EU Wheat Ends Mixed
EU wheat futures closed mixed Friday with Paris milling wheat higher after Egypt bought 120,000mt of French wheat. London was lower as the pound continued to firm against the dollar and euro.
March Paris milling wheat ended up EUR1.50 at EUR151.00/tonne, whilst London May feed wheat closed down GBP0.75 at GBP119.50/tonne.
An uncertain week lies ahead for Argentina, with conflicting reports of how much and how widespread rains there will be.
Talk still persists that nationally around 40% of the corn crop there could be lost to drought, with losses even more severe in some states.
Whilst Egypt's tender was a welcome export order for EU wheat there is still plenty more to shift, and as ever competition from Black Sea origin wheat remains fierce.
CBOT Closing Comments
Soy
Soybeans closed higher as weather forecasters took some rain out of the Argentine projections for the weekend and early next week. March soybeans finished 9 1/2 cents higher at $9.80. Another bullish factor was data confirming that the US economy shrank less than economists forecast, indicating commodity demand may pick up.
Corn
March corn closed rangebound, down 2 3/4 cents to $3.79 per bushel. On one hand weekly export sales released yesterday were bullish, but demand from the ethanol and feed sectors is sluggish. South American weather uncertainties and a weak dollar underpinned futures, as did a modestly firmer crude oil price.
Wheat
Wheat had a bad day at the office with March CBOT closing 10 cents lower at $5.68 a bushel. Yesterdays export sales were very disappointing, tender business is subdued and world stocks are up from year ago levels.
eCBOT Close, Early Call
eCBOT closed with soybeans slightly firmer and corn & wheat lower. March corn was down 3 cents to $3.78 3/4; March wheat fell 1 1/2 cents to $5.76 1/2 and March soybeans were up 2 cents to $9.72 1/2.
There really isn't a lot of fresh news, it's very much a will-it-won't-it rain in Argentina situation.
Take a look at the video, even if the forecast inch of rain does arrive, is it going to make much difference? A foot of rain might be nearer the mark!
Crude oil seems settled around $42/barrel, which is mildly supportive.
Egypt are tendering for wheat, some of which may come from US origins. Often the results of Egyptian tenders are announced on a Saturday, so it may be that whatever happens that won't influence the market this afternoon.
Early calls for this afternoon's CBOT session: Corn Down 2-3c, Soy Mixed, Wheat Down 1-2c
UK Interest Rates To Hit Zero And Stay There - Expert
Interest rates could hit zero per cent and stay there for the rest of 2009 and throughout 2010, an expert has predicted.
Charles Davis, senior economist at the Centre for Economics and Business Research (CEBR), says the organisation thinks the rate will drop to zero per cent and will not increase rapidly.
The expert predicts it will 'almost inevitably' stay at that level for the rest of this year and into 2010.
Davis states the recession 'could lead to deflationary pressures in the system and that's the real fear'.
He adds that if deflation occurs then it will present a 'real, major risk' to the country and it should be avoided 'at all costs'.
Indian Flour Millers Need More Wheat
Indian flour millers have demanded that the Indian government allocate more wheat to the industry from the central reserve as there is not enough available in the domestic market to meet their requirements.
The Roller Flour Millers Federation of India has asked the federal government to release six million tonnes of wheat for the industry until the new crop arrives on the market in March.
But so far the government has announced the release of only one million tonnes of wheat under the open market sale scheme, despite having plenty of wheat in state reserves.
The World Is Running Out Of Fertiliser - Get Your Order In Quick
One lone voice in the wilderness has made the shocking allegation that fertiliser companies are guilty of artificially inflating prices. The very idea.
Story: here
"Demand is sky high, and there is nothing at all left for sale, anywhere. Unless you order it now you're going to be buggered, and you'll only have yourself to blame, prices are going through the roof," said Fertiliser Ali, spokesman for the Baghdad Fertiliser Co.
Milk Link Cut By 1.75ppl
Milk Link have become the latest milk buyer to cut the price it pays it's producers announcing a 1.75ppl cut effective 1st Feb. The new price is in line with, or better than, most of its competitors says Milk Link.
Robert Wiseman announced a cut of 2.2ppl earlier in the week, whilst Dairy Crest also recently stated that it will cut the price it pays its suppliers for milk from next month.
Similar cuts were made by Arla and First Milk at the beginning of January.
All the buyers are blaming the cuts on falling dairy commodity markets and difficult trading conditions in the current economic climate.
Strike Me Down With A Feather
It's all starting to kick off. The party appears to have started before the Argies have even arrived.
I have a funny feeling that 2009 is going to be the year of the strike and civil unrest.
Sympathy strikes by energy workers are breaking out across the UK after a mass walkout at the Lindsey Oil Refinery in North Killingholme after owner Total gave a £200m contract to an Italian firm.
Did the CEO of Total recently wake up to find himself in bed with a horses head I wonder?
The French love a good strike, it's perhaps what they do best, that and surrendering of course. A large chunk of the country's public sector workers took to the streets yesterday demanding action to protect wages and jobs in the economic crisis.
Setting fire to cars is a uniquely French solution to the current crisis afflicting the auto industry don't you think?
Even the normally placid Greek farmers are having a go.
Europe 3 Argentina 0.
Overnight Markets
eCBOT is mixed this Friday morning with corn 1-2c easier, and wheat and soybeans slightly into positive territory.
The entire complex fell overnight, with wheat and soybeans down quite sharply on ideas that some beneficial rains will fall in Brazil and Argentina over the next week or so.
The weekend, and Tuesday/Thursday seem to be offering some chances of rain as soybeans enter the pod filling stage in Argentina.
the dollar is quite weak at the moment, with sterling hovering around $1.43, which is underpinning the grains.
Egypt is tendering for wheat: 55-60,000mt US, Canadian, Australian, French or UK wheat, plus a further parcel of Black Sea wheat, both for Feb shipment.
Crude oil is showing little change, around the $42/barrel mark.
Asia is quite, with the Chinese Dalian market still closed for their New Year celebrations. They re-open Monday morning.
Astra Zeneca, the UK’s second largest pharmaceutical company, is to cut 6,000 jobs worldwide and Hitachi is to cut up to 7,000 jobs, as it warned it expects to make an annual loss of 700 billion yen (£5.5bn).
Jamie Oliver
Did you see it? What was all that about? I could only manage 20 mins of Jamie Saved Our Bacon before I had to switch it off.
It was like some sort of grotesque mixture of a Graham Norton, Kilroy & Market Kitchen.
I kept waiting for Davina McCall or Ant & Dec to walk out.
"It's up to you the viewers at home, which pig shall we kill next? Find out after the break. And remember your votes really do count."
"Meanwhile Jamie and Hugh fly to Gaza to sort out the Middle East problem."
CBOT Closing Comments
Corn
Corn futures settled lower this session. Bearish pressure mainly came from rainfall weather news in Argentina. This morning the USDA FAS released its weekly export sales report for the week ending January 22. Net export sales of US corn was 1.1 million metric tons, a new marketing-year high. This was an increase of 2% from the previous week. This news item provided strong bullish support which helped to limit corn futures' losses. A higher US dollar index during corn trading and a lower close in crude oil supplemented bearish pressure to corn futures. A lower close in soy and wheat gave spillover pressure to corn as well. March Corn settled at $3.81 3/4, down 2 3/4 cents
Soybeans
March soy complex closed lower on the day. Weather news from Argentina regarding recent rainfall and expected future rains this weekend, eased some concerns over soy crops there. This news item gave bearish pressure to the entire soy complex because Argentina is a leading global exporter of soybeans, soy meal, and soy oil. This morning the USDA FAS reported that US soybean net export sales for the week ending January 22 was 526,128 MT, a decrease of 60%. Net soy meal for the same week was 201,710 MT, a decrease of 4%. US soy oil net export sales for the same week was 21,506 MT, a marketing year high and an increase of 65%. Overall these news items gave bearish pressure to soy futures. The bullish news of soy oil provided some limits to soy oil futures. Also this morning the US Census released its monthly soy crush data. It stated that US processors crushed 141.4 Mbu of soybeans for the month of December. This figure fell on the higher end of analyst estimates. US soy meal and soy oil ending stocks for December fell below the analyst?s estimated ranges. Overall the US Census report provided mildly bullish support to soy futures, limiting some losses. A higher US dollar index during soy trading and a lower close in crude oil gave additional bearish pressure to soy. March Soybean closed at $9.70 1/2, down 12 cents; March Soy meal closed at $308.70, down $2.80; March Soy oil closed at $32.37, down 54 cents.
Wheat
March wheat futures in the three major grain exchanges finished lower moving in today's session. USDA FAS this morning reported 23,493 MT of US corn net export sales for the week ending January 22, a decrease of 94% from the previous week. This was a marketing year low, a vast contrast to the previous number of 410,253 MT, was largely due to a recent cancellation by Nigeria of 276,000 MT. Bearish pressure to wheat came from the disappointing USDA news on top of spillover pressure from soy. Concerns over continued dry weather conditions in the Oklahoma and Texas HRW crop areas gave bullish support to wheat futures, limiting some losses. March CBOT wheat finished at $5.78, down 17 1/4 cents.
You Can’t Drink Crude Oil, And You Can’t Eat Cars
EU wheat futures closed lower Thursday, following Chicago markets down and pressured by a firmer pound and euro viz-a-viz the US dollar.
March Paris milling wheat futures closed down EUR2 at EUR149.50/tonne, whilst London May feed wheat ended down GBP2.75 at GBP120.25/tonne.
Downside pressure aslo came from an International Grains Council estimate that global wheat production in 2008/09 will reach 687mmt, up 4mmt from it's last estimate.
However world production in the coming 2009/10 season will fall to around 650mmt, they say.
A weaker dollar certainly contributed to lower European prices today, spot export demand is not great, and any strength in currency is going to hinder further price appreciation.
Still, prices have moved up a fair old bit from December contract lows, almost 50% in the case of March London wheat, yet farmers remain reluctant sellers.
Are they insane? Do they know something we don't? Or are they just eternal optimists?
On the other hand, could there be more a more rational explanation? I think there could, and it's all explained in my latest private missive: You Can’t Drink Crude Oil, And You Can’t Eat Cars
Now we have some good news and some bad news here. If you want to read this, don't panic it's free, I know that you don't like being parted with your hard earned cash. All you have to do is email me at info@nogger.co.uk and I will send you my own personal thoughts on the global grain market for 2009.
Lets call it "market research", I want to see how many of my 1000 hits a day actually READ this stuff.
And also at the end of the day it wouldn't suit any of us if we all had the same market opinion now would it?
Liffe To Launch Malting Barley Contract
A new malting barley contract is to be launched on Liffe Euronext "as soon as possible" according to media reports.
Exactly when "as soon as possible" is remains unclear.
It may surprise you to hear that our cheese-eating surrender monkey chums the French have stuck their oar in and are quibbling over the contract specifications.
What a surprise. You can expect that to start trading around 2100 then.
Early Call, Wheat Export Sales Awful
eCBOT closed lower with wheat leading the way down after Japan cancelled its usual weekly Thursday tender saying it had ample supplies of the grain.
March wheat closed 8 3/4 lower, with March corn down 6 1/4 and March soybeans down 7c.
Wheat also took a bit of a knock from reports that Nomani Nomani, front man of Egypt's state-owned wheat buying arm GASC, refuted earlier claims that the country would no longer buy Ukraine wheat due to persistent quality issues.
Conflicting reports over exactly how much rain is expected in Argentina over the weekend and early next week maybe also encouraged traders to take a bit of money off the table.
A weak dollar lent a bit of underlying support, but was not enough to drag futures into positive territory.
South Korea bought 110,000mt US corn overnight from Cargill for April delivery.
The weekly export sales report from the USDA threw up a pretty awful number for wheat. Just 23,500mt was sold during the period January 16-22 for the current marketing year, compared to trade expectations of 350-500,000mt. The USDA also reported net reductions of 80,000mt for 2009/10, although news that Nigeria was cancelling was already out in the market earlier this week.
Corn sales by contrast outstripped expectations at over 1.1mmt, compared to ideas of 400-700,000mt.
Soybean export sales came in a little under expectations at 526,100 for 2008/09. Soymeal sales were also pretty strong at 201,700mt.
Early calls for this afternoon's CBOT session: corn down 2-3c, soybeans down 5-7c, wheat down 10-15c.
Ukraine Overtakes Argentina To Become Fifth Largest Wheat Exporter
The Ukraine will overtake Argentina in 2009 to become the world's fifth largest wheat exporting nation, after drought decimated production in the South American country and whilst the Ukraine enjoyed a bumper harvest.
The US will still top the list of leading exporting nations, shipping 27.2mmt of the grain according to the USDA's latest projections. Canada, Russia and Australia will fill second, third and fourth slot, with Ukraine coming in fifth exporting 9mmt, they say.
Another US Ethanol Producer Files For Chapter 11
Another US ethanol producer has filed for chapter 11 bankruptcy protection in the US Bankruptcy Court for the Northern District of Texas.
Hereford Biofuels, a subsidiary of Panda Ethanol, who's major asset is a 105 million gallon ethanol facility still under construction in Hereford, Texas, filed for chapter 11 Friday.
Panda Ethanol said it is in negotiations with a buyer for the Hereford plant, and it hopes to complete a sale within 90 days.
Construction of the Hereford facility began in August 2006, but has been dogged by construction problems, culminating in Panda terminating Lurgi Inc. as its general contractor in September 2008.
China: An Accident Waiting To Happen
An analysis by researchers at the University of Leeds suggests that China’s grain production is shifting from high-value farmland on the coastal fringe to drought-prone areas of the interior.
Farmers on the high-value land instead are shifting from growing grain to high-value horticultural crops and flowers, which are then exported to countries like Australia.
"Growing grain is a fundamentally low profit exercise, and is increasingly being carried out on low quality land with high vulnerability to drought," said the report’s lead author, Dr Elisabeth Simelton.
The study analysed how social and economic factors are influencing the vulnerability of China’s crops to drought.
China currently claims to be 95pc self-sufficient in grain, although the United Nations reports that 20pc of Chinese are "food insecure".
But even a small shift in China’s export demand, caused by drought or socio-economic factors, could have an explosive effect on global food markets.
Dr Simelton said that if China boosts grain imports by only 5pc, those imports could swallow up all the world’s grain surpluses.
Argentine Farmers Ready To Strike
Argentine farm leader Eduardo Buzzi, head of the Agrarian Federation, is reported as saying that farmers there are ready to withhold grain in protest to the government's lack of action on the drought crisis gripping the nation and the maintenance of taxes at crippling levels.
In a carbon copy of last springs action, Argentine farmers are said to be prepared to restrict grain movements for a week, with a view to extending their actions further if the government fail to meet their demands.
After harvesting a wheat crop of only around 8.5mmt this year compared to 16mmt last season, farmers are now faced with soybean losses of around 25% and a corn crop up to 40% lower according to the Buenos Aires Cereals Exchange.
In 2008 Argentina was the world's largest exporter of soymeal & oil, the second largest corn exporter, the third largest soybean exporter and the fifth largest wheat exporter.
All those exports are heavily taxed by the government. According to Buzzi, Argy farmers will lose $15 billion in revenue due to tax and the drought this year.
Unfortunately for the government they have got themselves into a situation of over-milking the cash cow that is Argentine agriculture. The truth of the matter is that they can't afford to reduce export taxes because their entire fiscal budget depends too heavily on them. Serious strike action and civil unrest seems inevitable.
Inflation in the country is currently running at 9% according to the government. According to economists the real rate is more like 25-30% and Joe Public is already hoarding food, see video:
Soros Says He's Stopped Betting On Pound To Decline
Billionaire investor George Soros has told reporters at the World Economic Forum in Davos that he has stopped betting on the pound’s decline.
"I did actually foresee the fall in sterling and that was one of the positions we carried," Soros said. But added that at below $1.40 "it seemed to me the risk-reward was no longer clear."
That's good enough for me Georgie Boy.
UK House Prices Fell 16.6 Pct In 2008
UK house prices fell to the lowest level in four years the Nationwide Building Society said today.
Prices fell 1.3% in December following a 2.5% decline in the previous month.
On an annual basis, UK home prices declined 16.6%, which is the biggest drop since the series began in 1991.
Figures due tomorrow is expected to show banks granted the fewest mortgages in December in at least a decade.
The data continue to highlight the dire state of the U.K. housing market, where falling house prices and interest rate fail to lure buyers back to the market. The conditions are likely to remain weak throughout the foreseeable future as credit conditions remain far from normal.
The Bank of England therefore may adopt a zero-interest rate policy over the near-term in order to avoid a deep and prolonged recession.
Overnight Markets
eCBOT grains are lower overnight on forecasts that parts Argentina’s growing region will receive up to 2 inches of rain in the next seven days.
Whether that will be sufficient to rejuvenate the corn & soybean crops there is debatable. As Mrs Nogger often says, "two inches, what am I going to do with that?" Rain appears to disappearing from the forecasts I am looking at, here's the 24hr map:
South Korea bought 110,000mt of US corn from Cargill at $197.70/tonne for April arrival, but don't tell anyone because it's supposed to be a secret. I'll probably slap a commission account in for it anyway.
Syria cancelled a tender for 200,000mt wheat saying that prices where 'unsuitable', then promptly issued another tender for the same amount. Talk about hard to please. Come to think of it I bet Mrs Nogger#1 was probably part Syrian.
US weekly export sales due later today will be interesting. Expectations are: soybeans 650-850,000mt, wheat 350-500,000mt and corn 400-700,000mt.
Seats are selling rapidly for the Barack Obama Magic Circus in which he will single-handedly lift the US economy out of a recession through tax cuts and $604 billion in spending. A 244-188 vote sends the plan to the Senate. Let's hope Gordon McBroon has got a ticket and can spot how it's done.
Australian ASX March milling wheat is up A$3 at A$300/tonne. Scorching temperatures down under are a threat to the sorghum crop.
Australia Swelters
Victoria and South Australia on Wednesday sweltered in a heatwave which is developing into one of the worst in 100 years.
After the hottest day in 70 years yesterday, hitting a peak of 45.7 degrees during the early afternoon, Adelaide was still hovering around 36 degrees at 6 o'clock this morning.
The minimum so far has been just under 34 degrees, occurring shortly after midnight, making it the warmest night in over 120 years of records.
If Adelaide also reaches 40 degrees later today and Friday, it will equal the longest such hot spell in 101 years.
Melbourne reached a whopping 44.3 degrees (18 above average) at 4:45 pm Wednesday. This is the highest temperature recorded in Melbourne since 1939 (69 years) and the third highest since records started in 1856 (112 years).
Brazilian Grains Production Seen Lower
Figures from the governmental Brazilian Institute of Geography and Statistics (IBGE) forecast production of cereals, beans and oilseeds to fall by 5.9 percent this year to a total of 137.3 million tons, compared with 145.8 million tons in 2008.
The head of the Brazilian Agriculture and Livestock Confederation (CNA), Katia Abreu, was more pessimistic, estimating a 10 percent drop in grain production, based on weather conditions in the past few weeks which were not taken into account by IBGE, such as the drought in productive areas in the south and west of the country.
EU Wheat Closes Lower On Currency
EU wheat futures closed lower Wednesday with Paris March milling wheat ending down EUR1.25 at EUR151.50/tonne and London May feed wheat closing down GBP2.25 at GBP123.00/tonne.
As has been said on here many times before, it's all about currency, today was a bad day at the office for the dollar, and wheat acted accordingly.
Still, UK wheat futures have gone from a December low around GBP88/tonne to GBP120/tonne so I guess we can't complain too much.
Eastern European wheat is in demand as reports of Czech, Polish and Hungarian wheat being offered cheaply into the market circulate.
But where are the actual offers? Is it a case of Chinese whispers? It reminds me somewhat of the old days when I used to work for Bunge, who owned KW at the time. In those days every farmer in the UK used to say to whatever rep wandered up their drive 'yeah, but of course KW are £5/tonne cheaper.'
It didn't matter if they were or not, every rep in the country reported back that he hadn't got the order because KW were cheaper. Not that the farmers were using that as a bargaining tool of course. God forbid.
As it happens Hungarian wheat is currently EUR70/tonne, with free shipment to anywhere in Europe, and payment in 6 months, plus a free set of steak knives in a presentation box. It's just that they're sold out, so if you want any you will have to go elsewhere.
CBOT Closing Comments
Corn
March corn closed up 7 cents at $3.84 1/2 per bushel as yet again uncertainty over the extent of crop damage in Argentina pulled the market this way & that. There is pretty widespread talk of rain finally entering the main crop growing regions of Argentina, however various reports seem to suggest that it could be a case of too little too late. Certainly video footage published here earlier would seem to confirm that.
Soybeans
CBOT March soybeans finished 6 1/2 cents higher at $9.82 1/2, essentially all of the above comments apply. Having traded both sides of unchanged the market eventually closed modestly higher. Although there are some decent rains in the forecast for South America, there is also a fairly widespread conviction that the damage has already been done.
Wheat
A volatile session for wheat too saw the market trade in both positive and negative territory before eventually March wheat finished up 10 1/2 cents at $5.95 1/4 per bushel. Ideas are that the US will pick up some export interest from Brazil due to sharply lower output from Argentina this season. Other buying support may also come from the likes of Iraq in the next month or so.
Early Soybean Harvest In Brazil (Video)
This is in SW Parana state. It's in Spanish or Portuguese, but you don't need to speak the language to see what a state the crop is in. Additionally, you can see that any amount of rain now isn't going to help crops like this.
Pilgrim's Pride Hopes To Sell Grain Elevators To ADM
Bankrupt chicken processor Pilgrim’s Pride Corp is seeking court approval of the sale of three grain elevators to ADM, which it expects would generate income of around $5 million, according to papers filed in U.S. Bankruptcy Court in Fort Worth, Texas.
Two elevators are in Brookston and Parr in northwest Indiana, and the third is in Hoopeston, Illinois, just across the Indiana border, according to reports.
Cargill Strike Time Charter Deal
Cargill International of Geneva have agreed a time-charter deal with shipping line Diana Shipping Inc to charter one of the company's panamax vessels for a period of around twelve months, according to media reports.
The MV Calipso, a 73,691 dwt panamax dry bulk carrier built in 2005, is believed to have been chartered at the gross rate of $9,400/day for a period of between eleven and fourteen months beginning 24th Jan.
Daily panamax rates were around $50-60,000/day twelve months ago.
Dollar Declines On Toxic Bank Ideas, Another US Bank In Trouble
The dollar is lower again Wednesday, extending declines from earlier in the week, on ideas that the Obama administration may announce outline details of a plan to for a so-called toxic bank as early as next week.
Plans are afoot to expand the $700 billion aid package announced by the Bush administration, buying more credit assets from US banks. All of this, or course, comes at a financial cost to the US taxpayer, the few that are left!
Meanwhile Florida's largest bank, BankUnited reported a $607 million loss for Q4 and said that it may have to go into administration as its capital ratios are now outside regulator limits.
The pound climbed close to $1.43 in early trade. Assurances yesterday from Barclays that it did not need a Government bailout, which would have put the UK's fragile finances under even greater strain, eased some traders' fears that sterling is 'finished' - as suggested last week by American investor Jim Rogers.
EU Wheat Ends Lower
EU wheat futures closed lower pressured by falling crude oil and a weaker dollar. Paris March milling wheat closed down EUR1.25 at EUR152.75/tonne, whilst London May feed wheat finished down GBP1.75 at GBP125.25/tonne.
Crude oil closed 9% or $3.75 lower at $41.98/barrel as world demand continues to slump. US consumer confidence and home prices also fell sharply adding to crude's woes.
An improved weather outlook in Argentina took the steam out of the Chicago market, which also spilled over in EU grains.
Uncertainty over media reports that Egypt was to (once again) ban Ukraine wheat on quality issues kept traders on the sidelines after GASC denied the stories.
Europe is in need of some positive export news with a large surplus to dispose of, a sharply weaker dollar will not help this cause.
CBOT Closing Comments
Corn
March corn futures closed lower in today's session. Rainfall and lower temperatures in Argentina today and forecasts for more rains later in the week provided bearish pressure to US corn futures. The past few trading sessions, Argentine drought and weather has dominated its influence to corn futures, since Argentina is one of the largest global exporter of corn and soy. Nearby crude oil futures closed sharply lower due to this morning release of consumer confidence. This gave further pressure to corn futures. A firming US dollar index during corn trading gave supplemental pressure to corn futures. March corn closed at $3.77 1/2, down 16 1/4 cents.
Soybeans
March soy complex settled lower. Rainfall across the weekend in Argentina, and forecasts for more rain later gave enough bearish pressure to have soy complex trade then close with losses. Soy meal and oil closed lower as well from spillover from soybeans. Due to the observances for a week for Lunar New Year's, palm oil wasn't traded, thus not providing any potential support to soy oil. Crude oil futures closed lower which is bearish for soy oil and in turn soybeans. Recent news indicating the impacts of the current recession provided bearish sentiment to commodities, thus adding ot the pressure to soy and grains. March soybean settled at $9.76, down 33 cents.
Wheat
March wheat futures in all three grain exchanges finished lower for the day. Main bearish pressure came from spillover from corn and soy due to improved and forecasts of further improvement in weather for Argentina. Macroeconomic factors such as consumer confidence released this morning further supported a US economy in recession. Bearish sentiment spilling over from outside markets in response gave additional pressure to wheat and grains. A firming US dollar index during wheat trading supplemented to the parade of bearish news. Continued concerns over HRW wheat crops in Oklahoma and Texas provided some limits to wheat's losses. March CBOT wheat finished at $5.84 3/4, down 7 3/4 cents.
eCBOT Close/Early Call
eCBOT grains closed narrowly lower with March soybeans 1 1/4 cents down at $10.07 3/4, March wheat 1/2 cent lower at $5.92 and March corn down 4 cents at $3.89 3/4.
Conflicting reports emanating from Argentina are keeping the trade nervous. President and bit of a babe, Cristina Fernandez, said yesterday that the country was suffering from an "agricultural emergency" gripped by the worst drought in living memory.
But what is she going to do about it? A very interesting question. With millions of tonnes being wiped off Argy grain and oilseed production this year the government could lose $4.3 billion in tax revenue from the agricultural sector, according to one analyst.
That dwarfs the $66 million in subsidies to small agricultural producers, which translates to about $4,500 each for qualifying farmers, already pledged by the government.
How she responds could have a big impact on this years midterm elections. Fernandez's has already suffered when, in 2008, strikes by farmers and truckers forced her to reverse the tax hikes on grain exports that her government imposed when prices were soaring, in hopes of filling the governments coffers.
In other news, China is likely to be largely absent from the export market this week due to Lunar New Year celebrations. That could put a cap on soybean exports that have been very buoyant recently.
The infamous "February Break" or "John Deere Low" which often sees prices dip at this time of year is looming.
For wheat, there is the possibility of the US picking up some fresh export interest from Brazil, who is expected to import around 5.3mmt of the grain in 2009, due to Argentina's inability to supply.
There is also some concern about dryness in parts of Kansas, Oklahoma and Texas.
Iraq is making noises that it will be in the market to cover a significant volume of wheat during February, rumoured to be in the region of 2mmt, to cover it's requirements through the first half of 2009.
Early calls for this afternoons CBOT session: Corn Down 2-4c, Soy Down 1-3c, Wheat Down 1-3c.
Tyson Reports Q1 Loss
Tyson Foods Inc. swung to a fiscal first-quarter loss on slumping margins and a 2.7% drop in volume, although the company said that its struggling chicken segment has begun to improve.
Tyson is the world’s largest meat processor. Hurt last year by surging feed costs, especially at its chicken business, now slumping demand is pressuring results.
For the period ended Dec. 27, Tyson posted a net loss of $112 million, or 30 cents a share, compared with year-earlier net income of $34 million, or 10 cents a share. Revenue increased 0.7% to $6.52 billion.
Wiseman Cuts By 2.2ppl
Robert Wiseman have become the latest in a line of milk buyers to announce a price cut, dropping prices by 2.2ppl effective Feb. 1.
Dairy Crest also recently announced that it will cut the price it pays its suppliers for milk from next month.
The announcement follows similar cuts made by Arla and First Milk at the beginning of January.
All the buyers are blaming the cuts on falling dairy commodity markets and difficult trading conditions in the current economic climate.
Heavy Rain Finally In The Forecast For Argentina
Yes, heavy rain, not "isolated scattered showers" is finally in the forecast for Argentina. And boy do they need it, with most areas having had no more than two inches since Dec 1st, compared with a normal rainfall of 8 inches.
My favourite South American weather website is predicting 0.69 inches on Saturday night followed by 1.59 inches on Sunday. And it doesn't end there, with more decent rains in the forecast for the period 4-12 Feb.
Will the rains arrive & even if they do are they too late?
Here's the forecast for 4-12 Feb:
Argentina - It's Not Really That Bad - Is It? (Video)
I've been scouring the 'net for footage of exactly how bad things are in Argentina for a while now. None of the favourite sources like Reuters are carrying such info. Then I found this. This is a YouTube video shot at the end of last week. If you work for a company that blocks YouTube then you won't be able to see it. You might then like to point out to your IT dept that they are preventing you from gathering important market information. If you can't view it in work email me & I might send you the link so that you can watch it at home. On the other hand if I don't like you, eg Kenn from KKKKrusoe, the I won't! Nogger
Overnight Markets
eCBOT is firmer on a combination of a weak dollar (for once) and the ongoing drought in Argentina.
Wheat is around 4c higher, corn 2-3c firmer and soybeans up around 6-7c.
Australian wheat is now back above A$300, with ASX March milling wheat A$10 higher overnight at A$303.50/tonne.
Every cloud has a silver lining. And the US are rubbing their hands at the prospect of picking up some decent wheat export interest from Brazil in the months ahead. Brazil would normally be Argentina's biggest export home, but with the Argy's having a dramatically reduced surplus Brazil will have to look elsewhere for its supplies.
There are also some media reports circulating, officially unconfirmed, that Egypt has finally said enough is enough & will refuse Ukraine origin wheat due to quality issues for the remainder of the 2008/09 marketing year. This could be a little friendly for those with quality wheats to sell such as the US and France.
The pound has hit the dizzy heights of $1.4150 against the dollar as the greenback comes under pressure on ideas that US retail sales may fall for the first time in fourteen years in 2009.
Crude oil is around a dollar firmer at $46.75/barrel.
Canada To Reduce Grain/Oilseed Output In 2009
Canada will produce less grain and oilseeds for the coming 2009/10 marketing year according to Ag Canada.
They say that production of the eight major grains and oilseeds will decrease to 66.53mmt from 72.635mmt in 2008/09.
All wheat production will drop 12% to 25.09mmt from 28.611mmt, they say.
Canola production will fall almost 10% to 11.40mmt fro 12.643mmt, they add.
Wanted: 2-5,000MT Wheat To Ireland
Nogger has picked up an enquiry for 2-5,000mt any origin feed wheat CIF into southern Ireland if anybody would like to quote for it please let me know via info@nogger.co.uk
EU Wheat Ends Higher
EU wheat futures closed with strong gains Monday supported by firmer US markets and continued concerns over South American crops, particularly in Argentina.
March Paris milling wheat closed up EUR2.00 at EUR154.OO/tonne. May London feed wheat ended up GBP4 at GBP127.00/tonne.
The jury is still out on exactly how much rain fell, and where, and how beneficial it was in Argentina over the weekend. It was certainly too late for wheat, but may have had some impact on soy & corn crops.
The Buenos Aires Cereals Exchange released some forecasts Friday that pretty much said some very serious damage had been done to crops there and that 28.8 million tonnes of grain and oilseeds could already be lost to drought this season.
CBOT Closing Comments
Corn
Corn closed firmer but well off session highs. Argy weather pundits remain uncertain as to exactly how much benefit has been derived from scattered weekend rains. Demand from the US ethanol sector is questionable, especially in the light of a weak crude oil market. March corn settled at $3.93 3/4, up 3 1/4 cents.
Soybeans
Beans opened sharply higher but failed to fulfil early promise closing around unchanged to slightly steadier. March soybean finished unchanged at $10.09. Conflicting forecast updates for the week in Argentina weighed on soy futures from midday, pulling back some gains of the morning session. Although US export sales have held up well in recent weeks, Chinese New Year celebrations are likely to curtail demand this week.
Wheat
Wheat performed quite well, buoyed bt news that Iraq will be in the market soon to cover it's wheat requirements up until the end of FH 2009. March CBOT wheat closed at $5.92 1/2, up 9 3/4 cents. Whilst there may still be some doubts over this season's soy & corn crops in Argentina, it is a fact that the wheat crop there has been decimated by drought. There are some concerns over dryness in Kansas and Oklahoma for US wheat.
General Business News - Barclays Jump
Barclays shares led the FTSE higher in early trading Monday, leaping by a third on reports that although it wrote down £8 billion of credit assets in 2008 it won't need a capital injection as revenue from its investment banking arm rose. Its shares were up 31.84% at 67.50.
Lloyds also rose, being the mornings second biggest riser, up 18% to 58.20.
Cattles, however, the sub-prime and doorstep lender fell 36% to 11.50 after it failed to secure a banking licence.
Dutch banking giant ING has said it is to cut 7,000 jobs in an effort to reduce costs.
Steel maker Corus announced it was to cut up to 3,500 workers, with around 2,500 expected to go in the UK.
GKN, the component maker, is also expected to announce job cuts later in the week, as demand for new cars slumps.
Electronics giant Philips said it is cutting 6,000 jobs after reporting its first quarterly loss in almost six years.
Monday Morning Markets
The overnight markets have traded either side in quite a volatile session so far as traders try to weigh up exactly how much rain fell in Argentina over the weekend.
Reports I am reading suggest some rain did fall, up to 3/4" in some places, but that rains were generally scattered, with temperatures reaching 102 degrees.
There doesn't seem to be much rain in the forecast today, maybe a few lingering light shower, then it's back to business as normal for the rest of the week. Hot and dry.
Here's the 24 hour precipitation forecast map with the main soybean area marked by the red circle:
The Buenos Aires Cereals Exchange said Friday that 28.8 million tonnes of grain and oilseeds could be lost to drought this season.
On the export front, after another round of big soybean sales reported Friday, things may quieten down for a couple of weeks with the Chinese New Year celebrations starting today.
At 8.30am GMT March soybeans (which opened 6c higher) were 2c down having traded in a range of +15c to -17 1/2c. March corn was down a half and March wheat up 2 3/4c.
Crude oil was just over a dollar weaker at $45.33/barrel as demand continues to slump.
The euro and the pound both remain weaker on the outlook for lower interest rates. The pound was $2.11 as recently as November 2007, and spent most of that year with one euro worth around 65/66 pence. Today it's $1.3695 and 94.5 pence.
