Wheat Morning Update & Commentary 10/9
In yesterday's trade, wheat challenged
the 40 day moving average of $4.75, trading above it for a
substantial period of time. Today we look for a correction
off the moving average as supplies continue to
grow. The report this morning estimated U.S Carryout at
0.864 bln bu. vs. estimates of 0.80 and a
September report number of 0.743. World wheat carryout
continues to grow as well, with a 186.7 mmt
vs. a September report number of 186.6. The USDA revised
several country's production estimates
higher, including a 2 mil ton increase in Canada and other
minor increases in the EU, Australia, and the
FSU. In world markets, Oct 22nd is bid deadline in 200,000
mt Wheat buy tender floated by Morocco's
state grainary. Delivery is expected by December 15th.
Morocco is also around for 55,000 mt of U.S.
Soft wheat for Dec Delivery. Japan also floated an SBS
tender. Saudi Arabia moved into the market
550,000 tonnes of option origin tender for DEC09 through
FEB10 delivery, which will give a true sense
of world competition. Bangladesh, Jordan and Algeria remain
around the market with Pakistan
removing its bid. Cash prices in the U.S. have wheat - corn
at the narrowest point in years, with eastern
areas of the nation at an inverse. Trade in the corn-wheat
spread could be volatile as we contemplate a
move under $1.00. Huge carries and elevators ramped up for
fall harvest continues to slow movements,
but some farmer selling observed on yesterday's rally. HRW
basis steady as cash shorts fear a slow
down in shipments with the start of fall planting, freight
remains firm. SRW Basis is flat, with dull
demand and the recent run-up in prices leaving U.S.
uncompetitive once again for recent tenders.
Saskatchewan weather cold wet conditions last week delayed
harvest, 76% was complete compared to
the year ago 80%. Anecdotal evidence from the report suggest
farmers are worried about the condition
of unharvested grain.
Overnight markets were somewhat subdued. Chicago closed down
4 cents. Kansas City finished
overnight trade down a penny and MPLS closed down 2 cents.
Kansas City/Chicago spread has set back
below 18 3/4 cents and should have trouble with these recent
highs. The MPLS/Chicago spread is at 34
1/4. Euronext (Matif) Milling Wheat continues to gain with a
last trade at $5.03/bu USD in the Nov.
Globex Overnight
Contract Last Net Change High Low Volume
ZWZ9 470^0 -4^0 473^2 468^6 1517
ZWH10 489^2 -4^0 492^4 488^4 219
ZWK10 503^4 -3^4 503^4 502^4 24
ZWN10 515^0 -5^0 520^0 515^0 135
KEZ9 488^6 -1^0 489^0 486^0 223
KEH10 503^2 -2^2 503^2 501^2 38
MWEZ9 504^2 -2^0 507^0 502^0 144
MWEH10 522^0 -0^2 522^0 517^4 15
Opening Calls: off 4-6 cents
http://www.linngroup.com Page 2 of 3 312.896.2001
Reproduction or rebroadcast of any portion of this
information is strictly prohibited without the written
permission of the Linn group, inc. the information reflected
herein is derived from sources believed to be
reliable; however, this information is not guaranteed as to
its accuracy or completeness. Opinions expressed are subject
to change without notice. this material and any view
expressed herein are provided for
informational purposes only and should not be construed in
any way as an inducement to buy or sell commodity futures or
options contracts. The Linn group and its officers,
directors, employees and affiliates
may take positions for their own accounts in contracts
referred to herein. Trading futures involves risk of loss.
Past performance is not indicative of future results.
USDA Headlines
**US Oct Wheat 09/10 Carryout: 0.864 bln bu.; est. 0.80 ;
Sep Rpt 0.743
**World 09/10 Wheat Carryout: 186.7 mmt; Sep Rpt 186.6
**Oct Aussie 09/10 Wheat Output: 23.5 mmt; Sep rpt 23.0
**Oct Argentina 09/10 Wheat Output: 8.0 mmt; Sep rpt 8.0
**Oct EU 09/10 Wheat Output: 139.1 mmt; Sep rpt 138.5
**Oct Canada 09/10 Wheat Output: 24.5 mmt; Sep rpt 22.5
**Oct China 09/10 Wheat Output: 114.5 mmt; Sep rpt 114.5
Top News
-- Oct 22nd is bid deadline in 200,000 mt Wheat buy tender
floated by Morocco's state grainary.
Delivery is expected by December 15th, acc. to traders
-- Weekly wheat export licenses from the EU were 395,000 mt.
Year to date export licenses total 5.08
mln mt
-- Chinese grain stockpiles in gov't owned warehouses
totaled 225.4 mln mt at the end of March 2009,
acc. to China's Nat'l Development & Reform Commission. The
audit was in response to questions about
grainaries overstating their levels the audit found 99.7% of
the grain compared to reported levels
-- Saskatchewan weather cold wet conditions last week
delayed harvest, 76% was complete compared to
the year ago 80%. Anecdotal evidence from the report suggest
farmers are worried about the condition
of unharvested grain & oilseed
-- Pending Tender: 55,000 mt of US soft Wheat was approved
for import by Morocco's ONICL with
expected delivery by December, acc. to traders
-- Pending Tender: Japan's Ag Ministry also floated Oct 29th
SBS tender for 52,200 mt of food grade
Wheat
-- Pending Tender: Traders say a 550,000 mt optional origin
Wheat tender was floated by Saudi Arabia.
The grain is for Dec 2009 to Feb 2010 delivery
-- Pending Tender: Total of 125,000 mt of various Wheat
scheduled for export sale tender by Turkey on
October 15th, acc. to the country's state news agency.
They'll sell 50k mt of red mill Wheat, 50k mt of
white mill Wheat & 25k mt of durum.
-- Pending Tender: 100,000 mt of optional origin Hard Wheat
sought by Jordan's gov't in an October
14th tender deadline. Delivery was expected between Dec 2009
& Jan 2010
-- Pending Tender: 60,000 mt of optional origin Wheat is
sought by Bangladesh's gov't in a November
16th tender deadline
-- Pending Tender: Morocco's state grain buyer issued tender
to purchase 280,000 mt of Durum &
320,000 mt of
Soft Wheat from the US under a free trade agreement, acc. to
ONICL officials. Bid deadline is October
7th. Delivery is for Dec 31
-- Liffe Nov milling wheat futures were off -0.75 euro at
126.25 euros/mt.
-- Globex Wheat Vol. 83,368; Pit Vol. 5,500; Open Interest
Change: - 4,017
-- Weather: 6-10 day Forecast: Normal to Below Temps. Normal
to Above Precip.
-- Outside markets: Energy Complex -0.67 at $71.02; Gold &
Silver: -6.9 at $1049.4 & -0.150 at
$17.665; US $ +0.215 at $76.345
Cash Markets
http://www.linngroup.com Page 3 of 3 312.896.2001
Reproduction or rebroadcast of any portion of this
information is strictly prohibited without the written
permission of the Linn group, inc. the information reflected
herein is derived from sources believed to be
reliable; however, this information is not guaranteed as to
its accuracy or completeness. Opinions expressed are subject
to change without notice. this material and any view
expressed herein are provided for
informational purposes only and should not be construed in
any way as an inducement to buy or sell commodity futures or
options contracts. The Linn group and its officers,
directors, employees and affiliates
may take positions for their own accounts in contracts
referred to herein. Trading futures involves risk of loss.
Past performance is not indicative of future results.
-- CIF SR Wheat: steady up 7 . Oct. -25 to -10 Nov. -3 to +7
Dec. -5 to +15
--
John Christopher
Linn Group
312.896.2061