It is emerging that the victims of the alleged Bernie Madoff scam were all encompassing, with several prominent charities amongst those affected.
The Picower Foundation, established in 1989 by Barbara Picower and her husband, Jeffry Picower, that has given millions to promote biomedical research and human rights says it will close with immediate effect. Adding that this "act of fraud has had a devastating impact on tens and thousands of lives."
The Elie Wiesel Foundation for Humanity, that help Ethiopian Jews and Darfuri refugees, now admits that it invested $15.2 million with Mr Madoff that represented “substantially all of the foundation's assets”.
These stories dwarf the misery of the corporate fat cats such as HSBC and the Royal Bank of Scotland, Man Group, one of the biggest hedge funds in the City, and Nicola Horlick's Bramdean Alternatives. Other high profile victims include Hollywood titans Steven Spielberg and Jeffrey Katzenberg.
Ammonia has dropped to a 23-month low as U.S. demand has dried up and fertilizer producers have announced plant shutdowns over winter. Export sales also are off due to the impact of tight credit conditions on international sales. Terminals are reported to be full from reduced fertilizer applications this past autumn due to uncertainty about prices for both nutrients and crops. The ammonia spot market is $260/ton this month but demand is so slack and the sentiment is so bearish that buyers are uncertain whether the floor has been reached. There are reports of offers at $125/ton for first quarter deliveries, a low not seen since 2002, but no sales have been made.
A report by the ICISPricing.com subscription news service says market indicators point to a strong spring application of fertilizer that will absorb current ammonia stocks. And, in a recent presentation to analysts, Terra Industries vice president Joe Ewing pointed to a U.S. Department of Agriculture report projecting a significant increase in demand for corn, for ethanol in the United States during 2009. “Most recent estimate is an increase of roughly 1/3 over 2008,” said Ewing. “All this tells us that increased corn plantings will be needed next spring to prevent a further decline in already tight corn inventories. Projections indicate plantings will need to be at least in the area of 90 million acres.”
Are you familiar with the expression "talking your own book" Mr Ewing? Informa say that 2009 corn acres will only be a little over 82 million. If the price of corn and the cost of inputs doesn't justify it then you won't get your 90 million acres. Once again, the cure for high prices IS high prices.
So for now, the agricultural fertilizer market has gone into hibernation. From the U.S. Gulf to the Midwest, distribution and storage systems are backlogged. So, Terra Industries stopped production at its 500,000 ton/year ammonia plant at Donaldsonville, La., for six weeks of repairs. Agrium has shut production at its Fort Saskatchewan, Alberta, nitrogen unit. The plant includes a 465,000 metric ton/year ammonia unit and 430,000 tonne/year urea unit. This followed the closure of Agrium's 280,000 metric ton/year Redwater I unit in Alberta in November. Agrium also said it would reduce operating rates at other plants, but did not give details. PotashCorp.'s 1,500 metric ton/day O1 ammonia-making facility on Trinidad has been down for at least a month for maintenance and is reducing urea production as well.
Anyone watching the news Friday night, or picking up a newspaper Saturday may well have heard that crude oil was down below $35/barrel. Well it kind of was & then again it wasn't.
The January crude future was expiring Friday, leaving the board at $33.87/barrel.
Effectively what happened was that long-holders got squeezed out on the last day, unable to take delivery due to storage problems at Cushing, Oklahoma - the delivery point for West Texas Intermediate Crude. In contrast the February contract closed at $42.34/barrel.
With forward prices significantly higher than spot levels, storing oil is a no-brainer. If you have the money & the space that is.
Buy crude on Friday at $35/barrel, sell Jan '10 at $55/barrel, $20/barrel less storage and financing (each said to be around 35c/month). Robert is indeed your uncle, and Fanny your very favourite aunt. It's got to be good to be in the oil storage business at the moment.
It's no wonder that storage levels at tank farms in Cushing are approaching their all-time record level of 28 million barrels, with levels up by 4.7 million barrels this past week alone. And also no wonder total US crude supplies are running at such high levels. Cushing isn't the only storage facility overflowing with oil.
With freight rates through the floor, and commercial storage so tight, dozens of supertankers, full of crude oil, are going nowhere anchored in the Gulf of Mexico, the Far East and even off the coast of the UK.
Royal Dutch Shell Plc sees so much potential in the strategy that it anchored a supertanker holding as much as $80 million of oil off the UK to take advantage of higher prices for future delivery, according to Bloomberg.
It's a situation, traders say, reminiscent of the last time crude prices set a major bottom at around $10/barrel in the late 90's.
EU wheat futures closed a quiet session mixed Friday with conflicting influences pulling the market in either direction.
A sharply firmer dollar was friendly to prices, but crude fell to a four and a half year low adding a bearish tone.
It is worth noting that January crude was expiring Friday, leaving the board at $33.87/barrel as long-holders got squeezed out on the last day, unable to take delivery due to storage problems Cushing, Oklahoma - the delivery point for West Texas Intermediate Crude. In contrast the February contract closed at $42.34/barrel.
Paris March milling wheat closed up EUR1.25 at EUR130.75/tonne, London May feed wheat ended down GBP0.15 at GBP104.35/tonne.
It was a low volume session as traders begin to pack up ahead of the Christmas holiday season.
It's been a very volatile week on the currency front and that has dominated everything. Sterling fell from a high of $1.5615 early Thursday to a low of $1.4815 Friday, an eight cent move in one day!
The pound setting fresh all-time lows against the euro every day last week except for Friday supported London wheat throughout the week.
EU export business has slowed however, much of what has been shipped since new crop being old sales that were already on the books. Fresh orders are needed to shift the bulk of our surplus in 2009.
As ever, competition from Russia and Ukraine is fierce.
Looking further ahead, Strategie Grains reported this week that European Union grain production in 2009-10 will come in at 292 million metric tonnes, down 6% on the year.
With lower wheat plantings also expected in the US, China, Russia and Ukraine this will not leave a lot of room for a crop disaster somewhere in one of world's leading producers next season.
Nearby corn futures finished down, after weakness was extended from the overnight session. Selling pressure from a rallying dollar provided the price disadvantage to US corn in the global marketplace. A last minute rally in January crude oil, which today is its last trading day, couldn?t help corn futures end in positive territory. March Corn closed at $3.80 3/4 , down 8 3/4 cents.
January soybean complex futures closed mixed this trading day. While soybeans and soy oil closed down for the day in the pit and computer, soy meal closed higher. The strong rally of the US Dollar Index and weakened corn futures provided the selling pressure to the declining soybean future values.January Soybean finished at $8.68 1/4 , down 1 1/4 cents; Jan Soy meal finished at $267.50, up $1.20; Jan Soy oil finished at $30.60, down 10 points.
Today was the last day for the open outcry AKA pit trading for wheat at the Minneapolis Grain Exchange after a 125 year run. They are going full electronic. This sad news didn't conjure enough sympathy from traders to help CBOT, KCBT and MGEX nearby wheat futures to end up for the day. Even weather conditions threatening winterkill weren?t enough to provide bullish trading for wheat futures. Spillover selling from its grain brethren and a strong rally of the US dollar Index provided the selling pressure.CBOT March Wheat closed at $5.63 1/4 , down 8 1/4 cents; KCBT March Wheat closed at $5.83, down 7 1/2 cents; MGEX March Wheat closed at $6.25 1/4 , down 5 3/4 cents.
End-of-the-week profit taking is likely to stall the corn, soybean, and wheat markets' short-term higher trends Friday, especially since crude oil is on a bearish path.
eCBOT grains closed lower, pressured by a stronger dollar, weak crude and pre-Christmas book-squaring.
Beans closed around 8c lower, with wheat off around 12c and corn 11-13c easier.
Crude is sharply lower again at $34.50/barrel.
The dollar is firmer across the board, advancing the most against the euro in almost two months, in a correction from recent steep losses in the wake of the Fed rate cut.
The dollar climbed 2.3 percent to $1.3910 versus the euro, from $1.4240 late yesterday, when it slumped to a 12-week low of $1.4719.
The greenback is also sharply higher against the pound at $1.4960, from a low of $1.5612 yesterday.
An important weekend weather-wise lies ahead, with US wheat crops under threat from freezing temperatures on the Plains, and corn and soybeans wilting in South America from soaring temperatures and lack of rain.
Fairly widespread showers are forecast in parts of Brazil and Argentina this weekend, which is adding to the bearish feel this afternoon.
The dry conditions are speeding harvesting of Argentina's drought-stressed wheat crop, which is now ahead of last year's pace.
Early calls for this afternoon's CBOT session: Corn Down 9-11c,Soy Down 5-10,Wheat Down 10-12c.
High temperatures of 93 to 99 degrees yesterday across much of the major corn and soybean growing areas of Argentina and southern Brazil shows that there is some weather-related stress on the young crops in that areas, report Freese-Notis Weather.
All of those areas will stay hot for today and tomorrow; if anything a bit warmer than what has been seen so far this week.
Northern Argentina and southern Brazil will stay hot for Sunday, and while temperatures for the rest of next week will not be quite as bad there will be plenty of days with highs reaching the lower to middle 90s.
Since November 1, it has been exceptionally difficult to get the areas in question into a truly wet weather pattern. Were it not for a major rain event in Argentina in late November, and an exceptionally wet weather pattern in southern Brazil prior to November 1, problems right now would be severe.
Farmgate milk prices in the UK have risen throughout 2008, and the rolling 12 month average should reach 26p/litre by March 2009. But dairy farmers’ costs of production have also been rising just as fast, warns farm business consultant Andersons.
"However, the 2007/08 and 2008/09 milk years should return the sector to a reasonable level of profitability that gives producers some return on capital," says the firm's head of business research Francis Mordaunt.
"The continued upward movement in prices is somewhat against the EU and world trends. A continued lack of supply in the UK, as producers have left the sector, has helped insulate the remaining farmers from falls in dairy commodity prices elsewhere, and the link with cost of production established by some retailers for the liquid market will have helped those producers who signed up.
"The recent 2p/litre cut in milk price by Dairy Farmers of Britain, although driven by business restructuring, may be the start of other price cuts. The retailer tracker schemes will pick up the cost reductions from March 2009, and these price cuts will certainly be followed by other milk buyers, particularly those sourcing for commodity processing, who have not already cut prices," says Mr Mordaunt.
Other factors will continue to drive producers out of milk production. Age or retirement, historic under-investment, the need to respond to NVZ regulations and a lack of optimism in all parts of the industry are likely to contribute.
The livestock industry as a whole was faced with sharply higher feed costs during 2008. Not simply from the headline rises in cereal prices, but also from rapid increases in the price of the proteins like soya. For 2009, producers can look forward to some costs reducing, although for some it may take time before these to feed through to farm margins, says Mr Mordaunt.
"Any production systems relying on grass are likely to see costs moving in the opposite direction. Most fertiliser for the 2009 season has already been contracted at far higher prices than were paid in 2008. If fertiliser prices have permanently shifted to a different level, then there will be increased interest in the targeted use of livestock manures to replace at least part of the purchased fertiliser requirement. Although the new NVZ regulations are obviously unwelcome in terms of the increased costs they impose on farmers, it may be possible to make the best of a bad job and use stored manures effectively."
The transhipment of biofuels through the port of Rotterdam increased in the first half of 2008 from 1 mm tons to 2.5 mm tons, the port authorities report.
The ratio of ethanol to biodiesel was split approximately 50/50, they say.
The products were manufactured mainly overseas: ethanol from Brazil and biodiesel largely from the United States. Part of the incoming trade was used on the continent and some shipped on further by smaller sea-going vessels to England and Scandinavia in particular, they add.
The outgoing flow, however, also contained production from the continent, brought in mainly by barge.
Biodiesel throughput showed a particularly sharp increase: almost tripling from 430,000 tons in the first half of 2007 to 1,300,000 tons. This trend is expected to continue in the second half of the year.
In 2009 two plants with a joint capacity in excess of 600,000 tons are expected to begin production in the Rotterdam port area.
Farmers in Brazil, are experiencing problems obtaining finance, for the purchase of additional cattle and paying the rising costs of their expenses.
Brazilian farmers have been saddled with large amounts of debt in recent years, while the rural sector has expanded at an extraordinary rate.
The costs of producing corn, soy and cotton, are expected to increase 42% in 2009, according to industry analysis.
Farmers have been placed in a position where they have to forgo debt re-payments, in order to free up cash for day to day running of their farm properties.
There are stories circulating of the re-possessing of tractors and combines, and even of some large farms.
Michael Cordonnier of the Corn and Soybean Advisory, a consulting firm from Chicago, said "Now many farmers are rationing fertilizer and other supplies, which could translate into lower yields for next year".
Many Brazilian farmers, had hoped the booming grain market experienced in May, June and July would dig them out of debt. But with domestic prices having halved since then, those hopes have all but evaporated.
Health inspectors have raided 22 meat stalls in Hong Kong, after reports of an illegal coloring being used on frozen meat, to give it a colourful fresh meat appearance.
Government officers in plain clothes, from the Food and Environment Hygiene Department, collected samples of beef and sausages from several markets.
After testing 290 samples, 15 were found to contain the banned substance.
The colouring in the meat, is said to have a harmful effect on humans, if taken in sufficient quantities.
This comes in the wake of the melamine scandal, on the Chinese mainland with melamine being used in animal feed and dairy products.
Cattle from 21 farms in the Republic of Ireland, have had the test results for dioxins in the meat prove positive.
The Department of Agriculture has acted promptly, and ordered the culling of cattle from the affected properties, and they are to be destroyed and not enter the food chain.
"This is going to have a devastating effect on the Irish meat and farming industries, who have spent the last 40 years building a world class reputation for quality, traceabilty and safety in all of their food products," said an industry spokesman.
The Food Safety Authority of Ireland (FSAI), released a statement on Thursday night stating, "The trade withdrawal of meat from the 21 farms in question was initiated on Tuesday and is ongoing".
Alan Reilly from the FSAI, said meat not already consumed will be re-called and all animals on the farms will be destroyed
Russia is the largest country in the world, covering 17,075,400 square kilometers, from the Bering Sea twenty kilometers from Alaska, to the Baltic Sea in Europe. This emerging economy has an insatiable appetite for western meat, as well as meat technology and equipment
Whilst little was known about the old Soviet Union, which included all countries east of Germany, even less is known about modern day Russia and its 142 million population. This is a nation that is debt free, oil rich and eager to do business, Moscow the capital is the most expensive city in the world. There are more billionaires residing in Moscow than in London or New York.
The majority of the European supermarket chains are now operating in Moscow, which has a population of 12 million and in the second city St Petersburg, whose population is around 5 million. McDonalds, Kentucky Fried Chicken, Pizza Hut and Starbucks can be found on every corner, along side the showrooms for Rolls Royce, Bentley and Porsche, Russia is the worlds largest buyer of all three makes of car.
The Soviet Union from the end of the second world war until 1991, controlled its "satellite countries" of Poland, Hungary, Romania and the former Yugoslavia, which are the best beef producing countries in eastern Europe, with a combined cattle herd of 125 million cattle. In the Soviet days these countries exported prime beef to western Europe, with ample supplies left over for the domestic market. Yugoslav and Romanian beef was considered the best in the world, suckled on small farms and hand fed like family pets.
Since 1991 and the fall of the Soviet bloc, when independence came for the satellite countries, Russia turned to South America for its beef imports and more recently Australia. The United States, Denmark and Germany catered for poultry and pork supplies. The previously mentioned satellite countries, turned to the west and now are members of the European Union, restricting them from exporting meat to Russia.
The cattle herd in Russia today is 25 million head , whilst the nations total meat requirements are 7.5 million tonnes. Russians consume 50 kilos of meat per capita, a figure that is increasing at extraordinary rates. Projections are that by 2012, Russia will consume 10 million tonnes of meat per year. Domestic production of meat currently provides 4.7 million tonnes, leaving a shortfall of 2.8 million tonnes to be imported, making Russia the worlds largest meat importer.
Traditionally beef and pork are the most popular meats, along with many varieties of sausages, eaten cold in summer and hot in winter often in broth or stew. Poultry consumption has tripled in the last fifteen years, with imports now being double those of pork. The emergence of a wealthy middle class with high disposable incomes, has seen a high restaurant culture and the demand for more delicacies, in primal cuts of imported beef.
Australia has pioneered a lucrative trade in kangaroo meat, with the Far East of Russia in the frozen parts of Siberia, Kamchatka and Vladivostok, where the diet was previously reindeer and horse meat, mainly used in broth because of the cold artic temperatures. The plants in the Far East, have readily adapted to the use of kangaroo meat in sausages, salami and for general retail trade as stewing meat, replacing the need for reindeer meat. This trade has been very beneficial to Australia and for Russia who could never obtain sufficient quantities of reindeer meat. Australia are the main suppliers of horse meat to Russia followed by Argentina. Russia is the worlds largest importer of horse meat.
Russia plans to be self sufficient, in the production of pork and poultry within the next five years, however beef production is not expected to catch up with demand for at least fifteen years.
This rapid expansion in meat production will consume vast quantities of grain, quickly absorbing the nation's exportable surplus and possibly turning it into a net importer by 2012.
Dairy farmers from around Buenos Aires, sent 1,200 Holstein cows into the cattle market of Liniers on Thursday, to be sold for slaughter at knockdown prices.
This was part of a protest, against the lack of economic viability in the dairy farming sector.
President of the General Dairy Farmers Union, Emiliano Mondarain, said "we are sacrificing a lot of animals we have great affection for, cattle that we have been working with for generations".
The Holstein cows have a primary role in milk production, and the action is being taken to encourage dialogue with the government, according to the farm leader.
He went on to say, "we have been calling for dialogue with the national government for some time, yet nothing has been forthcoming".
The farmers claim they are receiving only US23 to25 cents per litre, not the agreed price of US31cents, that was agreed with the government in October.
The cows were sold to the meat plant buyers, for an average of 45c/kg USD live weight.
Although AWB and ABB Grain have called off merger discussions, farming groups are not so sure it is the end of the issue.
Industry speculation is that there was a failure to agree on the valuation split of the companies, with ABB currently having a marginally larger market capitalisation than its historically larger suitor in AWB.
Although the merger is off the cards for now, speculation is that is only the first cut and thrust in more protracted negotiations.
Some within the trade are not sure that consolidation within the grains industry needs to be done in the near term.
One source, who declined to be named, suggested that a deregulated grains industry was too immature to warrant immediate mergers.
More time is required to analyse the nature of the new industry, he said.
The level of toxins in the pig feed that caused the recent €220m-plus recall of pork products was more than 5,000 times the EU limit, report the Times.
Such was the concentration that scientists at the UK’s Central Science Laboratory (CSL) in York were initially unable to quantify the level, which went “off the scale”.
Feed samples taken from Millstream Recycling in Carlow were so badly contaminated that all the equipment used in the laboratory had to be “scrupulously cleaned” afterwards, causing a “logistical nightmare” for the scientists.
“We weren’t expecting it to be anywhere near the level that we found,” said Martin Rose, head of the Environmental Contaminants team at the CSL. “It saturated the detector. We injected the sample into the machine and it went off the top of the paper. It was off the calibration range. We knew it was over 2,000 times over the limit, but we could tell that it was probably much higher than that.”
After alerting the Irish authorities to the extreme contamination of both the feed and pig-fat samples, which had 80-200 times the EU limit for dioxins, Rose’s team conducted further tests on the feed. The concentration of chemicals in the samples meant it was too high to measure.
So the scientists had to water down the specimen before attempting to re-analyse the dioxin levels. “We diluted the extract and calculated that there was in excess of 5,000 nanograms of dioxins per kilogram present,” said Rose.
The founder of Italian Dairy Group Parmalat, Calisto Tanzi, has been sentenced to 10 years in prison for fraud relating to the collapse of the dairy group.
Tanzi was accused of manipulating the share price, hindering auditors and helping with false accounting.
Parmalat collapsed in 2003 with a 14bn euro ($20bn; £13bn) hole in its accounts in what remains Europe's biggest bankruptcy.
The other seven defendants, including executives and bankers, were acquitted.
Another eight defendants settled out of court in September.
More than 40,000 investors are seeking compensation for losses.
The court will now decide whether Tanzi should pay damages to them.
Parmalat was restructured and relisted on the Milan stock exchange in 2005 and is once again Italy's biggest market-listed food group.
It has recouped money from its banks in settlements since the collapse.
Tanzi will probably not begin his jail term straight away because under Italian law the sentence of the Milan court must be confirmed first by an appeals court.
Tanzi is also a defendant in a separate trial under way in Parma, where he is accused of fraudulent bankruptcy.
eCBOT futures are lower across the board as crude oil dives to it's lowest levels since 2004.
Soybeans are 4-5c easier, with corn down 6c and wheat around 10c lower.
With crude it seems to be a case of buy the rumour, sell the fact. Despite OPEC announcing it's largest production cut in a decade prices fell below $36/barrel in late trade last night and currently stand at $36.65.
The grains sector continues to do it's best to distance itself from crude, which has fallen an astonishing 33% this month alone.
Corn could be the biggest loser in all of this, if the US ethanol industry wasn't able to stand on it's own two feet at $147/barrel, what chance has it got now?
Year-end holiday demand is helping support the Chinese market, who were featured buyers of soybeans in yesterday's USDA export sales report.
The dollar consolidated modest gains during Asian trading that were made Thursday in New York on the back of the decision by the ECB to cut the rate on deposits with the central bank. The Bank of Japan cut rates by 20 points overnight to 0.10%.
Reports suggest that GM and Chrysler will get aid from the Bush administration as soon as today. The loans are likely to be sufficient to keep them afloat until March, effectively passing the buck to Barak Obama, sources say.
Camera-maker Polaroid has filed for US Chapter 11 bankruptcy protection amid allegations of fraud by the founder of its parent group.
At the CBOT, Corn opened higher but ended unchanged for the day. At the NYMEX, Crude oil closed below $37 dollars, which isn't friendly to corn futures because of the ethanol dependence on fuel prices. The US Dollar Index ended in positive territory. A rally in the dollar is a disadvantage for export sales on the world market. This morning the USDA released its weekly export sales numbers. The week ending 12/11, US corn exports were 3.147% up from the previous week yet net new sales were down 34.044% for the year. These placed a mixed selling pressure to corn future contracts, thus an unchanged session. CBOT March Corn finished unchanged at $3.89.
CBOT January Soybeans traded higher overnight and ended up for the day. The US Dollar Index closed up, which is not friendly to soybean futures, but a higher wheat market helped with soybeans. Heating oil futures (diesel) reversed course and closed lower, putting pressure on soy oil. The USDA weekly export sales numbers for soybeans for the week ending 12/11 were up 21.886% from the previous week, and up 10.346% from the previous week for net sales. January soy meal and soy oil closed mixed, as meal ended up while oil ended down. CBOT January Soybean closed up 5 at $8.69; January Soy meal closed up 3.10 at $266.30; January Soy oil closed down 30 points at $30.70
Wheat ended the session with double digit gains for the day. US Wheat export sales numbers for the week ending 12/11 were up 29.081% for exports from the previous week and up 9.508% for net sales. Wheat opened higher and extended gains while corn and soybeans opened lower. Wheat?s positive price support came from continued weather concerns and a lowered crop estimate by the USDA. End of year profit taking in wheat?s case means buying. CBOT March Wheat ended up 14 cents at %5.71; KCBT March Wheat ended up 12 � cents at $5.90; MGEX March Wheat ended up 12 cents at $6.31.
EU wheat futures closed mixed, with London prices steadier as the pound fell to another all-time low against the euro. Paris prices closed flat.
Paris March milling wheat closed unchanged at EUR129.50/tonne. London March feed wheat ended up GBP2.20 at GBP101.20/tonne.
London managed a nine-week high as sterling crashed to yet another new low against the euro. Suddenly 2.75% interest looks like a very good rate.
Strategie Grains and others are starting to suggest that 2009 plantings might not produce such high output as many have been suggesting.
We shall see.
Keep your eye on Burton's window again.
For the week ended Dec 11 the USDA has announced the following export sales:
Corn 612,500 MT 2008-09 (vs expectations 550,000 to 750,000 MT)
Wheat 262,100 MT (250,000 to 400,000 MT)
Soybeans 893,600 MT 2008-09; 6,700 MT 2009-10 (600,000 to 700,000 MT)
Soymeal 62,200 MT 2008-09; 400 MT 2009-10 (50,000 to 100,000 MT)
Soyoil 1,500 MT (5,000 to 10,000 MT)
Soybean sales stand out as being particularly strong, with 823,100 MT, including 156,000 MT switched from unknown destinations, going to China.
Export shipments for soybeans of 1,154,700 MT were also impressive, again China taking the lion's share at 972,800 MT.
Corn exports during the period were 710,200 MT, and wheat exports 415,400 MT.
eCBOT grains closed higher supported by a sharply weaker dollar. Beans ended the overnight session around 5-7c firmer, with corn 4-5c higher and wheat up 6-8c.
With US interest rates now effectively at zero, there is a growing concern that the dollar's safe-haven status is no more. All of a sudden rates of 2.75% in the Eurozone look positively stratospheric.
This may help US grains exports in 2009. At least that's the theory.
Strategie Grains peg the EU 2009/10 grain production down 6% to 292mmt, with wheat production down 5.4% to 132.7mmt.
The Australian wheat crop is still under threat of further quality downgrades as rain continues to hamper harvest progress in WA, NSW and Victoria.
The Argy wheat crop has been downsized by the Ag Secretariat to 9mmt, almost 44% down on last year.
Russia's 2008 grain harvest is now put at a final figure of 105.5mmt in clean weight by the Russian Ministry. They will double their intervention purchases to 20mmt to shore up prices and insure against a crop disaster in 2009, they say.
Assorted wheat tenders are kicking around, with Japan buying US/Australian wheat, Jordan taking Russian wheat and Israel booking Ukraine wheat.
Waiting in the wings are Pakistan tendering for 500,000mt US wheat for completion Dec20th and Saudi Arabia tendering for a similar quantity of optional origin 12.5% protein wheat for completion by 5th Jan.
Another very cold weekend is in store for the US Plains, putting winter wheat crops under threat of winterkill.
Early calls for this afternoon's CBOT session: Corn futures are expected to open 4 to 6 higher; soybeans 5 to 7 higher; wheat 6 to 8 higher.
The dollar and the pound have weakened further as interest rate cuts continue to undermine the two currencies. The dollar fell to 1.4717 and the pound to 95.05 pence.
On Tuesday, the Federal Reserve cut its key interest rate to a range of between zero and 0.25%, the lowest since records began in 1954.
With US rates set to remain low for many months, and with the head of the European Central Bank hinting recently that it is unlikely to cut its rate of 2.5% in January, the dollar is expected to remain weak against the euro.
With UK rates also lower than those in Europe, the euro is strengthening against the pound.
Amongst a plethora of bad economic data for the UK came a government report showing that the UK’s budget deficit widened to a record in November as tax revenue declined because of the worsening recession. A separate report showed mortgage lending fell 51 percent in November from a year earlier.
The pound has plummeted this week with other separate reports showed jobless claims rose last month at the fastest pace since 1991, house prices extended declines and inflation slowed.
On Wednesday, minutes from December's meeting of the Bank of England's Monetary Policy Committee (MPC) showed that it discussed the possibility of cutting rates by more than one percentage point. In the end, it cut rates to 2% from 3%.
The Financial Times report that the deputy governor of the bank, Charles Bean, told it that rates could approach zero.
The prospect of further sharp rate cuts by the Bank of England has sent the pound to a fresh low against the euro, and many commentators believe the pound could reach parity with the euro before long.
The government will double its grain-intervention program next year and buy nearly 20 million tons of grain, said First Deputy Prime Minister Viktor Zubkov, speaking at a meeting on Tuesday in the Moscow region.
Increasing grain purchases will "give us the necessary reserves for a bad harvest in the future," Zubkov said, Interfax reported.
He added that this will allow the country to export grain in more favorable market conditions.
After global and domestic prices plummeted early in the harvest season, the government began buying and storing millions of tons of grain to prop up prices and protect its producers and exporters from further price drops.
Since May, Russian grain prices have fallen more than 50 percent. As of Dec. 8, Russian class-3 wheat stood at 4,344 rubles per ton, down from 9,128 in May.
The government, which has bought wheat at up to a 25 percent premium to market prices, has spent 15.1 billion rubles on 3.2 million tons of grain, and before the end of the year it plans to buy another 1.8 million tons.
With crude oil skidding below $40/barrel last night, despite OPEC's best efforts, I thought it would be an interesting exercise this morning to run off a fresh chart plotting the relationship between crude oil and CBOT grains.
Certainly, the grains and crude appear to have been very closely linked during oil's meteoric rise to all-time highs during the first half of 2008.
As the chart shows, however, despite crude having fallen 60% in the last six months, CBOT grains have had a more modest price decrease. Indeed, since early October, soybeans, corn & wheat have moved further and further apart from crude.
Crude vs CBOT Corn, Soybean & Wheat - Click Image To Enlarge
I guess that this is maybe no great surprise. With crude at $40/barrel grains are being viewed as grains again, not a fuel raw material. With crude over £100/barrel things looked a little different.
Will crude ever get back to those levels? I think so & more. In fact I think $100/barrel will be cheap sometime in the not too distant future. It has to be a long-term cause for concern that the current financial melt-down sees plans for the development of new oil fields being shelved. Why bother looking for more oil when it's only $40/barrel?
I think this will come back to bite us on the bum sometime in the future. When? Who knows, how long is a piece of string? Three/five years down the line maybe? You can buy futures as far forward as 2013 below $70/barrel at the moment. That could be the biggest punt of all-time.
The Ukraine statistics committee reports that Ukraine’s grain stocks in the country amounted to 24.0 mln t as of Dec. 1, 2008 and were thus 57% above the 15.3 mln t recorded one year earlier. Wheat stocks were 12.0 (7.0) mln t.
For the 2009 crop, the winter wheat acreage should be 2% lower at 6.5 (6.7) mln ha, while the winter barley area is expected to be 49% higher at 1.3 mln (850,000) ha. The winter rapeseed area should be 6% lower at 1.4 (1.5) mln ha.
eCBOT grains are mixed, mostly slightly lower overnight with soybeans down a cent or so, corn 1-2 cents easier, and wheat up 3/4c to down 1/4c.
The weak dollar remains supportive for the entire complex.
There is reasonable export interest around for wheat this week, although competition remains fierce with the usual suspects, Russia and Ukraine, particularly aggressive.
Japan bought 62,000mt wheat overnight, 41,000mt US origin and 21,000mt Australian origin.
The Argy Ag Secretariat dropped it's estimate of output there for the current crop to 9mmt, 7mmt below last year's levels. This could open up the door for increased US exports to Brazil during 2009.
Crude is hovering around the $40/barrel mark despite OPEC's 2.2m bpd cut, as the market focused more on waning demand.
There is scepticism as to which OPEC members, apart from Saudi Arabia, will actually stick to their reduced quota, with the likes of Iran, Nigeria, Algeria etc likely to privately take the view that $40/barrel is better than nothing.
The dollar is at 2 1/2 month lows against the euro. Who wants dollars when interest rates are 0.25%? The pound is down again to fresh all-time lows against the euro currently standing at 1.0671, with one euro now worth around 94 pence. Against the dollar we are $1.5420.
The pound's demise yesterday saw London wheat close a pound or two higher, today's further declines are also likely to support. Where, however, is the new export business we should be picking up at these levels??
The government confirms that it has held talks with Jaguar Land Rover over the possibility of state aid for the carmaker.
Meanwhile, struggling US manufacturer Chrysler is to halt production at all 30 of it's plants for one month, in an effort to save money until (they hope) Barak Obama gets his chequebook out in January.
U.S. regulators are investigating Ruth Madoff, wife of alleged fraud mastermind Bernard Madoff, on suspicion that she maintained secret records used in a $50 billion Ponzi scheme.
The Securities and Exchange Commission have found evidence she may have helped track payments, and are also examining why her name appears on related transactions, reports Bloomberg.
USDA's Joint Ag Weather Facility has provided the following weekly weather/crop highlights:
EUROPE – Wet Weather Benefits Southern Winter Grains: Widespread rain in Spain and Italy boosts reservoir levels and provides topsoil moisture for emerging winter grains. Seasonably cold weather across central and northern Europe allows winter crops to go fully dormant, while above-normal temperatures in Poland melt the region’s protective snow cover.
FSU – Most Winter Grain Areas Lack A Protective Snow Cover: Mild weather continues to keep most winter grain areas in Ukraine and Russia snow free, leaving crops exposed to potential extreme cold.
SOUTHEAST ASIA – Favorably Dry In Vietnam; Wet Throughout Indonesia: Favorably dry weather in Vietnam aids coffee harvesting nearing completion, while also benefiting winter rice harvesting and early winter-spring rice planting. Showers in Indonesia slow oil palm harvesting but benefit rice.
SOUTH ASIA – Showers In Pakistan: Unseasonably heavy showers in Pakistan hamper cotton harvesting. Dry weather across India promotes rice and cotton harvesting.
MIDDLE EAST – Rain Benefits Turkish Winter Grains: Rain in Turkey provides topsoil moisture for vegetative winter wheat and barley.
NORTHWEST AFRICA – Wet Weather Continues To Hamper Fieldwork: Locally heavy showers in Morocco and Algeria slow winter grain planting but maintain favorable moisture for crop emergence and establishment. Mostly dry weather in Tunisia promotes a rapid pace of fieldwork, although showers return by week’s end.
AUSTRALIA – Wet Weather Continues: Widespread, locally heavy rain falls across much of the Australian wheat belt, further slowing winter grain harvesting and maintaining concerns about grain quality. In eastern Australia, the wet weather benefits vegetative summer crops.
SOUTH AMERICA – Rain Reaches Southern Brazil; Dry Pockets Persist In Argentina: Scattered showers bring some relief from dryness to corn and soybeans in southern Brazil. Rain maintains overall favorable conditions for soybeans in key farming areas of central Brazil. Rain benefits Argentina’s western farming areas. However, pockets of unfavorable warmth and dryness continue in central and northern Argentina, limiting moisture for emerging summer grains and oilseeds. Winter wheat harvesting is advancing rapidly.
SOUTH AFRICA – Conditions Are Favorable In Much Of The Corn Belt: Rain maintains favorable moisture levels for emerging summer crops in the eastern corn belt as drier weather promotes planting in the west.
The Argy Ag Secretariat say that this season's wheat crop will now only yield 9mmt, down 1.1mmt from last month's estimate, and 7mmt below output a year ago.
Drought led to lower plantings this year and has persisted throughout the growing season, hampering crop development.
The crop is slightly over halfway harvested, they added.
With a domestic consumption of 7mmt, this would leave just 2mmt available for export next year. The USDA may want to look into this as their current estimate for Argy exports next season is 5.8mmt!
Brazil is traditionally the biggest export home for Argy wheat, and may well have to turn to the US for extra supplies in 2009.
Meanwhile 80% of the corn crop and 89% of the sunseed crop has been planted so far, said the Secretariat. Weather conditions remain largely dry, and neither crop is off to a great start.
Weather conditions for soybeans become more critical in January, analysts said.
EU wheat futures closed mixed Wednesday with Paris milling wheat lower and London feed wheat higher. A sharply weaker dollar threatened French competitiveness on the export market. However a fresh plunge to all-time lows against the euro for sterling helped London wheat close higher.
March Paris milling wheat ended down EUR1 at EUR129.50 a tonne. London January feed wheat closed up GBP2.00 at GBP95.50/tonne.
Export orders for EU wheat still remain scant however. Jordan bought 50,000mt Russian hard wheat and Israel plumped for Ukraine feed wheat in a tender.
Both the Russian ruble and the Ukraine hryvnia are under severe pressure, meaning that they will continue to eagerly mop up any export orders around.
Weather remains a threat to US wheat in the Plains, with Arctic air threatening unprotected crops there with winterkill.
Things continue to go from bad to worse for the Argentine wheat crop with the Agricultural Secretariat trimming it's forecast for the current crop to 9mmt, from 10.1mmt previously. That's a 7mmt drop on 12 months ago, and the lowest estimate in the marketplace yet.
Corn closed lower today after opening higher from overnight trading and sustaining double digit losses through the midday session. Profit taking and crude oil trading lower during the session provided weakness in corn prices. Though a lower dollar provides a positive trading support to corn futures, the effects from profit taking and a drop in crude oil futures trump this positive effect. This morning the Energy Department released their weekly US totals of petroleum products. US total gasoline ending stocks for the week ending December 12 was about 204 million barrels, up 0.64% from the previous week. This additional news item was not kind to corn futures due to corn ethanol production relation to petroleum, namely gasoline. CBOT March Corn closed $3.89 per bushel, down 44 cents
Soybeans closed higher in the pit today after opening higher from overnight trading and trading lower during the midday session. Profit taking and lower crude oil futures helped lower soy complex futures, but bullish trading activity in wheat and a midday bull run in the financial markets helped the soy complex to end positive. A lowered dollar index also contributed to the positive close of the soy complex. CBOT January soybean closed $8.64 per bushel, up 5 1/2 cents; January Soy meal closed $263.20 per short ton, up $2.20; January Soy oil closed 31 cents per lbs, down 35 points
Wheat at the CBOT, KCBT and MGEX all closed higher today. A lowered Dollar Index and a moderate midday bull run in the financial market helped wheat futures move to positive territory. US wheat exports have been weak of late due to cheaper wheat supplies abroad but with the sharp declines in US dollar help to bring some buying interest back. US have finer quality milling wheat, while most Black Sea wheat are only feed quality grade. CBOT March wheat closed at $5.57 per bushel, up 13.4 cents; KCBT March wheat closed at $5.78, up 13.2 cents; MGEX March wheat closed at $6.19, up 11.6 cents.
OPEC says it is cutting crude oil output by 2.2 million barrels a day - the largest cut ever announced by the cartel.
The accompanying statement was at pains to point out that this latest cut takes 4.2 million bpd off the table compared to September production levels.
This figure comprises half a million barrels/day of overproduction cut in September, plus last month's 1.5 million barrel reduction.
In a concerted effort to shore up prices, Russia and Azerbaijan also announced reduced output of 600,000bpd.
January crude oil initially seemed relatively unmoved by the announcement trading flat around $43/barrel.
eCBOT grains closed higher Wednesday, buoyed by a weak dollar and steady crude oil.
Soybeans finished the overnight session around 13-14 cents higher, with wheat up 9-10c and corn 4-5c firmer.
The dollar fell to two-month lows against the euro after the Fed slashed US interest rates to just 0.25%.
Crude oil is steady in the mid $40's/barrel ahead of an announcement from OPEC today which is expected to cut production by 2m barrels/day. Russia may also weigh in with a separate cut of up to 400,000 barrels/day of its own. The concerted move comes in an attempt to shore up prices which have fallen around 70% from their summer highs.
Extremely cold Arctic weather in the US Plains is threatening young wheat crops in Kansas, Oklahoma, Texas, Nebraska and Colorado.
Temperatures have fallen well below the freezing point and below zero degrees Fahrenheit in the Northern Plains, leading to worries some of the crop may have been killed off.
Taiwan bought 56,030mt US wheat overnight, Japan are expected to confirm a purchase of US/Canadian wheat today. Saudi Arabia are said to be tendering for 500,000mt wheat shortly, and Pakistan and Iraq are also in the market.
Dryness in Argentina is a problem at the moment, particularly for earlier planted corn. Heat is going to become notable as well. Temperatures in the low 90s returned to Argentina for this past Sunday and Monday, and there will be more of that right through the end of the coming weekend. In fact, by Sunday, highs could top 100 degrees in parts of their growing area.
Early calls for this afternoon's CBOT session: Corn futures are expected to open 4 to 6 higher; soybeans 12 to 15 higher; wheat 8 to 10 higher.
A potential merger between AWB Limited and ABB Grain Ltd is over after the companies announced today that discussions on the proposed deal had ended.
The companies confirmed in separate statements issued to the Australian Stock Exchange this afternoon that merger discussions had ceased.
The two had said last month they were looking at forming an agribusiness group with the strength to better compete with commodity trading giants such as Cargill Inc in Australia's deregulated grain industry.
The merger would have created a $2 billion grain conglomerate and was floated just months after discussions believed to have been held between ABB Grain and the CBH Group on a similar proposal.
AWB said the merger discussions had ended because the parties had been unable to agree on appropriate commercial terms.
In a separate statement ABB Grain said it would continue to review potential merger and acquisition opportunities in the global agriculture sector.
Hands up if you saw that one coming. Right, so that's everybody then.
The price of urea, the world's most common nitrogen fertilizer, rose from about $280 to $405 per ton in 2007 and reached $452 in April 2008. The price then soared to $815 per ton in August, but has subsequently plunged to $247, lower than before the price spiral began, by mid-December, according to the IFDC.
The price of diammonium phosphate (DAP) increased by five times—from $262 to $1,218 per ton—from January 2007 to April 2008, but had fallen to $469 per ton in mid-December, they say.
"The high fertilizer prices caused 'demand destruction.' Farmers were unable or unwilling to pay two or three times the prices of early 2007," the IFDC says. The collapse of the global credit market, a trade recession, and slowdown in world economic growth worsened the situation.
Potash is the only fertilizer whose price is still rising. Standard grade muriate of potash, the most common source of potassium, sold for $172 per ton in January 2007 and $875 per ton in mid-December.
Potash prices have stayed high due to its shortage and difficulties in transporting Russian potash because of an enormous and expanding sinkhole near the Silvinit mines.
More bad economic data has sent the pound sprawling to yet another fresh all-time low against the euro, hitting 1.0867 late morning, with one euro breaching 92 pence at 92.05.
A U.K. employment report showed a 75,700 rise in jobless claims, which was the largest increase since 1991.
The total number on jobless benefit is now 1.072 million, surpassing the psychologically-important one million mark for the first time since 2001.
Minutes from teh BOE's MPC meeting showed that this months 1% cut in rates was the minimum reduction considered, pointing to lower rates ahead. With eurozone rates already running at 0.75% above those in the UK, that gap looks set to widen further.
Former Iowa governor, Tom Vilsack, is expected to be named as the new head of the USDA, replacing Ed Schafer, at a Chicago news conference later today.
Vilsack will join Obama at the news conference scheduled to begin at 10:45 a.m. Chicago time.
Vilsack dropped out of the presidential race in 2007 and backed Senator Hillary Clinton before campaigning for Obama in the general election.
Vilsack’s experience as a state legislator and leader of the nation’s largest corn-producing state makes him well-qualified to lead the third-largest Cabinet department in spending.
Amongst other things, Vilsack will be responsible for administering the President-elect's promised $150 billion in renewable energy investment over the next 10 years, making ethanol production a key issue for the new man.
Like Obama, he has publicly nailed his colours to the ethanol mast, linking farming to energy independence and national security.
The Bank of England's rate-setting body voted 9-0 to cut rates to 2% this month and considered a bigger move, minutes from its meeting released today have shown.
The monetary policy committee (MPC) agreed that a cut in the Bank rate from 3% to 2% was the minimum needed.
However, it avoided a deeper cut on concerns it could hit the pound and undermine confidence in the economy.
The minutes are likely to reinforce expectations that UK rates will fall further in the months ahead.
The MPC appeared to welcome the sharp fall in sterling in recent weeks, saying it should support the economy by boosting export growth while the fall in the oil price would lift consumer spending power.
In today's minutes the MPC also noted the importance of getting banks lending again but added that interest rates alone would not be enough to tackle limited credit availability.
"Further measures to underpin lending growth would be needed, building on the government's package announced in October to recapitalise and guarantee funding to the banks," they said.
The number of people out of work in the UK rose by 137,000 to 1.86 million in the three months to October - the highest level since 1997.
This took the unemployment rate up to 6% from 5.8% previously, the Office for National Statistics said
People claiming Jobseeker's Allowance in November rose 75,700 to 1.07 million - the largest rise since March 1991.
The number of people claiming unemployment benefit rose for a tenth consecutive month and climbed above the one million mark for the first time in eight years.
The pound hit another record low against the euro after the unemployment data underscored just how weak the UK economy was.
At 11.40GMT sterling was down to $1.5415 against the dollar and set a fresh low against the euro of 1.0926, with one euro climbing to 91.55 pence.
More heavy rain in NSW is leading to further quality downgrades for wheat, although aiding the outlook for a promising sorghum crop in 2009.
Each of the three major rain events in the past month have led to further downgrading of what had been a promising wheat crop, according to one trader.
"A lot of it was durum. That's been dominating the market for some time," he said.
"The estimates are that there's probably one to 1.3 million tonnes of downgraded wheat either feed wheat or AH Nine Wheat in northern NSW. It's an unfortunate situation."
But he says it is a different story for summer crop growers, with sorghum heading for its second big season in a row.
"It's in extremely good condition with all this rain and the mild temperatures. It's ideal for sorghum," he said.
Did they leave it on the bus?
Shares in BNP Paribas fell sharply in early trade Wednesday after the firm issued a statement saying that it's investment banking division has lost EUR710 million in the first 11 months of the year.
The bank had previously said that in the first nine months of the year, the same unit had recorded a pretax PROFIT of EUR879 million.
That adds up to a whopping loss of almost EUR1.6 billion in October and November alone!
EUR350 million of that is accounted for by exposure to the Madoff scam, but where has the rest of it been lost? And what are December's figures going to look like?
At 9.30am GMT, shares in BNP Paribas were down 16.71% at 34.44.
The Fed slashed US interest rates to just 0.25% last night in a further effort to stimulate a flagging economy. What's it got left in it's armoury after that though?
The pound is up to $1.56, it's best against the dollar in more than a month. The downwards decline continues against the euro though, setting an all-time low for the eight consecutive day. Today's magic number is 1.1031, or one euro equal to 90.68 pence, and we trade very close to those levels right now at 9am GMT.
eCBOT is higher, as you might expect with a sharply weaker dollar, with beans around 11-12c higher and corn and wheat both in the region of 6c firmer.
Good demand from China, and hopes that a weak currency will improve export competitiveness are behind the rally.
Chinese soybean futures settled 1.3% higher overnight as the government continues to support domestic prices with a program to buy up to 3mmt from local farmers. This is turn is supporting US prices as Chinese crushers turn to them for cheaper supplies.
Year-end holiday short-covering is also a short-term supportive feature.
Taiwan bought 56,030mt US wheat overnight, Japan are expected to confirm a purchase of US/Canadian wheat today. South Korea bought 110,000 Brazilian soybeans.
Crude oil is almost a dollar firmer at $44.52/barrel ahead of the OPEC meeting in Algeria where some hefty production cuts are expected to be formally announced.
The producer group will probably trim production by 2 million barrels a day at the beginning of next year, Saudi Arabia’s oil minister has said. Russia, a non-OPEC member and the world’s second-largest crude exporter, may also cut output by as much as 400,000 barrels, according to Kuwait’s oil minister.
US stocks data, due out later this afternoon, will probably show inventories of crude, gasoline and distillates all rising last week, analysts say.
The FTSE100, DAX and CAC40 are all down 1-1.5% in early European trade.
The latest UK unemployment figures, due later, are expected to show that the slowing economy has taken its toll on the jobs market.
The number of people out of work hit 1.82 million in the three months to September and is likely to reach two million in the coming months.
The US Federal Reserve has slashed its key interest rate from 1% to a range of between zero and 0.25% as it battles the country's recession.
In its statement, the Federal Reserve warned that "the outlook for economic activity has weakened further".
It predicted that rates would stay at the current exceptionally low levels "for some time".
The Dow Jones industrial average jumped by more than 351 points — a rise of more than 4 per cent— within an hour of the Fed's decision,
However, equity analysts said that the early rally on Wall Street might not necessarily follow through on to European stock markets on Wednesday morning and in coming sessions.
The pound rose to $1.56 in late-night trade against the dollar, but fell against the euro to 1.1083.
EU wheat futures closed higher in quiet pre-Christmas trade. Paris March milling wheat closed up EUR2.25 at EUR130.50/tonne. London May feed wheat ended up GBP1.50 at GBP100/tonne, with just 63 lots moved.
Various scattered tenders seem unlikely to make much difference to the wheat market at the moment. Japan is in for a routine 62,000mt US/Canadian wheat. Iraq is looking for 50,000mt optional origin wheat. Pakistan may, however, buy up to 500,000mt optional origin milling wheat this side of Christmas.
With the Russian ruble and Ukraine hryvnia about as popular as a wicker chair in a nudist colony there won't be too many surprises as to the favourites for these tenders. These guys want/need the foreign currency.
Severely cold weather in the US plains may be causing some winterkill to wheat crops without a protective snow cover.
The EU crop for 2009 is in the ground in generally less than ideal conditions. Lack of credit is the main hurdle in Eastern Europe, with price the biggest problem in the west. The French and German crops have been planted in a similar area to 2008, but the jury is still out on final yield. Apart from these two, next season's output is already expected lower, in some cases significantly so.
Corn futures rallied nearly 20 cents Tuesday pushing all but front month Mar past the $4/bu. barrier. US dollar continues to slide, reaching its lowest level since the first week of Oct '08, which was in the midst of the rally from the summer lows. 2009 production concerns are a major topic of late and helped to underpin the rallies in corn futures as corn gains on soybeans. Crude oil was steady for the most part during trade and helped to underpin ideas of higher corn and to sustain rallies. Long time shorts may be covering positions and adding additional price inclines. Mar +18 at 3.94.
Soybeans closed slightly higher than their midday prices, withholding their gains. Beans are giving ground on the corn:soybean price ratio. Soybeans also have some bearish fundamentals to face, as farmers may be more inclined to plant more bean acres this spring as it is more economic than corn for input cost wise along with rotation concerns. OPEC could announce production cuts tomorrow, which would be supportive to crude oil along with soybeans. Drought concerns still overhang in South America and could help boost US prices and world stock are already tight. Jan +12 at 8.58; Jan Meal +4.20 at 261.00; Jan BO +80 at 31.35.
Wheat futures shot higher on short covering and a softer tone in the US dollar. Wheat futures were also able to sustain gains on spillover buying and support from higher CBOT grains Tuesday. Declines in the US dollar has sparked some foreign interest as Taiwan purchased 56,030MT of US wheat, Japan is seeking a buy of 62,000 MT and Saudi Arabia is reportedly interested in a large tender of US milling wheat. The severe temperatures have raised some winter kill concerns, giving bulls some fresh bullish news. Mar CHI +24 at 5.44; Mar KC +22 at 5.65; Mar MLPS +18 at 6.07.
Microsoft have taken the unprecedented step of warning users of Internet Explorer to switch to another broweser such as Firefox whilst it creates a patch for a serious flaw in IE which allows hackers to steal personal information such as passwords etc as you type them in.
It seems that the hack has largely been used to steal computer gamers details and not for anything far more serious. Yet.
For more info & some recommendations on what to do to make your browsing more secure see here: Cheers Bill
I was reading a story the other day about a Trojan that lies dormant in your computer waiting for you to enter certain sites eg. a bank. Once you type in www.lloydstsb.com or whatever in your browser it springs into life, closing the real bank website & replacing it with a cloned one. You type in your password & username etc, it says "sorry we are experiencing technical difficulties, come back in a few hours." Meanwhile now armed with all your details some bugger is straight into your account to empty the lot. Nice eh?
Italy is experiencing heavy rains for more than a week, causing heavy flooding of many wheat fields in the country.
In some areas where sown fields have been flooded, sowing would have to start anew, farmers said. "We will have delays in the sowing campaign. Moreover, we will have a drop in sown areas and a drop in output," Lorenzo Bazzana, analyst at Italy's biggest farmers association Coldiretti, told Reuters.
Even where fields have not been sown yet, it would take a while for the land to dry enough for tractors and other machinery to move in, causing further delays in the campaign, Bazzana said. He said it was too early to give precise forecasts because rains continued across Italy.
French police acting on a tip-off discovered dynamite hidden in leading Pais department store Printemps today. The explosives were found in the third floor restroom of the menswear department.
French news agency Agence France-Presse said it received a letter Tuesday morning from a group calling itself the Afghan Revolutionary Front saying that several bombs had been planted in the store.
In the letter, the group demanded the withdrawal of French troops from Afghanistan.
Following the discovery, French President Nicolas Sarkozy, officially raised the country's terror alert from "RUN" to "HIDE".
Did you know that we were once at war with the French for 116 years? They called it the Hundred Years' War for some reason, it must have been a typo. Anyway, the only reason it lasted so long was that we were enjoying beating them so much we decided to pan it out a bit.
It's all kicking off in Bulgaria after satellite monitoring revealed that land that some Bulgarian farmers were claiming set-aside for turned out to include sports stadiums, rubbish dumps and graveyards!
These boys could teach the Chinese a thing or two about manipulating the system.
The EU Commission have apparently put the blocks on huge tranches of farm aid destined for Bulgaria, until the whole thing gets sorted out.
Legitimate Bulgarian farmers have taken to the streets in protest that their bent-as-a-nine-bob-note brothers are preventing real subsidies getting through.
It is worth noting that the country produced 4.385mmt of soft wheat in 2008. You can bet your house on it now that they won't be matching that again in 2009 if they're short of cash.
eCBOT grains closed mixed with beans around 7-8c firmer, wheat up around 3-4c and corn 1-3c lower.
The dollar is sharply weaker ahead of the Fed's anticipated interest rate cut later today. Just after 1pm GMT the pound was at $1.5330, close to it's highest levels in a fortnight.
Corn is a little lower on ideas that the late surge after Informa slashed 2009 acres by 3.6m may have been a little overdone.
Iraq is in the market for 50,000mt any origin wheat and Japan is tendering for a 62,000mt combo of US and Canadian wheat.
Ukraine remains amongst the countries hardest hit by world financial turmoil. It's currency, the hryvnia, is crashing through the floor making it very competitive on the wheat export arena.
So too, Russia, with it's ruble devalued twice in the last four days. Both countries have large grain stocks to sell and are keen for the foreign dollars that they provide.
Crude seems settled around $45/barrel ahead of the OPEC meeting at the end of the week.
Early calls for this afternoon's CBOT session: Corn futures are expected to open 1 to 3 lower; soybeans 8 to 10 higher; and wheat 1 to 3 higher.
Germany's Federal Cartel Office, the Bundeskartellamt, has fined Mars Inc. a record 4.5 million euros for having acquired pet food producer Nutro Products, Inc. without it's approval.
According to the Bundeskartellamt, the acquisition would have further strengthened Mars' already dominant prescence in the German market for dry dog food.
Mars' brands sold in Germany include Pedigree, Frolic, Chappi, Cesar, Whiskas, Kitekat and Sheba.
Dunn Commodities Ltd are NOT in receivership contrary to earlier reports.
My apologies to Mr. Greg Dunn.
It's comforting to know that the Chinese are finally (literally) cleaning up their act on what is, and what isn't, permissible in foodstuffs by banning such wholesome and nutritious products as insecticides, drain cleaners and industrial dyes according to media sources.
China's first list of banned food additives issued this week contains substances including boric acid that is not only used as an insecticide but is also added by Chinese food manufacturers to meatballs and noodles in order to increase elasticity. Formaldehyde and lye, which is used in soap production and drain-cleaner, was also banned. The materials are also added to water in which seafood is soaked to make the produce appear fresher and bigger.
The list of outlawed substances is the result of an investigation by Chinese officials charges with improving standards in the country’s food industry where the practice of adding industrial chemicals to foodstuffs is rife.
The government working group even listed an addictive substance made from the poppy plant and related to opium, which can be used as a painkiller. It is often used in hot pot, a Chinese dish where meat, vegetables and tofu are cooked at the table.
Oil World has revised up it's worldwide rapeseed production forecast for 2008/09 to 57.5 mln t from the previous figure of 56.5 mln t and compared to the 49.0 mln t of the previous year.
The main producers are the EU with 18.8 (last year 18.4) mln t, China with 11.6 (10.4) mln t, and Canada with 12.6 (9.6) mln.
Global use is expected at 54.5 (50.7) mln t and ending stocks at 7.6 (4.7) mln t.
Wordwide rapeseed meal production should reach 30.3 mln t in marketing year 2008/09 (Oct./Sept.), they say, exceeding the 28.6 mln t produced in the previous year.
The main producers of repemeal are the EU at 11.3 (10.9) mln t and China at 7.3 (6.8) mln t.
Global use is also expected at 30.3 (29.6) mln t, thereof in the EU at 11.2 (10.8) mln t, in China at 7.5 (7.0) mln t, in India at 2.3 (2.2) mln t, and in the USA at 2.5 (2.3) mln t.
A dry autumn and it's effects on plant emergence is leaving winter wheat crops in Romania vulnerable to a harsh winter. With farmers there also cutting back on inputs due to financial constraints the 2009/10 soft wheat production is seen 18% lower at 5.26mmt.
Similar problems in Hungary, and the unlikelihood that the record yields of 2008 will be repeated, sees Hungarian 2009/10 soft wheat output down 8% to 5.158mmt.
Norwegian salmon farming company Lighthouse Caledonia ASA has frozen payments to creditors and asked for it's shares to be suspended on the Oslo bourse today.
The company, who's main activities are in Scotland, said in a statement, "a recent reduction in credit terms from one key supplier - with credit time being reduced from 90 to 30 days - caused by the unresolved long-term financing of the company, has resulted in a constrained liquidity situation."
The pound was slightly firmer after the November CPI report showed that annual inflation slowed from 4.5% in October to 4.1% in November. The November retail price index was up 3% on the year, against the consensus view of 3.2%. The November retail price index excl. Mortgage interest Payments was up 3.9% on year, against the consensus for a 4% rise.
The pound was $1.5230 and 1.1150 against the euro at 9.45am GMT.
eCBOT grains are mixed overnight with soybeans a couple of cents higher, wheat down 3-4c and corn 1-2c easier.
There's not a lot of fresh fundamental news so far this morning.
On the Chinese Dalian Commodity Exchange, soybeans for May delivery fell 1.7 percent to settle at 3,035 yuan ($443) a tonne. The Chinese Ministry of Finance said Tuesday that the country had cancelled it's value-added tax on soybean exports.
Japan is tending the market for 62,000mt wheat, a combination of Australian & US, in a tender to be concluded Thursday.
The harvest in Australia is slowly grinding on with analysts now estimating that it could take until February to wrap up due to persistent heavy rains.
Morgan Stanley forecast corn will average $4.50 a bushel in the year to Aug. 31, down from $5.50 estimated in October. Still, that is significantly higher than current levels.
Crude appears to have settled into a trading range in the mid-$40's ahead of the OPEC meeting in Algeria later this week.
The dollar is at two-month lows against the euro on speculation the Federal Reserve will reduce interest rates to a record low later today.
The pound is at $1.5240, and hasn't even got around to setting a record all-time low against the euro yet today at 1.1156.
The latest UK inflation figures are expected to show another sharp drop in the rate for November.
Economics predict that inflation, as measured by the government's preferred Consumer Prices Index, will have fallen from 4.5% in October to 3.9% or less.
The FTSE100, CAC40 and DAX are all up a tad in early trade.
As the recession bites and consumer spending slumps more High Street names are feeling the pinch.
Kesa Electricals has reported a half-year loss at UK chain Comet, with sales falling because of "extremely difficult" trading conditions. For the six months to 31 October, Comet made a loss of £8.1m, compared with a profit of £10.6m a year earlier.
Carpetright, Britain's biggest carpet chain, warned annual profits would be "significantly" below City expectations as it reported a 67% fall in first-half profits and slashed its dividend.
EU wheat futures closed slightly higher Monday in relatively quiet pre-holiday trade.
Paris March milling wheat futures closed up EUR1.75 at EUR128.25/tonne. London May feed wheat closed up GBP0.75 at GBP98.50/tonne.
The devaluation of the Russian ruble, twice in the last three days, keeps Russia hungry for foreign currency. With it's largest grain crop since the early 1990's the country has plenty of grain to export and price is becoming almost secondary.
However, with winter weather closing in, there may be a window of opportunity for European wheat to re-enter the export arena.
The continued weakness of the pound is helping support UK wheat, thank God, because little else is.
Further forward, the EU-27 wheat crop for 2009/10 looks like being lower in virtually all producing countries. Small losses in France and Germany look like being compounded by significantly larger losses in the UK, Spain and elsewhere. Production in the FSU countries like the Ukraine also seems likely to be significantly reduced.
Despite sharply higher global production in 2008, stocks remain historically tight, with lower plantings and yields anticipated in 2009/10, the world still remains vulnerable to a serious weather problem somewhere next year.
Corn futures closed 1 to 2 cents higher Monday. The US Dollar stumbled lower again Monday creating buying interest across the commodity board and helped push CBOT corn futures higher. Private firms are estimating several million acres swing away from corn. USDA inspected 29.3 million bushels for export last week which was better than trade had estimated of 22 -26 MB. Initial rallies in crude oil and a softer dollar supported grains throughout trade on Monday. Trade may be starting to trade acres as Informa released their projections of 82.2 million acres, which is about 3.5 million off of 2008 bad about 10 million acres from 2007. Deliveries issued against the Dec ?08 contract (expired) were 136. Mar +1 at 3.75.
Soybeans backed off of midday rallies and closed several cents lower. Corn/Bean spreading was noted pressuring soy prices lower. Soybean crushings were their lowest since 1996 for the month of November at 139.4 million bushels. USDA reported export inspections of 34.4 million bushels of soybeans last week, but was slightly below trade guesses of 35-40 MB. Beans received some underlining support from the outside markets but fell as crude oil erased daily gains. Regions of Argentina and Brazil still remain severely dry and will need moisture to boost growing crops, also to aid soil moisture to any unseeded plants. Informa Economics released there estimates of planted acreage Friday, suggesting farmers will plant 5.55 million more bean acres than they did in 2008, for a total of 81.45 million acres, the increase in acres may limit upside potential as supplies should increase. Jan -8 at 8.46 Jan Meal -.90 at 256.80 Jan BO -37 at 30.55.
Wheat futures were mixed at the different exchanges Monday when the closing bell rang. Gains were noted in most CHI and KC contracts but spring wheat closed marginally lower in the front month. Wheat futures were boosted by higher CBOT corn and a weaker dollar. Deliveries issued against the expired Dec contract were 107 contracts. USDA reported export inspections of 12.3 million bushels below trade estimates of 13-17 million bushels. The softer tone in the dollar is lending support to wheat exports and futures. Iraq has issued a tender to purchase 50,000 metric tonnes; additional tenders are expected to be announced later in the week. Dormant winter wheat could be threatened by winter kill as temps across northern plains reach well below zero degrees Fahrenheit. Mar CHI +7 at 5.20; Mar KC +4 at 5.43; Mar MLPS -1 at 5.89.
Today's latest fresh all-time low for the pound against the euro is 1.1089, with one euro breaking through the 90 pence mark today for the first time ever.
Sterling has now dropped around 13 per cent against the euro in the past two months as the Bank of England has slashed interest rates faster than the ECB in its attempt to stave off a deep and prolonged recession.
Things could get worse later this week, new figures are expected to show that UK unemployment is worsening, increasing from 5.8 per cent to 6 per cent, while the number of people claiming jobless benefits is forecast to have risen by 45,000 in November.
Russia’s central bank devalued the ruble for the second time in three days Monday, but not before blowing $161 billion trying to defend the flagging currency.
The huge fall in the price of crude oil since the summer highs has drained 27 percent of the country's reserves, the world’s third-largest, trying to stem a 16 percent decline in the currency against the dollar.
It is possible we will see two to three more devaluations this week, said one analyst.
Prime Minister Vladimir Putin’s pledge to avoid a “sharp” devaluation of the ruble and let the currency fall gradually has dissuaded citizens from storming banks to remove deposits as they did in 1998, when many lost life savings as the ruble plunged 71 percent versus the dollar and the government defaulted on $40 billion of debt.
Standard & Poor’s downgraded the nation’s sovereign debt to BBB, the second-lowest investment grade rating.
It's no surprise therefore that Russia is so aggressive on the grain export market at the moment, nor that it is keen to help OPEC out in achieving it's targets re the price of crude.
eCBOT grains closed higher across the board Monday, with beans up around 17-18c, wheat 11c higher and corn up 8-9c.
China has asked state reserves to buy as many as 3 million tons of soybeans from domestic farmers to boost prices and rural incomes. That’s made processing domestic soybeans unprofitable and forced buyers to turn to buying cheaper U.S. and South American beans.
Purchases may total 2.9 million metric tons, the Ministry of Commerce said in a twice-monthly forecast report dated Dec. 12. That compares with 1.4 million tons in December 2007, according to customs data.
Chinese buyers may have ordered as many as 23 cargoes, or about 1.4 million tons, of soybeans in the 10-day period ended Dec. 12 for delivery in January and February, according to sources.
Lower estimates of US plantings of wheat and corn for 2009, released by a private research firm on Friday, are also encouraging for prices. Informa Economics Friday dropped 2009 US wheat plantings by 2m acres on 2008, and corn by more than 3.6m acres.
The USDA chief economist recently pegged 2009 US corn plantings at 90m acres, the Informa number is over 7.5m acres lower than that estimate.
Informa said that virtually all of these lost acres will go into soybean production, raising 2009 planted area by 5.6m acres to 81.5m acres.
Meanwhile crude oil futures climbed over $48 a barrel as investors anticipated hefty output cuts by OPEC producer countries at a meeting later this week.
Commodities and equities also reacted to renewed hopes about a bailout of U.S. automakers, and expectations of an interest rate cut of 0.5% from the US Federal Reserve later this week.
The dollar hit a two-month low against the euro on the outlook for lower US interest rates, boosting hopes of increased export activity.
Early calls for this afternoon's CBOT session: Corn futures are expected to open 7 to 10 higher; soybeans 16 to 19 higher; wheat 9 to 12 higher.
The Brazilian 2008/09 soybean crop is 92% planted as of Dec 11 according to AgRural, slightly behind last year's pace of 95% done.
The private consulting firm estimates final 2008/09 planted area at 22m ha producing a crop of 61.8mmt.
Mato Grosso state, Brazil's No.1 soy producer, has finished planting its soy for 2008/09, the firm said, whilst plantings in Parana, the No. 2 soy growing state, were 97% done.
Dry weather is still a concern however, despite some rains last week, the number of fields in good condition falling to around 66% from 86%, the firm said.
Associated British Foods plc, the international food, ingredients and retail group, has today announced that it has reached agreement with Ebro Puleva S.A. to acquire its Spanish sugar business, Azucarera Ebro S.L., for a value of Euro 385m. Completion of the transaction is subject to regulatory approval and is likely to occur in early 2009, they say.
Azucarera Ebro is the leading sugar producer in Iberia supplying some 50% of the 1.6 million tonnes of sugar consumed. Historically the business processed sugar from eight beet factories and had a beet quota of 741,000 tonnes. Following its agreement to permanently renounce 363,000 tonnes of quota from October 2009 it will process at three factories in northern Spain and a factory at Guadalete in southern Spain. To supplement the reduced beet quota of 378,000 tonnes a cane refinery is being built at Guadalete, which is near the port of Cadiz. It will have a capacity of 400,000 tonnes of sugar and is expected to be operational in late 2009. The refinery will process cane raws, sourced from Least Developed Countries with tariff-free access to the EU from October 2009, which will be supplied mainly by Illovo Sugar.
UK wholesale milk deliveries totalled 982.2m litres, 31.8m litres down on last year and the lowest level November 1974, according to latest Rural Payments Agency figures.
Cumulative production for 2008/09 now stands at 8,635m litres, 229m litres down on November 2007.
"It's a harsh reminder of the pressures and lack of confidence on dairy farms at the moment," NFU chief dairy adviser Hayley Campbell-Gibbons commented.
It appears that the British taxpayer is exposed to the newly outed Bernard Madoff biggest scam of all-time, after the RBS admitted that it had an exposure of £400 million in the ruse.
The potential loss is another blow to the beleaguered bank, which is 58 per cent owned by the Government after it accepted £20 billion from the taxpayer as part of the £37 billion bailout of British banks.
HSBC said it may have a potential exposure of about $1 billion from loans made to funds investing in Mr Madoff’s venture.
May have??!! Don't they bloody well know? Heads should well and truly roll over this fiasco. These muppets are getting bailed-out for their inefficiencies with taxpayers money & 'investing' it in crap like this rather than lending it to us!
And another thing, what are the Septics doing allowing this sort of thing to go on so long?
First estimates are now filtering through on the estimated planted area and output for soft wheat in Europe's leading producing countries for next season's crop.
In France, the EU's No.1 producing country, planted area is estimated at 5.03 mln ha which is 0.5% below the 5.06 mln ha in 2008/09, according to the French Agriculture Ministry (Agreste). ONIGC estimate plantings 0.7% lower at around 5 mln ha. Ouput is estimated around 1% lower on the current season at 36.9mmt.
In Germany, Europe's second largest producer, the size of the 2009/10 soft wheat crop is estimated at 25.282mmt, 2.7% down on the current season, with a slightly lower yield of 7.88mt/ha estimated.
The UK is the third largest producer in the the EU. Here output is seen at 16.015mmt next season by Strategie Grains, that's a drop of 8% on the current season.
No estimates are yet available for output in the fourth and fifth largest producers in the EU-27 during 2008/09 (Poland & Hungary).
Soft wheat output in Spain, the sixth largest EU producer in 2008/09, is seen 15% lower at 4.712mmt.
eCBOT is firmer across the board with beans, wheat and corn all up around 10-14 cents. It seems that the "fight for acres" in the US next season has already begun after Informa slashed their projected corn acreage numbers by 3.6m acres late Friday.
Chinese soybean futures were higher Monday, led by strong gains in soymeal prices as feedmills build up their stocks ahead of the year-end holidays.
The Chinese government is holding onto it's wheat stocks, selling just 294,593mt on the domestic market last week, at this time of year the government would normally auction off around 1mmt/week sources say.
Rabobank has cut it's Australian wheat production forecast by 1mmt to 19.5mmt. The barley crop there has been hit by a mystery fungus.
Just vefore 9am GMT the pound is at $1.5022 and 1.1170 against the euro. In early trade the pound hit it's fifth record low against the euro in succession. This time the magic number was 1.1124. One euro is now worth 89.5 pence, with seemingly more record lows lined up for the rest of the week.
Crude is slightly easier at $46.01/barrel on signs of falling Chinese fuel demand amid economic contractions in the U.S., Europe and Japan. It is however comfortably off Friday's lows after Pres. Bush announced that he is not prepared to let GM, Chrysler and Ford go to the wall. He will dip into the $700 billion TARP program funds if necessary, he said, in what appears to be a short-term measure to stave off bankruptcy before Obama gets the hot seat. OPEC meet at the end of the week to discuss exactly how big a production cut os needed to shore up the price of crude. Non-OPEC member Russia has indicated that it would also like to join the party.
Premier Foods has confirmed reports in the Sunday press that it is seeking up to 700 million pounds from investment banks and private equity groups.
The head of Barclays bank has predicted that economic gloom will deepen, with UK property prices falling by up to 30%.
Swedish company, Electrolux, the world's second biggest home appliance maker, is set to axe 3,000 jobs after warning it will miss full-year profits targets as demand for its goods in Europe and the US tumbled in November and December.
The FTSE100, CAC40 and DAX are all modestly higher in early trade with the FTSE up 0.65% to 4308.16.
Irish police are said to be investigating the theory that smuggled fuel may be behind the recent dioxin scare that led to a massive worldwide recall of potentially contaminated Irish pork products.
One theory is that the fuel, thought to have originated from County Tyrone in Northern Ireland, was of a contraband type that is converted from agricultural green diesel to red diesel. The conversion process produces dioxins as a by-product.
A second hypothesis is that the fuel was legitimately sourced but contaminated after being transported in a tanker that contained dioxins.
Irish police said that there was no suggestion the firm behind the incident, Millstream Recycling based in Co Carlow, had undertaken any illegal activity.
As the size of the EU-27 2008 corn harvest has finally become clearer, Coceral have increased their estimate for final 2008/09 EU grain production to 310.6 million metric tonnes, from the September estimate of 306.2 million tonnes.
The 2008 EU-27 corn crop is now estimated at 60.8 million tonnes, up from September's figure of 57.7 million tonnes and up a whopping 49% on the year.
Soft wheat production was tweaked up slightly to to 141.1 million tonnes, from September's forecast of 140.7 million tonnes, up 26% on the year.