CBOT Closing Comments
Soybeans
January soybeans closed at USD10.17 3/4, down 32 3/4 cents, January Soybean Meal at USD307.00, down 10.90 points and January Soybean Oil is at 39.99, down 0.68 points. China increased short term interest rates in an effort to slow their economy, that got the market spooked from the off. Weekly export sales were reasonable for soybeans at 726,100 MT, including 452,600 MT for China. Actual shipments were a robust 1,179,000 MT with half of that (641,100 MT) going to China. Conab upped their forecast for Brazilian soybean production in 2010 from 64.6 MMT to 65.2 MMT, a new record.
Corn
March corn futures ended at USD4.17 1/2, down 4 1/4 cents, May corn futures finished at $4.28, down 4 cents. Monsanto see 2010 US corn acres at 88 million, that's an increase from 86.351 million last year. Export sales were down 67% from the prior four week average at 364,700 MT but shipments were up 16% at 798,100 MT. The Buenos Aries Grain Exchange increased their estimates for Argentine corn production to 16.5 MMT, up from last week’s 15.8 MMT.
Wheat
March CBOT wheat closed at USD5.57 3/4, down 9 1/2 cents. Prices seem to remain bound in a trading range between $5.25 and $6.00. Net weekly export sales of just 93,400 MT were very poor, a marketing-year low in fact. The trade had been expecting sales of 250-450,000 MT. Exports of 244,200 MT were also slow with Nigeria (102,100 MT) the main destination. Some damage to winter wheat unprotected by snow may be occurring in Kansas and parts of Nebraska.
EU Wheat Closing Comments
March Paris milling wheat futures closed Thursday's session down EUR0.25 at EUR134.00/tonne and London March feed wheat futures ended down GBP0.65 at GBP109.45/tonne.
It was another largely unspectacular day with little more than 100 lots traded in London all day.
The widely touted fund buying that was supposed to be in evidence early in January has largely failed to emerge, and that was just about the only thing likely to support these markets.
Mother Nature is doing her bit to help, with a severe cold spell more or less across the entire northern hemisphere, but if it wasn't for that I think we'd see prices falling out of bed big-time.
The flip side of the cold snap currently gripping the UK is that it is also holding back the opening of the Ensus bioethanol refinery on Teesside.
Judging by some of the emails and telephone calls I've been having from assorted farming operations around the UK, many are coming to the same conclusion. They might not be overly keen on current levels, but they are a darn sight better than what was on offer back in September.
New crop wheat is now in the ground, and there doesn't seem to be any liklihood that there will be a shortage in 2010/11.
Around 200,000 extra hectares of winter wheat has been planted in the UK, according to Masstock. That will likely produce a wheat crop of around 16 MMT, around 1.8 MMT more, or 13% up on last year.
EU Soymeal Prices
Basis CIF Rotterdam/Amsterdam in USD/tonne unless stated:
Brazil pellets 48%
Afloat 435,00 -3,00
Jan 434,00 -1,00
Jan/March 421,00 -2,50
May/Sep 359,00 -1,00
Argentine pellets 44/45%
Afloat 420,00 unch
Jan 420,00 unch
Jan/March 418,00 unch
May/Sep 347,00 -6,00
Dutch Hipro 49% profat FOB
Jan 442,00 -10,00
Feb 441,00 -9,00
March 433,00 -9,00
Apr 417,00 -7,00
May/Jul 374,00 -3,00
May/Oct 375,00 -2,00
Argentine Hipro 49% profat
Afloat 435,00 -10,00
Jan 435,00 -5,00
Feb 435,00 -1,00
March 423,00 -2,00
May/Sep 366,00 -3,00
eCBOT Close, Early Call
The overnight grains closed lower, with beans down around 18 cents, corn 3-4 cents lower and wheat 5-6 cents easier.
China set the tone with a surprise move to raise the interest rate on three month treasury bills. The market is concerned that any tightening of monetary policy might have a negative impact on demand for soybeans.
Weekly export sales were reasonable for soybeans at 726,100 MT, including 452,600 MT for China. Actual shipments were a robust 1,179,000 MT with half of that (641,100 MT) going to China. Sales for corn were a little disappointing at 364,700 MT, and sales for wheat were very poor at less than 100,000 MT.
Conab upped their forecast for Brazilian soybean production in 2010 from 64.6 MMT to 65.2 MMT, a new record. Farmers there increased their planted area this season to 23 million hectares from 21.7 million hectares in 2008-09, they added.
Monsanto see 2010 US corn acreas at 88 million, with soybean planting at 75 million. That's an increase for corn and a decrease for beans from 86.351 and 77.51 million respectively last year.
After all that bearish news, the US weather is bullish with a hard freeze threatening wheat in the top producing state of Kansas and also keeping an estimated 500-600 million bushels of corn out in the cold. More than 30% of the North Dakota corn crop was still in the field when the USDA last reported on harvest progress.
The freeze should also be boosting feed demand and is causing problems for barge movement in the Midwest.
Fund money hasn't yet steamrollered the markets as some habeen expecting.
The trade is now starting to focus on next week's Jan 12th S&D report from the USDA. How much will winter wheat seeding be down, and will they take into account any losses to corn production given the unharvested acreage?
Early calls for this afternoon's CBOT session: corn called 4 to 6 lower; soybeans called 20 to 25 lower; wheat called 7 to 9 lower.
USDA Weekly Export Sales
For the period December 25-31, 2009 the USDA report the following sales/exports:
Soybeans
Net sales of 726,100 MT included 452,600 MT for China. Trade expectations were for sales of 600-850,000 MT. Actual shipments were a robust 1,179,000 MT with half of that (641,100 MT) going to China.
Corn
Net sales of 364,700 MT were mainly for Mexico (165,600 MT) and Cuba (125,000 MT). Trade estimates for weekly sales were 450-650,000 MT. Actual exports were 798,100 MT with Japan (298,100 MT), South Korea (170,400 MT), and Mexico (131,600 MT) the main homes.
Wheat
Net sales of just 93,400 MT were very poor, a marketing-year low in fact. The trade had been expecting sales of 250-450,000 MT. Exports of 244,200 MT were also slow with Nigeria (102,100 MT) the main destination.
French Grain Prices
Basis euros/tonne:
Wheat Jan Feb/Mar
Deld Rouen 121,00 121,00
Deld La Pallice 123,00 123,00
Deld Nantes 122,00 122,00
Barley Jan Feb/Mar
Deld Rouen 98,00 98,00
Deld La Pallice 98,00 96,00
Corn Jan Feb/Mar
Deld Bordeaux 131,00 132,00
Deld La Pallice 131,00 132,00
EU Rapemeal Prices
Basis FOB Lower Rhine in euros/tonne:
Jan 165,00 +5,00
Feb 160,00 unch
Mch/Apr 153,00 unch
May/1st h Jly 131,00 unch
Aug/Oct 10 127,00 +2,00
Nov/Jan 11 134,00 +2,00
Nov/Apr 11 136,00 +3,00
Bank Of England Leaves Rates On Hold
The Bank of England surprised nobody by leaving UK interest rates on hold at 0.5% today. Neither did they announce any further tinkering with the existing GBP200 billion quantitative easing measures.
As has become the pattern of late, with rates at a half percent the minutes of the meeting are now of more import than the actual announcement itself.
The currency markets were unmoved, with the pound in danger of slipping below 1.59 against the dollar on concerns about a leadership challenge to Gordon Brown, or Mr Magoo as I now call him.
A more insincere snake in the grass looking person than Geoff Hoon I can't imagine. Still if he ends up with egg all over his face a career in the grain trade surely beckons.
The reaction of those members of the Cabinet hastily interviewed on the BBC last night about a possible title challenge could hardly be called unequivocal support could it? David Milliband scurrying inside muttering something about having left the kettle on, whilst Alistair Darling did his familiar buttock-shifting squirm.
News Snippets
Monsanto see the US corn area increasing in 2010 to 88 million acres, with the soybean area falling slightly to 75 million acres, according to company chairman Hugh Grant (I kid you not). Did he stutter those estimates out in a kind of lovable middle class British idiot sort of a way that American women find irresistible I wonder?
Some early harvested soybeans out of Brazil's main centre-west grain state of Mato Grosso are already trickling onto the market from growers keen to take spot premiums. Brazilian carry-over stocks from last season are at their lowest levels in years after they exported aggressively in the first half of 2009.
China is cutting back on electricity usage as coal supplies run low.
The cold snap in the US is pushing south, threatening orange production in Florida, and bringing freezing temperatures to Mexico. Meanwhile barge traffic is being hampered by freezing rivers in the northern US, say Martell Crop Projections.
Some damage to winter wheat unprotected by snow may occur in Kansas and parts of Nebraska. The freezing temperatures may also boost feed demand, experts say.
The BoE is due to announce it's decision on interest rates at noon later today. Nobody is expecting anything other than they are left on hold at 0.5%, and there isn't likely to be any change to QE either.
Thursday Morning Thoughts - Soybeans Overvalued?
The overnight grains are sharply lower, taking their cue from a turnaround in the Chinese markets.
Agrimoney.com report that the Chinese government have upped the interest rate on its three-month bills overnight in an attempt to reign in inflation.
There are some fairly obvious implications for soybean demand here, as it's been Chinese buying that has singlehandedly supported the market recently.
That makes this afternoon's weekly export sales report from the USDA particularly interesting. The trade is expecting sales of 600-850,000 MT, something significantly lower, coupled with a marked absence of China might get the market a little spooked. Particularly as there's been quite a lot of talk that China has overbought and that there could be some cancellations in the offing.
Things are looking pretty rosy in South America, and there's some huge soybean crops on the way down there. Potentially record-breaking production from Brazil, Argentina and even Paraguay. Throw in the US and that gives us all-time highs from each of the top four exporting nations in the world for 2009/10.
Ten dollar beans seem rather expensive when you look at it like that. Remember that the Jan 10 CBOT soybean future gained 5.5% during the course of 2009. Against that March 10 corn fell more than 11% and March 10 wheat almost 10%.
That makes soybeans look the most over-valued of the grains complex. I'd rather buy into corn of wheat if you put a gun to my head, at least you can make out some sort of bullish story for either of those if you try hard enough.
Ice, Ice, Baby
For reasons I won't bother to bore you with I had to reverse the car onto the drive when I got back from a little excursion into town yesterday. A fascinating piece of seemingly pointless trivia I'm sure you'll agree.
Well that apparently insignificant act meant, crucially, that the car was then facing away from the house, not towards it. So come the school run this morning the windscreen was completely iced over on the inside of the car, not just the outside.
Three cans of de-icer later the temperature gauge was showing minus 6 when we finally crawled off the drive. Only a very light dusting of snow had fallen overnight, but the traffic was bumper to bumper even though it wasn't quite 8am. Clearly nobody was using that little shortcut down the side road that they normally do.
The council have done their best, bless, with a thimble full of grit for each of the main roads in town. The woman in the Nissan Micra in front of me was clearly running late. So late in fact that she'd decided to dispense with trivia like de-icing so that her wing mirrors were completely obscured by the snow, as too was her rear numberplate. The kids contemplated getting out at the lights and making a snowman out of what was piled up on her bonnet, but sadly I didn't have any carrots on me.
Neither had she bothered to dust any of the 10 inches of snow from it's roof so that every time she went above 10 mph a delightful cascade of the white stuff hit passing pedestrians and my windscreen with equal aplomb.
I don't normally laugh when the car in front of me hits a bus, but on this occasion I thought I'd make an exception, although the kids thought that screaming "die you thoughtless b*tch" was a tad harsh. There you go, wit is completely lost on the youngsters of today.
CBOT Closing Comments
Soybeans
January soybean futures closed at USD10.50 1/2, down 1 ¾ cents, January soymeal futures at USD317.90, down USD1.50, and January soy oil futures at 40.67, down 4 points. The outlook for record large South American crops remains intact. Also talk of Chinese purchases being overdone and cancellations on the horizon weighed on futures today. Trades are estimating tomorrow’s export sales between 600 and 850 thousand MT.
Corn
March corn futures closed at USD4.21 ¾, up 3 cents, and May corn futures at USD4.32, up 3 cents. Plenty of US corn still remains out in the field. Trade guesses for tomorrow's weekly export sales report range between 450 and 650 thousand MT. The harsh winter weather in the US helped support crude oil from a demand point of view. Informa increased their production estimates for both China and Argentina.
Wheat
March CBOT wheat futures closed at USD5.67 1/4,up 14 1/4 cents, March KCBT wheat futures at USD5.60 1/2, up 13 3/4 cents, and March MGEX wheat futures at USD5.71 1/2, up 15 1/4 cents. Export sales estimates for tomorrow range from 250,000 to 450,000 MT. Very cold temperatures across Nebraska and Kansas are a threat to winter wheat. Commodity funds bought an estimated 4,000 contracts of CBOT wheat today.
EU Wheat Futures End With Little Change
EU wheat futures continue to tread water with little significant change showing up again on Wednesday. March Paris milling wheat futures ended unchanged at EUR134.25/tonne and London March feed wheat futures ending down GBP1.15 at GBP110.10/tonne.
Heavy snow across large parts of the UK kept some traders away from their desks (especially the southern softies), northern traders largely dragged themselves into the office only to find that their southern counterparts were out sledging, or pursuing other feminine-type activities.
Perversely the pound was sharply lower against the dollar, but London futures declined anyway. It might be worth noting that the pound was relatively strong when London wheat peaked in early June last year.
Fund money will be back in to support EU and US wheat any day now is what the wires keep telling us. They don't inform us what will happen if this doesn't materialise.
US wheat in Nebraska and Kansas may be damaged by “extreme cold” according to AccuWeather. Kansas is the largest wheat producing state in the US and snow cover there is rather light according to reports. Afternoon highs Thursday and Friday will be in the mid teens F causing a 72 hour stretch of bitter cold, says Gail Martell of Martell Crop Projections.
The USDA will report on US wheat winter plantings on Jan 12th, a fall of 2 million acres plus is expected.
eCBOT Close, Early Call
The overnight grains closed narrowly mixed, with corn and wheat around a cent higher and beans around a cent higher to a cent lower. You can't get much narrower than that.
Crude is steady after the American Petroleum Institute said yesterday that US stocks fell by 2.3 million barrels last week, compared to an anticipated fall of 1.6 million. The US Energy Dept release their stocks data later today.
The cold spell gripping the US may certainly help boost demand, and it won't do any harm across much of the rest of the northern hemisphere either.
Wheat in Nebraska and Kansas may be damaged by “extreme cold” according to AccuWeather. Minus 20F is likely in parts of Nebraska and minus 10 is on the cards for the top US wheat producing state of Kansas. The cold front might also push into another important US wheat state of Oklahoma, taking temperatures down to minus 5, they say. Large parts of all three states apparently have little or no snow cover.
Up to 65 million bushels of corn in North Dakota is now going to have to sit there until the spring, some analysts are saying.
Most of the major news services still talk about fund "rebalancing" this week as if it's a given. What will the market do if it doesn't show up? And why on earth would they want to buy into some of the worst performing commodities of 2009 anyway?
If they are in the mood, I can root those glass hammers out of the shed if they fancy those, and I'm sure I've got a box of left-handed screwdrivers somewhere too.
US jobs data shows 84,000 private employment losses in December against 73,000 anticipated. The Fed releases the minutes from its December meeting later today.
Early calls for this afternoon's CBOT session: corn called 1 to 2 higher; soybeans called mixed; wheat called 1 to 2 higher.
EU Soymeal Prices
Basis CIF Rotterdam/Amsterdam in USD/tonne unless otherwise stated:
Brazil pellets 48%
Afloat 438,00 +7,00
Jan 435,00 +5,00
Jan/March 423,50 +4,50
May/Sep 360,00 -2,00
Argentine pellets 44/45%
Afloat 420,00 unch
Jan 420,00 unch
Jan/March 418,00 +2,00
May/Sep 353,00 +1,00
Dutch Hipro 49% profat
Jan 452,00 +7,00
Feb 450,00 +5,00
March 442,00 +7,00
Apr 424,00 +6,00
May/Jul 377,00 unch
May/Oct 377,00 unch
Argentine Hipro 49% profat
Afloat 445,00-442.00 N/a
Dec 442,00 +5,00
Jan 440,00 +4,00
Feb 436,00 +3,00
March 425,00 +3,00
May/Sep 369,00 +1,00
Tuesday Snippets
More heavy snow fell again overnight across large parts of the UK, and there's plenty more on the way, according to the forecasters. It did amuse me how they pointed out on the news last night that the Met Office did tell us we were in for a BBQ summer that never came off, coupled with a prediction for a mild winter. cheers lads, don't give up the day job will you?
The pound is under the cosh again after data revealed that UK construction activity fell for the 22nd month in a row in December. it looks a nailed on cert that it won't be picking up in January with all this snow around either. Still, don't worry the Met Office reckon there's an economic recovery on the way!
Oil World have been the least bullish on Argy soybean prospects of late, pegging the crop around 48 MMT, citing poor quality of the planted beans amongst other things. They now say that they might be a tad on the low side saying that "the 2010 soyabean production prospects have improved and we now consider it likely that the crop will turn out above our end-November estimate of 48.0 million tonnes". They still consider that other trade estimates of 50-52 MMT are too high however.
Paraguay will produce a soybean crop of 6.7-6.8 MMT, according to Oil World. That's almost 75% up on last season's 3.9 MMT.
US job losses have shrunk to two-year low in December, according to data just out.
Chicago Closing Comments
Soybeans
January soybean futures closed at USD10.52 ¼, up 2 ¾ cents, January soymeal futures at USD319.40, up USD3.40, January soyoil futures at 40.71 cents, down 19 points.
Corn
March corn futures closed at USD4.18 ¾, up ¼ cent and May corn futures ended at USD4.29, also up ¼ cent.
Wheat
March CBOT wheat futures finished at USD5.53, down 4 ¾ cents, March KCBT wheat futures at USD5.46 ¾, down 4 cents, and March MGEX wheat futures at USD5.56 ¼, down 4 ¾ cents.
It was a very lacklustre day, the widely touted fund buying failed to materialise, and instead profit-taking following yesterday's gains was the order of the day. The US weather seems to be supportive to corn, and possibly winter wheat. Chinese buying has helped beans of late, but that may disappear anytime soon.
EU Wheat Futures Closed Narrowly Mixed
EU wheat futures closed narrowly mixed Tuesday with March Paris milling wheat ending unchanged at EUR134.25/tonne, and London March feed wheat futures trading up GBP0.80 at GBP111.25/tonne.
The much touted arrival of fund money into the buying arena has largely failed to materialise just yet, although it is only day two of 2010 as far as trading is concerned.
The funds will be in by the end of the week, according to various popular media sources. Lets hope they are, because there is precious little else to support the markets in the medium/longer term.
Short term however, we do have the little added bonus of some very cold weather and lots of snow across Europe and the UK. The BBC tonight report temperatures down to -25C in Poland, and the worst snowfall in the UK in 30 years.
The long awaited opening of the Ensus refinery on Teesside appears to have been delayed again. No it isn't owned by British Rail, but we do seem to be having the wrong type of snow. It's the white stuff that falls from the sky that they don't like apparently.
So every cloud brings a snowy lining, or something like that. The cold weather is increasing feed demand, but slowing bioethanol demand (if you can reduce it from no demand whatsoever that is). It may also be decreasing potential wheat output next season, but at this stage it's far too early to say.
Show Me The (Fund) Money
Fund money may have bought a few wheat contracts last night but they aren't in evidence en-masse in the grains pits at the moment.
"Rebalancing" and "laggards" are the words of the moment. The funds will start rebalancing and buying laggards on Friday various news wires are telling us.
But for today it seems we can expect some profit-taking after wheat posted some decent, but largely unjustified, gains last night.
Early calls for this afternoon's CBOT session are soybeans up 3-4 cents; corn and wheat flat to down 2 cents.
Maybe the funds might be interested in some of those chocolate fireguards I've got in the shed? Or my boxed collection of classic episodes of Eldorado on Betamax?
EU Sunpellet Prices
Guide prices basis FOB Rotterdam/Amsterdam unless otherwise stated in USD/tonne:
Arg/Urg Sunplts 37/38%
Spot 155,00 fot
Feb/Apr 150,00 fob
May/Jly 150,00 fob
EU 29% Sunplts FOT in euros/tonne
Jan 126,00 fot
Jan/Mch 124,00
Apr 119,00
May 110,00
Jne 110,00
July 110,00
Sept/Dec 112,00
EU Soymeal/Pellet Prices
Guide prices basis CIF Rotterdam/Amsterdam unless otherwise stated in USD/tonne:
Brazil pellets 48%
Afloat 433,00 +1,00
Jan 430,00 -2,00
Jan/March 419,00 unch
May/Sep 362,00 +2,00
Argentine pellets 44/45%
Afloat 420,00 -5,00
Jan 420,00 -1,00
Jan/March 416,00 -1,00
May/Sep 352,00 -1,00
Dutch Hipro 49% profat
Jan 445,00 -4,00
Feb 445,00 -1,00
March 436,00 -3,00
Apr 418,00 -2,00
May/Jul 377,00 -1,00
May/Oct 377,00 -1,00
Argentine Hipro 49% profat
Afloat 438,00 +1,00
Dec 437,00 unch
Jan 436,00 -1,00
Feb 433,00 +3,00
March 422,00 +4,00
May/Sep 368,00 unch
EU Rapemeal Prices
Guide prices basis FOB Lower Rhine in euros/tonne:
Feb 153,00 +4,00
Mch/Apr 146,00 +4,00
May/1st h Jly 130,00 +4,00
Aug/Oct 10 124,00 +4,00
Nov/Jan 11 132,00 +5,00
Nov/Apr 11 134,00 +6,00
Twelve Months Ago Today
The Paris March milling wheat future finishes up EUR8.25 at EUR151.50/tonne, and London May feed wheat also closed up strongly +GBP3.30 at GBP115.05/tonne on fund buying.
In the US March CBOT corn stood at $4.27 1/2, January soybeans at $10.14 1/4 and March CBOT wheat was at $6.43 1/2. Interesting to note that there isn't too much difference between today's prices and those of twelve months ago on corn and beans, but a significant change in the price of wheat.
Crude oil was USD49/barrel as the situation in Gaza worsens and the Russian gas dispute with Ukraine spreads to other nearby countries.
The euro is under renewed pressure, just a day after the single currency's biggest ever one-day fall against sterling, standing at 1.09 against the pound. Sterling was worth 1.47 against the dollar.
The Financial Services Authority (FSA) announces it is to lift the ban on short selling of financial shares in the UK.
Soybeans and corn in Brazil and Argentina are hurting from hot & dry weather. Even so Informa still peg Brazilian soybean production for 2009 at 59 MMT, and Argentine production at 51.7 MMT. Only 20 MMT out on the latter there!
Tuesday Morning News Snippets
Asda say that they are cutting the prices by an average 13% on one in five products across their range for a "minimum of six to 12 weeks". It will fund the cuts via "sales volumes, cost reductions and better terms with suppliers" it says. I don't like the sound of that last bit.
A GASC delegation will visit France on Jan. 11-15 to discuss the new Egyptian import regulations on wheat. The French will be hoping to get them to revise their new minimum 60,000 MT one port of loading rules, by attempting to convince them that two loading ports and/or smaller vessel sizes could save them money. They may also point out "what are you going to do if/when Russia runs out/has quality issues/becomes ice-locked?" Good luck with that one. If all else fails there's always the suitcase full of Levi 501's and a large brown envelope option.
It's snowed heavily again overnight here in North Yorkshire. Looking at the weather forecast on TV last night I can only imagine what conditions must be like this morning on the trans-Pennine M62. Thank God I work from home, although today I also have the kids for company as the schools are shut. The snow gremlins don't seem to have affected my internet connection yet thankfully, although emails don't seem to be getting through for some reason. Bugger.
The USDA release their latest S&D numbers on 12 Jan. They are expected to drop US corn production with an estimated 500 million bushels still out in the fields. They will also issue a revised US wheat production estimate for 2010. The IGC release their initial estimate for global wheat output on 21 Jan with a USDA estimate not expected until 11 May.
Morocco is looking for 150,000 MT of soft wheat, 100,000 MT of barley and 4,500 MT of durum from the EU. It is also in the market for 200,000 MT of soft wheat and 150,000 MT of hard durum wheat from the US.
CBOT Closing Comments
Soybeans
January soybean futures closed at USD10.49 ½, up 9 ¾ cents, January soymeal futures are at USD316.00, up USD2.10, January soyoil futures at 40.90 cents, up 55 points. A weaker dollar, stronger crude and sharply higher gold all helped push soy futures higher, although prices closed well off earlier highs. A harsh cold snap gripping the Midwest and US Plains also helped, as too did conjecture that fund money will soon be flowing back into the markets in 2010. We haven't seen it yet.
Corn
March corn futures closed at USD4.18 ½, up 4 cents, and May corn futures at USD4.28 ¾, up 4 ½ cents. Corn was also sharply higher in early trade but sold off mid-session, but still managed to hold onto some gains. Around 500 million bushels of corn remains still stuck in the fields, concentrated heavily in North and South Dakota, Minnesota, Nebraska and Wisconsin, according to Martell Crop Projections. Sub zero temperatures and up to a foot of snow are unlikely to have seen much progress made over the festive period.
Wheat
March CBOT wheat futures finished at USD5.57 ¾, up 16 ¼ cents, March KCBT wheat futures at USD5.50 ¾, up 14 ½ cents, March MGEX wheat futures at USD5.61, up 16 cents. A weak dollar and firm crude and gold also helped wheat today. Unlike corn and beans, wheat closed much closer to session highs, perhaps because it is far more heavily oversold than the other two. The severe cold spell across the leading beef cattle states, where ranches and feed lots are most heavily concentrated, may lead to a pick-up in feed consumption, says Martell Crop Projections.
EU Wheat Closing Comments
EU wheat futures started 2010 in positive mood with January London wheat closing GBP1.30 higher at GBP107.80/tonne, and Paris January milling wheat ending EUR0.50 higher at EUR131.75/tonne.
Laggard seems to be the new buzzword in many of the newswires at the moment, and that certainly applies to wheat. What goes down must go up seems to be the popular theory doing the rounds.
And if the laggard needs any help going up then the funds will happily oblige. They've got a pot full of investment money burning a hole in their pockets, and have decided en-masse to buy the worst performing commodities of 2009. At least that's the theory.
Are they really that stupid? Only time will tell, they haven't been too much in evidence today that's for sure.
Certainly a severe cold snap across huge areas of the northern hemisphere may be causing some damage to winter wheat. It may also help provide a little boost in spot demand. Maybe that is what got the market moving into positive territory today, there's been no sign of "smart money" so far in 2010.
Russia keep winning the vast majority of any export tenders going, they also seem to have already fully allocated their intervention kitty.
The USDA peg the world stocks to usage ratio at 29.5%, its highest since 2001/02, and equivalent to more than 3 1/2 months supply. In the US the stocks to usage ratio is now its highest in at least the last twenty years.
It's hard to be overtly bullish, even with the funds.
An Interesting Question For The Statisticians Out There
Seeing as a lot of the talk in the market at the moment is of the imminent arrival of fund money in the grain markets to save the day....
If you toss a perfectly normal, perfectly balanced coin 99 times and it lands on heads all 99 times, what are the odds on it landing heads again on toss #100?
a) 99/1 against, the law of averages says that over the course of time it will land heads and tails an equal number of times. Therefore the chances of it landing heads again are HUGE, tails must be the hot favourite to help redress the balance. How can you not see that?
b) 1/99, odds on, if it's landed heads the last 99 times then it's heavily odds on that it's going to do it again surely? Do you fancy a game of poker, you idiot?
c) Evens, forget what's happened in the past, it's a perfectly evenly balanced coin, the odds each time it's tossed are even money. Who do you think you are, Rainman?
eCBOT Close, Early Call
The overnight grains closed sharply higher with beans up around 13-14 cents, wheat 14-15 cents higher and corn up in the region of 8-9 cents.
Crude oil is above USD80/barrel and the dollar is starting 2010 where it left off in 2009 - in weak mode.
The US is experiencing a sharp cold snap with temperatures last week at 8-15 F below average in Texas, Kansas, Oklahoma, Nebraska and Colorado, says Gail Martell of Martell Crop Projections. These are the leading beef cattle states where ranches and feed lots are most heavily concentrated, leading to a pick-up in feed consumption, says Gail.
Elsewhere snow has expanded and deepened in North-Central United States during the past 3 weeks, making corn harvesting difficult if not impossible, adds Gail. Perhaps 500 million bushels of corn is stuck in the field, concentrated heavily in North and South Dakota, Minnesota, Nebraska and Wisconsin, she adds.
Heavy snow across large swathes of Europe and Asia might also provide futures with a little boost.
The funds will be in to buy commodities early in January is a theory that has been widely touted for some time now. The commodities that will be most in demand are those that have fared less well in 2009, or so the theory goes.
Step forward wheat. Front month CBOT wheat was down 11% during 2009 and the Dec10 future was almost 15% lower. It seems a tad bizarre to me that the funds should think to themselves "I'd like to put my money on that lame horse that trails the field by 15 lengths please" but there you go.
Some reports suggest that a combined 50-100,000 of soybeans, wheat and corn contracts could attract fund buying interest in the next week or two.
Early calls for this afternoon's CBOT session: corn called 7 to 9 higher; soybeans called 12 to 15 higher; wheat called 12 to 15 higher.
EU Soymeal/Pellets Prices
Guide prices basis CIF Rotterdam/Amsterdam unless otherwise stated in USD/tonne:
Brazil pellets 48%
Afloat 432,00
Jan 432,00
Jan/March 419,00
May/Sep 360,00
Argentine pellets 44/45%
Afloat 425,00
Jan/March 417.00
May/Sep 353.00
Dutch Hipro 49% profat
Jan 449,00 FOB
Feb 446,00 FOB
March 439,00 FOB
Apr 420,00 FOB
May/Jul 378,00 FOB
May/Oct 378,00 FOB
Argentine Hipro 49% profat
Afloat 437,00
Dec 437,00
Jan 437,00
Feb 430,00
March 418,00
May/Sep 368,00
Twelve Months Ago Today
Crude oil was USD47/barrel as Israeli troops entered the Gaza Strip. The pound was around 1.45 against the dollar and 1.06 against the euro. Arla and First Milk announced the first of many 2009 producer price cuts. Spot CBOT corn was at USD4.11 1/4; Spot soybeans were worth USD9.83 3/4; Spot CBOT wheat was USD6.16 3/4. Paris March milling wheat was at EUR143.00/tonne, whilst London May feed wheat was worth GBP111.75/tonne.
EU Rapemeal Prices
Basis FOB Lower Rhine in euros/tonne:
Jan 156,00
Feb 149,00
Mch/Apr 142,00
May/1st h Jly 126,00
Aug/Oct 10 120,00
Nov/Jan 11 127,00
Nov/Apr 11 128,00
Entire Northen Hemisphere Gripped By Cold
It's brass monkey weather here in North Yorkshire today, but it seems like the whole of the northern hemisphere is being gripped by the same. Media reports suggest that at least 33 and possibly more than 100 people died in India over the weekend, many freezing to death in Uttar Pradesh.
Further east, Beijing received its heaviest daily snowfall in nearly six decades over the weekend, the state Xinhua news agency reports. In the South Korean capital of Seoul, around 26 centimetres (10 inches) of snow fell today, the biggest snowfall since record-keeping began in 1937.
In the US, the mercury is well below zero even as far south as Florida, where temperatures are seen falling as low as 20 F overnight. The Central Plains are set to see their coldest air since February '96 by mid-week. That may provide a threat to winter wheat where snow cover is lacking.
Here in the UK, a bitterly cold week lies ahead, according to Metcheck.com, with temperatures barely rising above freezing for most areas this week, and falling well below at night with some severe frosts expected.
And it doesn't seem like things are a whole lot warmer across much of the rest of Europe either:
Crude Oil Breaks Through USD80/Barrel
Crude oil has broken through USD80/barrel in early trade this morning on talk that Russia has, or is about to, cut supplies to Belarus. Apparently an agreement between the two parties for Russia to supply Belarus with crude oil at heavily discounted prices expired on New Year's Eve.
You'd be forgiven for getting deja vu at this point, as the pipelines through Belarus also supply more lucrative markets in the West. Sound familiar?
Hopes that a gradual US economic recovery in 2010 will boost demand for black gold, is also adding a bit of positive influence this morning, as too is the carryover impetus from last year. Front month crude posted a 78% gain year-on-year in 2009, its best performance since 1999.
However, Bloomberg reported recently that almost 6% of the world's supertanker fleet is sitting on the high seas with crude oil onboard with nowhere in particular to go. However, the huge price differentials that we saw in early in 2009 between spot and forward months that made this option attractive, appear to have been eroded significantly recently.
The spread between the first and sixth Brent crude-oil contract on 31/12/08 was 23%, today it is 3%. I can't see that a 3% return over six months will cover your ship rental, insurance and finance.
Storing oil at sea clearly isn't the lucrative money-making proposition it was at the height of the financial crisis. If I had crude sitting on a tanker somewhere in the North Sea right now, I'd be looking to take advantage of a nearby price spike and offload.
That's the fundamentals of the matter, but then again when did they have anything to do with things?
Price League Table 2009
Doing a bit of research over the festive period, for one of my in depth market reports that I do for someone, here's a price movement league table for 2009 that might interest you:
Market Month 2009 Close Change On Year
----------------------------------------------------------------
Crude Oil Feb10 79.36 +49.7%
STG/USD Spot 1.6184 +10.9%
Paris Rapeseed Feb10 287.50 +9.4%
STG/EUR Spot 1.1206 +7.4%
CBOT Soybeans Jan10 1039.75 +5.5%
EUR/USD Spot 1.4287 +2.3%
Paris Corn Jan10 135.00 +1.5%
Paris Wheat Jan10 131.25 -7.7%
CBOT Wheat Mar10 541.50 -9.6%
London Wheat Jan10 106.50 -11.3%
CBOT Corn Mar10 414.50 -11.4%
Footnote: apart from currencies, these changes are comparing the price of the individual futures months mentioned. If you were to compare front month crude oil on 31/12/08 with front month on 31/12/09 the change is even more impressive at +78%!
I guess it's no great surprise to see London wheat languishing down in the relegation zone, given the strength of sterling (or is it the acute weakness of the dollar/euro) up the top.
CBOT corn being the worst peformer of the lot is maybe a little surprising though.
Incidentally, if we were to run the same league table for forward months (ie Nov/Dec10 as appropriate) the worst performer over the 12 months is....CBOT wheat, where the Dec future has declined 14.4% over the course of 2009.
CBOT Closing Comments
Soybeans
January soybean futures closed at USD10.39 ¾, up 3 ½ cents, January soymeal futures at USD313.90, down 2.30 points, January soy oil futures at 40.35 cents, up 0.86 points. Beans closed well off the daily highs on end of year profit-taking. Export sales were respectable at 799,000 MT for 2009/10 delivery and 276,000 MT for 2010/11. China took 430,500 MT of soybeans for 2009/10 delivery and 101,000 MT for 2010/11 delivery.
Corn
March corn futures closed at USD4.14 ½, up ¾ cent, with May at USD4.24 ¼, up ¾ cent. Weekly export sales were 772,500 MT and shipments were 863,600 MT. Analysts estimate that 50-100 million bushels of corn might be lost in unharvested acres across the winter. The USDA will issue a revised production estimate on January 12th.
Wheat
March CBOT wheat futures closed at USD5.41 ½, down 3 ¼ cents, March KCBT wheat futures at USD5.36 ¼, down 4 ¼ cents, and March MGEX wheat futures at USD5.45, down 6 ¼ cents. Export sales were 370,266 MT for 2009/10 delivery and shipments were 294,063 MT. Egypt bought 240,000 MT of Russian wheat for March shipment at levels significantly lower than US offers.
EU Wheat Closing Comments
EU wheat futures closed the last trading session of the year with March Paris milling wheat futures down EUR0.50 at EUR133.25/tonne and London May feed wheat futures closing up GBP0.35, at GBP112.25/tonne.
As might be expected it was a fairly quiet session with little more than 1,000 lots traded in Paris all day. London saw a bit more activity than other days this week, with 293 lots traded in what can only be attributed to year-end book squaring.
Egypt was back in the market again, booking four 60,000 MT cargoes of Russian wheat for March shipment, two priced at USD191.88/tonne and two at USD191.47/tonne.
These bids comfortably beat the cheapest one load port French wheat offered, which was at USD194.39/tonne.
Interestingly, French wheat basis a two load port option was offered by Soufflet at a USD6.20 discount and by Invivo at a USD3.40 discount to their one load port prices. For the time being at least, Egypt are sticking by their newly introduced rule of a minimum 60,000 MT strictly one port of loading.
For the record, November London wheat closed the day at GBP114.20/tonne, GBP7.30 down on the year. The high for the year was GBP135.00/tonne (set in January), and the low GBP105.20/tonne (September), giving a GBP29.80/tonne trading range.
Paris November wheat ended at EUR142.50/tonne, EUR8.00 lower than when the contract was introduced in March, having had a trading range of EUR36.50/tonne across the remainder of 2009. The years high was EUR170/tonne set in June, and the years low EUR133.50 set in September.
