Wheat Morning Update & Commentary 11/12

 

CME Group is waiting for final approval from the CFTC, however they say that beginning with the
2010 July CBOT Wheat Futures contract they'll implement variable storage rates. The variable storage
rates should favor the storage of wheat and might limit exports. Could variable rates favor the storage of
wheat enough to depress prices and force SRW to be used for feed? Exports remain subdued as prices
drift higher, however bids are around the market. With futures riding to the upside once again, the U.S.
is in jeopardy of losing export business to CIS and Australian origin. Egypt's GASC tenders for option
origin wheat with mid DEC delivery in mind. Bangladesh has several option origin tenders on books
though DEC 7th. HRW Basis is weaker this morning, bids are some what supportive, but being
adjusted. PNW pipeline remains full and SRW supplies overhang the gulf. According to Buenos Aires
Grain Exchange Wheat progress is mixed in latest Argentine report, with dryness impacting southern
crops, but central areas showing good yield potential. The exchange left projections unchanged at 7.75
mln mt. Rains are interrupting Australian harvest progress - analysts there are shaving estimates of the
crop size and quality after a hot and dry October. USDA Weekly Export Sales report will be released
Friday, November 13, 2009, due to Veterans Holiday instead of its usual Thursday release.
Price action in wheat moved corn wheat – corn spread dramatically yesterday. Remember fade the
extremes. @ 150 premium Wheat over Corn--- Buy Corn and Sell Wheat. @ 120 Wheat premium to
Corn – Buy Wheat and Sell Corn. KC – Chicago in the differed because an attractive trade as variable
storage rates are launched in the July 2010 contract.
Overnight markets experienced normal volume last night. Chicago closed down 7 1/4 cents. Kansas City
closed down 5 3/4 cents and MPLS closed down 4 1/2 cents. Kansas City - Chicago spread is now at 5
cents in the DEC and the MPLS - Chicago Spread is now 21 3/4 cents. Matif Milling wheat is slightly
higher this morning.
Early Opening Calls: off 5-7 cents
Top News
** USDA Weekly Export Sales report will be released Friday, November 13, 2009, due to Veterans
Holiday instead of its usual Thursday release.
-- Argentine Grain Exchange leaves 2009/10 Wheat output figure unchanged in latest report, at 7.75 mln
mt
-- Acc. to Buenos Aires Grain Exchange Wheat progress is mixed in latest Argentine report, with
dryness impacting southern crops, but central areas showing good yield potential
-- Egypt's GASC tenders for nominal 55-60,000 mt of Wheat, acc. to company chairman. GASC is also
seeking 30,000 or 60,000 mt of Syrian or UK Wheat for shipment from Dec 10-25
-- While CME Group is waiting for final approval from CFTC, they say beginning with the 2010 July
CBOT Wheat Futures contract they'll implement variable storage rates
-- While internal EU zone wheat exports were lower, better exports to mideast from EU wheat farmers
helped Strategie Grains raise their overall export estimate to 17.1 mln mt up 900,000
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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.
-- Grain exports from the Ukraine are now expected by private forecaster at 17 mln mt, while the crop
harvest was expected at 48 mln mt, compared to the 45 mln mt gov't expectations
-- Private crop forecaster group in Australia says reduced output in key states of New South Wales,
Western Australia from dry October & wet harvest period will bring 09/10 crop to 22.7 mln mt down
400,000 mt from prior forecast
-- Higher German biofuel taxes hurt production at German based Verbio biofuel maker, they note Jan-
Sep output fell by 12,000 mt to 288,000 mt in that period
-- By the end of 2009, a $350 million agriculture fund to purchase 50,000 ha of Romanian farmland,
hopes to be finanlized by Miro Holdings of the UK & Pharos Group of United Arab Emirates
-- Pending Tender: Japan announced 97,000 mt tender volume for their weekly Wheat purchase from the
usual suspects of US and Australia. The tender is set for Friday due to Veterns Day holiday
-- Pending Tender: Japan's Ag Ministry announced 20,000 mt SBS feed Wheat tender, with bids due by
Nov 18th
-- Pending Tender: 45,000 mt of EU feed grade Wheat tender was issued by Israeli group on Tuesday,
bids must be submitted by Nov 5th
-- Pending Tender: Turkey's state run grainary will also hold a sales tender for up to 100,000 mt of
milling grade Red Wheat on November 12th
-- Pending Tender: Turkey's state run grainary will also hold a sales tender for up to 75,000 mt of
milling grade White Wheat & 25,000 mt of Durum Wheat on November 12th
-- Pending Tender: Turkey's state run grainary will also hold a sales tender for up to 25,000 mt of feed
grade White Wheat November 12th
-- Pending Tender: 60,000 mt of optional origin Wheat is sought by Bangladesh's gov't in a November
16th tender deadline
-- Pending Tender: 100,000 mt optional origin Wheat tender was announced for November 24, by
Jordan's gov't, acc. to traders. Shipment was for Feb-Mar 2010
-- Pending Tender: Japan announced a November 26th SBS tender for 35,100 mt of food grade Wheat
for shipment between Dec - Jan
-- Pending Tender: A new 100,000 mt of Wheat tender for Dec 2nd was issued by Bangladesh state run
grainary, acc. to traders
-- Pending Tender: December 14th is date set for new Bangladesh 100,000 mt Wheat tender, acc. to top
official with the agency to administer tender. Delivery of the grain is for March 2010
-- Liffe Jan milling wheat futures were off -0.50 euro at 130.50 euros/mt.
-- Globex Wheat Vol. ; Pit Vol. ; Open Interest Change:
-- Weather: 6-10 day Forecast: Above Normal Temps. Below Precip West, Above East
-- Outside markets: Energy Complex -0.63 at $78.65; Gold & Silver: +0.4 at $1115.0 & -0.042 at
$17.495; US $ +0.145 at $75.405
Cash Markets
-- CIF SR Wheat steady: Nov. +20 to +?? Dec. +20 to +?? Jan. +15 to ??
--
John Christopher
Linn Group
312.896.2061