Thought for the day

That wheat trader who lost $141.5m overnight the other week. If he'd have waited a fortnight before putting his "bet" on he'd be labelled a hero now!

Another one bites the dust

CHENOA — Citing high corn prices and a tight money supply, Chenoa Mayor Walt Hetman announced last week that developers for a $180 million ethanol plant have decided not to renew their option to buy.

In November 2006, Hetman announced U.S. Ethanol was interested in building a 100-acre ethanol plant on the 550-acre industrial park located south of U.S. 24. The plant would create up to 500 construction jobs and 65 full-time workers.

Pat Hinner, owner of AGRA Industries which was hired to build the plant, said the plan would have processed as much as 40 million bushels of corn a year into 100 million gallons of ethanol annually. Hinner added the plant would have operated 24 hours a day, been able to store up to one million bushels of corn, and receive grain by truck and rail.

The plant was to be the first of six U.S. Ethanol planned to develop over the next few years. There is no word whether the company will continue developing the other plants.

Erm, let me take a guess on that last bit. I'll go for it won't.

Investors Wanted - Surefire Cert - Get In Now Before It's Too Late

You couldn't make it up really could you? Despite a commitment to phase in biofuel sales at the pumps from 2 1/2 percent in April 2008, increasing to 5 percent by 2010, our lovable Chancellor, the aptly named Mr Darling, has done a swift u-turn & announced that the 20p/litre fuel duty benfitting biofuels is to be scrapped in 2010. Ten minutes after the 5 percent inclusion rate gets phased in presumably!

With the doubling in price of the raw material coupled with this latest little set-back I think I'd be getting my calculator out & re-doing my sums if I was putting some of my hard-earned into one of those little projects.

“British-produced biofuels are sustainable and can make a very real contribution to the reduction in greenhouse-gas emissions, in transport especially. They should be encouraged by the Government, not undermined,” sobbed Meurig Raymond, deputy president of the National Farmers’ Union.

You wouldn't have a vested interest there by any chance would you Meurig?

Sorry Miss, I left that $190 billion I owe you on the bus

The US hedge-fund industry is reeling from its worst ever crisis because bankers -- staggered by almost $190 billion of asset writedowns and credit losses caused by the collapse of the U.S. subprime-mortgage market -- are raising borrowing rates and demanding extra collateral for loans.

The dollar sank to the weakest ever against the euro and to a 12-year low versus the yen on speculation credit-market losses may widen after New York Federal Reserve and JPMorgan Chase & Co. stepped in to rescue Bear Stearns, and a Carlyle Group fund defaulted on $16.6 billion of debt. Two days ago, Drake Management LLC said it may shut it largest hedge fund.

Hedge-fund managers and other large speculators cut their net-long position in soybean futures by 8.8 percent to 115,796 contracts in the week ended March 11, the U.S. Commodity Futures Trading Commission said today after the close of trading. Net- long positions, or bets prices will climbed, reached a record 155,278 contracts on Dec. 11.

Funds that invest in baskets of commodities reduced net- long soybean positions 6.4 percent to 183,252 contracts on March 11. Index funds were net long a record 198,707 in the week ended Feb. 19.

"The fear now is how many other hedge funds and other investors have losses they cannot cover, and commodities are the most liquid asset to raise capital,'' said Alan Kluis, president of Northland Commodities LLC in Minneapolis.

"It's could get real ugly if these hedge funds decide to exit longs and get short,'' Kluis said. "I told clients this week that commodities are reaching an extreme high and equities may be at an extreme low.''

Informa See More Beans & Wheat, Less Corn

Figures released Friday by private analytical firm Informa Economics estimated 2008-09 U.S. soybean planted acreage at 71.3 million, up from the 68.97 million acres it estimated in January. Soybean planted acreage in 2007 was 63.6 million acres, according to the U.S. Department of Agriculture.

Informa estimated 2008 U.S. planted cornacreage at 87.5 million acres, below the 93.6 million planted in 2007 as well as the 90.0 million estimated by the U.S. Department of Agriculture at its Outlook Forum in February.

Informa pegged 2008-09 all wheat plantings at 63.5 million acres, up from 2007 plantings of 60.4 million acres.

The USDA is scheduled to release it's revised report Monday, March 31, at 13:30 GMT.

Bear Market?

Chicago Board of Trade grains & oilseeds futures ended sharply ower Friday, with some contracts closing limit down on profit-taking and pressure from a hard fall in soyoil, traders said.

Soybeans fell the maximum allowed by the Chicago Board of Trade after investors sold commodities to raise cash as banks demand more money to back leveraged positions in stocks and bonds.

Profit-taking also was a feature amid worries about the economy, analysts said. U.S. equities tanked after the Federal Reserve approved an arrangement to provide emergency funds to Bear Stearns through JPMorgan Chase & Co.

Bear Stearns is more involved with equities than commodities, but the investment bank's trouble is ""certainly is something that has some sentimental impact" on commodities, an analyst said.

The shares of Bear Stearns, the second-biggest underwriter of U.S. mortgage bonds, plunged as much as 53 percent after the company said its cash position had "significantly deteriorated."

Key Data in USDA Reports

** 2007-08 U.S. CARRYOVER **
CORN: 1.438 billion bu.; unch from Feb. est. of 1.438 bil. bu.
BEANS: 140 million bu.; down from Feb. est. of 160 mil. bu.
WHEAT: 242 million bu.; down from Feb. est. of 272 mil. bu.

** 2007-08 GLOBAL CARRYOVER **
CORN: 104.0 MMT; up from 101.88 MMT in Feb.
BEANS: 47.44 MMT; up from 45.82 MMT in Feb.
WHEAT: 110.4 MMT; up from 109.7 MMT in Feb.

ARGENTINE BEANS: 47.0 MMT; unch from Feb. proj. of 47.0 MMT
BRAZIL BEANS: 61.0 MMT; up from Feb. proj. of 60.5 MMT
ARGENTINE WHEAT: 15.5 MMT; unch from Feb. proj. of 15.5 MMT
AUSTRALIA WHEAT: 13.1 MMT; up from Feb. proj. of 13.0 MMT
CHINA WHEAT: 106.0 MMT; unch from Feb. proj. of 106.0 MMT
CANADA WHEAT: 20.1 MMT; up from Feb. proj. of 20.05 MMT
EU-27 WHEAT: 119.7 MMT; up from Feb. proj. of 119.5 MMT
CHINA CORN: 145.0 MMT; unch from Feb. proj. of 145.0 MMT
ARGENTINE CORN: 21.5 MMT; unch from Feb. proj. of 21.5 MMT
SOUTH AFRICA CORN: 11.0 MMT; unch from Feb. proj. of 11.0 MMT
BRAZIL CORN: 53.0 MMT; up from Feb. proj. of 50.0 MMT

Although higher exports and tighter ending stocks projections for soybeans and wheat are nominally bullish to futures markets Tuesday (and the markets may already be bullishly biased), larger world ending stocks projections for corn, soybeans, and wheat could temper the overall reaction.

What goes up etc

Having closed locked in limit down on Friday night CME soyoil is locked in another limit (200pts) down this am on all positions bar the soon to expire March. May soyoil is down 1136 points since last Tuesday.

Beans, which fell their 50c limit Fri are down around a further 40/45c this morning. May beans have lost 220c in a week.

The recent darling of the wheat rally May Minneapolis wheat fell it's 60c limit Fri night & is down around 55c further this am. This presents some speculators who bought a week ago last Thursday at just shy of $20.00/bushel with a net loss of almost $7.50/bushel!

Meanwhile this side of the pond French rapeseed futures have been hit hardest with May dropping EUR20.50 Friday, and already trading a further EUR9 lower at 10am this morning.

US recession worries have sparked fears that the "new money" piling into ag's might disappear as fast as it arrived with many speculators already facing a pasting. Lets hope we can get back to some sense of normality with futures markets serving the purpose for which they were originally intended.