 2009/2010 (Something like £125/t, ish would be my best bet), the bubble may burst at any time.

UK wheat is one of the cheapest on the planet.

But you as farmers get more for it than we do in Canada, You see we have (only in the Prairies) a wonderful quango called the CWB to which all your wheat and barley has to be sold. I DO have neighbours that have sold over the border in the US and HAVE gone to gail for this.My three nearest elevators to me are in the US and today, if I could deliver there, I would receive $27.70/tonne more for my wheat.

The wheat boards Fixed Price Contract as of today's close with standard Manitoba deductions taken off... 
 
$6.26/ bushel 
 
http://www.cwb.ca/db/contracts/ppo/ppo_prices.nsf/fixed_price/fbpc-wheat-2010-mhrs-20100805.html 

So the CWB would be paying in stirling 141.28/tonne, for top milling.  

stop it. you are an eternal pessimist. obviously not a farmer. are you a grain merchant perchance?

there is so little left to trade, with harvest barely started, we could see £200 next week!

i see the boats have arrived for feed barley at£130 ex boats for wheat next.

caveo, when do stats canada publish figures?

in 2007, the market peaked then slumped because of record plantings in russia.

this wont happen this time, as there is no money pouring into russia now since the credit crunch, and there is no moisture to plant anyway.

i think the eu will act after this to stabilise prices for european farmers at a sustainable level, just as they did post the1973 great grain robbery.

caveo, when do stats canada publish figures

Not sure, and Stats Can are a joke, they are not a well loved body amongst the farming community due to the fact they are very heavy handed, demanding answers immediately and with threats. Most fammers give them any old answers just to get rid of them.

What I can tell you is that a very large proportion of Canadian wheat never was sown, and much that was, was destroyed by excess moisture. I thought that the wheat in SW Manitoba was actually looking quite good but now that the combines are rolling the picture is very different, the yields are not there, and we have a great deal of disease. Take it from me, the CWB figures are not only very optimistic, but unless they have some very good reserves, they will be buying from the US to cover some of their ars... (forward contracts).

glasshouse:

stop it. you are an eternal pessimist. obviously not a farmer. are you a grain merchant perchance?

there is so little left to trade, with harvest barely started, we could see £200 next week!

i see the boats have arrived for feed barley at£130 ex boats for wheat next.

caveo, when do stats canada publish figures?

Hehe, well, I have been called many things, but a grian merchant isn't one of them (Feel free to replace grian with something more derogitory!).

 Actually my line of work relies of farmers (of all kinds) not losing money so they can afford to replace/repair the kit on their farms, so I would welcome higher grain prices All I am saying is that all markets over-exaggerate the highs and the lows, and that the inflationary pressure that £200/t wheat would cause would most likely make even Cameron sit up and pay attention.

Peronally I think feed wheat is going to stay at around £150/t for a while, barring a complete an utter disaster of a harvest or something unexpected happens. Of course Russia turning protective over its grain stocks wasn't expected and frankly, we are only one major shock away from £200/t wheat, so you never know glasshouse, it may be time to get that Moet on ice.

 One things for sure, in Dec 09 I posted on Philip Clarke's blog that I thought wheat would be £115/t come the start of July, I was called an optimist then, it's funny what a difference a few months make!