Queensland about to get drenched
(The WeatherCo) -- Eastern Queensland is in for a drenching more typical of Summer than mid-Winter this week.
Anywhere east of Normanton to Goondiwindi is likely to see 10 mm of rain by Thursday. This will grade to more than 30 mm close to the coastal ranges, with heavy falls of more than 90 mm possible about the Central Coast.
Cloud is already building over eastern Queensland. On Tuesday, patchy rain will develop over most of the coast, and over the inland north of about Mackay. By Wednesday, rain is likely over the entire southeastern quarter.
This is good news for the South East, Burnett and Central Coasts, as well as the Darling Downs, which have so far seen a fairly dry July.
The forecast wet weather is the result of a low pressure trough deepening off the coast, forcing strong, moisture-laden easterly winds over the state. This is quite unusual for Winter, when dry westerlies normally dominate
EU wheat moves lower on harvest pressure
The wheat harvest has started in France. "Initial yields are average (in France) and as a start that is not bad," one European dealer said, noting much of the early harvest was in areas which usually had below average yields.
London-based November feed wheat is £1 lower this morning at £137, and Paris-based November milling wheat EUR1.25 easier at EUR188.25/tonne.
US: Hog Farmers Should Return to Profitability in 2009 – if They can Survive
Under-pressure pork producers in the US should return to profitability in 2009 - as long as they can stay in business until then, analysts Rabobank have said.
Last week, Fiona Boal, Executive Director of Rabobank's Food & Agribusiness Research and Advisory (FAR) department, said the industry was currently in the midst of a ‘perfect storm’ as it battled to cope with high feed prices, an excess of hog supplies and concerns over whether domestic demand can hold up.
In many cases, hog farmers in the US have been in the red for the last nine months. But Ms Boal has added: "While the industry is undoubtedly being forced to adjust to a new, unique, and difficult, operating environment, a 1998-like collapse does not appear likely and those participants with the financial resources and management expertise to survive the next 12 to 18 months should enjoy renewed levels of profitability by the end of 2009."
EU Rapeseed Futures Dive, So Why Isn't Meal Following Suit? Is It Really All Down To Oil?
With the rapeseed harvest well underway in France EU rapeseed futures prices have plummeted recently. The Nov future price has fallen from a recent high of EUR478 set on 16th June to EUR422 this morning.
Indeed, the Nov future closed EUR7.25 lower Friday and is currently down a further EUR10.25 today. That's EUR17.50 in a couple of days. It's somewhat surprising therefore that rapemeal prices today are only £1-2 lower than Friday morning.
Since June 16th seed prices have fallen EUR56/tonne, which is the equivalent of £44.50, yet UK crusher meal prices today are only around £10 lower during the same period.
Ah, its all down to the price of rapeoil the crushers would say.
Fair enough the price of rapeseed oil is substantially lower than 16th June. So lets do the calculations. I've used Liverpool prices just because the oil price there is more readily available to me. For what it's worth Liverpool rapemeal is actually down GBP 2 more than Erith since June 16th:
16th June: Nov rapeseed future EUR478, Nov rapeoil GBP858, Nov rapemeal GBP181.
Rapeseed at EUR478 = GBP382.50 (using a ballpark exchange rate of 0.80 euros/pound).
One tonne of rapeseed yields approx 40% oil and 55% meal and 5% "waste".
So on 16th June with Nov oil at GBP858 and meal at GBP181 we have a "theoretical" crush margin of GBP60.25 over the futures price (858x40/100 plus 181x55/100 minus 382.50).
At today's rates the sums are rapeseed=GBP337.50 (422x0.80). So the same margin over futures price has risen by more than GBP11/tonne (789x40/100 plus 170x55/100 minus 337.50) = GBP71.60.
If today's margin over futures price was still GBP60.25 then the price of November Liverpool rapemeal would be GBP150.45, nearly GBP20 LOWER than it actually is!
Yes I do fully realise that the physical price of seed delivered into Liverpool isn't the same as the Paris futures price, so please don't ring/email me to point that one out! What I am saying is that based on the decline in seed futures over the last month, and allowing for the decline in oil price, meal should be substantially lower than in fact it is. Discuss.
NZ Dairy Feed Production Up 80% On 2007
Feed manufacturers in New Zealand have reported a 287% increase in production of dairy feed in the March quarter compared to the same period in 2007. In 2007 the production of dairy feed also increased almost 80% on the previous year.
"New Zealand dairy producers are increasingly looking to manufactured feeds to help meet the nutrient requirements of their high producing animals" says Michael Brooks, Executive Director of the New Zealand Feed Manufacturers Association (NZFMA). "No doubt, the drought in some areas like the Waikato, has meant that dairy producers purchased more compound feed than they would have in a normal rainfall year" he added.
"But we are also seeing a continuation of the trend which has been observed over the past 18 months, with dairy farmers realising the benefits available from using manufactured feed as a to supplement our traditional grass-fed dairy farming system.
"Manufactured feeds have a number of benefits over other feedstuffs and in many cases can fulfil functions which other feeds simply cannot" said Mr Brooks.
US Midwest Weather Latest
(Freese Notis) -- Weekend rainfall and forecasts for continued favorable weather coming up kept pressure on corn and soybean prices overnight.
Significant about weekend weather was the development of rainfall in a pocket of the northwestern Corn Belt that had missed that rain through early Friday morning. Sioux Falls picked up close to two inches of rain through Sunday morning with a couple of rain events, with Worthington, MN picking up over two inches. That "dry pocket" then got filled in even more late yesterday and overnight as significant rains fell right along the Nebraska/South Dakota border.
This has been quite a stretch of wet weather for a lot of places in the northwestern Corn Belt; seven stations that I track in that area have had at least two inches of rain since last Wednesday, with another four stations recording over three inches. Eastern Iowa and northwestern Illinois were seeing strong thunderstorms move through early on this Monday morning (storms that left behind a lot of wind damage in the Interstate 80 corridor of Iowa; there was an unofficial report of 100 mile per hour winds to the northwest of Des Moines near the town of Dawson).
Rains will be most prevalent in the south-central Corn Belt during the next couple of days, certainly beneficial there given that very little rain has fallen in that area over the past week and it has been hot (99 at St. Louis yesterday, and something similar may be seen today).
A northwest-to-southeast moving rain system is forecast to impact the Midwest later this week as well.
Temperatures for this work-week, especially after today, look cool for eastern parts of the region with highs no better than the 80s or even 70s. Heat that was expected to encroach on the far western/northwestern Corn Belt for late this week looks very muted, and the outlook for next week does not look to feature big heat either.
Overall it is a forecast for the Corn Belt that looks favorable for the rest of this month, so it looks like we will be able to pollinate the bulk of the 2008 corn crop with favorable soil moisture and without extreme heat. That's a notable accomplishment, given how long the pollination season is this year (given the extended period of planting seen back in the spring).
Chinese wheat stocks 56 percent up on year ago
China's state reserves authorities purchased 26.32 million tons of wheat from six provinces between May 20 and July 5 for government wheat stockpiles, according to statistics released by the Henan Grain Administration on July 15.
Active selling by farmers on the back of the fifth straight year of bumper wheat harvests meant that government stockpiles on July 5 stood 56 percent higher than they did on the same day a year ago.
"Farmers are anxious to get the cash to buy seeds and agricultural materials for autumn sowing, which has helped drive wheat sales," said grain expert Wang Xinfeng from Zhengzhou, capital city of major wheat producing region Henan Province.
Feds can't fix Fannie and Freddie
The mortgage giants aren't short of cash. They're stuck with bad loans that aren't going away. Also: Short sellers didn't bring down the lenders -- the lenders did it themselves.
As the Treasury prepares to ride to the rescue of Fannie and Freddie, it's worth noting one little detail: That so-called plan is in reality just a concept.
Fannie Mae and Freddie Mac do not have a liquidity problem that can be solved by the Federal Reserve or even by an injection of Treasury capital. It's a solvency issue. Short-term cash isn't the real problem. Over time, the mortgage giants' liabilities are quite likely to swamp their assets. Thus their assets are contingent, but their debts are forever.
Further, if the Treasury is the only entity left willing to buy shares to shore up Fannie and Freddie, what will happen to other troubled financial institutions? Between now and the year's end, more mortgages will percolate through those institutions' balance sheets, creating losses that will force them to seek capital as well.
As for access to the Fed's discount window, even if Fannie and Freddie use it, that won't change much. Lehman Bros. has had access to the discount window, and that has done Lehman little good. Nor has it healed Washington Mutual, Bank of America, Citigroup, etc.
The rapidly growing disaster the country faces, in addition to the financial one, is a recession that's worsening -- a reality depicted in widespread images of depositors lined up at IndyMac bank. (A friend of mine has also noted lines at multiple locations of Washington Mutual.) I suspect that as this process moves forward, many regional banks will experience modest runs, because fear becomes contagious at some point. And fear eventually leads to panic.
