Crude And Equities Rise On Obama Magic
Crude oil, equities, and just about everything else was higher Monday following president-elect Barack Obama's NBC television interview Sunday reiterated his commitment to the biggest investments in the US’s infrastructure since President Dwight D. Eisenhower created the interstate highway system in the 1950s.
Crude oil for January delivery rose $2.90, or 7.1 percent, to settle at $43.71 a barrel on the New York Mercantile Exchange.
Libya’s top oil official, Shokri Ghanem, hinted that OPEC could make a "substantial" cut to output at it's Dec. 17 meeting in Algeria.
Chakib Khelil, OPEC president, said on Dec. 6 that the group may make a “severe” reduction in production to stem the 70 percent decline in prices from July’s record.
As we all know, what OPEC says & what OPEC does are frequently two very different things. However, with crude languishing around $40/barrel, maybe this time they will realise that drastic times call for drastic measures.
EU Wheat Sharply Higher For Once
EU wheat futures closed sharply higher for once, buoyed by firmer stock markets, crude oil and overnight CBOT futures.
Paris March milling wheat closed up EUR2.75, or 2.2%, at EUR126.25/tonne. London May feed wheat traded up GBP2, or 2.1%, at GBP95.50/tonne.
Prices regained some of last week's losses with farmer selling exceptionally light at current levels.
Reports coming out of Australia continue to suggest that there has been some serious quality losses due to persistent rains.
Australian durum wheat has risen by $90/tonne during the last week, according to some reports. Farmers who were looking at prices only three or four weeks ago of around A$380 (per tonne) delivered Newcastle, have seen prices increase to A$520 delivered Newcastle, according to commodityonline.com.
With output from Argentina also seen around 6mmt lower than 2007, world wheat supply and demand is looking at tight ending stocks for 2009, with little room for a crop disaster.
The potential for significantly lower yield potential still exists, with fertiliser prices remaining stubbornly high, there is every likelihood that many farmers the world over will cut back on inputs.
Adverse weather conditions, coupled with a lack of inputs, has the potential to slash yields, and final production numbers, in 2009. That would make the global balance sheet look perilously tight come next season's harvest.
CBOT Closing Comments
Corn
Corn futures bounced higher after suffering severe losses last week, gaining 20 to 22 cents Monday. Corn along with most grains opened sharply higher and maintained those gains throughout the day but the question is whether or not those gains can be withheld and develops a bottom or is this just a breather for the bears. Crude traded $3 higher adding support to grains and additional help came from a weaker US Dollar. Deliveries issued against Dec were 1,044 contracts. USDA corn inspections for export were 21.34 MB well below last week's of 37.269 MB. Dec +20 at 3.14.
Soybeans
Soybeans continued higher morning prices and closed above $8 per bushel. Higher crude oil helped boost soybean futures Monday. Fine exports especially to China underpin soybeans as ending stocks are seen around 205 MB, lower inventories and steady demand could help boost futures prices but again fundamentals have not been trading that last month or so with heavy position liquidation pressures prices lower before year end. The US Dollar should hopefully be making commodities cheap enough to attract some global buyers. USDA inspected 40.63 MB vs. 39.88 last week and was on the high side of trade estimates. Jan +37 at 8.20; Dec Meal +8.80 at 259.30; Dec BO +1.23 at 29.48.
Wheat
Wheat futures followed CBOT grains higher in trade Monday with spring wheat posting the highest day gain for the Dec contract of the different exchanges. Wheat like corn had disappointing weekly grain export inspections but was practically ignored in Monday's trade as traders focused on oversold conditions and outside market influences. All Dec wheat contracts are set to expire Friday and deliveries issued for CHI December were seen at 1,991, Dec KC 409, and Dec MLPS 0 contracts as basis is reported being positive there. USDA inspected a mere 12.57 MB vs. 20.61 MB last week and lags last year's pace by 108.2 MB. US winter wheat crop remains in good condition, being benefited with ample moisture and the absence of severe weather. Dec CHI +15 at 4.73; Dec KC +12 at 5.01; Mar MLPS +17 at 5.68.
J K Rowling Must Be Sh*tting Herself
"The World Market for Wheat Groats, Meal, and Pellets: A 2009 Global Trade Perspective"
That'll be flying off the shelves at Amazon this Christmas.
Hurry whilst stocks last: I'm sad, I'll take two
PS: The butler did it & she dies in the end.
Freight Rates Rewrite Shipping Rule Book
Shipping costs have plunged to 22-year lows, skewing global grain trading patterns to the point where U.S. hog farmers are importing wheat from Britain and Japan has eschewed U.S. corn supplies to buy from the distant Ukraine.
In some countries, it is now cheaper to ship grain thousands of miles across the ocean rather than move supplies hundreds of miles by barge or railroad cars.
"Ocean shipping costs are so low that it would be cheaper for south Indian buyers to import Russian wheat than move wheat from north India by train," one European trader said.
Collapsing ocean shipping costs have leveled the playing field for wheat exporters -- who now compete solely on the price of the grain.
Russia and Ukraine have been able to make sales far beyond their traditional markets in Europe and the Middle East, reaching out to Asia, European traders said.
In a recent and closely followed international tender for wheat shipped to Egypt, U.S. wheat freight was $11 per tonne, an insignificant difference from Russian freight at $12. French and German wheat were also offered at $11-$12 per tonne to Egypt.
"Ship owners are giving away bulk carriers at operating costs just to generate cash flow and to pay crews' wages," another European trader said. "This will expand the selling range of U.S., Argentine and Australian wheat in the Middle East market if they can compete against the Russians on (free-on-board) prices."
And while the export season in the Black Sea region is quickly closing, dirt cheap freight rates will allow countries such as Argentina and Australia to be more competitive going forward.
"It is happening all because of the freight rates and I think it will go on for a longer period as the freight market doesn't show any signs of improving," said Vijay Iyengar, managing director of the Singapore-based grains trader Agrocorp International Pte Ltd.
Argentine wheat could makes sales to Morocco and Algeria, which typically buy wheat from nearby France.
"Argentine wheat -- whose quality is slightly better than French -- could very well make it on our traditional markets," said a European trader. "We could see switches on existing deals from European wheat to Argentine wheat.
100,000 Pigs Face The Chop In Contaminated Feed Incident
Irish authorities say oil that was mixed into animal feed could force farmers to destroy 100,000 pigs, according to reports.
On Saturday, the Dublin government ordered a recall of all pork products linked to pigs slaughtered in Ireland, after laboratory tests found the presence of dioxins in animal feed and pork fat samples.
According to The Associated Press, food safety officials have now traced the problem to one small animal-food maker that supplied oil-tainted feed to 10 pig farms in the Republic of Ireland and nine in Northern Ireland.
Currently, officials and police are investigating the possible source of the contaminated feed, a plant run by Millstream Power Recycling Limited near Fenagh, County Carlow in southwest Ireland.
A total 20-25 countries may have received contaminated shipments, including France, the Netherlands and Belgium, according to Irish officials. The final bill for the total recall of all pork and pork-related products such as pizzas and pies is estimated to be in the region of 100 million euros.
The Irish Association of Pigmeat Processors (IAPP), said "We're facing a major financial crisis, a major liquidity problem."
eCBOT Close/Early Call
eCBOT grain futures closed higher, reversing Friday's losses as Asian and European stock markets rebounded.
Soybeans closed around 22c firmer, with wheat up 16-17c and corn 12c higher.
Ideas that Chinese demand will support futures as the government there steps in to buy grains on the domestic market to help boost rural incomes, lent to the firmer tone.
With the Chinese government effectively supporting prices, crushers there may switch their attention to buying US soybeans, wheat and corn, analysts said.
The USDA confirmed Friday a sale of 110,000mt of US soybeans to China.
Crude oil is a little steadier, around $2 firmer at $42.75/barrel on the Obama factor, after the US president-elect pledged the biggest US public works program in 50 years to revive the economy at the weekend.
Early calls for this afternoon's CBOT session: Corn futures are expected to open 8 to 13 higher; soybeans 20 to 25 higher; wheat 12 to 18 higher.
The Cheeky Chinky B@stards #4
Chinese product safety authorities have seized several batches of contaminated European food imports, and are also recalling all Irish pork products following a tainting scare there, the government said on Monday.
Beijing says this is a global issue in which China is a victim too of poor quality imports.
The goods affected included Italian brandy, Spanish dairy products, Belgian chocolate and seasoning from Britain, all of which had been tainted with various chemicals, it said.
Well, we've heard it all now. The world's largest consumer of melamine is a victim too. Bless their little melamine-tainted cotton socks.
Ruvverry.
