Target Futures
Trading Day Awaits Fed Announcement
Vic Lespinasse's Pre Opening Grain Commentary from the Floor of the Chicago Board of Trade for April 30, 2008A higher start is likely in most pits this am, judging by overnight trading. The early call is roughly 2 up in wheat, steady/1 better corn and 10 higher beans. Keep in mind, however, overnight trading this week hasn't been as reliable as usual with the opening deviating from the overnight pattern significantly.
Deliveries were in line for wheat, 1144 lots to April 25, beans 721 to April 3, and oil, 2104 to April 25. Meal was larger than expected, 1475 lots to April 16. Rice was higher than expected too with 715 lots to April 28 and oats were more than expected, 275 to April 28. Corn was much less than expected, just 198 lots to February 6. There were no large commercial stoppers in any of the markets.
The outside markets are mixed this am and won't provide much direction for our grain market on the opening with Dalian, China grain futures mixed, the $, crude oil and Malaysian palm oil all a bit higher. Remember, the weekly crude oil stocks report is out at 9:30 central time, which could move this market and, in turn, move our corn and bean oil markets. Also, the Federal Reserve Board will announce its decision on interest rates at 1:15 central time this afternoon, which could impact the $ and influence our market tonight and tomorrow. A cut of 1/4 point is expected by the Fed today. The global food situation continues to garner headlines: I was walking by a TV on the floor that was tuned to CNBC with a segment on "battle lines drawn over ethanol". This morning's front page headline story in the Wall Street Journal reads "Grain Companys Profits Soar As Global Food Crisis Mounts". The story goes on to list the huge jump in profits by ADM, Cargill, Bunge, etc.
There is a threat of very cold temps, which could do some damage to the winter wheat in the southwest winter wheat belt, which bears watching. This area will see beneficial rain tomorrow-Friday in northern and eastern sections of less than .5". The weekend is forecast to be mostly dry. The 6-10 day calls for above normal rain in northern and eastern areas with below normal rain in southern and western parts of the belt, which need rain the most. The northern plains spring wheat belt will see rain Thur-Fri, .3-1.5" with dry weather over the weekend. The corn belt will see rain Thur-Fri in the west, up to 1.5", and Thur-Sat in the east, also up to 1.5". Temps will remain mostly cool, slowing needed drying in the wet fields. The 6-10 day calls for wet weather in the south and east, below normal rain in the northwest. Overall, the forecast is bullish corn and bearish beans but this is already at least partly in the market, as we saw yesterday when corn opened much higher but closed lower and new crop beans ended higher. This is just the opposite of what one would expect, given the wet weather and the very slow corn planting pace, which could lead to more bean planting. Finally, there is a small but growing fear of a backlash against bio fuels, which would be bearish corn and bean oil with their ethanol and bio diesel links, respectively.
Corn Planting Progress at Slowest Pace Since 1995
Vic Lespinasse's Pre-Opening Grain Commentary from the Floor of the Chicago Board of Trade for April 29, 2008A higher start is expected this am, led by corn, following overnight gains. Corn is called around 10 higher with wheat up 3-5 and beans 2-3 better. Rice is called sharply lower to start. Corn planting progress yesterday afternoon was reported at only 10%, way below trade ideas of 15-20% and the 5 year average of 35%. Illinois is only 6% done vs 57% average and Iowa is only 3% planted against 32% average. So far this season, corn planting is going at the slowest pace since 1995, when over 3 million acres of intended corn acreage was not planted and yields dropped 10%. A repeat of that year would be extremely bullish for corn prices, of course.
The forecast doesn't suggest any sudden jump in corn planting is likely with dry weather today and tomorrow replaced by widespread rain across the midwest Thur-Sat of .3-1.5". The 6-10 day calls for more of the same with cool temperatures continuing and above normal rain falling in southern and eastern areas. The northwest part of the belt is expected to have below normal rain, however, which would be welcome. Winter wheat good to excellent ratings improved just 1% to 46% according to yesterday afternoon's weekly crop progress report. Traders had expected a 2% improvement. Winter wheat headed is 15%, behind the 25% average for this time of year. Spring wheat planting is 34% done vs 40% average. Bean planting is 2% complete against 5% normally for this time in the season. Rice planting reached 44% against 58% normally. Emerged rice hit 20% vs 32% average. The delta is expecting up to 1.5" of rain the second half of the week and the 6-10 day calls for above normal rain, a combination that should keep planting of rice, corn and beans slow. The southwest winter wheat belt will see light, scattered rain the second half of the week with the 6-10 day calling for below normal rain in the south and above normal rain in the north. Any rain is welcome in this region, especially the dry western area.
The December corn/November bean ratio is less than 2-1, which will strongly encourage farmers to plant corn rather than switch to beans, if the weather allows. Corn planted after May 10 starts losing yield, on average, or so it is said.
Tomorrow is first notice day for May deliveries and I am hearing talk of light deliveries in beans and meal but heavy deliveries in wheat, corn and oil.
Malaysian palm oil fell sharply today, down 161 ringgit. Dalian, China grain futures were mostly lower today while crude oil is sharply lower and the $ is higher, all bearish signals for our grain market. No new word on the situation in Argentina regarding the talks to avert a renewed farmers bean strike with no confirmation of yesterday's rumor of a 30 day extention of the truce or non-strike period. Thailand is going to open its rice stockpile, selling over 2 million tonnes of rice into the domestic market to cool rising prices. This pushed Thai rice prices down today and is expected to weigh on our rice market this am. The UN is setting up a task force to deal with rising world food prices.
Some US states, such as Texas and Missouri, are asking for a waiver from the federally mandated use of ethanol due to rising feed grain prices. If this became widespread, it would be bearish for corn demand. The USDA announced this am the sale of 116,000 tonnes of US wheat to Brazil for the 2008-09 crop year. I think we will start higher but then I think prices will turn mixed like yesterday.
Bullish Factors Open the Week in Grains
Vic Lespinasse's Pre-Opening Grains Commentary from the Floor of the Chicago Board of TradeA higher to sharply higher start is likely this am, around 15 higher wheat, corn and beans, following similar overnight gains. Crude oil is higher and the $ is lower this am while Malaysian palm oil gained 91 ringgit today and Dalian, China grain futures ended higher. All this is bullish for our grain market this am.
Iraq is in the market for optional origin wheat, which could lend a little support to this pit. The Federal Reserve Bank is expected to cut interest rates a quarter point Wednesday, which would be negative for the $. Anything that makes the $ weaker is bullish for grains as it makes US grain exports more competitive in the market.
There is no fresh news this am on the situation in Argentina, where farmers are threatening to go back on strike by May 2 if talks between the government and the four big farmers unions don't resolve the high bean export tax issue. If this issue isn't resolved, it is very bullish for nearby bean prices on both an outright and spread basis. Traders will keep monitoring the situation closely.
Weather remains the main market mover and it is viewed as bullish this am. There was less rain than expected over the weekend in the eastern corn belt, according to Meteorlogix, the only weather forecasting service I have seen so far this am. There was rain scattered in the western half of the belt over the weekend as well as in the delta (Arkansas, Mississippi, Louisiana), where up to 1.5" fell. More rain is forecast in the midwest and delta the second half of this week, generally up to 1". The 6-10 day calls for above normal rain in both these regions, which will keep planting slow. The weekly crop porgress report this afternoon is only expected to show corn planting progress roughly half or less the normal pace for this time of the season. The southwest winter wheat belt had very cold temps over the weekend but very little damage is likely as a result of this cold. The southwest also had up to .5" of rain over the weekend, scattered in the eastern half of the belt. More rain is forecast the second half of this week, which will be welcome. The 6-10 day predicts wet weather in the southeast part of the area with below normal rain in the northwest part of the belt. Overall, the market views the weather currently as bullish and is building a weather premium into prices so keep an eye on the latest weather updates for market direction.
Lower Start in Grains Possible to Close the Week
Vic Lespinasse's Pre Opening Grain Commentary from the floor of the Chicago Board of Trade for April 25, 2008A lower to sharply lower start is likely this am, down roughly 7-10 wheat, 5-7 corn and 15-20 beans. Rice could be limit down to start, which is 75 cents today, following limit losses of 50 cents yesterday. Crude oil is higher this am but so is the $ while Dalian, China grain futures prices were mostly lower, sending mixed, but mostly negative signals to our grain market this am. Malaysian palm oil fell 41 ringgit today.
Argentina's Economy Minister reportedly has resigned this am, which might have some influence on the talks to avert another farmers strike there as the Economy Minister has been described as the "architect" of the higher bean export tax that started the farmers strike. All week nearby beans have been gaining on deferred month beans due to fears of a renewed farmers strike but yesterday afternoon the nearby months lost to the deferred months, perhaps signaling a reduced threat of a strike. If the strike threat continues to recede, expect more pressure on the nearby months vs the deferred months today.
The UN Secretary General said today that rising world food prices are a "global crisis". UN agency heads will meet in Switzerland next week to discuss ways to deal with this crisis.
There is a chance of a frost in the southwest winter wheat belt over the weekend but any damage to the crop is unlikely. Still, the situation bears watching, according to Meteorlogix Weather Service. Rain is likely today in the corn belt, continuing through the weekend in much of the region. Much colder temps are also forecast to move into the area over the weekend and continue the first half of next week, slowing drying in fields and keeping planting of corn slow. More unwelcome rain is forecast the second half of next week. A similar pattern is forecast for the delta, which will delay planting there also. The 6-10 day forecast for the midwest and the delta calls for above normal rain, which is bullish for corn as it will keep planting slow. The southwest winter wheat belt had scattered rain yesterday and more is forecast today-tomorrow, up to 1.5" in some areas. The dry western part of the belt will only get .25" or less, however. More rain is forecast the second half of next week and the 6-10 day calls for above normal rain in all parts of the belt except the area that needs it most, the west, where below normal rain is likely.
Crush Report Figures and Looming Argentine Strike Fears May Push Soy Complex
A mixed start is expected this am, down roughly 10 cents in wheat but steady/1 higher corn and 2-3 up in beans. Crude oil is sharply lower this am and Malaysian palm oil fell 90 ringgit while the $ is higher, a bearish combination for the grains. Dalian, China grain futures were mixed so they won't provide much direction for our grain market this am.
The Census Bureau March crush was 152.6 million bushels, over 3 million less than expected. Oil stocks were 2.910 billion lbs, about 30 million lbs below trade ideas. Meal stocks were 395,400 short tons, well above trade ideas of 317,000 short tons. Weekly export sales were mostly in line, 158,000 tonnes of old crop wheat and 115,000 tonnes of new crop wheat, 775,000 tonnes old crop corn and 212,000 tonnes of new crop corn, 377,000 tonnes of beans and 140,000 tonnes of meal. Oil was higher than expected, 25,000 tonnes.
Fears of a renewed Argentine farmers strike continue to grow, which has kept the nearby beans strong vs the deferred months all week. This pattern will probably continue today, pending any change in the tone of the ongoing talks in Argentina between the farmers unions and the government.
The Philippines raised its May 5 rice tender from 500,000 tonnes to 675,000 tonnes. Pakistan's Farm Minister is predicting a wheat crop of just 21.8 million tonnes vs 23.5 million last year. Rice in Thailand, the world's largest rice exporter, traded at another new all time high, over $1000 per tonne, today. Expect continued strength in our rice market today.
The midwest is likely to see widespread, significant rain the next several days, up to 2" or more, by early next week. The delta is expecting similar coverage and amounts over the next several days. All this moisture will continue to slow planting and is bullish new crop corn but bearish new crop beans as farmers could be forced to plant more beans and less corn than intended despite the fact the new crop corn/bean ratio favors corn planting over beans. The southwest winter wheat belt had beneficial rain yesterday in central and eastern areas, up to 1.5". More is forecast today and tomorrow, up to 1". The 6-10 day calls for below normal rain, which isn't a problem in the east but would further stress wheat in the already dry western part of the belt. The 6-10 day in the midwest is for wet weather in the west but below normal rain in the east.
Look for continued overall weakness in wheat, relative strength in nearby beans and two sided trading in corn.
Slow Planting May Support Corn Today
Vic Lespinasse's Pre-Opening Grain Commentary from the Floor of the Chicago Board of Trade for April 22, 2008A mostly higher start is likely this am, 3-5 corn and 15 beans but 1-3 down in wheat, following overnight trading. Dalian, China grain futures were mixed but mostly lower today while Malaysian palm oil fell 19 ringgit, the $ was lower and crude oil traded slightly lower.
Egypt is in the market for wheat with results expected slightly before our opening. If they buy a large amount of US wheat, this could turn this pit higher to start. South Korea passed on their tender for 150,000 tonnes of optional origin non-genetically modified beans but they are expected to return Thursday for 50,000 tonnes of the same. Chinese bean imports in the first three months of 2008 jumped 36% to 7.8 million tonnes vs last year's first quarter.
Reports keep coming out of Argentina that the talks between the government and the farmers unions to avert another strike are not going well. Farmers say they will resume their strike May 2 if the talks fail to resolve the dispute over export taxes for beans.
Corn planting progress was surprisingly slow last week, according to the weekly crop progress report yesterday afternoon with only 4% done vs expectations of 7-10% and an average pace of 17%. This is the slowest corn planting pace in 15 years. No corn has been planted in Iowa yet vs 12% average while only 1% of Illinois corn is in the ground vs 29% average! This very slow planting pace should support corn today. Spring wheat is 20% done vs 23% average. Winter wheat was expected to show a slight improvement in its good to excellent ratings but instead it declined from 47% to 45%, which should lend some support to this pit today.
The Asian Development Bank said Asian rice stocks are at the lowest level in several decades. Rice is called higher this am after suffering its first lower close yesterday in a week. Turkey is in the market for 150,000 tonnes of corn, optional origin, April 29. India raised it wheat production guess from 74.8 million tonnes in February to 76.8 million tonnes today, which would be a record.
The US and European weather models for the midwest and southwest diverge after just 3-4 days, making the 6-10 day outlook more tentative than usual. Meterologix is hazarding a guess of above normal rain in its 6-10 day view for the corn belt. Its 6-10 day outlook for the southwest winter wheat belt is for below normal rain in the west and above normal in the east. The west is still very dry so that is where the rain is needed but not expected to fall. Rain is likely in the western corn belt Thur-Fri, up to 1.5". The eastern belt will be dry until Thur-Fri, when up to 1" is predicted. The southwest winter wheat belt is expecting rain Wed-Thur, up to 1.25" in central and eastern areas but only 1/4 or less in the dry west.
Remember, the CFTC forum on whether the futures markets are functioning properly starts this at 8am central time. Go to
www.cftc.gov for directions on how to watch the webcast of this important meeting that could help determine future policy regarding the futures and options markets.
The Board of Trade is hiking margins for oil but lowering them for corn and beans starting tonight.
Weather is Bearish Influence on Grains
Vic Lespinasse's Pre-Opening Grain Commentary from the Floor of the Chicago Board of Trade for April 21, 2008A lower to sharply lower start is likely in all pits except rice, which is called higher. Wheat is expected down 10-15, corn off 7-10 and beans 15-20 lower. Dalian, China grain futures were all lower and Malaysian palm oil fell 94 ringgit today. Crude oil is lower after trading higher earlier this am. The $ is lower, the only bullish outside market for the grains this am.
Stats Canada estimated all wheat planting this am at 25.1 million acres, durum 5.9 million, oats 4.5 million and canola (rapeseed) 14.8 million. Traders were looking for 24.4 all wheat, 5.7 durum, 5.0 oats and 15.1 canola. The wheat estimates are bearish while the oats and canola guesses are bullish.
The weather is the main influence on the market now and it is bearish. Less rain is forecast for the midwest this week after a drier than expected weekend. There will be some scattered, light rain this week but not enough to totally halt corn planting progress. The southwest winter wheat belt will be dry until the second half of the week, when scattered rain is forecast, favoring the central and eastern parts of the belt. The dry western part of the belt is only likely to get .25" of rain or less, increasing the need for more moisture there soon. Corn planting this afternoon is expected to be reported around 7-9% complete. Normally, it should be around 20-23% done this time of year. It should be almost 50% complete by the end of the month so the midwest weather will need to cooperate or planting will remain well behind normal.
China's North China Plain had 1.4" of rain over the weekend, which was very beneficial for the wheat crop there. There was some talk about drought in Thailand's "rice bowl" but I don't have any details yet. Thailand is the largest rice exporter in the world so any drought there could be important. The Phillipines might increase their May 5 rice tender to 600,000 tonnes, up 100,000 tonnes. Jordan tenders May 7 for 100,000 tonnes of optional origin wheat.
The big Commodity Futures Trading Commission meeting will start tomorrow am at 8 am, central time. It will be a forum to discuss whether the futures markets are functioning the way they were designed, the role of the index funds and other large speculators, the lack of convergence (the coming together of the cash and futures prices when a contract is about to expire), etc. To watch this meeting, go to www.cftc.gov for directions. This is an important meeting although no decisions will be made tomorrow. Still, it could have long term implications for the futures industry.
Weather Worries Overcoming Bearish Factors to Support Grains
Vic Lespinasse's Pre-Opening Grain Commentary from the Floor of the Chicago Board of Trade for April 17, 2008A higher start is expected across the floor this am, 10-15 wheat, 3-5 corn and 15-20 beans. Malaysian palm oil fell 42 ringgit today while Dalian, China grain futures were mixed but mostly lower. Crude oil is a shade lower and the $ is a little higher. All of these other markets are negative for the grains this am but they should still be higher, supported by overnight gains and ongoing weather worries.
Weekly export sales were slow for wheat, 129,000 tonnes this crop year and 179,000 tonnes next crop year. Corn was good, 869,000 tonnes, as was meal, 176,000 tonnes and rice, 176,000 tonnes. Bean sales were in line, 477,000 tonnes but oil sales were slow, 7000 tonnes.
The western corn belt will see rain today-tomorrow, .5-1.5" with dry weather over the weekend. More rain is forecast Monday. The eastern corn belt will have .5-1.5" of rain Fri-Sat with more Mon or Tue. The 6-10 day forecast calls for above normal rain. Some forecasters, however, think next week will bring below normal rain, at least to the western corn belt. The delta is expecting rain Friday, up to 1.5", and again Mon-Tue. The 6-10 day calls for above normal rain, which could keep rice planting slow. The southwest winter wheat belt will have rain today-tomorrow. Up to 1.5" is expected in the east, up to 1" in central areas but only up to .25" in the dry western part of the belt. The 6-10 day calls for below normal rain in the west and above normal rain in the east.
There is still a lot of talk in the press about food shortages in various countries around the world, many involving rice in Asia, which has been driving our rice market sharply higher lately and should continue as a very bullish influence in this market. Look for higher prices overall today.
Corn Planting Off to a Slow Start; Weather Becoming Critical
Vic Lespinasse's Pre-Opening Grain Commentary from the Floor of the Chicago Board of Trade for April 16, 2008A steady/higher start is expected this am, 10 up in wheat, 2 better corn and steady beans. Dalian, China grain futures were lower today, a negative indicator for our grain market. Crude oil is higher but only slightly at this time, not enough to influence the grains very much. Malaysian palm oil fell 16 ringgit, also not enough to impact our market.
Corn planting is off to the slowest start in 15 years and it ain't goin' to improve much for now with rain forecast over much of the corn belt tomorrow through Saturday. Amounts could reach as high as 1.5" in parts of the belt from this rain, keeping farmers out of the fields. Both the 6-10 and 8-14 day forecasts call for above normal rain in the corn belt, which will further delay corn planting. These forecasts supported corn overnight while weighing on beans since acreage will be switched from corn to beans if rain continues to delay corn planting. The southwest winter wheat belt is expecting rain today-tomorrow, up to 1" in central and eastern areas but much less in the dry western part of the belt. The 6-10 continues to predict below normal rain in the dry western part of the belt but above normal rain in the east.
There is very strong demand for fertilizer this spring. How strong? India bought potash fertilizer last month at $625 a tonne, more than double the price of a year ago. Chinese potash importers agreed today to pay $576 a tonne vs just $176 last year! As grain prices have rallied sharply from levels of a year ago, so have fertilizer prices.
Bullish Factors May Impact Grains to Open the Week
Vic Lespinasse's Pre-Opening Grain Commentary from the Floor of the Chicago Board of Trade for April 14, 2008A higher start is likely this am, 10-12 wheat, 2-3 corn and 20 beans. Crude oil is higher and the $ lower, a friendly combination for the grains, especially corn and bean oil because of their bio fuel link with the energy market.
I am now hearing there was progress in the Argentine government-farm union talks Friday and they are going to meet again today. Supposedly, the farmers unions said they will honor the 30 day no-strike period before possibly going back on strike. If this issue is resolved, it is bearish for our bean market. Why our wheat and bean markets were so much higher overnight is hard to explain this am. There is a lot of press about rising food prices around the world and the unrest that this is starting to cause, a situation that could have an impact on our markets so we will continue to watch developments closely.
Dalian, China grain futures were all higher today and Malaysian palm oil gained 141 ringgit, both supportive items for our grain futures this am.
The March NOPA (National Oilseed Processors Association) crush was lower than expected, 148.2 million bushels. Oil stocks were also below trade ideas, 2.529 billion lbs.
Bangladesh is in the market for 100,000 tonnes of optional origin wheat. The USDA reported South Korea bought 100,000 tonnes of US corn, half for the 2007-08 crop year and half for the 2008-09 crop year. The USDA also said 116,000 tonnes of US corn was sold to an unknown destination for 2007-08. The head of China's State Grain Administration said China is finding it harder to keep up with growing domestic demand for food and needs to depend more on imports while curbing exports. This isn't fresh news this am but just the fact a government official said it is bullish for prices.
Heavy weekend rains of up to 4" in Brazil could damage the quality of the remaining bean crop to be harvested and slow down the harvest. There was a freeze over the weekend in Argentina that might have done some damage to late developing beans there. There is no significant rain in the outlook for Australia's wheat belt for the next 7 days but it is still early with wheat planting starting next month.
The southwest US winter wheat belt was mostly dry over the weekend with more dry weather forecast the next 2-3 days. Rain is likely Thur-Fri, .25-.75", in central and eastern parts of the belt while only very light rain falls in the dry western part of the belt. The 6-10 day calls for more of the same, below normal rain in the west and above normal rain in the east. The midwest saw scattered weekend rain in the east but dry weather in the west. Rain is forecast in the west the second half of the week, up to 1". After dry weather the next 3 days, rain is forecast in the eastern half of the belt Thur-Sat, up to 1", favoring the south. The 6-10 day predicts above normal rain in the west and below normal in the east.
Mixed Start Possible in Grains to End Volatile Week
Vic Lespinasse's Pre-Opening Grain Commentary from the Floor of the Chicago Board of Trade for April 11, 2008A mixed start is expected this am following mixed overnight trading. The early, tentative call is 10 higher wheat, 2-3 better corn and 2-3 lower beans.
The Dalian, China grain futures market was mixed today while crude oil is trading back and forth this am on either side of unchanged and the $ is a bit lower. Malaysian palm oil futures fell just 1 ringgit today. All these markets are sending mixed signals to our grain market this am so that is what we are expecting. There is no significant rain in the outlook for Australia's wheat belts for the next 7 days. Wheat planting starts next month so there is still plenty of time for rain to occur. However, following the severe droughts of the last two years, farmers are eager for rain to build up soil moisture supplies ahead of planting.
The big meeting between the Argentine president and the 4 major farm unions is expected this afternoon with union leaders and farmers threatening to renew the strike by May 1 if significant progress isn't seen soon. The results of this meeting probably will not be available until after our bean and product markets close today but Sunday night trading will be affected. South Korea bought 165,000 tonnes of US corn late yesterday. China's March bean imports increased 10.5% over last March to 2.3 million tonnes. For the first three months of the year, Chinese bean imports are up a whopping 36%. These increases are from all sources, not just the US, of course, but this augers well for continued strong US bean export demand from China, our largest customer by far. Chinese corn exports in March fell to only 20,000 tonnes, less than 1 cargo, vs 1.13 millon tonnes last March, illustrating the well known fact that China is out of the corn export business, which is bullish for US corn exports. The USDA announced this am that China bought 240,000 tonnes of US beans, which should firm up the opening in this pit.
Various world bodies, such as the World Bank, the International Monetary Fund, and the UN, are all talking up the prospect of increased social unrest in third world countries as a result of the huge run up in food prices over the last couple of years. There have been riots in some countries already and more are feared. This hasn't directly impacted our grain prices and probably won't in the future but it is something to be aware of just in case it ever does become a market factor.
The southwest winter wheat belt had much needed, very beneficial rain across most of Kansas, the largest US winter wheat state, yesterday, .25-1.0". Dry weather is forecast today through next Wednesday. The 6-10 day calls for generally below normal rain in the western half of the belt with normal rain in the eastern half, which is in good shape already. The midwest saw rain yesterday and this rain will linger today in the eastern half of the belt. A mostly dry weekend is forecast to continue through the first half of next week, allowing rain saturated fields to start drying out so corn planting can commence. The 6-10 day outlook calls for above normal rain in the western half of the belt, below normal in the eastern half.
I was supposed to be on CNBC again this am but the surprisingly poor 1st quarter results from GE and their lowered outlook for 2008 knocked me off the program. Oh well, that's show biz! Have a great day.
USDA Supply/Demand Figures
Vic Lespinasse's Pre-Opening Grain Commentary from the Floor of the Chicago Board of Trade for April 9, 2008The USDA supply/demand report was mixed this am. US wheat ending stocks were friendly at 242 million bushels but world stocks were negative at 112.5 million tonnes, up 2 million tonnes from last month. Corn ending stocks in the US were supportive at 1.283 billion bushels while world stocks were also supportive, 103 million tonnes, down 1 million tonnes from last month. US bean ending stocks were neutral, 160 million bushels but world stocks were negative, 49.3 million tonnes, up almost 2 million tonnes vs last month. US rice ending stocks were unchanged from last month but world stocks were raised almost 2 million tonnes to 77.1 million. Most of the world production guesses were unchanged from last month.
The USDA cut its estimate for corn used to make ethanol by 100 million bushels to 3.1 billion bushels. They hiked their estimate of bean oil used to make bio diesel fuel by 150 million lbs, as many traders expected, to 2.950 billion lbs. This isn't a major report so the market will trade it for a few minutes and then go back to trading the weather, which is also mixed.
The dry areas of the southwest winter wheat belt have a chance of some much needed rain today and tomorrow with up to .5" in the driest areas. The eastern half of the belt, which is already in fairly good shape, will enjoy .5-1.5" of rain between today and tomorrow. The dry areas are mostly in southwest Kansas and the panhandles of Oklahoma and Texas. The 6-10 day outlook calls for below normal rain, making it more important that the rain the next couple of days reaches the dry areas. The midwest will see heavy, widespread rain the next few days, up to 2" in the west and up to 2.5" in the east. The forecasters keep changing their ideas on next week with some who were previously expecting generally dry weather then now suggesting it might be wet while some who had forecast wet weather next week are now calling for generally dry weather. The midwest needs dry weather next week, especially after what should be heavy rains the next few days, to allow fields to dry out so farmers can start planting corn. The market will react each day to the changing forecast as weather is now the single most important market determinant. At this point, the longer term forecast is unclear, which could make for increased volatility in the market, especially corn and beans.
China's north China plain had beneficial rain yesterday but Manchuria is forecast to remain dry the next week or so, increasing the need for moisture there soon. Dalian, China grain futures were mostly higher today with the exception of corn, which was a little lower. Crude oil is about unchanged at this time but the $ is lower, which is friendly for grains. Malaysian palm oil prices fell 50 ringgit today. It could easily be a choppy trade today and at this point, it isn't even clear how we will open. Corn should be higher but there are mixed ideas regarding wheat and beans.
Turn Around Tuesday May Boost Grains
Vic Lespinasse's Pre-Opening Grain Commentary from the Floor of the Chicago Board of Trade for April 8, 2008A slightly higher start is expected in most pits this am, 2-3 better in wheat, steady/firm in corn and 2-3 higher in beans. Dalian, China grain futures were mixed today, providing no strong directional signal for our market this am. Crude oil is lower and the $ is higher, a negative combination for the grains. Malaysian palm oil gained 7 ringgit today, hardly enough to impact our bean oil market.
There is a feeling, on the part of some traders at least, that yesterday's losses were overdone and a "turn-a-round Tuesday" pattern could be seen today with prices reversing from yesterday's lower course to a higher one today.
The USDA didn't report weekly corn planting progress yesterday afternoon, suggesting it might be nil. Usually, around 3% of the crop is planted by this time in the season. Spring wheat planting came in at 5% vs 6% average. Winter wheat was rated 45% good to excellent vs 64% last week, about as expected.
Jordan will be in April 17 for 100,000 tonnes of optional origin wheat. Conab, the Brazilian version of the USDA, upped their bean crop estimate from 59.6 million tonnes last month to 59.99 million tonnes today. They raised their corn crop guess from 55.3 million last month to 56.23 million tonnes today. Beneficial rain is forecast in the north China plain today but Manchuria is likely to stay on the dry side the next 5 days or so. More rain is needed in most of the major Chinese grain areas.
Yesterday afternoon the updated forecast for the US midwest and southwest weighed on corn and wheat. This am the weather reports say .25-1" of rain fell in the eastern half of the southwest wheat belt over the last 24 hours but only .25" was seen in the dry southwest part of Kansas, where rain is badly needed. Rain is likely Thur-Fri in the east with .5-1.5" expected but only .1-.5" is forecast for the western areas. The 6-10 day forecast calls for below normal rain. The western corn belt will see rain in the south today with more forecast Thur-Fri, .5-1.5". The eastern corn belt will see up to 1", followed by .3-1.5" Thur-Fri. The 6-10 day predicts below normal rain in the west, above normal in the east.
