Bad Week At The Office For The Pound
The pound capped a terrible week closing at 13 year lows on a trade-weighted index against a basket of currencies. It also set a record low against the euro since the single currencies inception in 1999.
The downwards pressure came as markets braced for further aggressive cuts in UK interest rates in the coming months.
Speaking in New York on Friday, Prime Minister Gordon Brown added weight to rate cut expectations by saying that the BoE has scope to cut interest rates in order to bolster the UK's ailing economy.
Against a basket of currencies, sterling hit a 13-year low of 80.5.
The pound closed the week at 85.5 pence against the euro, just over a penny away from the weeks all-time low of 86.62 pence.
Sterling finished Friday at $1.4746 against the dollar, not far off a 6-1/2-year low of $1.4555 hit on Thursday.
CBOT Closing Comments
Corn
Corn futures closed slightly higher on a relatively quiet day. Weather was unfavorable to allow much harvest progress but the weekend and next week appear to have a better forecast in store for producers. Exports sales for last week totaled 357,800 MT, which was a little disappointing, trade anticipated sales between 400,000 and 600,000 MT. Despite yesterday's late rally in the Dow Jones corn was unable to hold overnight gains. Crude oil was lower throughout the trading session today and weighed in on prices. Dec +3 at 3.80.
Soybeans
Soybeans closed Friday with near double digit losses. The November contract expired today at noon, 275 delivers were posted against it as of last evening. USDA released in their delayed export sales report this morning that 478,400 metric tonnes were exported, which was below trade estimates of 550,000 to 750,000 MT. NOPA released their soy crush data this morning as well; indicating that 143.4 million bushels were crushed in October, slightly above the average trade guess of 142 MB, meal exports for Oct totaled 581,175 tons, sharply higher than in Sep and soyoil stocks were steady with Sept at 1.984 billion pounds. Nov -9 at 8.78; Dec Meal +1.5 at 265.50; Dec BO -21 at 32.60.
Wheat
Wheat futures rallied to pegged double digit gains at the three various exchanges Friday. The dollar traded mostly steady and with crude oil modestly lower. Bearish fundamentals have pressed wheat for several months, but the pressure has been lessened with lately and giving life to some contracts. USDA reported export sales for the week prior or 253,300 metric tonnes, just barely inside of trade guesses (250,000 - 350,000). Weakness in crude oil and a steady dollar may limit any gains today. Some short covering has also been noted and boosting the initial rally. Winter wheat crop conditions remain ideal with ample moisture and mild temperatures. Dec CHI +16 at 5.54; KC +15 at 5.93; MLPS +11 at 6.57.
USDA Weekly Export Sales A Bit On The Low Side
The USDA weekly export sales report was out at 13.30GMT today, a day later than usual due to the Veterans Day holiday.
Here's what they had to say (vs trade expectations):
Wheat 248,300 (250-350,000) metric tons were down 32 percent from the previous week and 40 percent from the prior 4-week average. In addition, net sales of 5,000 MT for delivery in 2009/10 were for Mexico.
Corn 355,500 (400-600,000) metric tonnes were down 25 percent from the previous week and 46 percent from the prior 4-week average. In addition, net sales of 2,300 MT for delivery in 2009/10 were for Canada.
Soybeans 478,300 (550-750,000) metric tonnes were down 47 percent from the previous week and 53 percent from the prior 4-week average.
Soymeal 124,400 (75-125,000) metric tonnes were up 16 percent from the previous week, but down 33 percent from the prior 4-week average.
Soyoil 6,300 (0-10,000) metric tonne were for Mexico.
US Attache Trims Australian Production Numbers
The U.S. ag attache in Australia says that although the wheat harvest has begun, very few results were available at the time their report was submitted.
"At time of writing, much of southeastern Australia has returned to drought conditions," says the attache. "Total wheat production for 2008/09 is forecast at 20.15 MMT, down on the 21.6 MMT previously forecast. In revising production downwards, we have cut area by 500,000 hectares and has also trimmed yield."
The attache forecast barley production for 2008/09 at 7.013 MMT, down sharply from their previous forecast of 7.875 MMT. "There remains significant scope for further reductions in forecast production for both wheat and barley," adds the attache.
Fannie And Freddie Are Back In The Headlines
And once again it's for all the wrong reasons.
On Monday, District-based Fannie Mae reported a whopping $29 billion loss, bringing it close to triggering a government cash injection.
Fannie's net worth, or the difference between assets and liabilities, tumbled to $9.4 billion as of Sept. 30 from $44.1 billion at Dec. 31. The Washington-based company said Nov. 10 that the number may be negative by the end of the year.
Today Freddie Mac said its third-quarter loss increased more than 20-fold to $25.3 billion, or $19.44 a share in the three months ended Sept. 30, compared to $1.2 billion, or $2.07 a share in the year-ago period.
The US government has set aside $200 billion for capital infusions into the two companies. Under the government's agreement with the companies, the Treasury is required to inject money in any quarter when the companies' liabilities exceed their assets, up to $100 billion for each firm.
As a result of Freddie's loss, the company is $13.8 billion in deficit. The Director of the Federal Housing Finance Agency (FHFA) has therefore today submitted a request to the Treasury for $13.8 billion.
So Freddie is in for the first installment of his promised $100 billion. Undoubtedly, there will be more to follow in subsequent quarters. Fannie, meanwhile, has already said this week it may need more than the $100 billion in funding pledged by the Treasury to stay afloat.
eCBOT Close/Early Call
The overnight market closed with mostly modest gains, wheat and corn 3-4 cents firmer and soybeans mixed between 2 up and 1 1/4 down.
Firmer stock markets helped support grains. Asian stocks, including Japan's Nikkei average and Seoul shares, bounced on Friday as U.S. stocks surged in the previous session after hitting 5-1/2-year lows.
At 12 noon GMT, London's FTSE100 was 3.7% higher, with the German DAX up a similar amount and the French CAC 2.17% higher.
The is still a considerable amount of corn left to harvest in the US, which is supporting prices. Some of these unharvested acres were also intended to be planted with winter wheat, which is also mildly friendly for wheat.
The USDA weekly export sales may provide further direction this afternoon. But ahead of that report earliest calls for this afternoon's CBOT session are: Corn futures are expected to open 2 to 4 higher; soybeans 1 to 2 lower; wheat 2 to 4 higher.
London Wheat Up Most In A Month
London wheat is currently posting its largest daily gain in a month today, with January futures £2.25/tonne higher at £96.50/tonne.
Another appalling performance from sterling is encouraging buyers into the market as producer selling remains light in the run-up to Christmas.
One or two are even predicting that the bottom of the market is in!
Certainly the recent precipitous drop has been arrested as indicated by the chart below:
Jan 09 London Wheat Future
The pound has hit multi-year lows against the US dollar this week, and yesterday set a record all-time low against the euro, fostering belief that UK wheat is finally becoming competitive on the export arena.
Paris wheat is posting only modest gains of EUR0.50-EUR1.00/tonne.
Two Fertiliser Firms Cease Production
Two Bulgarian fertiliser firms are halting production as demand has weakened as a result of the global financial crisis, they said on Thursday.
Bulgaria's Agropolichim and Neochim, are leading fertiliser producers in southeast Europe.
The shutdowns are bad news for Bulgaria's emerging economy as the two companies are among the top exporters from the Balkan country, which depends heavily on foreign cash to fund its huge current account deficit.
Fertiliser prices have plummeted in recent weeks, pulled down by falling world commodity prices and global market turmoil, denting producers' margins.
Last month, Yara International ASA, the world's largest producer of mineral fertilisers, halted production at a plant in Italy and did not rule out more capacity cuts.
"We are probably the last factory in the Balkans which is still working," Agropolichim's CEO Phillipe Rombaut said. "Usually this time of the year is high season and we are shipping 2,000 tonnes a day. Now we are shipping 300 tonnes."
Phosphate fertiliser production at Agropolichim, over 90 percent of which is exported, will probably resume work in early December when it expects sales to the Middle East, he said. Nitrate production will remain shut indefinitely.
Agropolichim, which produces about 800,000 tonnes of fertilisers a year, will decide in the next two to three weeks how many of its 1,100 workers will lose their jobs, Rombaut said.
Neochim, which like Agropolichim exports most of its fertiliser and chemical output to the Balkans, South America, the Middle East and Europe, will not resume work after being shut for maintenance for the past month, a spokeswoman said.
Citigroup Cut More Jobs, Raise Credit Card Rates
Citigroup has said it will shed at least another 10,000 jobs in its investment bank and other divisions throughout the world, according to the Wall St Journal.
Citigroup announced last month it cut 11,000 jobs in the third quarter, bringing the total number of job cuts in 2008 to 23,000 already.
Citigroup aims to shrink its workforce to about 290,000 employees by next year from 352,000 as of Sept 30, the WSJ said.
The paper also reported that Citigroup is notifying some credit card customers that their interest rates are being raised by an average of three percentage points, despite falling base rates.
UK: 17,000 Jobs Lost So Far This Week
BT's announcement on Thursday of plans to axe 10,000 jobs has taken the total redundancies announced by UK companies this week to over 17,000. Redundancies at BT and JCB, which is cutting 400 jobs, follow revelations of 2,200 job losses at Virgin Media, 1,000 at Taylor Wimpey and 1,300 at Yell. Many of the job cuts were blamed on the recession, while some, such as those at BT and Virgin Media, were attributed to long-overdue restructuring.
IEA Slashes World Oil Demand Expectations
The International Energy Agency (IEA) slashed its global oil demand growth forecasts yesterday in response to mounting evidence that the world economy is far weaker than previously thought.
Demand has grown this year at the slowest rate in a generation. Next year it is now expected to expand by only 350 000 barrels per day (bpd) - down 340 000 bpd from the IEA's prediction just a month ago.
The revision follows the release of sharply weaker economic forecasts by the International Monetary Fund, which said last week that the world's developed economies were headed for the first full-year contraction since World War 2.
Crude is holding up relatively well under the circumstances, with December half a dollar lower at $57.71/barrel.
America: Stevie Wonder Is Driving The Bus
Is it just me, or is it becoming increasingly apparent that America hasn't got a clue what it's doing?
Take the US Treasury's about-face on Wednesday, when it officially abandoned its original strategy of buying troubled assets from banks.
The Bush administration now says it will try to jump-start the stalled credit markets with new lending programs, rather than by buying troubled assets from banks. But the line for help at the Treasury keeps getting longer. A big commercial lender, the CIT Group, applied to become a bank on Thursday in hopes of qualifying for rescue money. American Express took the same step earlier this week. And then, of course, there is the beleaguered auto industry, we'll get onto them in a minute.
Before that, consider the AIG precedent. It shows that once a company has the money and is deemed too important to fail, it can do as it pleases.
It was less than two months ago that the government put up $85 billion for AIG. The interest rate was high, and the term of the loan was just two years. The company, under a new chief executive, would have to shape up or close down within 24 months.
The first thing the new CEO did, as soon as the cheque had cleared, was renegotiate more favourable terms. Plus more money, in exchange for what? For the US government taking on the risk of some of his company's worst assets while letting AIG share in the profits if those assets should prove valuable!
Meanwhile, President-elect Barak Obama is a big fan of the US automakers, and is pushing for Bush to step in now and bailout GM, Ford & Chrysler. News emerging last night suggests that Democratic congressional leaders have conceded that they would face potentially insurmountable Republican opposition to push such a bailout through, ahead of Obama's inauguration. Some industry experts fear that without it one of the Big Three automakers will collapse before then.
The idea is to channel $25 billion of the promised $700 billion bailout fund to the Big Three. Bush, however, has not signaled any willingness to tap the bailout fund, which the Treasury has said is money better spent on financial institutions. And some powerful Republican lawmakers have voiced strong opposition to government aid for the automakers.
Senator Richard Shelby of Alabama, the senior Republican on the banking committee, said he would not support legislation to aid the auto companies and seemed prepared to let one or all of them collapse.
"The financial straits that the Big Three find themselves in is not the product of our current economic downturn, but instead is the legacy of the uncompetitive structure of its manufacturing and labor force," Shelby said in a statement. "The financial situation facing the Big Three is not a national problem but their problem."
"They are producing high-cost products that consumers don't want to buy. And so now we have Washington on the verge of giving them a bailout simply because we have all heard of them and they have high-priced lobbyists," said a Representative.
America: would you buy a used car off it?
Headline Of The Day: Tesco Withdraws Spotted Dick
Classic from the FSA, hot on the heels of the recent "melamine found in Chinese chocolate cock paint" scandal. I can't wait for next weeks already. We appear to have a government body with a sense of humour on our hands. Give it up for the FSA....
Tesco has withdrawn some spotted dick sponge puddings because jam sponge puddings, containing egg, have been packed in the spotted dick packaging and egg is not mentioned on the label. This product is therefore a possible risk for people who are allergic or intolerant to egg.
The Agency has issued an Allergy Alert advising anyone with an allergy or intolerance to egg not to eat this product.
UK: More Proof Recession Is Here
John Lewis today reported a 9.7% drop in weekly department store sales, with most of its stores suffering double-digit falls.
Despite Christmas on the horizon this is the eighth weekly decline in a row.
Sales were down at all John Lewis department stores across the country with the exception of Cambridge.
Peterborough and Cribbs Causeway near Bristol saw the biggest slump with sales down by over 20% in the week to last Saturday. Even the group's flagship store in Oxford Street reported a 9.1% sales drop.
The worst performance came from the group's home departments which suffered a 14.8% fall in sales. Electricals posted an 8.5% drop and fashion sales were down 6% on a year ago.
Meanwhile, shares in DSG International, owner of PC World and Currys, fell by over 30 percent on Thursday after credit insurer Atradius reduced its cover against the retailer being unable to pay its suppliers.
In other gloomy news Rightmove, the online estate agent has warned that house prices across the UK have fallen further than official data and market indicators suggest. Miles Shipside, the company's commercial director, said that estate agents had revealed that the actual prices being achieved for properties had fallen by around 20 to 25 percent beneath peak asking prices, a disclosure that had not been referred to in national indices. The latest trading statement issued by Rightmove also revealed that the downturn had forced 250 to 300 estate agents to leave the market each month between August and October.
The Pound Under More Pressure
The pound is heading for its largest ever weekly drop against the euro as more and more evidence emerges that the UK is in recession.
Sterling hit an all-time low against the euro of 86.63 pence yesterday, and hovers just above that this morning at 85.35 at 9am GMT.
The currency seems now firmly entrenched below $1.50 for the thrid day running, currently standing at $1.4862.
The currency's demise, against the dollar in particular, is largely responsible for the little bounce in domestic feed prices this week which sees hipro soya up around £6-7/tonne.
As Cefetra put on their list yesterday, a one cent fall against the dollar adds £1.50/tonne to the price of soya. Considering that the pound started the month at $1.64 and we are now $1.48, that's equivalent of £24/tonne extra on the price of soya in the last fortnight, ignoring Chicago fluctuations of course.
Overnight Grains Mixed
Overnight grains are mixed on the eCBOT market, with what and corn a cent or so firmer and soybeans 2-3 cents weaker.
Last nights rally in the US stock market has spilled over into Asian trading, whilst crude oil has weakened from yesterday's highs, which is modestly supportive for grains.
Although the US soybean harvest is now pretty much in the bag, the corn harvest is lagging, which is lending some underlying strength to corn.
Wheat is also getting some support from the late corn harvest, as it may prevent plantings of some acres intended for wheat.
At 13.30 GMT today we get the latest USDA weekly export sales report, which may provide some direction later on.
Still, the underlying fundamentals haven't changed. Slumping world economies, credit difficulties and slack demand.
US Gas Prices Tumble, Unlike Ours
The U.S. average price for regular gasoline tumbled another 17.6 cents to reach 222.4 cents per gallon this week. Over the past eight weeks, the U.S. average has plummeted 161.1 cents and has now dropped 189 cents from the all-time high set on July 7. As a result, the price is now 88.7 cents below the price a year ago.
By my calculations this means that US prices are down 54% from the July high. A figure pretty close to the actual fall in the price of crude. Fair do's.
Here in the UK however, petrol prices at the pumps are only some 20% lower than the July highs, when unleaded averaged 119.5p/litre and diesel 133.1p/litre.
Bastardos.
RBS Cuts 3000 Jobs
The Royal Bank of Scotland (RBS) is to cut about 3,000 jobs in the next few weeks, according to reports this morning.
The positions will go in its global banking and markets workforce, spanning more than 50 countries. Jobs are likely to go in the City of London.
It is understood the bank's High Street operations, and those of subsidiary NatWest, will be unaffected.
RBS, which predicts its first annual loss this year, hopes to raise £20bn as part of the government's bail-out plan.
The bank employs about 170,000 people, of which roughly 100,000 are in the UK.
Earlier this month the group's new chief executive, Stephen Hester, signalled a round of cost cuts in the wake of the bank's rescue package from the Government.
Pilgrim's Pride Battered
Investment research firm Morningstar has lowered its estimated value for the US's largest chicken producer by volume, Pilgrim's Pride Corp, to $0 per share, down from a previous estimate of $7.50, Reuters report.
The reduction follows news released Monday that rival firm Tyson Foods will not reduce output despite falling profits in the chicken sector. See previous story here
"After taking into account Tyson's recent announcement that it is maintaining production levels, we are changing our fair value estimate for Pilgrim's Pride to $0," Morningstar analyst Ann Gilpin said in a note to clients.
Ms. Gilpin has long had a downer on Pilgrim's see here
Shares in Pilgrim's Pride closed at just 33 cents each Thursday night, a year ago they were almost thirty dollars, that's a drop of almost 99% in the last twelve months.
Now here's a thought. Is the US government going to bail Pilgrim's Pride out? If not, why not? Because they're not part of the financial services industry? Neither are Ford, GM and Chrysler.
According to Wikipedia Pilgrim's Pride employs around 56,000 people, add onto that employees indirectly affected in associated service industries, and that's a lot more people on the dole.
Whats more important for the average unemployed American who has just had his house foreclosed on, something to eat or deciding what colour metalic paint to have on his next SUV?
Is there a line, and if so where has it been drawn?
EU Wheat Edges Higher Late
EU wheat futures edged higher late in the session Thursday supported by an upturn in US futures.
Front-month January Paris wheat was 0.75 euros higher at 140.50 euros and London wheat for January closed GBP0.75 higher at GBP91.75/tonne.
"Still, the market remains very weak and is on the verge of sinking further. It's just a question of when," one trader said.
EU wheat may be benefiting from a strong dollar, making US wheat uncompetitive on the export arena, but Black Sea wheat, particularly Russian still has the competitive edge.
Much has been made recently of falling freight rates. However, one trader noted that the sharp fall in ocean shipping freight costs in past weeks has also increased the sales range of rival United States, Argentine and Australian wheat.
Spanish wheat prices were stable in thin physical dealing with many consumers covered until year-end and few willing to take positions in the new year amid market uncertainty.
CBOT Closing Comments
Corn
Corn futures finished on a positive note with all contracts posting marginal gains. Funds were net buyers of an estimated 4,000 CBOT contracts. Crude oil rebounded from yesterday's losses and was more than $2 higher for a majority of trade Thursday. Some bottom picking may be occurring also supporting prices. Corn has mixed fundamentals, decreasing demand by exports and some livestock, but some bullish fundamentals are developing; American farmers still have 29% of the corn crop to harvest or roughly 2.2 million acres. Basis is firming as farmers are reluctant to sell at current prices and using the on farm storage. Dec +7 at 3.77.
Soybeans
Soybeans and soybean oil climbed from midday losses and to close higher, but meal was unable to buck selling pressure. Trade was choppy and volatile at times, funds were quoted as being net sellers of 1,000 beans, 1,000 meal, but bought an estimated 1,000 bean oil contracts. The November contract is set to expire Friday, deliveries against Nov were 409. Beans may also be pressured by Wheat/bean spreading. The dollar traded on both side of steady during trade giving no strong momentum to either the bull or bear. Tomorrow USDA will release export sales for last week, the delay is due to Veterans Day Tuesday. Nov +1 at 8.87; Dec Meal -2.40 at 264.00; Dec BO +23 at 32.81.
Wheat
Wheat futures backed off of midday highs to close higher in CHI and KC but MLPS lost ground in the nearby Dec contract Thursday. Funds purchased an estimated 2,000 CBOT wheat contracts. Japan purchased 100,000 metric tonnes of US wheat. Much debate has circulated about the Aussie wheat crop with many analysts lowering total production, but the simple fact that Australia is on tract to producing nearly 45% more than last year still resides. Wheat futures also received some support from technical buyers and traders covering short positions. Dec CHI +5 at 5.38; KC +2 at 5.78; MLPS -6 at 6.46.
US Jobs Data Getting Worse
Just a week after saying that US unemployment was at a 14-year high of 6.5%, the US has posted more poor jobs data today.
US initial jobless claims surprisingly jumped to a 7-year high of 516K during the week ended November 8. This is the number of Americans filing new claims for state unemployment insurance.
In addition continuing jobless claims for the week ended November 1 rocketed to the highest reading since December 1982.
The figures suggest that the US labour markets are continuing to deteriorate at a rapid rate, and unemployment rate could be climbing much higher.
Looking at a chart of continuing claims versus the unemployment rate going back to 1970, it's clear that the figures used to be significantly more correlated. However, changes to the methodology used by the Bureau of Labor Statistics (BLS) to calculate the unemployment rate since 1994 have weakened the link.
See here where the orange line is % unemployed. It is also interesting how unemployment peaks and troughs seem to cycle at roughly 10-year intervals.
AN Fertiliser Prices Not Coming Down Awhile Yet
Responding to a challenge from the NFU as to why ammonium nitrate prices are still so incredibly high, the UK's sole manufacturer GrowHow must have been searching for a plausible answer for weeks ahead of yesterdays AIC conference in Peterborough.
Perhaps they should have sent somebody from a certain shipper to concisely explain it was all due to "the inverse basis at the stem thingy, coupled with the other thing that I can't remember the name of, but I heard the foreign people that set our prices talk about it the last time I was in a meeting with them months ago."
That would have cleared things up, put everyone's mind at rest, sent everyone home happy that everything was being done to bring prices down soon.
But no, instead everyone was assured that the fertiliser market will re-adjust next February or March in response to recent falls in the cost of raw materials. However, the benefits of low prices will not be seen until June.
Indeed, the recent huge falls in the price of ammonia, urea and elemental sulphur, are an "over correction" and a short-term market shift resulting from the credit crunch.
Full report here:
How Much Are Your Business Premises In Your Accounts At?
The rout in commercial and residential property values shows no sign of slowing, making valuation of the assets - and the companies that own them - increasingly tough.
This week has produced some bearish valuation metrics for both sectors. First, the respected Royal Institution of Chartered Surveyors' housing market survey showed that completed sales per surveyor have fallen to less than one a week - the weakest performance in the 30-year history of the poll. Worse, an all-time-high of 93 per cent of respondents report that prices have fallen further in the past three months.
Nationwide now forecasts a 25 per cent peak-to-trough fall in house prices. The government's stamp duty holiday has had zero effect, with the number of mortgages completed in September falling by 15 per cent on the previous month. This is hardly surprising; after all, why buy a house now, when it will almost certainly be cheaper next year?
The same question could be applied to buying shares in UK commercial property companies, where steep falls in asset values and an absence of investment buyers has dented confidence. With few actual transactions for a valuer to reference, most are erring on the side of caution. Land Securities sliced £1.72bn, or 12.7 per cent, off the value of its investment portfolio at Wednesday's half-year results, with far-reaching implications.
"Land Securities has broken ranks, bitten the valuation bullet and been pragmatic about the brutal realities of the UK real estate market," said one analyst.
Businesses like Punch Taverns, where the bottom line is hugely affected by the value of the premises themselves, have seen their shares fall in value from around 950 pence a year ago to 134.5 pence today as millions is wiped off its assets.
They've been hit by the double whammy of the smoking ban as well. Swinging into the red with a £80m loss before tax, after writedowns of nearly £300m on 491 pubs that no longer have value for the group.
Strategie Grains Sees Only Minimal Loss Of Grain Acres For 2009 Crop
Strategie Grains says that despite sharply lower prices, EU grain planted area for 2009 will decrease by just 2% to 1.07m hectares.
Some of last seasons set-aside acres will be returned to set-aside or planted with oilseeds or sugar beet, they say in a report.
Final EU-27 2008 production numbers have been refined higher than last months estimates with soft wheat production now seen at 140.1mmt, up from last months estimate of 139.5mmt. Barley production has also been revised higher this month to 65.8mmt, up 800,000mt and corn output is also seen higher at 61.0mmt, up 600,000mt.
eCBOT Close/Early Call
Grains closed lower, just to be consistent, on the overnight eCBOT market with wheat giving up most of last night's gains 7c lower, soybeans down 2-3c and corn 1-2c easier.
Global recession fears mounted after the US Treasury backed away from using a $700 billion bailout fund to clean up bank balance sheets of bad mortgage debt and a spree of gloomy economic and corporate news battered the markets.
US Treasury Secretary Henry Paulson said in a speech last night that he was backing away from buying troubled mortgage assets and would focus on the capital needs of both banks and non-bank financial institutions.
The Bush administration have been under heavy pressure recently to bail-out troubled US car makers GM, Ford and Chrysler. President elect Barak Obama is also said to be in favour of the move, in an attempt to stave off more job losses, with US unemployment already running at 10.1 million.
Crude oil fell to a 22-month low below $55/barrel, adding to the bearish pressure on grains.
A downturn in meat consumption around the world has also hit demand for US corn, along with an ailing US ethanol industry that relies on corn as a feedstock.
Record world wheat production, and the beginning of the Australian harvest are also bearish factors.
Japan today bought 100,000mt US wheat in a routine tender.
Early calls for this afternoons CBOT session: Corn futures are expected to open 1 to 3 lower; soybeans 2 to 4 lower; wheat 5 to 8 lower.
Australian Wheat Exports Almost Double In October
Australian wheat exports in October were almost double year ago levels, the government's new wheat export regulator said on Thursday.
Exports were 400,000mt, up from 274,497 tonnes a year ago, with 8 newly licensed exporters participating in the sales, it said.
Wheat Exports Australia (WEA) licenced 19 exporters under Australia's new wheat
exporting arrangements, effective from July 1, which ended AWB's monopoly position that had existed for more than 60 years.
AWB lost its monopoly after being found to have broken United Nations sanctions against Iraq by paying $222 million in back-handers to Saddam Hussein.
WEA said Australian wheat had been delivered to eight different countries during the September-October period,
Looks Like It's A Charity Shop Christmas As Credit Crunch Bites
With the credit crunch biting there's at least one area of the High Street that is reporting a boom in sales - Charity Shops.
Charity shops are reportedly defying the credit crunch as cash-strapped shoppers turn to secondhand stores in search of bargains.
While High Street retailers are bracing themselves for poor Christmas trading, shops such as Scope and Save the Children are experiencing a mini boom.
And with the festive season approaching, the shops are predicting a further boost for sales, with people buying up everything from children's clothes to books and DVDs.
One shop manager said: "There seems to be a big change happening at the moment.
"We have seen an increase in customers and sales recently. A lot of new faces are coming in and we are selling a lot of clothes."
"We have definitely noticed more young people coming into the shop, and an increase in families with children," she said.
Nogger is famed for his work with charity as you all know, although he doesn't like to talk about it. So it looks like Mrs Nogger will be getting some second-hand skimpies from the British Heart Foundation this year. Lucky old her.
Talking Tosh With Hugo Chavez
Venezuelan President and transparent despot Hugo Chavez has to be the biggest exponent of "talking his own book" of all-time.
Back in July, as oil prices peaked, Hugo wasn't happy with $147/barrel, he wasn't even happy with some analysts projections of $200/barrel. Oh no, dear old Chavvy was foaming at the mouth predicting $300/barrel.
As we know he didn't get his wish, however undeterred, as recently as October 18th Chavez said Venezuela, "could withstand any oil price."
This week, in a television interview Wednesday, he finally admitted that, "if it continues in the future, low oil prices could affect us."
Chavez discussing Foreign Policy with half black, half white President elect Barak Obama in a Las Vegas hotel bedroom recently
US Farmers Already Looking To 2009 Planting Ideas
Even as he finished up harvesting corn and double-crop soybeans, Strasburg, Illinois farmer Tim Lenz said he’s looking ahead to 2009.
“I usually have 200 or 300 acres of corn on corn,” he said, but market conditions right now as far as grain prices are concerned might have Lenz put off some planting plans. “I might now make a decision until March. It’s kind of up in the air between now and then.”
Lenz said the market will have to make its case for corn over the next few months before he pledges all of his acres one way or another.
“I’ll definitely go corn on beans and some corn on corn,” he said. “It depends on market prices between now and March how I’ll go and how much tillage we get done this fall.”
He also feeds about 100 head of cattle and as a livestock producer, he’s optimistic for the livestock industry.
“I’m optimistic that maybe cattle will be profitable, if the general economics get set maybe cattle will be profitable again. We’ve always fed them out and figure if you just stay the course and not try to outguess it, you’ll hopefully be right,” he said and added a note of optimism for the hog industry too. “For the guys who feed hogs, now they’ve got a chance to buy some cheap corn.”
For right now, Lenz said he’s focusing on fertilizer and tillage practices as ways where he can economize.
“Nitrogen is the only thing in my mind that I’m concerned about,” he said.
To save on fuel, Lenz said he’ll be watching his tillage.
“We probably won’t do as much deep tillage, just to save on fuel,” he said. “We’ll do deep tillage on the ends but we’ll do a light vertical-type tillage everywhere else.”
This year, he had to replant acreage due to flooding and he said he’s pleased with yields even with that replanted acreage.
“We had to replant about 600 acres. That’s the first time in 20 years that I’ve been farming that we’ve just replanted wholesale fields,” he said. “We’re shelling that right now and it’s actually doing fairly well, the yields really aren’t much lower.”
Lenz also has branched out in varieties as prices have moved around and said that premiums on certain varieties might make those more attractive.
“As prices have come down, I grow some white corn and some seed beans and we’re maybe looking at some non-GMO beans next year,” he said.
As far as the general atmosphere, Lenz said he sees a return to more realistic thinking in terms of prices and profits.
“Just the psychology is not as optimistic,” he said. “It’s probably more realistic and now it gets back to being a little harder to make a profit.”
Russian Grain Harvest Now At 113.6MMT
As of November 10, Russia had harvested 113.6 mln tonnes of grain in bunker weight, an increase of 26.4 mln tonnes compared to the same date of the previous year, according to the Ministry of Agriculture. Russian farmers have completed harvesting on 45.3 mln ha or 97.7% of planted area, up 4.1 mln ha compared to the same date of 2007.
Overnight Grains Lower
Overnight grains are lower on the eCBOT market this morning, with beans down 8-9c, wheat off 7-9c and corn 2-4c lower.
It's pretty much a case of same old, same old.
Global meltdown, firm dollar, declining stocks and crude, credit crisis, falling demand etc.
Wheat got a bit of a shot in the arm last night as Syria announced it was in the market for 200,000mt and Japan for 100,000mt, but frankly these amounts are a drop in the ocean compared to what wheat is kicking around the export market looking for a home.
Some of last nights strength was technical as December came within sight of the pivotal $5/bushel mark. The contract currently trades some 25c above that level.
The Pound: $1.30 By Christmas?
The pound is back below $1.50 today, taking up where it left off last night. We started the day yesterday at $1.5479, before steadily declining to crash through the $1.50 mark in late trading for a loss of around 5 cents on the day.
Losing 5 cents in a day is almost becoming an embarassing norm now for the pound. Where the hell is it all going to end, apart from in tears? Below $1.30 by Christmas? I wouldn't like to bet too much against that, at 5 cents a day it could be be $1.40 by Friday night!
In early this morning we stand at $1.4911 at 8.30am GMT, having already been down as low as $1.4809.
This week is the first time we've been below $1.50 in more than six years.
Job vacancies in London's financial-services industry sank 48 percent in October from a year earlier, according to a survey by recruitment firm Morgan McKinley. Total unemployment claims rose to the highest level since March 2001 it was revealed yesterday. BT have today said that they will cut 10,000 jobs by the end of the financial year.
Meanwhile, the Bank of England indicate that it will keep cutting interest rates as the economy slumps.
Crude Falls Below $55/Barrel
Crude has fallen to a 21-month low overnight, dipping below $55/barrel for the first time since Jan 2007.
US gasoline purchases dropped again last week, an astonishing 29 straight weeks of lower sales, according to MasterCard data.
Asian stocks were lower overnight, and the US dollar firmer, which also added to the general doom and gloom.
The US Energy Dept release their inventories data later today, a day later than normal due to the Veterans Day Holiday. The figures are expected to show that crude oil stockpiles increased by around 1 million barrels in the week ended Nov. 7.
December crude traded at $54.95/barrel at 8am GMT, having earlier hit an intraday low of $54.67/barrel. Brent is now in danger of slipping below $50/barrel, currently trading at $51.04.
CBOT Closing Comments
Corn
Corn futures traded lower at midday but rallied sharply to mark gains of near 10 cents but that was only short lived and futures closed lower. Outside markets continue to have a large influence on commodities and today was no exception. Crude oil was down hard again today, trading below $60 and the dollar shot higher, both are viewed bearish to commodities. Farmers haven't been able to ramp harvest back up, as unfavourable weather has set in since the beginning of the week. Dec -4 at 3.69.
Soybeans
Soybeans, like corn did post gains on the day but finish with losses in all contracts. Outside markets also weighed in on prices in the soy complex pushing prices lower. Deliveries against November total 424, and the contract is set to expire Friday. Harvest in nearly complete with a few areas left to finish up, however, weather has not been cooperating this week to allow producers to finish up. Nov -22 at 8.85; Dec Meal -3.10 at 266.40; Dec BO -1.15 at 32.58.
Wheat
Wheat futures finished higher Wednesday and CHI lead the way, well at least in the nearby months. Funds were net buyers today and helped underpin the market. S. Korea has reportedly purchased 46,000 metric tonnes of US wheat. US winter wheat crop is having an idea pre winter growth. Adequate moisture and above freezing temperatures is really benefiting that crop. Demand for US wheat is diminishing, as foreign wheat is cheaper. Dec CHI +9 at 5.33; KC +4 at 5.75; MLPS +8 at 6.52.
ONIGC Up's French Corn Crop 1.1MMT
ONIGC has upped its 2008 French corn crop estimate by 1.1mmt to 15.4mmt, a 7% increase on 2007.
The group left its 2008 French wheat production estimate unchanged at 37.4mmt, 22% up on 2007.
Soft wheat exports within the EU-27 are expected to be 7.1mmt, and exports to non-EU27 countries will rise to 9mmt, it added.
The figure for exports outside the EU-27 is substantially higher than the 4.9mmt exported during 2007-08, and reflects the weaker euro helping competitiveness, and there are also some quality issues with wheat from the Ukraine, it says.
Certainly Ukraine may have had a huge harvest in 2008, but only 11% of the crop is said to be of bread-making standard.
Food Shortages Are Next Says UN
As if the global meltdown wasn't enough, we must now brace up for food shortage in the coming two years, says the United Nations.
Even as the world is struggling to fight global market meltdown with companies sacking employees and industries scaling down production, the world will also have to tackle food shortage and soaring prices in the coming days, according to United Nations’ Food and Agriculture Organization.
The current financial crisis will adversely affect agricultural sectors in many countries, including India and other developing countries.
This warning is issued by the FAO despite predictions that world cereal production is set to hit a new record of some 2.24 billion tones in 2008/2009. Again, global rice production is also expected at 450 million tonnes during the same period.
Still, this year’s record cereal harvest and the recent fall in food prices should not create a false sense of security.
If the current price volatility and liquidity conditions prevail in 2008/09, plantings and output could be affected to such an extent that a new price surge might take place in 2009/10, unleashing even more severe food crises than those experienced recently.
The report also noted that most of the recovery in cereal production took place in developed countries, where farmers were in a better position to respond to high prices.
In contrast, developing countries were largely limited in their capacity to respond to high prices by supply side constraints on their agricultural sectors.
FAO said the sharp 2007/2008 rise in food prices has increased the number of undernourished people in the world to an estimated 923 million.
Lower international commodity prices have not yet translated into lower domestic food prices in most low-income countries, it added.
The FAO report further noted that world agriculture was facing serious long-term issues and challenges that need to be urgently addressed.
These include land and water constraints, low investments in rural infrastructure and agricultural research, expensive agricultural inputs relative to farm-gate prices and little adaptation to climate change.
The more critical and likely impact of the global meltdown will be on credit, whose non-availability is widely recognised as one of the major constraints to agricultural development in the developing countries, and the rationing of which is likely to be more serious than any interest rate effects, it said.
To feed a world population of more than nine billion people by 2050 (around six billion today) global food production must nearly double.
Population growth will take place mostly in developing countries and for the greater part in urban areas. A shrinking rural work force will thus have to be much more productive. This will require more investments in agriculture, machinery, tractors, water pumps, combine harvesters etc., as well as more skilled, better-trained farmers and more efficient supply chains.
Food for thought. I wonder if Boulton is a seller of Oct49/Apr50 Tilbury wheatfeed?
Light Fading For US Electronics Giants
The top two electrical retailers in the US are in serious trouble.
The largest, Best Buy, said Wednesday that falling consumer spending has caused it to lower earnings forecasts. Calling this the most difficult climate it has ever seen.
Best Buy sees same-store sales for the four months remaining in its 2009 fiscal year dropping by as much as 5% to 15%.
The second largest, Circuit City, filed for Chapter 11 bankruptcy protection Monday.
The company attempted earlier this month to stem its financial troubles by closing 155 stores and shelving plans for new stores.
Dollar At 6 year High Vs Pound
The dollar hit a fresh 6-year high versus the pound of $1.5203 Wednesday as traders reacted to indications that the Bank of England will further cut interest rates in a desperate effort to stem the tide of economic weakness.
Having already slashed rates 1.5% last week, the Bank of England Governor Mervyn King said Wednesday that the Monetary Policy Committee is certainly prepared to cut interest rates gain if necessary.
Cheers, Merv.
Separately, the Office for National Statistics said the number of Brits without a job rose to 1.825 million in the three months to September, the highest level since the three months to December 1997.
Exactly why the US dollar is so bloody popular at the moment is intriguing, the state they are in. Unemployment is running in excess of 10 million, interest rates are 2% lower than ours and the governments $700 billion bailout is looking to be woefully insufficient.
Treasury Secretary Henry Paulson will speak later today on the financial bailout program. Meanwhile Democrats in Congress are ratcheting up the pressure on the Bush Administration to provide emergency assistance to the ailing American auto industry.
eCBOT Close/Early Call/Nobody Saw This One Coming
eCBOT grains closed lower dragged down by falling crude oil and a strong dollar.
Beans closed around 9c lower, with wheat down 6c and corn one cent easier.
Crude is now firmly entrenched below $60/barrel. The gloomy global economic outlook seems to be capping any rallies in the grains sector.
So, if we are going to get a sustained rally then it needs to come from the supply side rather than being demand led. Corn could provide it, with over a quarter of the US crop still to be harvested, if the winter weather closes in.
On the wheat side, the Australian harvest is now underway and expected to produce a crop of around 20mmt, down on what was hoped for a few months ago, but still a substantial increase on 2007. The Argy crop is likely to be some 5mmt lower than last year, but that already seems factored into the market.
The nearest possible banana skin on the horizon for wheat would be a crop disaster in India, but that isn't likely to happen before Jan/Feb time.
This week's shockingly poor figures from Pacific Ethanol, hot on the heels of VeraSun filing for chapter 11 and a spate of other bankruptcies earlier in the year, seem to indicate that you don't want to be expecting any support coming from that sector.
How things have changed. Nobody saw this one coming did they?
See: Wheat, uranium, its all the same! posted 25th March 2008.
Early calls for this afternoons CBOT session: Corn futures are expected to open 1 to 3 lower; soybeans 7 to 10 lower; wheat 3 to 6 lower.
Pakistan Needs IMF Loan
A top Pakistani official has said that Islamabad would approach the International Monetary Fund (IMF) for a loan in the next 10 to 15 days.
Pakistan has been exploring other sources of funds in order to avoid stringent IMF conditions, but the efforts have failed so far.
The official said the country would have to "swallow the bitter pill".
Pakistan needs more than $5bn in less than a month to avoid defaulting on international debts.
Overnight Grains
Grains on the overnight eCBOT market are modestly lower on the same old economy worries news. Wheat is around 3-4c lower, with corn down just a cent or two. Soybeans are 3-4c easier.
Corn hit a one year low in yesterdays CBOT session before recovering somewhat towards the close. There's still 29 percent of this year's corn yet to be harvested. That's around 3.4 billion bushels still out in the field. Snow, freezing rain and other precipitation in much of the Corn Belt is going to make this a difficult crop to wrap up.
If anything is going to stage a rally at this stage corn looks to be the one. There are no such problems for beans with the harvest just about complete, and wheat has gone into ground on the Plains with a better moisture profile than in many years.
Rabobank Agribusiness Review
This is well worth a read and throws up some interesting data & charts.
It's also beautifully presented: Rabobank
UK: Supermarket Wars Heat Up
Data released yesterday shows that Asda, Britain's No.2 grocer, is gaining market share as cash-strapped shoppers hunt for bargains. Meanwhile market leader Tesco's growth is lagging despite efforts to take on discounters.
Asda's sales grew by 8.7 percent in the 12 weeks to Nov. 1, lifting its market share to 15.6 percent from 14.9 percent in the same period last year.
Sales growth at Tesco, Britain's biggest retailer, lagged the market at 4 percent, despite its launch in September of a new range of low cost products. The move hasn't picked up many new customers, it has merely encouraged existing Tesco customers to trade down within the store, analysts say.
Sales growth at Wm Morrison, Britain's fourth-biggest supermarket group, was 9.1 percent in the 12-week period, but slipped below Asda in the latest four weeks.
Number three J. Sainsbury saw growth of 3.4 percent, while upmarket groups Waitrose and Marks & Spencer struggled with growth of 0.3 percent and a fall of 0.7 percent respectively.
Crude Hits 20-Month Low Sub-USD60
Crude oil fell to a 20-month low in early trade Wednesday as demand continues to fall. Crude oil for December delivery fell as much as 78 cents, or 1.3 percent, to $58.55 a barrel in electronic trading on the New York Mercantile Exchange. At 9am GMT it trades at $68.67/barrel.
Yesterday, oil lost $3.08, or 4.9 percent, to $59.33 a barrel, the lowest settlement since March 20, 2007, after earlier dropping as low as $58.32. Prices are now around 60% off the July highs.
The International Energy Agency is expected to cut its consumption forecasts later today. The IEA already has already cut its 2008 forecast about 1.3 million barrels a day in seven revisions this year.
US stocks data due out tomorrow is expected to show that crude-oil supplies probably rose for a seventh week by around 750,000 barrels in the week ended Nov. 7. Gasoline supplies are also expected to show an increase.
Brent fell as low as $54.40/barrel in early trade, Wednesday.
Australia's New Crop 2008 Wheat Exports Begin
Western Australia, the country's largest wheat producing and exporting state, sent out its first export shipment of 2008/09 season at the weekend.
The 30,000 tonne cargo left Geraldton port bound for Indonesia, shipped by the CBH Group subsidiary AgraCorp.
Rabobank left its Australian wheat production estimate unchanged at 20.5mmt Wednesday, 0.5mmt higher that the USDA projected on Monday.
CBOT Closing Comments
Corn
Corn futures were initially under heavy selling pressure but did cut losses in about half with a rally at the close. Several deferred months lost double digits. Funds were thought to be large net sellers. Crude oil was off $3/barrel for most of the trading hours and the dollar soared higher and then retreated but did mark a high of 87.27. Harvest is lagging from previous paces, and is being slowed again early this week due to snow/freezing rain and other precipitation is much of the Corn Belt. Dec -9 at 3.74.
Soybeans
Soybeans lost more than 30 cents in every contract that traded Tuesday. The nearby November contract is set to expire this Friday. Weakness in crude oil and strength in the US dollar ran the show in most commodities today, pressuring prices sharply lower. USDA indicated that soybean harvest is almost complete and the rate is steady with prior years. Deliveries against the Nov contracts were 70. Meal and bean oil were pushed lower from soybeans and lower crude oil. Nov -32 at 9.08; Dec Meal -5.80 at 269.50; Dec BO -1.65 at 33.73.
Wheat
Wheat futures traded lower for there better part of Tuesday but rallied near the close to finish higher on the day at all three wheat exchanges. No major production threats for next year's US winter wheat and the burden of a record global crop kept a lid on the short covering and spreading rally. Outside markets and other CBOT grains also limited gains in most wheat futures. Dec CHI +3 at 5.23; KC +8 at 5.71; MLPS +4 at 6.44.
Pacific Ethanol: These Boys Sure Know How To Lose Money
Pacific Ethanol, Inc. have reported a net income loss of $54.9 million for the third quarter, ended Sept. 30, a near 1150% increase compared to a loss of "just" $4.8 million during the same period last year. The firm blames the volatile price or corn.
The losses came despite increasing sales volume by 15 million gallons, or 30%, to 65 million gallons, compared to 50 million gallons for the same period in 2007. In addition the company reported a net sales increase to $184.0 million, a 56% increase over $118.1 million during the same period in 2007.
Earlier this month, VeraSun Energy, the largest publicly traded ethanol maker, filed for Chapter 11 bankruptcy protection, citing similar problems to those experienced by Pacific Ethanol, while Greater Ohio Ethanol, Gateway Ethanol and Beatrice Biodiesel have also filed for bankruptcy this year.
If ever you needed a clearer picture of the foolhardy nature of the heavily subsidised ethanol-from-corn business failing to cut the mustard then this is surely it. Despite the tax-breaks, this industry is still built on a pack of cards that simply can't cope with the fluctuations in price of it's raw material. Corn.
Remember too, these losses came with crude reaching $147/barrel and petrol, sorry gas, at the pumps in the US exceeding $4/gallon. Imagine if you will, taking the 45c tax break that ethanol qualifies for off these figures, if that was to suddenly be rescinded. That makes the bottom line for this quarter alone almost $30 million worse!
Shares in Pacific closed at 79 cents last night, they were almost $10 less than a year ago.
Very Hot And Dry For Southern Australia
South Australia is once again being blasted by hot, dry northerly winds with temperatures soaring to the mid thirties over most of the state, up to 12 degrees above average.
The hot weather is another cruel blow to drought affected southern regions which missed out on last weeks widespread rain event. While arid northern regions of South Australia received up to about 25mm, totals in the south were closer to only 5mm.
Since the start of September Adelaide has recorded a paltry 29mm of rain, well short of their spring average of 142mm. If Adelaide does not receive another 5mm by the end of November, spring 2008 will become their driest since records began way back in 1839. It has been even drier to the northwest of Adelaide with Whyalla up to just 6mm, less than 10% of their spring average. The town needs another 7mm to avoid its driest spring on record.
Cooler southerly winds will develop by Thursday and early indications are cloud and rain will once again spread over Australia's southern interior by the weekend. Unfortunately agricultural parts of the state are once more likely to only catch only the southern fringe of the rain.
eCBOT Close/Early Call
Overnight grains closed lower on the eCBOT market with soybeans around 22c easier, corn 5-6c weaker and wheat down around 4c.
Outside influences dominated the overnight session, with crude dipping below $60/barrel and Asian and European stock markets falling.
China's much-lauded $586 billion stimulus package and the USDA crop production report are already yesterday's news.
There is, in reality, no evidence that a global economic recession will or can be averted. There is no evidence of increased consumption from China, particularly for food products.
The targets for the Chinese package are said to be low income housing, water, electricity, disaster relief, and railways. I don't see that increasing demand for US soybeans or corn do you?
Demand for freight is still through the floor with the Baltic Dry Index hovering around the 820 mark, 93% down from its May high.
A stronger dollar will do little to aid US exports, although Japan is tendering today for 100,000mt wheat.
Early calls for this afternoons CBOT session: Corn futures are expected to open 5 to 8 lower; soybeans 20 to 25 lower; wheat 3 to 5 lower.
Carrs Milling Industries FY Results
Carr's Milling Industries PLC have reported a sharp rise in profits for its financial year ended Aug 30th 2008.
Revenue for the period rose 47% to £372 million from £253 million a year earlier, whilst pre-tax profit was up 133% to £12.9 million.
Net profit attributable to shareholders rose to £7.7 million from £4.2 million.
The company said operating profit at its agriculture division more than doubled due to unprecedented increases in commodity prices during the period, but warned that this was most unlikely to be repeated in FY 2009.
Agriculture increased its operating profit by 128% to £11.7m on revenue up 48% at £275.8m. Food increased its operating profit by 77% to £2m on revenue up 50% to £85.6m as wheat prices rose sharply, while engineering increased its operating profit by 7% to £1.1m.
Carr's raised its final dividend 26% to 17 pence from 13.5 pence. In mid-morning trade shares were up around 5% at 519 pence.
French Grain Sales Well Ahead Of Last Year
ONIGC reports that French farmers sold 27.8 mln t of grain from July to September 2008, the first three months of marketing year 2008/09. This is much above the 24.1 mln t sold in the same period of last year. The total includes 18.0 (16.0) mln t of soft wheat (excl. durum), 1.0 (1.2) mln t of durum, 7.3 (5.8) mln t of barley and 763,000 (670,000) t of corn.
Argentine 2009 Sunseed Crop Lower
Oil World forecasts Argentina’s sunseed crop at 3.8 mln t in marketing year 2009 (Jan. - Dec.). This is below the 4.4 mln t harvested this year and should be a result of a lower harvested area of 2.24 (2.58) mln ha and expected lower yields of 1.67 (1.71) t/ha.
The Argentine agriculture ministry reports that sunseed plantings were done on 59% of the intended area as of Nov. 7, 2008, lagging last year’s pace of 69%.
Australia May Have To Import Rapeseed This Season
Reports from Bloomberg suggest that Australia may become a net importer of rapeseed in the coming season after drought has hit the nation's crop badly.
Normally the worlds third largest exporter, Australia was forced to import its first ever commercial shipment of canola two years ago after drought cut production to a 10-year low.
It may be back in the same boat again this year the report suggests:
Yes we have no canola!
Even Chelsea Can't Afford New Players In January As Credit Crunch Bites
Chelsea, the Premier League football club controlled by Russian billionaire Roman Abramovich, has binned 15 scouts and will sign fewer new players because of the credit crunch, Chief Executive Officer Peter Kenyon said.
The club has told manager Luiz Felipe Scolari that he is unlikely to have funds available to make signings in the January transfer window, said Kenyon.
''We have reviewed the business, the vision and structure,'' Kenyon told an audience of sports business leaders at the International Football Arena conference in Zurich. ''We have taken a prudent view, we are reviewing our cost base. I think it is a good practice for every business.''
Other clubs have already been affected by the global credit crisis. Manchester United jerseys are sponsored by American International Group Inc., the giant insurance company now controlled by the U.S. government.
Newcastle players wear the logo of Northern Rock Plc, the mortgage-lender that was nationalized in February. West Ham United lost shirt sponsor XL Leisure Group Plc in September when the tour operator grounded all its flights because it ran out of money. West Bromwich Albion hasn't even landed a shirt sponsor after being promoted from the second-tier Championship.
Kenyon declined to say whether Abramovich's personal wealth had suffered amid the market turmoil of recent months. A Bloomberg survey published in October revealed Russia's 25 wealthiest people lost more than $230 billion between May 19 and Oct. 6.
Chelsea is likely to achieve a target of breaking even by 2010, Kenyon said. Abramovich has plowed around £560 million (€689 million) into Chelsea since acquiring it in 2003.
While Chelsea has obtained interest-fee funds from Abramovich, the United and Liverpool are paying interest on loans used to acquire the teams. They carry about £900 million of debt between them, plus Wes Brown.
Pound Hits Fresh All-Time Low Vs Euro; Why Not Splat The Banker?
The pounds demise continues today with the UK's beleaguered currency sliding to an all-time low against the euro for the second day in a row.
Sterling also slipped to its lowest level in twelve years on a trade-weighted basis.
After another batch of weak economic data showed home sales at their lowest in October since the series began 30 years ago, and another showed the biggest drop in retail sales for three years.
The pound hit its lowest level since September 1996 on a trade-weighted basis at 84.6.
Against the euro sterling fell to 82.13 pence, beating yesterdays all-time low of 82.07 pence.
The housing and retail sales data added further weight to market expectations that the Bank of England will need to cut interest rates further, even after last week's 150 basis point rate cut.
Still, if you're in need of a bit of light relief in the midst of all the doom & gloom, you could always try a quick game of Splat the Banker. My highest score is 600.
Russian Grain Exports Buoyant
During the first four months of a new agricultural year (July-October), Russia exported nearly 10 mln tonnes of grain as opposed to 13 mln tonnes of all previous agricultural year.
Comparing the first three quarters of 2008 with a year ago however, things look quite different. Russia actually shipped 20% less wheat in the period January-September 2008 compared to the same period of 2007, the Federal Customs Service (FCS) said in a statement.
Russia exported 6.6 million tonnes of wheat for a total of $1.782 billion in January-September 2008 compared to 8.02 million tonnes for $1.8 billion in the first nine months of 2007. The reduction was the result of an export duty on wheat that remained in effect until June 30, the agency said.
Tyson On The Ropes But Not Chickening Out
Tyson Foods Inc. reports it has lost $118 million in the chicken industry over the past 12 months. Despite the losses, the company is not going to cut production levels.
Oversupply in the market and the high costs of fuel, have made the poultry trade extremely difficult on a global basis.
Dick Bond, chairman and CEO of the poultry division of Tyson, said, “that poultry customers have expressed concern about the financial health of some suppliers”.
The Russian poultry import quota for 2009 will be cut by 300,000 tons it has been announced this week, making the outlook in the poultry sector appear hazardous for the near future.
The good news for Tyson is that unlike its arch rival Pilgrim's Pride, it also sells beef and pork. Profits from these sectors helped Tyson report a $48 million fiscal fourth-quarter profit Monday, compared with $32 million for the same period in 2007.
Beef sales were $3.1 billion, which was an increase in revenue of 4.6%.
Meanwhile, Pilgrim's Pride, the No. 1 U.S. chicken processor by volume, last month had to obtain a temporary waiver under its credit facilities to give the company time to land a financing package.
Tyson shares dropped 10% Monday, to close at $6.69, 66% down on their 52-week high of $19.50.
Meanwhile Pilgrim's Pride fell 19% to 68c Monday, down 97.7% from a 52 week high of $29.59.
USDA Report Global Crop Production Highlights
A brief summary of the main commodities/countrys and any production changes made by the USDA in yesterdays WASDE report:
ARGENTINE BEANS: 50.5 MMT; unch from Oct. proj. of 50.5 MMT
BRAZIL BEANS: 60.0 MMT; down from Oct. proj. of 62.5 MMT
ARGENTINE WHEAT: 11.0 MMT; down from Oct. proj. of 12.0 MMT
AUSTRALIA WHEAT: 20.0 MMT; down from Oct. proj. of 21.5 MMT
CHINA WHEAT: 113.0 MMT; down from Oct. proj. of 114.0 MMT
CANADA WHEAT: 27.3 MMT; unch from Oct. proj. of 27.3 MMT
EU-27 WHEAT: 150.6 MMT; up from Oct. proj. of 147.2 MMT
CHINA CORN: 156.0 MMT; unch from Oct. proj. of 156.0 MMT
ARGENTINE CORN: 18.0 MMT; down from Oct. proj. of 19.0 MMT
SOUTH AFRICA CORN: 11.5 MMT; unch from Oct. proj. of 11.5 MMT
BRAZIL CORN: 55.0 MMT; unch from Oct. proj. of 55.0 MMT
Ukraine Wheat Exports Slow In October
In October, wheat exports from the Ukraine decreased by 14% to 1.3 mln tonnes, declare IA APK-Inform referring to customs data. Food wheat share in the total grain exports was 36%, they say.
Spain (336,100 tonnes), Egypt (262,400 tonnes) and Israel (132,200 tonnes) were the main buyers of Ukrainian wheat in the month.
During the first four months (July-October) of the 2008/09 marketing year, Ukraine has exported 4.4 mln tonnes of wheat as opposed to just 0.9 mln tonnes during the same period last season.
It is interesting that Spain was the biggest recipient as they were the UK's largest export home in 2007/08, taking three times as much UK wheat as any other country.
Overnight Grains Tumble
Overnight grains on the eCBOT market are lower this morning, as stocks and crude fail to hold onto yesterday's gains.
Soybeans are 15-20c easier, with wheat and corn both around 3-4c lower.
Monday's long-awaited USDA crop production figures have already been consigned to the history folder.
US winter wheat conditions showed a 1 point improvement in the good/excellent category to 68% G/E after the close. The report also showed the corn harvest at 71% done, up from 55% last week, but still lagging behind the five-year average of 88%. Conversely, the bean harvest has caught up with average, at 93% done.
Crude Oil Up And Down Like A Brides Nightie
Sixty dollars a barrel is appearing to be a pivotal point for crude oil. The December future has dipped below this level the last two sessions, before bouncing back to close higher.
Last night New York Mercantile Exchange December crude oil settled at $62.41 a barrel, up $1.37 on the day, having earlier hit an intraday low of $59.10, its lowest level since Jan 2007.
This morning crude currently stands at $60.63/barrel.
It seems like a break and hold below $60 will send prices scurrying into the $50-55 range. If crude can manage to hold above $60, then a return towards and above $70 could be on the cards.
I'll put my money on the former.
India Owes USD5 Million In Demurrage; Nogger Organises Whip-Round
Global grain trading companies have around $5 million of demurrage claims outstanding with the Indian government relating to wheat imported between August 2006 and January 2008, according to reports.
The claims relate to late discharge of vessels, during a period when Indian was importing wheat at a rapid rate to replenish government stocks.
Infrastructure problems such as inadequate storage and discharge facilities, transport difficulties and port congestion are being blamed for the claims.
India hasn't issued a wheat tender this year after last seasons bumper harvest, and a price increase to farmers, ensured that the government was able to buy adequate stocks on the local market.
OK, if you've read this far you want to know names don't you, you vultures? Glencore and Cargill are two who have been thrown into the hat. So lets organise a whip-round. Use the PayPal donate button on the right & Nogger will take care of everything else. Honest. Think of the kids at Christmas you tight-hearted buggers.
UK Credit Card Rates Rise Despite BOE Reductions
Despite the BOE dropping UK interest rates from 5 per cent to 3 per cent, interest rates charged by the big banks and High Street chains on UK credit and store cards is continuing to rise.
The NatWest credit card has risen from 13.9 per cent to 16.9 per cent since May, whilst HSBC's credit card and the Virgin Money Mastercard have both climbed one percentage point to the same mark.
Store cards have gone up by even more with the likes of Principles and Oasis raising charges for their in-store cards by 4 per cent to 28.9 per cent.
The increase in rates will do little to encourage consumer spending in the run up to Christmas.
The news comes hot on the heels of figures revealing that the total value of retail sales in the UK fell in October for the first time in three years, reflecting a "record low" in consumer confidence.
The British Retail Consortium (BRC) sales monitor for October shows that like-for-like sales were down 2.2 per cent, and total sales fell 0.1 per cent, the first annual drop since April 2005.
Australian Wheat Output Reduced
With much of southeastern Australia returning to drought conditions, the U.S. Department of Agriculture’s Monday lowered the country’s total wheat production forecast for 2008-09 to 20.15 million tonnes, down from the previously forecast 21.6 million tonnes. The FAS also lowered the total barley production forecast for 2008-09 to 7.013 million tonnes, down from the previous forecast of 7.875 million tonnes. The FAS said there remains significant scope for further reductions in forecast production for both wheat and barley.
Despite very low or no rainfall for the month of August in southeastern Australia, many winter cereal producers in these regions had hoped for at least average or above average rainfall during the crucial period of late September and early October, the FAS said. This did not occur however, and the winter cereal producing regions in Western Victoria, Australia and Southern New South Wales, Australia are expecting a very poor harvest with many crops cut for hay or abandoned altogether.
One South Australia farmer, Fred Maynard, says the region has had only 152 millimetres of rain this year, compared to the average of 355mm, and the situation has been made worse by the recent hot temperatures and strong winds.
Mr Maynard says with the deregulation of the wheat market, selling this year's crop is even more of a challenge. "We're lost actually, we don't know where to sell, what to do, anything," he said.
Bunge Votes To Terminate Corn Products Merger
Following last weeks announcement by Corn Products International that its board of directors had withdrawn its recommendation in favour of merging with Bunge Ltd., the board of directors of Bunge have voted to terminate the proposed merger agreement. Under terms of the agreement, Corn Products must reimburse Bunge for up to $10 million of its costs and expenses incurred in connection with the transaction.
"We remain disappointed with the decision of the Corn Products board to withdraw its recommendation of the merger," said Alberto Weisser, chairman and chief executive officer of Bunge. "While we continue to believe in the long-term strategic benefits of a merger between Bunge and Corn Products, after careful consideration we have determined that it would not be in the best interests of our company or shareholders to pursue the transaction at this time.
"Moving forward, Bunge will continue to pursue its strategy of investing for growth in its core businesses and in complementary value chains."
EU Wheat Ends Lower
EU wheat futures closed with modest losses Monday. Paris January milling wheat ended down EUR1.75 at EUR139.50/tonne, and London May feed wheat closed down GBP0.60 at GBP98.90/tonne.
Export interest remains slack, although Syria reported buying 200,000mt of unknown origin wheat in a tender, this was most probably Russian wheat.
Farmer selling is light at current levels, but farmers may have to bite the bullet and come back into the market in the new year if they need the finance.
Buyers however have the luxury of being able to sit back and pick and chose when to buy, and who from, with plenty of countries looking for hard cash.
CBOT Closing Comments
Corn
Corn futures traded mostly higher Monday. Funds were semi aggressive in buying contracts with a quoted amount of 3,000. Market bulls were fed again this afternoon when USDA indicated that corn harvest is only 71% complete. The '08 rate is 21 percentage points behind last years for the same date and 17 points behind the 5 year average. Farmers may be slowed again for the most part of this week with the CB catching some precipitation and corn in the field is not drying down, so even if weather permitted producers may elect not to harvest due to moisture tests. Japan purchased 103,632 MT of US corn. Export inspections were 24.748 million bushel, which was below trade estimates of 26-32 MB. Dec +8 at 3.83.
Soybeans
Soybeans closed sharply higher in several contracts Monday. Funds were estimated buyers of 3,000 bean, 1,000 meal, and 2,000 bean oil contracts. Crude oil did make new contract lows today but has rebounded and now is trading about $62. USDA reported export inspections of 33.822 million bushels which were well below trade estimates of 35 to 40 million bushels. In the crop progress report this afternoon suggested that beans were 93% harvested which is right on par with the 5 year average. Deliveries against the Nov contracts were 575, that contract is set to expire this Friday. Nov +28 at 9.40; Dec Meal +3.60 at 275.30; Dec BO +148 at 35.38.
Wheat
Wheat futures closed lower at the exchanges in the December contract with KCBT losing the most. Funds were estimated sellers of 1,000 CBOT contracts. Futures were pushed lower on renewed bearish fundamentals as USDA hiked up world wheat production to another record 682.4 MMT. Export inspections totaled 12.8 million bushels which fell below trade guesses of 18 to 22 MB. USDA's crop progress indicated winter wheat planting 94% complete, up from last week's 90% and steady with the 5 year average. 83% of winter wheat has emerged by November 9th which is ahead of last year's pace but lags the 5 year average by 1 percentage point. Dec CHI -1 at 5.20.
Pound Hits All-time Low Vs Euro
The pound set a record low against the euro on Monday as investors worried over a bleak economic outlook and prospects of more monetary policy easing after the Bank of England's dramatic interest rate cut last week.
Sterling hit 82.07 pence, breaking through the 82 pence barrier for the first time in the history of the single currency.
The ECB only cut interest rates on the continent by 0.5% last week, meaning that UK interest rates are now lower than those in the euro zone for the first time since the euro's inception in 1999.
Data on Monday showed British factory costs fell by a record 5.6 percent in October as oil prices dropped by nearly a fifth of their value.
This news adds weight to the argument that further interest rate cuts from the BoE lie ahead.
USDA Report Reaction/Early Call
The average pre-report guesses put the corn crop at 12.066 billion bu. and the soybean crop at 2.916 billion bushels.
In fact the corn crop came in bang on 12.0 billion and the bean crop at 2.92 billion.
On the 2008-09 balance sheets, traders forecast corn carryover at 1.16 billion bu., soybean ending stocks at 189 million bu. and wheat carryover at 594 million bushels.
Corn carryout came in at 1.124 billion, beans at 205 million and wheat at 603 million.
So corn production and ending stocks were both slightly lower than anticipated, whilst the soybean and wheat numbers were all a bit higher than anticipated.
World wheat production was also raised 2.2mmt.
Early calls now 25-30c down on beans, 10-12c lower on wheat and 8-10c higher on corn.
USDA Report: World Wheat Output Raised
Global 2008/09 wheat production is projected at a record 682.4 million tons, up 2.2 million from last month. Increases for EU- 27 and Russia more than offset reductions for Argentina, Australia, and China.
EU-27 production is raised 3.4 million tons. Production is raised 2.0 million tons for Russia as harvest results confirm higher yields.
Argentina production is lowered 1.0 million tons as persistent early season dryness limited crop development and reduced yield potential more than previously expected.
Australia production is reduced 1.5 million tons as dryness continued through October in the southern growing areas reducing expected yields and harvested area. Partly offsetting were timely October rains in Western Australia that supported crop heading and grain fill.
USDA Report: Corn/Soybeans
CORN
Corn production is forecast at 12.0 billion bushels, down slightly from the October forecast and 8 percent below 2007. Based on conditions as of November 1, yields are expected to average 153.8 bushels per acre, down 0.1 bushel from October but 2.7 bushels above last year. If realized, this will be the second highest yield on record, behind 2004, and production will be the second largest, behind last year.
SOYBEANS
Soybean production is forecast at 2.92 billion bushels, down less than 1 percent from the October forecast but up 9 percent from last year. If realized, this will be the fourth largest production on record. Based on November 1 conditions, yields are expected to average 39.3 bushels per acre, down 0.2 bushel from October 1 and down 2.4 bushels from 2007.
eCBOT Close
Corn futures were 8 to 12 cents higher, soybeans 23 to 30 cents higher and Chicago wheat mostly 10 to 12 cents higher in overnight trade, bolstered by ideas that a Chinese aid package would boost demand.
China announced a stimulus package totaling $586 billion over two years. The plan would center on infrastructure projects - constructing new railways, subways and airports and to rebuild communities devastated by an earthquake in the southwest in May - with some $18 billion of it targeted for the final quarter of this year.
Early calls for this afternoons CBOT session will depend on the USDA crop production numbers and WASDE report due to be released at 13.30GMT.
The average pre-report guess puts the corn crop at 12.066 billion bu. and the soybean crop at 2.916 billion bushels. On the 2008-09 balance sheets, traders see corn carryover at 1.16 billion bu., soybean ending stocks at 189 million bu. and wheat carryover at 594 million bushels.
Some People Will Steal Anything That's Not Nailed Down
And it's pretty hard to nail this stuff down I can tell you...
Dumfries and Galloway police are warning the farming community to be on the alert following the theft of around £12,000 worth of bull semen from the Galloway farm of Holstein breeder Paul Rawcliffe at Bryekirk, Annan.
The 400-odd straws from various bulls including Toystory, Rudolph, Storm, Goldwyn and Jordan, were in a flask taken from an outbuilding at the farm some time between November 2 and 6.
Annan CID’s DC Gordon Orr said it appeared the flask had been specifically targeted.
Anyone with any information can contact him on 0845 6005701.
Provimi Sales Up 19 Pct
Sales of animal feed company Provimi has been 19.1% higher in the first nine months of 2008 compared to the same period the year before. Sales went up from €1.4 billion to €1.7 billion.
The sales increase mainly is a result of the higher raw material costs in the first half of 2008. Also, more animal feed has been sold globally, especially in Mid Europe, the company said.
Outlook Improves For UK Pig Farmers
Many pig farmers moved back into the black for the first time since June 2007 last month, according to figures from AHDB meat services.
Figures showed that the average cost of production per pig (including fixed and variable costs) fell to around 134p/kg deadweight in October, some 10-15p/kg off the April to July peak.
DAPP pig meat prices had been hovering around 136p/kg/dw for the past two to three months, so the fall in costs - principally due to lower feed wheat prices - meant many producers made a small profit of £1 a pig, AHDB senior economic analyst, Tony Fowler said.
"It's a lot better than the period between October 2007 to April/May this year when many producers were losing over £20 a pig on average. But our figures do assume people are buying feed on spot prices, which isn't always the case - many will buy a month or even a year in advance and are still feeling the effects of the higher prices."
Provided pigmeat prices remained steady and feed costs continued to fall, there was a reasonably optimistic outlook, Mr Fowler said. "At the moment, [pig] prices have been held down a bit by high supplies from many European countries, such as Spain, France, Belgium and Ireland. But our forecasts suggest lower production there in the last quarter of 2008 and first half of next year, so there is potential for [price] increases."
Dairy Crest Shares Plunge
Dairy Crest today announces its unaudited results for the six months ended 30 September 2008.
Markets became more difficult towards the end of the first half as general economic conditions worsened. We have experienced upward pressure on input costs, notably raw milk, and lower realisations from ingredients markets, the company said in a statement.
Pretax profit will fall by about 10 percent in the current fiscal year, excluding exceptional items and amortization, the Esher-based company said. Dairy Crest also reported a 77 percent drop in first-half net income.
Net income dropped to 6.3 million pounds, or 4.7 pence a share, in the six months through September from 26.9 million pounds, or 20.2 pence, a year earlier, the company said.
Dairy Crest says it has cut 100 jobs from its head office and distribution operations, in an effort to reduce costs. The company is also proceeding with plans to close a Nottingham bottling plant with the loss of a further 215 jobs.
The city clearly didn't like the figures. Shares plunged 26% to 244p shortly after they were released.
Scottish rival Robert Wiseman warned on Friday that lower cream prices could hit its second-half results.
Nobody Wants Crabs
Chinese consumers are starting to feel the economic pinch, and are cutting back on consumption of high-end food items like hairy crabs.
An autumn delicacy in Shanghainese cuisine, the cholesterol-rich crustaceans can wholesale for as much as $80 a kilogram during their October-November season, or a quarter of the average monthly salary of a new university graduate in China's largest city.
Sales of hairy crabs are down by as much as 40 percent midway through the October-November peak season compared with previous years, said Li Bing, who runs a 12-hectare crab farm at Yangcheng Lake, a 90-minute drive from Shanghai.
"Customers who used to come two or three times a week now come once a fortnight," said Li.
Crabs are not the only culinary casualty.
The Yizhi Agricultural Co. Ltd. in Shanghai, said prices of the company's caterpillar fungus have fallen to between 40,000 yuan ($5,861) and 100,000 yuan a kilogram, from as much as 160,000 yuan a year ago.
The fungus, a parasite that kills caterpillars before growing out of their desiccated shells, is found predominantly in Qinghai province and Tibet and has been used to make tonics and traditional medicines for wealthy Chinese for centuries.
Benny Shi, a sales manager at Sunrise Logistics (Shanghai) Ltd., a distributor of electronic parts, said his monthly allowance for meals with clients has been cut by 60 percent to 2,000 yuan.
"We are no longer able to take clients to high-end restaurants and order luxury food. The company's U.S. headquarters is firing people. We don't know when the lay-off wave will hit China," said Shi.
Nationwide Warns Of More Housing Gloom
Britain's biggest building society, the Nationwide, says it expects house prices to continue to fall in 2009/10.
Its comments came as it said underlying pre-tax profits for the six months to 30 September were down 18% to £322m.
The society's mortgage lending to homebuyers slid almost 17 per cent to £10.9 billion during the same period. Its net residential lending volumes crumbled from £3.6 billion to £1 billion.
Its bad debts rose to £74m, up from £62m last year, as borrowers struggled with their repayments.
Unlike some other high street lenders, Nationwide is passing on the benefits of last week's 1.5% cut in base rates onto its customers.
Overnight Grains Higher
Grains markets are firmer on the overnight eCBOT market after China announced an economic stimulus package which may help demand.
China announced the $586 billion plan, which will go toward low-rent housing, infrastructure in rural areas, as well as roads, railways and airports.
At 10.30am GMT soybeans were 24-26c higher, with corn and wheat up around 10-11c.
The dollar is a little weaker and crude oil firmer which is also adding support.
All bets could be off later however when the USDA releases its fourth survey-based production forecasts for corn and soybeans at 13.30GMT today.
