European Wheat Planting: 50,000 Monkeys Can't Be Wrong
Despite world prices having halved, EU farmers will still plant wheat like crazed demons for the 2009 harvest according to a Reuters report, predicting just a "marginal decline in area."
The United Nations' Food and Agriculture Organisation said in its Food Outlook issued on Thursday that area planted for wheat in the EU would fall by just 2 percent, despite falling prices and high costs for inputs such as fertilisers.
German wheat plantings rose by an unusually high seven percent last winter and one analyst said more farmers could actually turn to wheat as safe haven.
"Wheat has the largest range of sales options from milling, animal feed to bioethanol," he said.
In the UK, Susan Twining of crop consultants ADAS, said wheat area in Britain was likely to be only about two to three percent lower. This would of course still leave wheat plantings at a comparatively high level after area in Britain surged by 13 percent to 2.075 million hectares last year.
The UkrAgroConsult agriculture consultancy said last week that winter wheat area in Ukraine decreased to 6.067 million hectares, four percent lower than forecast.
Meanwhile, most observers expected the French soft wheat area to stay close to the record 5 million hectares of 2007/08.
The International Grains Council said in a monthly report last week that world wheat plantings for the 2009 harvest would drop by just 1.8 percent to about 221 million hectares.
What's that expression, 50,000 monkeys can't be wrong?
US: GM And Ford Hemorrhaging Money
Reports released Friday indicate that US motor giants General Motors and Ford are hemorrhaging money at an alarming rate, as they become two of the companies hardest hit as the world's largest economy goes down the toilet.
GM reported a larger-than-expected loss of $4.2 billion in the third quarter on Friday. The company's revenue in the third quarter fell 13 percent, to $37.9 billion from $43.7 billion a year ago, because of weak demand in its core North American and European markets, it said.
The company also reported that it burned through $6.9 billion in cash during the quarter and ended the period with just $16.2 billion in cash reserves. That leaves the company just enough to see it through to the new year.
The motor giant admitted it "will fall significantly short" of the cash needed to run its business in the first half of 2009 unless economic conditions improve and the company gets aid from the federal government.
Earlier Friday, Ford Motors said it burned through $7.7 billion in cash in the third quarter, leaving it with $18.9 billion at the end of September. It reported a loss of $2.9 billion in the third quarter.
The CEO's of Ford, GM and Chrysler met with government representatives last week to discuss an emergency loan package, believed to be as much as $25 billion, to help the companies get through the worst vehicle market in 15 years and avoid going into bankruptcy protection.
USDA Report - What Is Expected
The November Crop Production Report comes out Monday and it will provide the final U.S. corn and soybean crop updates until January 2009. Traders have set their expectations in place for the data which will be out Monday at 13.30GMT before US markets open for the day.
CORN
On average, analysts expect the USDA to increase the corn yield slightly to 154.3 bushels an acre, from 153.9 bushels last month, pushing up 2008-09 production slightly to 12.066 billion from 12.033 billion bushels. New crop carryout is expected at 1.160 billion bushels, from 1.088 billion.
SOYBEANS
Average soybean production estimates are 2.916 billion bushels, lower the USDA's current forecast of 2.938 billion bushels. The average soybean yield estimate is 39.2 bushels per acre, below the USDA's 39.5 estimated in October. Analysts, on average, peg new-crop carryout at 189 million bushels, compared to the USDA's current estimate of 205 million bushels.
WHEAT
The average of analysts' estimates for U.S. wheat carryout in 2008-2009 is 594 million bushels, down from the USDA's October estimate of 601 million.
Argentina To Plant Record Soy Acres At Expense Of Wheat And Corn
Argentina's Agriculture Secretariat said Friday that the nation's farmers would plant a record 18.1m ha of soybeans for the 2008-09 crop. That figure is up substantially from the previous record acreage of 16.6m planted last season.
The figure represents an increase of 100% in area given over to Argentine soybeans in the last ten years.
Planting is currently 23% complete, the Secretariat added.
Soybeans are more popular than ever this season, due to a combination of lower input requirements relative to other crops, and also farmer mistrust of the government. After a difficult year, with long-running disputes between Argentine farmers and the government, the spectre of export bans on corn and wheat are always a possibility from the cash-strapped government. The threat of an export ban on soybeans is much lower.
The corn crop is seen at 67% planted, with 3.4m ha seen going into corn production this year. Output for the season ahead is seen at 18mmt, some 2.5mmt lower than 2007/08.
The wheat harvest in Argentina has just begun at around 5% complete. Final output is only expected to be in the region of 9.5 to 11mmt, the Secretariat says, substantially down on last seasons 16mmt due to lower plantings and drought.
EU Wheat Slips Lower In Quiet Trade
EU wheat futures slipped to close slightly lower Friday on another day of quiet, low volume trade.
Paris January milling wheat closed down EUR0.25 at EUR141.25/tonne. London November feed wheat fell GBP0.20 to GBP91.00/tonne.
Prices appear to have halted their recent steep declines and, although the general trend is still lower, prices are declining in pence rather than pounds.
In the UK, winter wheat planting is 85% complete according to the HGCA. Whether anyone from the HGCA has been up north recently is unclear. Here, plenty of land will be left fallow as it’s just too heavy and wet.
OSR planting has fared even worse, with many fields looking “awful” one North Yorkshire agronomist said this week. “We only got in 60 to 70 per cent of what we hoped to get drilled and of those crops that are in, not all will make it through the winter. The slugs, rabbits and pigeons will take their toll on what is already a small crop. If it is a hard winter, many oilseed rape fields just won’t make it,” he concludes.
Elsewhere, the Argentine wheat crop is now around 5% harvested and is expected to produce a crop of around 10-11mmt, some 5-6mmt below last season. This is partly due to lower plantings and also reduced yield due to drought.
The Australian crop is also seen lower than originally hoped for. ABARE cut it's estimate this week to 19.9mmt, citing a 'lack of spring rain'. Although that is still around 7mmt up on 2007, it's 3-4mmt less than had been anticipated earlier in the year. Output in South Australia and Victoria is now seen at levels only comparable with last season's drought-ravaged crop.
CBOT Closing Comments
Corn
Corn futures were pretty quiet during trade on Friday as expected ahead of Monday's USDA reports. Almost steady trade was credited to position squaring ahead of the crop production and USDA supply/demand report Monday. Trade is expecting less demand and a slight increase in yield but lower production due to less harvested acres. Crude oil did bounce slightly higher during trade and the dollar dipped giving that scenario price usually move higher in grains but was reluctant today. Harvest weather took a turn for the worse at the tail end of this week and should halt harvest in many regions of the CB till early next week. Dec -2 at 3.75.
Soybeans
Soybeans rallied towards the end of trade to post double digit gains in all contracts that traded Friday. Strength in crude oil and some bullish technicals boosted bean futures higher, and could receive fresh bullish news on Monday to prolong the short term rally. Deliveries were significant Thursday with 735 contracts posted against the Nov contract. Trade is looking for USDA to drop yield slightly in the Monday report but boost production due to with new found bean acres available for harvest. China was a large importer of beans last week helping bean exports stay above water. Nov +12 at 9.11; Dec Meal +8.90 at 271.70; Dec BO -27 at 33.90.
Wheat
Wheat futures were mixed at the three different exchanges Friday but CHI was marked the only red in nearby Dec month. Wheat futures have been hammered by the realization that the world is on track to harvest the largest crop on record although Australia and Argentina may not participate as heavily as once anticipated. Short covering and weakness in the dollar help support prices lightly. US wheat for export has struggled to due higher currency and cheaper foreign wheat. The US dollar is supportive to grains at midday being off .55 points at 85.75. Crude oil pushed passed the $61/barrel to have gains on the day. Dec CHI -1 at 5.21; KC +5 at 5.68; MLPS +8 at 6.42.
US Jobs Data Awful; Over 10M People Unemployed
US unemployment shot to a 14-year high of 6.5 percent in October as another 240,000 jobs were cut, stark proof the economy is almost certainly in a recession.
The figures are even gloomier than expected. Analysts had predicted a rise of 220,000 to 6.3%.
The new snapshot, released Friday by the Labor Department, showed the crucial jobs market deteriorating at an alarmingly rapid pace.
Unemployment is now at it's highest level since March 1994, surpassing the high seen after the last recession in 2001.
The report also included revisions to the August and September reports, and they don't make for pretty reading. Employers cut 127,000 positions in August, its says, compared with 73,000 previously reported. And a whopping 284,000 jobs were axed in September, compared with the 159,000 jobs first reported.
So far this year, a staggering 1.2 million US jobs have disappeared. Over half of the decrease coming in the past three months alone.
Over 10 million people are now unemployed in the US, an increase of 2.8 million over the past year.
Welcome to the hot seat Mr. President.
Dollar Declines Ahead Of Jobs Data
The dollar fell against the pound and the euro Friday on speculation a government report due out just after 2.00pm GMT will show that the US economy lost the most jobs since 2003, bolstering the case for the Federal Reserve to lower interest rates.
Speculation is mounting that the Fed will drop US interest rates by a half percent to just one half percent at its next meeting.
The dollar weakened to $1.2785 per euro from $1.2653 and $1.5805 from an intraday low of $1.5539.
Data due later today is expected to show that US payrolls fell by 200,000 last month, and the unemployment rate rose to a five-year high of 6.3 percent.
