The Morning Muse

Posted by Nogger - a legend in his own mind at 10:18 | Categorized as

26/09/12 -- The overnight markets are lower, with beans down 17-18 cents, wheat down 6-9 cents and corn around 5 cents easier.

At USD15.94, front month Nov 12 beans are now well below USD16/bu, a level they have been flirting with breaking and holding below all week. Is today going to be the day that they manage it?

It could be, given that we have a USDA report coming up, the US harvest is well advanced and that funds still hold a chunky long position thought to be in excess of 200,000 contracts despite a bit more liquidation in the past week. (The latest official figures are as of last Tuesday night's close).

We've got the USDA's Sept 1 stocks report coming out on Friday, supposedly the final numbers for the 2011/12 season for corn and soybeans, with the trade expecting the lowest estimates for both in eight years.

However, with both harvests well ahead of normal there has to be a possibility that the USDA may get some new crop mixed up with old crop on Friday, particularly for corn.

This was exactly what happened a year ago, when Sept 1 2011 corn stocks were estimated at 1.128 billion bushels, when just about everybody was expecting a sub-one billion number. Back then the USDA figure was higher than even the highest trade estimate, and corn subsequently closed down the then new 40 cent daily limit.

Subsequently, the USDA's higher than anticipated estimate was blamed on new crop corn stocks being mixed with old crop. Last year the corn harvest had barely begun on Sept 1, this year it was already 10% complete, so clearly there is some potential for an even larger mix-up this time round.

Before that report comes out we have Thursday's weekly export sales to look forward too. Recent reports have had corn sales floundering, will that continue to be the case even with prices almost a dollar below the recent highs? Quite possibly. Will there be any sign of the rumoured 5-10 cargoes of soybeans sold to China this past week? Quite possibly too. Wheat sales have been bumbling along OK thank you very much, without pulling up any trees. There maybe won't be much change on that front either.

In other news, Egypt are back in the market tendering for wheat, this time for Dec 1-10 shipment, with the results expected this afternoon. It will be extremely interesting to see what origins are offered and at what prices. I don't see US wheat threatening to trade into there just yet though.

The Chicago Tribune report that floor traders on the CBOT are to hand in a petition to the CME Group asking them to stop the almost 24-hours/day trading that they have recently switched to.

"There's a general feeling that the markets are a mile wide and an inch deep," the guy who started the petition is quoted as saying. I like that quote, and have to say that I agree with him. Full story here: CME My Arse

Talk that Australia's wheat crop may end up less than 20 MMT is gathering credence (except with the USDA of course).