US Regulator To Review Monday's Crude Oil Activity
The CFTC has said it will review Monday's wild NYMEX trading session for any evidence of wrong-doing.
The U.S. crude oil expiring October contract soared by $16.37 to settle at $120.92 a barrel. At one point, the contract was up by $25.45 a barrel, or 24 percent.
A CFTC spokesman said they "will scour today's trading activity to determine whether anyone engaged in illegal manipulative activity."
Why use your own money to scam the market when you can use a government handout, eh?
CBOT Closing Comments
CBOT grains closed sharply higher led by soaring crude oil and a heavily weaker dollar.
The great US bailout is seen ending the dollar's three month rally, which may in turn lead to US grains becoming more competitive on the export arena.
November crude leaped $7/barrel yesterday on hopes that the rescue plan would improve the outlook for energy demand. Expiring October, which traded $25 higher, settled up 16 percent at $120.92/barrel. Yes, you did read that correctly!
Corn closed around 16-18c firmer, wheat around 20c higher and soybeans up 61 1/2 to their 70c limit on deferred months.
This Bailout Thing
How the hell is pumping $700 billion to $1 trillion (depending on who's figures you believe) into the markets really going to make any difference at the end of the day?
Why is crude up $17/barrel on the back of it? The idea that the lower prices we've seen will stimulate & increase consumption is surely just pie-in-the-sky.
The average consumer isn't suddenly going to start buying more petrol because the pump price has come down a few pence. Their decision was made when oil almost hit $150/barrel. The SUV has been sold & the Corsa is on the drive.
Unemployment is still rising (ask ex-Lehman's employees), as is the cost of living. Home fuel bills are still going up. I don't see half of Americans suddenly leaving the lights on all night thanks to the Fed throwing cash at Wall St.
And I certainly don't see the mortgage company sending out letters saying "Dear John, don't worry about the mortgage this month Bernanke's paid it."
It all seems like a massive knee-jerk reaction to me. Once reality kicks in, we'll all be back to square one. Except the US government will be $700 billion plus behind where they were last week.
Still that's Obama's problem.
EU Wheat Futures Post Modest Gains
EU wheat futures posted modest gains Monday with Paris November milling wheat closing up EUR2.00 at EUR172.00/tonne. London November feed wheat finished up GBP0.50 at GBP107.00/tonne.
Firmer outside markets helped wheat, with crude oil and metals both firmer.
However, a sharply weaker dollar on the back of the proposed $700 billion US rescue package for the financial markets will do little to help EU export ambitions.
UK wheat quality remains a problem,in the north in particular, and it is difficult at this stage to see where all this extra low grade wheat will go.
Strong competition from the Black Sea remains, plus a large EU corn crop is about to come onto the market.
Fundamentally, nothing much has changed. Large crop, low prices.
US Soybean basis dives as harvest finally gets underway
The US soybean harvest has finally got underway, sending basis premiums sharply lower as empty supply pipelines are slowly replenished.
Farmers as far north as Michigan and Minnesota are said to have begun harvesting over the weekend, encouraged by hefty spot premiums.
Farmers in the southern Plains and Delta were also able to resume harvesting at the weekend following heavy rains produced by Hurricane Ike.
Spot premiums are said to have declined as much as 80c Monday and are currently averaging 61 3/4c under the Nov future.
Is US Wheat Profitable?
Yes it is, but only just is the answer according to economists Alan May, Jack Davis, and Matthew Diersen of South Dakota State University.
Total US production costs are expected to rise from $217 in 2008 to $309 next year, with 70% of the increase due to fertilizer price, they say. Consequently, they are recommending soil tests to determine fertilizer needs more accurately. Based on a 50 bu. yield and a $7.50 market price, gross revenue would be $375 per acre. With production costs estimated at $309, they project a return to labour and management of $65.85 per acre.
If prices were to fall to $6/bushel then wheat would fail to break even. The South Dakota economists say despite larger wheat supplies, those supplies will be tight enough to support prices above $6 for the balance of this year.
In the US winter wheat planting conditions are currently said to be very good and some analysts expect acres to be higher. Howver they say that they'll likely see more winter wheat grazing as well, so harvested acres are a little harder to determine. Plantings are slightly behind normal because of the hurricane rains throughout the southern and central plains. Even the very dry western plains have a good moisture base, the first time in many years.
eCBOT Closes Higher On Stunning US Revelations
eCBOT futures closed higher, buoyed by ideas that the "Great US Bailout" will stimulate the economy and put an end to the financial crisis.
Later today the Fed will also unveil it's plans to solve the Middle East problem and promote world peace. It is also rumoured that they have found a cure for the common cold, know the secret of eternal life and can strike a match on a jellyfish.
Corn closed around 10c firmer on the news that Treasury Secretary Henry Paulson will jump through a flaming hoop live on CNN at 2.30pm this afternoon.
Soybeans finished around 32c firmer on the back of Ben Bernanke's plans to swim the Atlantic, whilst wheat managed to post gains of 14-19c as it was revealed that George W Bush can shit gold bars.
Early calls for this afternoon's CBOT session: Corn futures are expected to open 8 to 10 higher; soybeans 30 to 35 higher; wheat 15 to 20 higher.
Bradford And Bingley Takeover Rumours
Bradford & Bingley shares rallied on the stock market Monday morning on speculation that the troubled lender could be taken over, despite analysts urging investors to shun the company.
Shares in B&B soared by 17% in early trading before settling around 8% higher at 30p, a 2.25p rise.
The jump came on the back of a strong rally on Friday, and followed reports that three foreign banks – Santander, ING and NAB – could step in to acquire B&B.
