Monday Morning Snippets
Asian and European stock markets are lower after the US government warned that more money may be required to shore up the ailing banking sector, and that bankruptcy might be the best option for GM and Chrysler.
In London the FTSE 100 is down 2.42% at 3804.64. the German Dax is down 3.54% and the French CAC40 2.98% lower. In London banking shares are amongst the largest fallers with Barclays down 13.30 or 7.65% at 160.50, Lloyds are down 7.36% at 70.50 and RBS 6.02% lower at 25 pence. Amongst the topt ten gainers this morning we have leading sausage fanciers Cranswick up 4.13% at 567 pence.
The Nationwide is to take on the ailing Dunfermline Building Society's good bits. The Treasury will take on a billion pounds worth of bad bits.
In Argentina the one-week strike is officially over and everything is supposed to turn back to normal today. Grain deliveries to Parana River fell 80% last week as farmers held onto supplies, according to Bloomberg. Despite the strike being over for now, farmers are generally expected to continue to sit on their stocks this week too.
The news that everything is officially back to normal is highly unlikely to have a flood of foreign buyers lined up at Argentina's door wanting to buy grains, oilseeds & meals. The country has simply proven to be too unreliable a supplier in the last twelve months & nobody in their right mind would think that today's news is likely to be the end of the matter.
The Buenos Aires Cereals Exchange cut it's Argy soybean production estimate to 41.2mmt late Friday. Another private estimate suggested that the crop might only make 36-38mmt. Lord knows how low it would have been if it hadn't rained heavily during February.
In the US it remains a game of two halves, too wet in northern & central States and too dry in the south and east:
The week ahead will see a continuation of wet conditions for the Northern Plains as well as across the Gulf States. Lighter amounts will reach from Oklahoma to Pennsylvania, according to Allen Motew of QT Weather.
Significant conditions over the next few weeks are flooding in the Northern Plains, heavy rains for the Gulf Coast, drought relief in the Southeast, severe drought continuing across the Southern Plains, he adds.
The overnight eCBOT market is lower, dragged down by falling equities and weaker crude oil (down almost $2/barrel). Beans are currently around 14 cents lower, with wheat and corn both a couple of cents easier.
Tomorrow's USDA planting intentions report is expected to show 2009 bean acres up 3.5 million, corn around a million lower and wheat down around 4 million.
Monday Morning Grains
The grains markets are firmer Monday morning, adding to friday night's gains, with beans, wheat and corn all mostly 4-5 cents firmer.
US farmer selling remains light on soybeans forcing the cash basis higher. The USDA are out Wednesday with their latest S&D estimates, and some analysts are forecasting a cut in soybean ending stocks by around 25 million bushels.
The ongoing dispute between Argy farmers and the government is also keeping the nearby cash market tight as farmers their also sit on their hands, and their beans!
I wonder if we are starting to see a bit of a trend developing here?
Argy farm leaders meet with the government there again tomorrow when the thorny subject of the soybean export tax will no doubt be on the menu. As the government have already clearly stated that they will not be moving on the issue (because they desperately need the tax to pay the bills), it will be interesting to judge the farmers' mood after this one.
US wheat remains under threat from drought in the Southern Plains.
Overnight Market News
eCBOT is a little steadier on ideas that last night's losses may have been overdone a tad. Last night's close and the latest eCBOT prices are available on the right.
China will continue to support it's own domestic farmers by buying a further 2.5mmt of corn for government stockpiles in Heilongjiang province, according to reports.
Rains have finally arrived in Argentina, but may be too late to save some corn & soybean crops in the area, with up to 40% of corn and 20% of soybeans "beyond help" according to some reports.
There are quite a few tenders around with South Korea buying 165,000mt each of optional origin corn and wheat yesterday. Bunge sold the wheat.
Egypt is looking for at least 55,000mt wheat and Japan is expected to buy 128,000mt of the grain tomorrow, the majority being US origin.
Pakistan has bought 172,500mt of optional origin wheat, and may buy more ahead of the weekend.
Drought is said to be seriously threatening the Chinese wheat crop with water levels running at 50-year lows. Red-alerts have been issued in at least two provinces in the north of the country.
Overnight Grain Markets
eCBOT grains are a little lower after some rain fell in Argentina over the weekend. Beans are around 8c lower, corn down 5c and wheat 1-2c easier.
US winter wheat in Texas is under threat from drought, as is wheat in China's Henan province.
Egypt bought 120,000mt French wheat and 60,000 US wheat in tenders Friday/Saturday, whilst Japan bought over 200,000mt US corn.
Rain in Argentina appears to have been scattered, rather than the widespread soaking many had hoped for. Latest estimates say 800,000 cattle have been lost on the Pampas.
There is some talk of a farmers strike in Argentina starting as soon as next week. That would certainly affect availability and probably push spot premiums higher.
The pound is sharply lower ahead of Thursdays anticipated half percent cut in rates from the BoE. It's nice to get back to normal with the pound isn't it? I feel a bit "weird" when it's going up!
LIFFE wheat has opened 50p easier, with MATIF around EUR1.50 lower.
Crude oil is around a dollar lower at $40.73/barrel as demand continues to fall.
And if you think unemployment is bad over here, a report out today suggests that 26 million migrant Chinese workers are now out of work as exports slump in the face of the global economic recession.
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).
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.
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.
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.
Overnight Markets
eCBOT grains are a tad easier Friday, with beans down 1-2c, wheat 1-3c lower and corn 5-6c easier.
All eyes are on Argentina this weekend with a chance of rain Sunday/Monday. Rains were in the forecast last weekend too, and they largely failed to materialise. Most of the forecasts I am reading are using words like 'scattered' or 'isolated' or 'light showers' so I don't hold out too much hope for any serious drought-busting going on.
But the threat is probably enough to keep a lid on any rally attempts this side of the weekend.
Recession fears are also weighing on the market this morning. The USDA weekly export sales report, due out at 13.30GMT, may provide some pointers this afternoon. Trade estimates are: soybeans 750-950,000mt; corn 400-600,000mt; wheat 150-350,000mt; soymeal 75-150,000mt; soyoil 0-10,000mt.
South Korea bought 110,000mt of corn, half US and half South American in an overnight tender.
Pakistan is expected to buy 250,000mt of wheat over the weekend and possibly a further 150,000mt at the end of the month.
Australian ASX March milling wheat is A$3 lower at A$293.50/tonne.
Crude oil is under pressure after stockpiles rose dramatically yesterday, up 6.1m barrels against expectations of an increase of just 1.4m barrels. Crude stocks at Cushing, Oklahoma - the delivery point for NYMEX crude - were the highest on record at 33.2 million barrels. That's a lot of oil.
All this comes at a time when US refineries are only operating at 83.3% capacity, the lowest level for this time of year since 1991.
The pound appears to have arrested it's steep decline, flattening off around $1.3660 against the dollar and 1.0640 against the euro.
Official data due out later is expected to confirm that the UK is in recession, apparently. Shock, horror, that crept up on us unseen didn't it? I can't imaging that the official confirmation of what every man, woman & child in the country already knows should make much difference to the exchange, but you never know.
Overnight Markets And The Beginning Of The End For Kirchner?
eCBOT grains are narrowly mixed in what, for once, has been a relatively quiet and stable overnight session, with wheat 2-3c higher and soybeans & corn down 1-2c.
In Argentina there is still no rain in the 24 hour forecast for the soy and corn areas highlighted:
The Argy Ag Secretariat yesterday lowered its estimate for corn & soybean plantings due to the drought. Bean area was cut sharply to 16.5 million hectares (41 million acres) from a previous estimate of 17.8 million hectares. Corn area was cut more modestly from 3.5 million hectares to 3.4 million.
Now that the Argy wheat harvest has been completed, the Ag Secretariat reduced its estimate for final production to 8.3mmt. This is a huge decrease on last season and leaves the country with very little to offer on the export arena for the whole of 2009.
As a side issue, very little wheat to export also means sharply lower revenues for the Kirchner-led government. If the soy and corn crops prove to be similarly drought afflicted, and I think they will, this is going to blow a massive hole in the Argy budget this year. The strikes and civil unrest of 2008 will start to look like a walk in the park. Bye bye Mrs Kirchner.
Japan has bought 157,000mt wheat overnight, as expected, 90,000mt of it US material. Egypt also bought wheat late yesterday afternoon, some of it also being US origin. It's nothing that much to write home about, US weekly export sales will be scrutinised later this afternoon to see if they throw up any pearls of wisdom.
Weekly export sales for soybeans have been very strong so far this year, the trade will be hoping that that trend continues later today. Meanwhile, South Korea is seeking to buy 165,000 tons of corn today.
Australian wheat futures are higher overnight with front month ASX march milling wheat A$6.50 higher at A$296.50/tonne, A$45.50 up from the contract low set mid-December.
Overnight Markets
It's all looking as clear as mud on the overnight eCBOT session, wheat is around 5c higher, with corn and beans flirting either side of unchanged.
Crude isn't doing a lot either after the expiry yesterday of the Feb contract, front month now is March - currently $40.84/barrel.
Rain still stubbornly avoids soy and corn areas of Argentina.
There are various wheat tenders kicking around which may explain wheat being a bit steadier.
Egypt is seeking to buy at least 55,000mt of wheat today. Japan plans to buy 157,000mt of the grain tomorrow, comprising a mixture of US, Canadian and Australian wheat. Pakistan is expected to conclude a tender for 250,000mt any origin wheat this week.
In addition South Korea is seeking to buy a total of 146,000 tons of soybean meal today.
Japan, the world's biggest corn importer, may still need to buy 1 million tonnes of the grain for March shipment according to media reports. Japan buys almost exclusively from the US.
A sharply weaker pound may be supportive to UK wheat futures as the day wears on.
Unemployment data and the BOE minutes are both due for release at 9.30am, don't be surprised to see more bad news and the pound under further pressure later in the day.
Overnight Markets
The overnight markets are mixed this morning trying to reconcile the negative impact a firmer dollar and weak crude, with the bullish effect of the continuing drought in Argentina.
In what looks like being a volatile session after a three day weekend, beans are down around 7c, wheat down 1c and corn up 2-4c as I type. Check the latest movements on the right as things look like they could vary quite considerably this morning.
The drought in Argentina is ongoing, with earlier maturing corn the first crop under most threat. With the wheat crop already down the toilet, analysts are now predicting a total 2009 Argy grain crop of 'just' 80 million tonnes, 20 million below last year.
Soybeans are down a little as some analysts (but not me) seem to think that there is still long enough left for timely rains to help achieve a decent crop. But what do I know?
India, expecting another bumper wheat crop in March/April, has said that it may lift its ban on wheat exports once the harvest is complete in May.
Japan is seeking 157,000mt of US/Canadian and Australian wheat in a routine tender Thursday.
The Australian Oilseeds Federation has increased its estimate on canola output this year to 1.62mmt, up 10% from its previous forecast, and double last years production.
Crude oil is down $3.71 at $32.80/barrel as the global economic meltdown continues to eat away at demand.
Monday Morning Roundup
Not a lot fresh first thing today, there is no eCBOT or CBOT today as it's Martin Luther King Day in the US.
Crude oil is trading however, and is slightly lower on the old chestnut of weak demand and bulging supplies.
It doesn't seem that Argentina got much in the way of drought relief over the weekend, with highs of 95-101 and only scattered showers. There's not much in the 24 hour forecast either (main soy area highlighted in red):
Brazil fared somewhat better, with more widespread showers and thunderstorms.
The Philippines bought 40,000mt Ukraine feed wheat as a substitute for high-priced domestic corn. Wheat imports are tariff-free, whilst there is still an import tax on corn.
Australian ASX March milling wheat is A$2 higher at A$288.50/tonne.
The pound is weaker after Alistair Darling announces throwing another estimated $100 billion at the UK banks, on top of the $250 already committed.
Personally, I'm all for poking the board of directors of the banks in the eye, and would like to volunteer my services to do so if asked.
The board at Lloyds TSB, for example, are said to be "resisting" the government upping their stake to 50% from 43%. I bet they are too, nobody likes to see their cash cow taken away do they?
Supervision and regulation aren't words that these boys are very keen on. But when you run around behaving like former Royal Bank of Scotland boss Sir Fred Goodwin, what do you expect?
Overnight Market
Grains are firmer on the overnight eCBOT market, supported by a weaker dollar and continuing weather concerns. Latest eCBOT prices now available on the right hand side of this blog.
Yesterday's weekly US export sales for soybeans were very strong, with China once again taking the majority of kit, as the continue building domestic stocks.
Latest figures show that the Chinese imported 3.3mmt of soybeans in December and are forecast to import a similar amount this month.
Chinese Lunar New Year is not very far away however, when they often disappear completely from the market.
By contrast, export sales for corn & wheat were disappointing. However, drought in South America is supportive for corn as well as soybeans.
For wheat, the last couple of weeks of export sales have been extremely poor, but temperatures as low as minus 55 (including wind chill) are certainly plenty low enough to cause winter kill to any crops unprotected by a layer of snow in the Plains and western Midwest.
Russia keep mopping up most of the export orders, but at least that means that they are taking something off the table and eventually their surplus will be eroded. Won't it?! Although Russian wheat is reportedly $5-7 cheaper than EU wheat there are some logistical problems in buying Russian grain, which may push some business our way.
The dollar is weaker across the board as fears of much greater than originally anticipated credit losses at top US banks mount.
The pound is also up against the euro, ahead of Eurozone trade balance deficit data due later today.
Live forex rates now also available on the right hand side of this blog.
Thursday Morning Titbits
Not much fresh so far overnight. eCBOT futures are a little lower at 8am GMT. Updated prices appear on the right throughout the morning.
Japan has bought 157,000mt wheat in a tender this morning, 90,000mt of it US origin, and the rest a mixture of Canadian and Australian wheat.
Pakistan is seeking 150,000mt optional origin wheat in a tender.
The weather in Argentina continues hot & dry, with temperatures forecast to get even hotter, with highs of 104 degrees forecast for the weekend. President Christina Fernandez de Kirchner, addressed the farmers of Argentina on Wednesday and has offered aid in the midst of the worse drought in living memory in the hottest summer since 1955.
Crude is lower overnight at $36.72/barrel. US Energy Department data yesterday saw oil stocks at Cushing, Oklahoma - the delivery point for the contract - reach a record 33m barrels. Gas stocks also rose more than expected, but the biggest surprise was distillate stocks increasing by more than 6 million barrels. Distillates includes heating oil and diesel.
The euro is lower, close to a five week low against the dollar ahead of today's ECB announcement on interest rates. A cut of a half percent is already priced into the market. Keep up to date with the latest movements with live forex rates to the right of this blog.
ABF posted a sharp rise in revenues in the 16 weeks to January 3 climbing by 21% from the same period the previous year.
HSBC and UBS may be liable for as much as $3.2 billion of losses linked to Bernard Madoff in a dispute over the duties of financial custodians at funds in Luxembourg and Ireland, reports Bloomberg.
DSG International, which owns Currys and PC World, said like-for-like sales dropped 10% in the three months to 10 January. Sales at Argos are also down, falling 7.5% in the 18 weeks to 3 January, whilst sales at Homebase fell 10.2% in the same period.
Grains Firmer In Overnight Trade
eCBOT grains are firmer in overnight trade Wednesday morning, with beans up 14-16c, corn around 3c firmer and wheat up 1-2c.
Argentine weather is the main driving force, with temperatures this week 5 degrees Fahrenheit above normal, and set to climb further next week. The country is set for its warmest summer in 55 years, according to media reports.
Rains meanwhile continue sparse, mostly dry conditions with just a few light showers in the forecast Friday through to Sunday. Further ahead there is no more than an inch in the forecast through until the end of January.
Crude oil is a little firmer after Saudi Arabia announced that it would cut production by more than the OPEC mandate, in an effort to shore up prices. US stocks data due out later today will be closely watched.
China meanwhile continues to be an active buyer in the soybean market, purchasing 399,000mt of US beans Monday, according to the USDA.
Various tenders kicking around should ensure that weekly export sales released tomorrow show an improved performance from corn & wheat compared to last weeks lows.
The dollar is a little weaker against the pound and euro on speculation that retail sales & manufacturing data, due later, will show the recession worsening.
Overnight Markets
Corn & wheat are a bit lower still, after posting limit losses last night, whilst soybeans have stabilised somewhat, turning modestly higher.
Latest eCBOT prices this morning see beans around posting double digit gains, with wheat and corn 6-8c lower.
Yesterday's USDA data was very bearish for corn, and that has led to follow through selling this morning. Sharply lower demand from the ethanol sector is finally showing up in the USDA data.
The trade is still, rightfully, concerned about crop losses in South America, particularly Argentina, where the forecast remains mostly dry with just a few light showers with temperatures 86-94F.
For now, the trade seems to be ignoring the fact that the wheat data was really very bullish for new-crop, with all positions closing 56-60c lower last night. A 4 million acre reduction in plantings, double what was expected, doesn't warrant that in any shape or form.
Egypt plans to buy at least 55,000mt of wheat in a tender today, Japan is seeking 157,000mt of milling wheat in a tender on Jan. 15, of which 90,000mt is U.S. wheat. Pakistan is looking for bids to import 150,000mt by Jan. 31.
South Korea is seeking to buy 55,000mt of corn taking 110,000t of U.S. or South American origin yesterday.
Australian ASX March milling wheat is A$12 lower at A$278, mirroring last night's Chicago fall. The harvest in the east is now complete, with maybe 15% or so remaining to be cut in Western Australia.
Overnight Markets - Monday Morning Roundup
eCBOT grains are largely firmer, but off earlier highs, trimmed by falling crude oil and a strong dollar.
At 7.30GMT soybeans are 8-14 cents firmer, having posted gains in the 20's earlier in the session, as the weather outlook for South America turns drier than forecast last week.
Mostly dry conditions with just a few light showers Wednesday and Thursday, returning to dry conditions again Friday, with temperatures normal to above normal, is the revised forecast for Argentina.
Argy corn is about to start pollinating and soybeans flowering in the next couple of weeks.
The Argy winter wheat crop has already been slashed by drought from 16mmt to around 9mmt across the last few months. This clearly highlights that the recent dryness is not just a recent development. This situation has been ongoing for the last 8 months or so. If you recall Argy winter wheat plantings were reduced, in part by drought (plus other political factors), when the crop went into the ground back in May/Jul.
Corn and wheat on eCBOT are unchanged to a couple of cents firmer, wheat having been around 7 cents higher, with corn as much as 5 cents firmer.
South Korea is seeking to buy 110,000 metric tons of corn for feed production in a tender.
The Australian wheat harvest is finally in the bag in NSW, producing a crop of around 6.5mmt, significantly higher than last season's drought ravaged 1.8mmt. Despite the increased crop, Australian wheat is higher this morning following CBOT's strong close Friday night with ASX January A$5 higher at A$292.50/tonne.
Crude oil back below $40 at $39.70 is what is keeping the grains in check this morning, after the entire sector posted strong gains Friday night. Despite swingeing cut in production by OPEC, demand continues to slump and stocks keep rising.
A firmer dollar is also tempering gains in the grains sector. The euro is under pressure with the ECB expected to cut interest rates in the Euro Zone later in the week. At 8am GMT the pound stands at $1.5060 against the dollar and 1.1275 against the euro.
Overnight Markets - What's New?
The overnight markets are sharply higher for some reason, although none of the factors being talked about are especially fresh news.
Beans are 26-28c firmer, with corn 6c higher and wheat up around 8c.
Soybean export sales reported yesterday were solid at 529,700 MT for 2008/09, with China taking the lion's share at 444,500 MT, including 110,000 MT switched from unknown destinations. There is some talk this morning that they may have bought another 120,000 overnight.
Forecasters opinions are divided on exactly how much rain is going to reach the right places in South America over the weekend. And after months of dry weather how much benefit will they derive? Conab cut it's soybean and corn estimates for Brazil quite sharply yesterday, and warned of possible further cuts to come in February.
Traders seem nervous ahead of Monday's USDA report. Again it's not particularly fresh news, but the final 2008 US corn and soybean production numbers are expected to be revised downwards slightly. In addition the first USDA estimates for winter wheat plantings are expected to show a drop of around 4.5% to a tad over 44m acres.
Crude oil seems to have stopped the rot for the time being, after falling heavily on Wednesday on surging US stocks. Saudi Arabia said it has sent notices to refiners in Japan and Taiwan that it was cutting shipments for February by 10 percent in accordance with OPEC's recently announced cuts. Crude is flat around $42/barrel this morning.
The dollar is under pressure ahead of this afternoon's payrolls data which will likely show that the economy lost jobs every month in 2008 and the unemployment rate now stands at a 16-year high. The pound is at $1.5245.
Overnight Developments
eCBOT grains are lower in follow-through trade from last nights weak close. Crude oil fell out of bed late yesterday after the US Energy Dept came out with substantially higher stocks figures than the market had been anticipating.
Crude finished 12% lower on the day, its biggest one-day drop since 2001.
That, coupled with some decent rains in the forecast for Brazil and Argentina over the next few days, have got the market back on the defensive.
Corn is around 6c lower this morning, with wheat down around 10c and soybeans 7-10c easier.
An escalation of the violence in the Middle East overnight has arrested crude oil's decline this morning after several rockets fired from Lebanon hit northern part of Israel. Crude currently hovers around unchanged.
Japan has confirmed a purchase of 127,000mt wheat in a tender today. Most of it - 106,000mt - being of US origin, the rest is Canadian.
South Korea's Major Feedmill Group has bought 45,000mt Brazilian corn for delivery by March 10th.
Weather watchers will be keeping a close eye on developments in South America over the next few days.
In Brazil we seem to have a game of two halves, with some rain in the forecast for developing soybeans across Rio Grande do Sul and Parana during the weekend but more is needed. Meanwhile conditions in Mato Grosso and Goias are generally favourable.
In Argentina forecasts vary from just scattered showers to a fairly widespread rain event. Certainly developing corn will be entering the critical pollination period within the next few weeks and significant rains ahead of this stage would really help the crop. The wheat harvest is nearing completion, and as you probably know by now has been severely reduced by drought.
Australian wheat futures are down heavily overnight, following the lead from CBOT, with most active March ASX milling wheat A$11.50 lower at A$279.00/tonne.
Sterling kept to a narrow, well-defined range in overnight trading as traders brace for the coming interest rate announcement from the Bank of England. Expectations call for a 50 basis point cut to bring rates to 1.50%, the lowest since the central bank’s creation.
The ECB is not due to announce it's decision on rates until Jan 15th. The general mood in the market seems to suggest that, having been slightly more cautious than the BOE recently, maybe a slightly more aggressive stance is required next week.
Base rates here in the UK are currently 2% against 2.5% in the Euro Zone. The anticipated further UK rate cut today would bring the benchmark to the lowest since King William III created the bank in the 17th century.
At 8.45am GMT the pound was steady just under 1.11 against the euro and 41.5045 against the dollar.
