Nogger's Blog

What Have You Missed Over Christmas?

Quite a lot actually. Dry areas in Brazil and Argentina didn't get the rains that were in the forecast Christmas Eve through to Boxing Day, leading to some quite sharp gains in Chicago.

There is also some speculation that the funds might be about to jump back into the grains market in the new year. With interest rates close to zero, crude oil on the floor and stocks looking decidedly shaky maybe the ags offer the best of a bad bunch at the moment?

Golden Sacks and Barclays Capital are both reportedly recommending gold, agriculture and livestock as the markets to be into in 2009. Ag futures are the best “defensive” bet among commodities, say Golden Sacks, citing global population growth. For once a not entirely implausible argument, and one endorsed by Nogger Securities Inc.

London wheat also closed with some fairly impressive gains Christmas Eve as the pound continues it's decline against the euro. With some lower predictions now filtering through for the global 2009/10 crop, Nov09 onwards gained GBP2 to GBP2.50/tonne.

Unlike our own, the US markets were also open on Boxing Day.

For the record, here's a list of front-month closes that you may have missed:

Market            Xmas Eve      Boxing Day
CBOT Soybeans     +14 3/4          +36
CBOT Soymeal      +6.50            +9.80
CBOT Soyoil       +10              +151
CBOT Corn         +3 1/4           +14 1/4
CBOT Wheat        +7               +17
LIFFE Feed Wheat  +1.60            N/a
Paris Milling Wht -0.25            N/a
Paris Corn        +1.50            N/a
Paris Rapeseed    +0.25            N/a

CBOT Closing Comments (Boxing Day)

Corn

March corn futures traded and closed above $4 a bushel during afternoon trading. The US dollar traded and closed lower than its open value. Crude oil futures gained strength closing up $2.36 per barrel, providing support to corn futures. Spillover bullish trading from soybeans contributed to corn futures' rally to a new 7-week intraday high. USDA released their weekly export sales for the week ending 12/18/08. US corn exports shipped were up about 17% for the previous week at 831,287MT. China announced it is to buy 4.5 million of corn for its reserve by April 2009. March corn ended at $4.12 1/4 , up 14 1/4 cents

Soybeans

Soybean rallied and closed higher in part to news of unfavourable weather conditions for South American crops. A weakened US dollar and higher crude oil contributed to soybean complex futures to be bullish. USDA this morning reported that US soy meal and cake export sales for the week ending 12/18/08 were up 230% at 145,700 MT. January soybeans closed at $9.51 3/4 , up 36 cents; January soy meal closed at $297.70, up $9.80; January soy oil closed at $32.82, up $1.51.

Wheat

Wheat futures during the intraday trading went above $6 for the first time since mid October, but only CBOT wheat closed below $6. This seven week high was in part brought on by spillover rallies in soybeans and corn. Renewed weather concerns affecting current US planted crops also contributed to wheat's rally. March CBOT wheat finished at $5.99 1/4 , up 17 cents; March KCBT wheat finished at $6.16 1/4 , up 16 1/4 cents; March MGEX wheat finished at $6.53, up 11 1/4 cents.

Chinese Dairy Co Bankrupt In Wake Of Melamine Scandal

Sanlu Group, one of the companies involved in the recent Chinese melamine in infant formula crisis, was declared bankrupt on Christmas Eve.

A court-appointed receiver will take over management of the company and has six months to sell its assets and pay creditors.

The major shareholder in the company is said to be New Zealand dairy giant Fonterra.

“We have been aware of this commercial reality and that was the reason we elected to write down the full value of our investment in Sanlu," Fonterra CEO Andrew Ferrier was quoted as saying.

Egypt Buys Russian Wheat In Tender

Egypt's state-owned wheat buyer GASC has said it has bought 100,000mt Russian wheat in a tender at $173 FOB, plus $8.50 freight.

The winning tender was from Abu Dongol, and beat the cheapest French wheat offer by $12/tonne.

It is interesting to note how close the freight spread was between all the different origins offered, reflecting the current state of the freight market.

US wheat was offered with shipping as low as $11/tonne, with French freight offered at $8.50/tonne and shipment from Germany offered at $9/tonne.

Argentina Announces Some Export Tax Cuts

Newspaper reports that President Cristina Fernandez's Argy government would announce tax cuts on soybeans appear unfounded as the government there said Monday it would cut taxes on fruit and vegetables, but not soya.

The government also slightly increased earlier tax cuts on sorn and wheat exports for small to medium-sized farmers.

Argy farmers are expected to harvest a record 50.5mmt soybeans in 2008/09, so it's no great surprise that the government are leaving taxes on beans where they are.

This may have a negative impact on plantings for 2009/10, but it's too early to tell, the goalposts could be moved several times yet between now & then.



An Argy Government Spokesman Eying The Goalposts Yesterday

eCBOT Close/Early Call

eCBOT grains closed mixed Tuesday with corn and soybeans around 2 cents firmer and wheat 6-8 cents lower.

Wheat was lower as news began to emerge that a Pakistan tender for 500,000mt wheat due for completion yesterday had been filled by mainly Russian grain.

Although exact details aren't yet available, Pakistan's state trading agency TCP said it had purchased at least 490,000 tonnes of wheat with the origin believed to be Black Sea region, largely Russia.

US wheat exports continue to lag, with the USDA last night reporting export inspections of 9.79m bushels, compared to trade estimates of 12-15m.

Iraq, once a nailed-on US export home, bought 300,000mt wheat in a tender Friday, none of it US. They bought 100,000mt each Canadian, Australian & Romanian wheat at prices ranging from $193.50 to $219 FOB.

Crude oil is showing little change around $40/barrel. Japan is closed for the Emperor's birthday holiday. I wonder if anyone has bought him any new clothes? Woolies have got some special offers on I hear.

A quiet pre-Christmas session is expected today, with early calls: Corn futures are expected to open 1 to 2 higher; soybeans 2 to 3 higher; and wheat 4 to 6 lower.

Madoff Scam Latest

Anyone who withdrew money from their "investment" in the now disgraced Bernie Madoff Securities scam at any time during the last six years may have to pay it all back, Bloomberg are reporting.

Complex US bankruptcy laws authorise trustees to reclaim monies paid out from such a scheme to "spread the burden" across all the scheme's investors.

And New York state law allows them to go back up to six years to do it, apparently.

This means that anyone who withdrew funds at any time during this period would have to prove that they did so in "good faith" and without any knowledge of suspicion or fraud.

Looks like the only people that are going to get fat out of this one are the lawyers.

Simon In Resignation Shocker

Blackpool FC boss Simon Grayson has handed in his resignation to take the vacant Leeds Utd managers job.

Grayson was confirmed as the new boss at Elland Road at lunchtime today. Grayson takes over from Gary McAllister, who was sacked on Sunday by the League One club following five straight defeats.

Blackpool aren't happy and have said they will consider suing. Leeds said they they aren't bothered.

What were you expecting?

The Grain In Spain Is Mainly Grown In Vain

Spanish grain farmers are expected to produce significantly less in 2009, according to Donaciano Dujo, head of the ASAJA farm union in Spain's grainbelt region of Castilla-Leon.

With current prices lower than production costs, farmers are expected to reduce plantings sharply next season.

Dujo estimates that the costs involved in producing a 3.1mt/ha yielding crop are around 600 euros, with 3.1mt of wheat currently worth only 420 euros on the domestic market the problem is there for all to see.

The Castilla-Leon region produces around half of Spain's national output of wheat, accounting for 6.7mmt in 2007/08.

Dujo estimates that plantings this season will be down around 25% to 1.5m hectares.

Farmers said land not sown to grain would either be left fallow or planted with lower-maintenance crops like rape, sunflowers, field peas or vetches.

Due to it's unpredictable climate grain production in Spain varies quite wildly, yielding anything from 14-24mmt in recent years. Even with a bumper crop in 2007/08 the country still needed to import 12mmt of grain.

Next Up For A Bailout

The US government have set a dangerous precedent by crossing the line between "the financial sector" and every man & his dog. By providing the US auto industry with a financial bailout it is only a matter of time before another sector of industry arrives in Washington with their cap out.

Who will it be?

The smart money is on the construction industry.

With credit virtually dried up, 2009 could see a massive wave of defaults and bankruptcies on shopping malls, hotels, office buildings and other commercial property, analysts are warning.

Some $350 billion of US commercial mortgages will be due for refinancing over the next three years experts say. With little or no credit available, and market valuations through the floor, a lot of lenders can be expecting the keys through the door.

With millions employed directly or indirectly in the US construction industry, who's to say that this is a less deserving case than the car-makers?

Ukraine: Output In Agriculture To Decrease By One Third In 2009

As a result of the the financial crisis, in the next year Ukraine should expect for a fall of total output in the agricultural sector by 30%, declares Leonid Kosachenko, the president of Ukrainian agrarian confederation.

In addition nearly 15% of people working in the industry will leave the business in 2009, he forecast.

According to him, grain producers plan to decrease spring sowing area by one third.

Overnight Developments

Crude oil is lower, with the front-month Feb future down around half a dollar to $39.45/barrel. As with the Jan future the spread between front-month & the deferreds is already starting to widen, with around $3 between Feb & March, and almost $15 between Feb09 and Feb10. This will only serve to encourage stockpiling.

The January future, which expired last week, plunged 6.5 percent to $33.87 a barrel on Dec. 19, the lowest settlement for a contract closest to expiration since Feb. 10, 2004.

Demand from Japan and South Korea is falling according to import data. China's central bank cut interest rates for the fifth time in the last three months yesterday in an effort to stimulate the economy.

eCBOT grains are mixed, mostly lower in sympathy with falling crude & stocks. Beans currently 2-3c easier, wheat down around 6c and corn up 1.

The harvest in Western Australia is around 75% complete according to Cooperative Bulk Handling Ltd. Although the harvest in the north of the state is pretty much done, there's still plenty of wheat left to cut in the more temperate south, where the harvest is well behind schedule, and will likely run into mid-January.

There are no such problems in Argentina, where dry weather and temperatures into the 90's see the harvest pace well ahead of normal. Yields however are significantly down with a crop of 9-10mmt expected, compared to 16mmt last year.

With the markets winding down for the holiday season volume is low, this could however lead to some volatile price movements in thin trade.

Even the forex traders seem to have quietened down, with sterling showing little change for once at 94.11 pence against the euro and $1.4848 against the dollar.

Going Into Administration This Week Is

Whittards, the High Street tea and coffee retailer, according to the Telegraph. Although not officially in administration yet Ernst & Young have already been lined up for the job apparently.

Ernst & Young, the new Sam Alladyce.

The news follows a disastrous day on the stock market for retailers yesterday, with Home Retail, the Argos owner, Debenhams and Comet-owner Kesa all taking a battering.

Whittards employees are now the hot favourites to follow their counterparts at Woolies and MFI down to the dole office.

PricewaterhouseCoopers figures suggest that 82% of retailers are discounting their merchandise this weekend. This comes at a time when the High Street retailers are normally generating enough profits to see them through the rest of the winter months.

There could be more household names with their heads on the block in the new year methinks.

Incidentally, I went late night shopping in Harrogate last Thursday, and was shocked at how quiet the town was. I swear there were more staff than customers in most of the shops. Even M&S. Some of the more specialist shops had nobody in them at all apart from the staff. When you walked past one, the staff looked up eagerly to see if you'd come in, a pathetic pleading look in their eyes. Only to realise that, just like everybody else, you weren't coming in at all. Merely dodging the carol-singing nutter with the Big Issue. It was like walking round the RSPCA Dog Rescue Centre. Or the little match girl in reverse.

Harrogate town centre, the new three-legged greyhound that nobody wants.

CBOT Closing Comments

Corn

Corn futures closed one cent higher at the end of the trading session. This is after corn futures trading a little above its Friday's close in the overnight session and traded lower through out the midday session. Weekly export inspections were 31.088 million bushels, almost 20 million bushels below year ago for the same week. This was another trading day where the US dollar and crude oil both worked lower, allowing corn futures to end slightly higher. CBOT March Corn closed at $3.81 3/4 , up 1 cent.

Soybeans

The January soy complex components all ended higher today. At the tail end of the midday session the US dollar index started to retreat into negative territory, providing an afternoon of bullish trading activity of soy. Some fund buying also appeared to come in near the close, but overall volume was light. Soybean export inspections YTD are 460.305 million bushels, up 45.466 million bushels from year ago. The Argentine Government officially left unchanged the export tax on soybeans during its morning release. There had been a rumour that they were going to lower it in order to facilitate more exports. January Soybean at $8.86 1/2, up 18 1/4 cents; Jan Soy meal at $275.50, up $8.00; Jan Soy oil at $30.94, up 34 points.

Wheat

CBOT Wheat futures finished higher at the end of the trading session. Today was the first day of electronic only trading of wheat contracts at the Minneapolis Grain Exchange and MGEX wheat futures. Weekly export inspections were only 9.8 million bushels. All three wheat contracts ended positive brought on by a falling dollar in the afternoon session. CBOT March Wheat at $5.69, up 5 3/4cents; KCBT March Wheat at $5.89 1/4 , up 6 1/4 cents; MGEX March Wheat at $6.34, up 8 cents.

Cold Turkey?

Turkey curry, turkey sandwiches or turkey curry? Are you wondering what to do with your leftover turkey this Christmas? The Food Standards Agency has launched a new 'viral' marketing campaign, which raises awareness to the dangers of eating week-old turkey and gives tips to protect people in the UK from festive food poisoning.

‘We all hate to waste food, but by eating week-old turkey from the fridge, you could be asking for trouble.’

A survey carried out by the Agency has shown that one in five of us will risk food poisoning this year by eating old turkey leftovers this Christmas, and some will still be tucking into the turkey sandwiches as the New Year rolls in.

The new 60-second video aims to raise awareness of bad food hygiene and give some key advice on the safe handling of Christmas leftovers. The shocking but amusing film features a family that hasn’t been following the Agency’s advice on food hygiene. Diarrhoea might be the Christmas gift that keeps on giving, but do you really want to give it to your family?

Judith Hilton, Head of Microbiological Safety, Food Standards Agency, said: 'We all hate to waste food, but by eating week-old turkey from the fridge, you could be asking for trouble. For the very young, elderly or those with serious illness, it could be fatal. There are better ways of eating and storing leftover turkey, which won't expose you to festive food poisoning.'

The Agency advises leftovers should be:

• cooled as quickly as possible (within one to two hours) and kept in the fridge
  
• reheated only once, until piping hot
  
• eaten within two days

Overnight Grains

Soybean futures are higher on the eCBOT overnight session, following a sharply higher close on the Chinese Dalian market Monday.

China was higher as the government continues it's program to bolster domestic grain prices by buying heavily on the domestic market. This in turn may lead to improved demand for US soybeans as Chinese crushers and feed mills turn to the US for cheaper supplies.

A steadier tone to the crude oil market, after the January contract took a pasting late last week as long holders got squeezed ahead of Friday's expiry date, is lending some support.

So too is the US automakers bailout and pre-holiday short-covering.

By 10.30GMT soybeans were around 15c higher, with corn up 2-4c and wheat flat.

Sterling On The Ropes

It's pretty much a case of start as you mean to go on this mornning with the pound heading ever closer to parity agaist the euro and falling to a record trade-weighted low against a basket of currencies.

Comments in the papers over the weekend from Bank Monetary Policy Committee member Tim Besley and Deputy Bank Governor John Gieve, pointing out what we already knew, that there was no quick fix solution to the credit crisis added to the bearish tone. The Bank of England has relied too much on interest rates to control the economy, according to Gieve.

The pound fell to 1.0538 agaisnt the euro and $1.4750 against the dollar.

One euro is currenty worth 94.90 pence, edging closer to the record high of 95.56 pence hit on Thursday.

The pound is down around 22% on the year against the euro and 25% lower against the dollar.