Trade Readies for S&D Report
The following are the pre-report trade expectations ahead of tomorrows USDA's S&D Report. USDA will release the report on Friday, May 9, at 13:30 p.m., BST.
2007-08 Carryout
Avg Range Apr USDA 2006-07
Corn 1.320 1.240-1.434 1.283 1.304
Soybeans 0.152 0.130-0.160 0.160 0.574
Wheat 0.243 0.232-0.257 0.242 0.456
2008-09 Carryout
Avg Range 2007-08
Corn 0.707 0.481-1.114 1.283
Soybeans 0.273 0.481-1.114 0.160
Wheat 0.424 0.280-0.501 0.242
Estimates in billion bushels.
Boris Johnson is ace
If we really can't have Jeremy Clarkson for Prime Minister, then Boris Johnson for Mayor of London must be next best thing.
Sian Berry, the Green Party candidate says "There are a hundred reasons why Boris Johnson should not be Mayor of London. But his dinosaur views on the environment alone are enough to show what a disaster he would be for our city. The man who backed Bush against the Kyoto treaty and who doesn't believe there's a risk from passive smoking cannot be trusted with our future - or even, really, with his own. He's a 19th century man in a 21st century city."
What has Boris himself got to say about all this: "If you want to be green - kill a cow."
Words of wisdom indeed.
Hmmmm, Boris Johnson & Rupert Stafford, you never see them in the same room at the same time do you?
Soapy bubble or opportunity of a lifetime?
Steven Pearlstein at the Daily Stox Report writes:
"The global financial system these days is beginning to look like a giant Whack-a-Mole game: When we think we've knocked down one speculative bubble, another one just like it pops up. The latest is the commodities bubble is everything from oil and natural gas to gold, copper, wheat and rice. But what turned a bull market into a bubble was the sudden arrival of large numbers of new investors and an array of new investment vehicles, many of them involving derivative instruments traded outside the confines of regulated markets.
"Speculators have always played a prominent role in commodities markets, but in the past year, they have literally overwhelmed them, causing a dramatic increase in trading volume, volatility and prices and disrupting many of the normal relationships between producers and end-users.
"Many of these were the same hedge funds and hot-money investors who had gorged on sovereign debt of developing countries, tech and telecom stocks, subprime mortgages and commercial real estate and now needed a new thing to focus on. Others -- including, it is said, some sovereign wealth funds -- looked to commodities as a hedge against the falling dollar. But perhaps the biggest push came from pension funds, foundations and university endowments whose managers had all gone to the same conferences and read the same academic papers, suggesting that a basket of commodity futures would provide a good hedge against stock and bond market declines.
"To meet the needs of these investors, Wall Street and Chicago's commodities houses came up with all sorts of new vehicles, including exchange traded funds, index funds and structured investment vehicles -- the commodities equivalent of mortgage pools and asset-backed securities.
Trevor Williams at fxstreet.com sees it differently: "Our view is that there is little or no evidence to support the view that it is investment flows that have primarily driven up commodity prices or that there is a bubble developing. It is true that more funds have been set up to invest in commodities, creating more liquid markets in goods that are now in much greater demand, but no signs of the trillions of dollars that drove the credit cycle or the dot.com boom in the 1990s. Further, there is little to suggest that these markets are in bubble territory anyway, i.e. a situation in which prices are so far above fundamentals or their own long run performance as to be unsustainable."
Then there's a poll over at Fundmymutualfund.com asking readers their long-term view on commodities. With 97 respondents, 16 percent responded that this is just the latest in a series of bubbles and 84 percent said "in 5 years we are going to wish we could buy at these prices."
A million well-dressed monkeys can't be wrong.
Overnight market developments - oil supports
Oil at or near a record $123/barrel is supporting all the grains complex this morning. Corn is up around 7c, soybeans 4-8c firmer and wheat up around 4c.
The Argy problem is ongoing & although some progress has been made is far from resolved as yet. This is also supportive for beans.
The USDA are out Friday with a revised crop production estimate which will keep traders cautious.
Early call on Chicago
Corn futures are expected to open 1 to 3 higher; soybeans 11 to 14 higher; wheat mixed. Overnight soybean prices rallied on technical strength and corn prices recovered some of Monday's loses due to low planting progress. Wheat is mixed in very light trade.
Overnight developments
Corn futures are up 4-5c overnight after the USDA planting progress report showed 27% of the new corn crop was in the ground as of Sunday, well under the 45% planted a year ago.
"It's still of a concern," Simon Roberts, head of agricultural commodities at Australia and New Zealand Banking Group Ltd., said by phone from Sydney today. "But there is the general perception that like last year, if there are any breaks in the weather you'll see a rapid planting progress."
Dale Durchholz, an analyst at AgriVisor in Bloomington, Ill., cautioned against reading much into the numbers because plantings were unusually early between 2004 and 2006. The percentage planted nationwide in those three years was 84%, 79% and 70%, respectively, he said.
"You've got to step back and see that made some kind of a distortion," he said.
Soybean futures are around 11c firmer this morning. Soybean planting was 5% complete as of Sunday, below the average of 14%,according to the USDA. Analysts' expectations were for 7% to 9% complete.
Market participants are closely watching a meeting in Argentina, the world's second-largest corn exporter and the third-biggest in soybeans, today to resolve a dispute between farmers and the government over taxes that disrupted crop exports.
The U.S. has a large amount of unshipped soybean export sales on the books that would be susceptible to cancellation if the dispute is resolved soon.
Wheat is little changed overnight after the USDA report threw up little in the way of a surprise.
The USDA said 47% of the winter wheat crop was rated good to excellent, up from 46% last week and 57% a year ago. Traders had expected the good-to-excellent rating to improve by 1 to 2 percentage points from a week ago.
Durchholz said that as with the other crops' progress reports, there was little in the winter wheat progress that was likely to move the market.
USDA Plantings/progress highlights
Corn 27% planted is within the range of expectations and well up on last week's meagre 10% done, although still behind last years 45% and the five year avg of 59% done.
Bean plantings are 5% done vs last years pace of 8% and the 5 year avg of 14%.
Winter wheat condition good/excellent improved 1% point to 47%.
Overnight developments
Corn fell overnight on speculation a rally in the dollar may make the grain more expensive to overseas importers and reduce the appeal of commodities as an alternative investment. Having reached 8c down, corn had clawed back most of those gains by 9am, supported by soy & wheat, and stood 1c easier.
Wheat is around 7c higher on speculation demand will rise after the price fell to $7.765 on May 1, the lowest since Nov. 20.
Soybeans are 2-3c steadier after Argentina failed to lift a ban on beef exports as promised earlier last week, eroding optimism that farmers would resolve a dispute with the government over taxes that disrupted crop exports.
The Argentine government isn't prepared to modify the export tax when officials and farmers meet tomorrow, newspaper La Nacion reported yesterday, citing people close to the government who weren't identified.
