The Morning Vibe
21/12/12 -- It's a sea of green, as Ringo would say from his yellow submarine vantage point, with the overnight grains higher on bargain-hunting with beans 15-20 cents firmer, corn 3-4 cents better and wheat 2-3 cents higher.
What were this week's Chinese cancellations all about then? If I were to hazard a guess they were nothing more than an attempt to get out of some higher priced contracts. Beans are trading higher this morning on the Chinese Dalian Exchange, not following last night's Chicago lower.
The US now has 83% of the USDA's 36.6 MMT export target already shipped or on the books. South American new crop can't come fast enough. By the time we start to get the inevitable logistical problems there availability in North America will be tighter than a sharks arse at fifty fathoms.
There are signs now that US wheat is now competitively priced and that sales will improve in the second half of the season. Argentina, the wheat Primark of the southern hemisphere, is only around halfway through harvesting a small and low quality wheat crop, which will minimise it's ability to drive world prices down.
Taiwan has bought 75,600 MT of US wheat from Columbia Grain/Toepfer overnight for Feb/Mar shipment.
US corn remains the "Billy no mates" of the grain world.
Tonight we will get the weekly commitment of traders report, which will put a bit of flesh on the bones of exactly how much length has been removed from the market of late (although this data will only be a snapshot of how things looked as of Tuesday night).
The big question now is will it be a case of new month, new year, new money come January or will fund money continue to exit? The answer to that probably depends on what happens with regards to the US fiscal cliff.
As far as trying to get your head around that conundrum is concerned, someone emailed me yesterday to very helpfully reduce it all down to terms that even a monkey could understand:
U.S. Tax revenue: $ 2,170,000,000,000
Fed budget: $ 3,820,000,000,000
New debt: $ 1,650,000,000,000
National debt: $ 14,271,000,000,000
Recent budget cuts: $ 38,500,000,000
Let's now remove 8 zeros and pretend it's a household budget:
Annual family income: $ 21,700
Money the family spent: $ 38,200
New debt on the credit card: $ 16,500
O/s balance on the credit card: $ 142,710
Total budget cuts so far: $ 38.50
It all looks a bit scary when you look at it like that doesn't it?
The other analogy he used was suppose that you come home from work one day and find that the sewerage system in your street has completely blocked up and there's raw sewage throughout the house all the way up to the ceiling. What do you do, raise the ceilings or remove the shit?
Over to you Mr President...
