CBOT Closing Comments
Soybeans
January soybean futures closed at USD10.53, down 1 ½ cents, December soymeal at USD326.50, up USD8.50 and December soy oil futures at 40.10 cents, down 0.47 points. The market opened heavily down following outside markets on concern over Dubai debt defaults, but quickly reversed those losses to close around unchanged. The USDA reported weekly soybean export sales of sales of 1,135,300 MT, robust but in line with expectations, China taking 859,800 MT of that. What the trade wasn't expecting however were shipments for the period November 13-19 of 2,434,500 MT, with a huge 1,835,500 MT going to China.
Corn
December corn futures finished the day at USD3.97 ¼, up 5 ¼ cents, and March corn futures at USD4.13 ½, up 5 ½ cents. Corn opened sharply lower, but was the catalyst to lead a strong grains recovery following much higher than anticipated weekly export sales, The USDA reported total weekly sales of 1,626,500 MT, well above trade estimates for combined sales of 500,000 and 700,000 MT. Of that 402,900 MT was for delivery in 2010/11, mostly for Mexico (352,600 MT). The USAD will report Monday night on corn harvest progress, last weekend only 68% of the US corn crop was in the barn, down from 94% normally at this time of year.
Wheat
December CBOT wheat futures closed at USD5.48 ¾, down 1 ½ cents, December KCBT wheat futures were at USD5.42 ¾, down 3 ¾ cents and December MGEX wheat futures at USD5.53 ¾, up 2 cents. Wheat export sales were 351,200 MT for 2009/10 delivery and 42,400 MT for 2010/11 delivery, in line with trade estimates of 350,000 to 450,000 MT. First notice day for December wheat is Monday, it's possible that there might be heavy deliveries against that next week, which would weigh on prices. The USDA will report on planting progress Monday. Last week Illinois SRW wheat sowings were at 89% versus 100% normally, whilst Indiana was 90% against 99% normality. Missouri was only 61% done compared to 92% usually at this time of year.
EU Wheat Ends Narrowly Mixed
EU wheat futures closed narrowly mixed Friday with Paris January milling wheat futures up EUR0.25 at EUR131.25/tonne and London March feed wheat down GBP0.20 at GBP110.15/tonne.
Considering the air of nervous uncertainty in the global financial markets on talk of possible Dubai debt defaults, it was a very respectable performance by wheat.
The dollar was stronger across the board as it usually is in such times, which helped EU wheat.
The markets were however pretty thin with the US CBOT only open to trade a shortened session Friday afternoon. Many participants were likely missing from their desks on the other side of the water following Thursday's Thanksgiving Day holiday.
We may get a more clearer direction next week when things return to normal, once we get past first notice day and month-end on Monday. On Monday night the USDA will also report on US soybean and corn harvest progress, together with winter wheat plantings.
The EU granted export licenses for 310,000 MT of soft wheat for the week ended Nov 24th, bringing the total volume of licenses granted to 7.1 MMT, 26% down on the 9.6 MMT exported at the same time last year.
Cumulative grain imports however are also sharply down at 4.1 MMT, 29% lower than the 5.8 MMT imported during the 2008/09 marketing year.
News coming out of Australia suggests that yields and quality this season will be down on what was expected a month or two back. A combination of a September freeze, a November heatwave and recent heavy rains are likely to produce a crop of 21 MMT, say the National Australia Bank, that's 2 MMT below their October prediction.
eCBOT Close, Early Call
The overnights closed sharply lower pressured by the fallout from the Dubai jitters. That said, grains did manage to close off their lows with beans down around 22 cents, wheat down 13 or so and corn around 10 cents lower.
Crude oil is around USD4 lower and the dollar higher on the usual "flight to safety" that accompanies a severe dose of the Ertha Kitts.
It's a shortened trading session today, and with many participants missing PLUS the Dubai uncertainty anything could happen this afternoon.
It wouldn't take too much selling to see the market limit down, neither though would it surprise me to see it close in positive territory. Indeed when the fallout settles and things get back to normal next week that is where I think things are headed.
Weekly corn export sales were much larger than anticipated, whilst bean and corn sales were in line with expectations. Weekly soybean shipments however were gigantic at almost 2.5 MMT, with China alone taking more than 1.8 MMT of that.
When the dust finally settles these are the sort of things that the market will be concentrating on.
Early calls for this afternoon's CBOT session: corn called 5 to 10 lower; soybeans called 20 to 25 lower; wheat called 10 to 15 lower.
USDA Weekly Export Sales
A day later than normal due to the Thanksgiving Day holiday, the USDA have reported the following weekly export sales and shipments for the period November 13-19, 2009:
Corn
Net 2009/10 sales of 1,223,600 MT - a marketing-year high - were up noticeably from the previous week and from the prior 4-week average. The main homes were Mexico (664,400 MT), Japan (286,400 MT) and South Korea (119,000 MT). There were also net sales of 402,900 MT for delivery in 2010/11 which were mostly for Mexico (352,600 MT). That gives us total weekly sales of 1,626,500 MT, well above trade estimates for combined sales of 500,000 and 700,000 MT.
Corn exports were 627,900 MT with Japan (248,300 MT) and Mexico (122,100 MT) the leading destinations.
Soybeans
Net sales of 1,135,300 MT were down 16 percent from the previous week, but up 23 percent from the prior 4-week average. The primary destinations were China (859,800 MT), Turkey (109,000 MT), Germany (75,200 MT), France (62,000 MT), Egypt (60,000 MT), and the Netherlands (56,400 MT). Trade estimates were for sales of 800,000 to 1,100,000MT.
Actual exports of a stunning 2,434,500 MT were up 41 percent from the previous week and 53 percent from the prior 4-week average. The primary destination was China with a huge 1,835,500 MT.
Wheat
Net sales of 351,200 MT were in line with the prior 4-week average. The main homes were the Philippines (100,200 MT) and Japan (85,700 MT), but also of interest was 36,500 MT to Spain. There were also net sales of 42,400 MT for delivery in 2010/11 to the Philippines. That gives us total weekly sales of 393,600 MT, in line with trade estimates for combined sales of 350,000 and 450,000 MT.
Exports of 416,100 MT were down 15 percent from the previous week and unchanged from the prior 4-week average. The primary destinations were Nigeria (59,000 MT), Iran (54,300 MT), South Korea (40,900 MT), Taiwan (40,100 MT), Mexico (31,100 MT), and Cuba (27,500 MT).
National Australia Bank Cuts Wheat Crop Estimate
The National Australia Bank has cut it's wheat crop estimate by 2 MMT to 21 MMT, citing frost damage in September followed by a more recent heatwave.
Extreme heat in November, and recent heavy rains also look like affecting quality as well as quantity this year.
Torrential rain in eastern Victoria to central NSW yesterday will have stalled harvest progress for a few days. Meanwhile a Severe Thunderstorm Warning is currently in place for much of southern SA, with potential for damaging wind gusts and large hail, forecasters say.
EU Rapemeal Prices
EU rapemeal prices continue their recent steep incline, regardless of what is going on in Dubai. Latest prices basis FOB Hamburg/Lower Rhine in euros/tonne;
Dec 148,00
Jan 146,00
Feb/Apr 141,00
May/1st h Jly 126,00
Aug/Oct 10 124,00
Nov/Apr 11 133,00
Asian Flu? Or January Sales Come Early?
The world markets appear to have caught a cold overnight, as fear spread from the stock market into just about everything else, including agricultural commodities. Even gold has had a bad case of the jitters this morning, down 4% at one stage.
Shares in Asia fell sharply overnight on concerns over exactly what the implications are, particularly for the banking sector, of Dubai World being unable to meet its financial commitments.
It seems that everybody was assuming that Dubai World were underwritten by the Government of Dubai and Sheikh Mohammed Al Maktoum, Dubai’s billionaire ruler. Now it looks as if things maybe aren't quite that straightforward.
It won't come as a huge surprise to hear that Credit Suisse estimate that European banks are exposed to half of Dubai's $80 billion debt. And British banks are likely to be holding the lion's share of that.
Consequently UK banking shares took a GBP14 billion hit in their value yesterday.
Overnight Tokyo's Nikkei fell 3.2% to 9,081.52, a new four-month closing low. Hong Kong's Hang Seng index closed down 4.84% at 21,134.5.Crude oil is USD4/barrel lower at just under USD74/barrel, and the overnight eCBOT market is also sharply weaker with soybeans down the thick end of 30 cents, wheat down almost 20 cents and corn 13 cents easier.
The pound is also taking a pasting at 1.6360 against the dollar and just under 1.10 against the euro.
Is all this just a knee-jerk reaction? It could be that, in the cold light of day, investors will come to the conclusion that sticking their money into agricultural commodities is a safer bet than equities. On recent evidence it's certainly better than money in the bank!
In case you missed it yesterday, the Chinese government effectively put a floor in their domestic soybean and corn market by saying they'd support the rural sector by buying all the soybeans and corn they want to sell, at prices equivalent to a generous USD548 and USD220/tonne respectively.
In the UK, whilst Chicago might be down, the pound has fallen 3.65 cents against the dollar since midnight on Wednesday. That will more than compensate for any movements in Chicago.
Meanwhile the nearby fundamentals are tight. The rapemeal market has moved up a tenner in a week, but even at that it still looks cheap with hipro soya nudging GBP300/tonne, and the wheatfeed market is up thirty quid in a month.
European shares have only opened fractionally lower this morning, having already done most of their falling yesterday, when the FTSE 100 suffered its worst one-day fall since March. On the FTSE 100 today Lloyds and RBS are amongst the mornings biggest gainers on bargain hunting, and it's not even the January Sales yet!
EU Wheat Ends Quietly Mixed
EU wheat futures closed mixed in a quiet trading session with the US markets closed for Thanksgiving. London wheat closes with January up GBP0.10 at GBP107.60/tonne, and Paris January milling wheat down EUR2.25 at EUR131.00/tonne.
Tomorrow will be interesting. Chicago trades a shortened session due to Thursday's holiday. The USDA are out with their weekly export sales report, and I for one expect soybean sales to be larger than trade expectations once again. The stock market has the jitters over Dubai, and China has announced that they will buy domestic soy and corn stocks at or around current market levels.
Gold hit another new all-time high as well. The dollar is weak, but the pound weaker still. There's quite a few conflicting influences there, pulling the market this way and that.
On the fundamental front, the IGC today said that they expect global 2009/10 wheat production to come in at 668.3 MMT, 1.5 MMT up from it's previous estimate. They also said that they see 2010/11 plantings down 1.5 million hectares, and cut their Australian 2009/10 production estimate to 22 MMT.
Widespread reports now suggest that the Australian crop has had a very poor finish, hit by 30-35C temperatures and heavy rain and high winds. The crop their is estimated to be around 40% harvested.
For all the rhetoric from grain merchants about the recent price rise being a God-given selling opportunity, one trader I know today told me that he'd had the Devil's own job just trying to even get a price on UK wheat delivered on a 24 month forward contract.
If anyone reading this thinks that's complete rubbish, give me a call or email tomorrow with a guaranteed firm offer on a load a week of feed wheat for Dec09-Dec11 delivered to the Preston area. We are awash with the stuff after all!
