Sean K. Treasure
Equity markets took a dump this week with the S&P finishing the week down 3.5%. Overseas markets didn’t behave any better. Despite closing on an uptick today, the Nikkei also finished the week 3.5% lower. Traders are jittery over the rapid decline in oil prices coupled with a general apprehension regarding the health of the global economy. Lower oil prices = negative equities? Yes, evidently Russia’s economy is much more important to the world than I ever thought. The collapse in oil prices has the Russian’s reeling and the reverberations can be felt everywhere. Still, consumers will be enjoying the cheaper fuel which will be beneficial in the long run.
On the grain side, March Corn futures finished the week up 12 cents and January Soybeans closed up 11 cents. Wheat was mixed on the week, with Chicago March closing up 12 cents, but Kansas City slid 5 cents and Minneapolis finished down 2 ¼.
Export sales were brisk this week for corn, wheat and soybeans. Corn was particularly impressive, coming in at 962,800 MT mostly to Japan. There are a lot of pundits saying corn is overvalued and we understand the argument and actually even agree with it, particularly in the face of a 2 billion bushel carryout. Still, with exporters staying busy you have to wonder how far back it could break.
The Spaniards were big buyers of US soybeans, even buying more than the Chinese. You read that right; Spain bought 257,000 MT for the week ending Dec 4, versus 217,000 for the Chinese. It’s a novelty; don’t expect it to persist but interesting to take note of. Nothing to noteworthy in US wheat exports, other than to say the total sales volume was decent, not huge but “average.” We’ve heard a lot of wheat bulls suggest that it has a lot of room to run to the upside. Perhaps so, but keep in mind that we’re struggling competitively with the world. Our days as a major supplier to Brazil are numbered and the Black Sea and Aussies are selling other non-traditional outlets. Additionally, the MACD’s crossed over in KWH this week signaling a break. Frankly, we don’t expect a major downtick but its something to keep an eye on when you’re placing long hedges.
Globally, South Korea bought 50,000 MT of Australian wheat and Iraq issued a tender for 50,000 MT of hard wheat. Egypt bought 180,000 MT of Russian and French wheat. US wheat won’t be a player in the Middle Eastern market at this time due to price. Historically, HRW will trade into the Saudi Arabian and Iraqi market when the price is right. SWW often works into Yemen but it probably won’t anytime soon. If you don’t pay attention to the PNW market, the soft white wheat carryout is expected to be critically tight this year, possibly even below 30 million bushels.
Syngenta announced that they expect Chinese government approval of MIR162 corn. I’m not sure how they’d have the inside track on Chinese government decisions but what do I know. If true, its obviously very significant for everybody involved in the supply chain of US corn. I worked at an exporter for a number of years and I can tell you that there was no small amount of hand wringing when the Chinese rejected a corn cargo last year. Scary stuff.
Disclaimer: Commodity trading involves substantial risk and may not be suitable for everyone. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this email and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.
Equity markets took a dump this week with the S&P finishing the week down 3.5%. Overseas markets didn’t behave any better. Despite closing on an uptick today, the Nikkei also finished the week 3.5% lower. Traders are jittery over the rapid decline in oil prices coupled with a general apprehension regarding the health of the global economy. Lower oil prices = negative equities? Yes, evidently Russia’s economy is much more important to the world than I ever thought. The collapse in oil prices has the Russian’s reeling and the reverberations can be felt everywhere. Still, consumers will be enjoying the cheaper fuel which will be beneficial in the long run.
On the grain side, March Corn futures finished the week up 12 cents and January Soybeans closed up 11 cents. Wheat was mixed on the week, with Chicago March closing up 12 cents, but Kansas City slid 5 cents and Minneapolis finished down 2 ¼.
Export sales were brisk this week for corn, wheat and soybeans. Corn was particularly impressive, coming in at 962,800 MT mostly to Japan. There are a lot of pundits saying corn is overvalued and we understand the argument and actually even agree with it, particularly in the face of a 2 billion bushel carryout. Still, with exporters staying busy you have to wonder how far back it could break.
The Spaniards were big buyers of US soybeans, even buying more than the Chinese. You read that right; Spain bought 257,000 MT for the week ending Dec 4, versus 217,000 for the Chinese. It’s a novelty; don’t expect it to persist but interesting to take note of. Nothing to noteworthy in US wheat exports, other than to say the total sales volume was decent, not huge but “average.” We’ve heard a lot of wheat bulls suggest that it has a lot of room to run to the upside. Perhaps so, but keep in mind that we’re struggling competitively with the world. Our days as a major supplier to Brazil are numbered and the Black Sea and Aussies are selling other non-traditional outlets. Additionally, the MACD’s crossed over in KWH this week signaling a break. Frankly, we don’t expect a major downtick but its something to keep an eye on when you’re placing long hedges.
Globally, South Korea bought 50,000 MT of Australian wheat and Iraq issued a tender for 50,000 MT of hard wheat. Egypt bought 180,000 MT of Russian and French wheat. US wheat won’t be a player in the Middle Eastern market at this time due to price. Historically, HRW will trade into the Saudi Arabian and Iraqi market when the price is right. SWW often works into Yemen but it probably won’t anytime soon. If you don’t pay attention to the PNW market, the soft white wheat carryout is expected to be critically tight this year, possibly even below 30 million bushels.
Syngenta announced that they expect Chinese government approval of MIR162 corn. I’m not sure how they’d have the inside track on Chinese government decisions but what do I know. If true, its obviously very significant for everybody involved in the supply chain of US corn. I worked at an exporter for a number of years and I can tell you that there was no small amount of hand wringing when the Chinese rejected a corn cargo last year. Scary stuff.
Disclaimer: Commodity trading involves substantial risk and may not be suitable for everyone. Neither the information presented, nor any opinions expressed, constitutes a solicitation for the purchase or sale of any commodities. The thoughts expressed in this email and basic data from which they are derived are believed to be reliable, but cannot be guaranteed due to uncertainty about future events and complexities surrounding commodity markets. Those acting on the information are responsible for their own actions.
