Friday Seems A Long Time Ago Doesn't It?

Posted by Nogger - a legend in his own mind at 11:52 | Categorized as

02/10/12 -- The overnight markets are lower, with beans leading the way around 17-18 cents easier, wheat down 9-10 cents and corn down 2-3 cents or so. Much of the weakness in beans coming in the last hour. Friday night's strong rally already seems a very long time ago.

With the USDA's bullish corn number now absorbed it would seem and we are scratching around for fresh news ahead of next week's October WASDE report from the USDA due on the 11th.

Before that we've got this Thursday's weekly export sales numbers to peruse. A feature of recent reports has been strong demand for US soybeans, slack demand for corn and ho-hum demand for wheat.

Golden Sacks have apparently released a report saying that they expect Chicago wheat to average USD10.25/bushel over the next three months, saying that they expect wheat and corn prices to outperform those of soybeans.

The future of soybean prices is an interesting one. Nearby we have very strong demand for US beans with South America just about finished until new crop and a very healthy forward book for US sales for 2012/13. We also have new crop pressure, with US growers seemingly content to sell the nears on an inverse market, and reports of better than expected yields as the US harvest progresses.

Going forward of course we have the spectre of huge South American production. US stocks though will probably be pretty tight by the time they come on stream. There is also the question of whether the Southern Hemisphere growing season weather will be conducive, and even if it is how will they cope logistically with record production everywhere from Bolivia to Brazil?

As ever, fund activity is likely to be the determining factor as far as price direction is concerned going forward, and second guessing them is like figuring out the next move of a menopausal USDA full of gin.

With Russia and Ukraine's harvest drawing to a close, and Kazakhstan's just about finished, we're already looking at planting progress in the Black Sea and Europe.

Ukraine farmers have sown winter grains sown on 5.1m ha so far, up 8.5% on this time a year ago, including 4.6m ha of wheat. Total winter grain area is expected to be broadly unchanged on a year ago 8.2m ha. Soil conditions so far are said to be "significantly" better than last year. Although dryness persists in the south and east, it usually does.

Russia's Deputy Agriculture Minister has said that the government is to consider selling off part of it's 5 MMT intervention stocks to local flour millers in Siberia, the Urals and the far east of the country as early as this week. Domestic wheat prices are said to have softened in the last few days after reaching their highest levels since April 2008 last week.