Wheat Comment 10-23-09
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Wheat Morning Update & Commentary Wheat continues to feel like the movie Groundhog Day, it continues to rally and punish shorts as the market presses higher. Weather across the SRW Belt has greatly affected planting efforts. Many farmers are beginning to abandon plans to plant wheat. CFTC report out this afternoon should show reductions in the short positioning as commercials and producers shorts have been forced out. The volatile nature of the Chicago contract continues to lead some traders and hedgers to seek refuge in the MPLS contract. Import/Export business saw Morocco step in for 219,000 mt of EU Soft Wheat. Delivery is intended for mid December. 30,000 mt of Black Sea origin Wheat was bought late on Thursday by Israeli group. Bangladesh, and Iraq remain around the market for wheat. As a response to low cash prices, Russian announced that it will begin a grain intervention program starting on November 2nd. SRW Basis remains flat with a full pipeline, however some farmer selling has been noted on this rally. HRW has firmed as more buyers seem to be stepping into the market. PNW pipeline remains full. Aussie bank raised its grain harvest forecast for this year to 23 mln mt, up half million tonnes from their prior forecast. They say the crop in South Australia & Victoria will gain a boost from recent rains. Saskatchewan's crop harvest is behind schedule due to excessive wetness. Harvest in the latest report was unchanged at 77% complete same as ...
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Page 1 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.
Wheat Morning Update & Commentary
Wheat continues to feel like the movie Groundhog Day, it continues to rally and punish shorts as the
market presses higher. Weather across the SRW Belt has greatly affected planting efforts. Many farmers
are beginning to abandon plans to plant wheat. CFTC report out this afternoon should show reductions
in the short positioning as commercials and producers shorts have been forced out. The volatile nature of
the Chicago contract continues to lead some traders and hedgers to seek refuge in the MPLS contract.
Import/Export business saw Morocco step in for 219,000 mt of EU Soft Wheat. Delivery is intended for
mid December. 30,000 mt of Black Sea origin Wheat was bought late on Thursday by Israeli group.
Bangladesh, and Iraq remain around the market for wheat. As a response to low cash prices, Russian
announced that it will begin a grain intervention program starting on November 2nd.
SRW Basis
remains flat with a full pipeline, however some farmer selling has been noted on this rally. HRW has
firmed as more buyers seem to be stepping into the market. PNW pipeline remains full. Aussie bank
raised its grain harvest forecast for this year to 23 mln mt, up half million tonnes from their prior
forecast.
They say the crop in South Australia & Victoria will gain a boost from recent rains.
Saskatchewan's crop harvest is behind schedule due to excessive wetness.
Harvest in the latest report
was unchanged at 77% complete same as last week
Wheat continues to defy all fundamental logic. Market remains technically driven with fund money
leading the charge.
Dollar weakness continues to encourage buying across commodities. Look to sell
scale up on strength today. Given the weak exports sales in corn this morning, it could be excellent
opportunity to buy Corn and sell Wheat. KC- CHI is near even money and remains a spread to keep your
eye on.
Overnight markets had fairly active trade with Chicago trading 5499 contracts. Chicago closed up 12
cents. Kansas City finished overnight trade up 9 cents and MPLS closed up 10 1/4 cents. Kansas
City/Chicago spread is now trading at an inverse in the DEC. The MPLS/Chicago spread has narrowed
all the way to 6 1/2 cents. Euronext (Matif) Milling Wheat continues to gain with a last trade at $5.49/bu
USD in the Nov.
Globex Overnight
Contract
Last
Net Change
High
Low
Volume
ZWZ9
563^6
12^0
564^4
551^4
5499
ZWH10
581^2
12^0
582^0
568^0
2091
ZWK10
589^0
9^0
589^0
580^0
97
ZWN10
599^0
11^0
599^4
586^0
244
KEZ9
562^0
9^0
562^0
551^2
774
KEH10
577^4
9^2
577^4
566^2
162
MWEZ9
570^4
10^2
570^4
558^2
406
MWEH10
585^0
8^2
585^0
575^4
30
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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.
Early Opening Calls: 8-12 cents better
Top News
-- 30,000 mt of Black Sea origin Wheat was bought late on Thursday by Israeli group, acc. to traders
-- 219,000 mt of EU Soft Wheat was authorized for import by Morocco's gov't on Thursday, acc. to
traders.
Grain was for deliverable by mid December
-- Russia's AG Minister says the gov't will begin buying grain during intervention tenders starting
November 2nd
-- EU data shows the area granted 269,000 mt of Wheat exports, marketing year to date total is now at
5.7 mln mt
-- Aussie bank raises its grain harvest forecast for this year to 23 mln mt, up half million tonnes from
their prior forecast.
They say the crop in South Australia & Victoria will gain a boost from recent rains
-- Survey of grain conditions in Spain shows its soft Wheat crop with lower quality with lower protein
content & higher moisture levels, however Durum Wheat quality was said to have improved
-- Saskatchewan's crop harvest is behind schedule due to excessive wetness, acc to the local provincial
ag department.
Harvest in the latest report was unchanged at 77% complete same as last week
-- Fertilizer maker in Canada, Agrium, says earnings will come in 90-95% lower than the same quarter a
year ago.
Yesterday Potash Corp reported earnings 80% below yr ago quarter earnings.
The firm says
wet conditions in the US have pushed back demand for crop nutrients to spring of 2010, trying to remain
upbeat on their future.
-- Ag ministry official in Brazil says the gov't will keep their mandated 25% ethanol blend rate for
gasoline, but the gov't will continue to monitor the ethanol market
-- Latin American nations have probably seen the worst of the global economic crisis, but weak demand
in the US could weigh on Latam countries, acc. to IMF report
-- While China said it was happy with the US decision to lift a poultry import ban on Chinese poultry, it
was still investigating whether those announced changes adhere to WTO rules
-- Pending Tender: Oct 26th is bid deadline for 100,000 mt plus Wheat tender floated by Iraq's Grain
Board on Tuesday, acc. to their website.
-- Pending Tender: Japan's Ag Ministry also floated Oct 29th SBS tender for 52,200 mt of food grade
Wheat
-- Pending Tender: 60,000 mt of optional origin Wheat is sought by Bangladesh's gov't in a November
16th tender deadline
-- Pending Tender: A new 100,000 mt of Wheat tender for Dec 2nd was issued by Bangladesh state run
grainary, acc. to traders
-- Liffe Nov milling wheat futures were +3.25 euro better at 134.75 euros/mt.
-- Globex Wheat Vol. 72,503; Pit Vol. 7,082; Open Interest Change: - 1,210
-- Weather: 6-10 day Forecast: Below Normal Temps. Normal to Above Precip.
-- Outside markets: Energy Complex +0.23 at $81.42; Gold & Silver: +8.3 at $1066.9 & +0.370 at
$17.915; US $ +0.155 at $75.395
Cash Markets
-- CIF SR Wheat steady up 5: Oct. -10 to -?? Nov. -5 to +10 Dec. Opt. to +15
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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.
--
John Christopher
Linn Group
312.896.2061
