Hi Goodlander...............................................the limit down in corn was all Acreage & Stox report related. the USDA raised the total corn acres over 3 million acres higher than any of the recently released Private estimates!!!! this was a complete shock as most where thinking they would drop corn 3 million. plus they raised stoxs.

in their divine wisdom, the USDA raised IL's corn acreage higher than it was in 08! central & southern Il have been very wet all spring and many acres got switched to beans or took Prevented Plantings on their crop insurance. all together the USDA raised 7 of the top 8 States corn acreages in this report.

another shock was the USDA raised Winter Wheat plantings by 1%??? why would they wait this late to increase Winter Wheat plantings? they also increased spring wheat plantings. notice Egypt was tendering overnight?

and to add insult to injury, they raised soybean acres & stoxs for good measure! lol.........................................good thing inputs cost where so high this year or us farmer's would have begun to plant all the interstate medians according to the USDA! lol the USDA really out did themselves on this report considering the obvious financial differences between last year and this year!

i wonder how many Bail Out/Tarp recipients where short grains somehow since the previous acreage/stoxs report? easy way to make another stimulus injection to those now government run org's, eh?

If the expectations were three million down and they got three million up i can see where there was a little bit of panic selling. they bought the rumor and sold the news alright!

I agree that these reports are getting farcical. There is always a bit of head shaking when the .gov kicks out a report but this is getting completely out of hand. Anyone who thinks the USDA, Ag Can and the rest of them are not getting marching orders from above have their head shoved up their ass.

I think they have hopes that this entire thing will all blow over before they have to say "our bad, there really is not that much food out there."

Was egypt putting out a big tender or just some feelers? they have been feeling some of the influence from that drought system that has been in some of the middle east for some time now.

Thanks for the info cat. Damn near got shot at work the other day so taking advantage of our holidays to do some extended partying therefore have not been paying much attention to the markets.

i read where Egypt was tendering last night for wheat late yesterday afternoon after the fall in prices and have nothing today to confirm a transaction or otherwise? the news of the drought in India is getting airplay now as i read something yesterday on it also.

shame you had such an instance and glad you received no harm! sometimes it takes a shocking happening to help us see the more important parts of life. i suffered one myself in spring of 08, though it was a great loss in my family's and my life........it helped me get my life better organized so to say. stay safe!

i just got an email and Egypt purchased 90000 tons last night, 60 from the US and 30 from France. FWIW

thanks for the info cat.

sounds like the monsoons have finally started in india. they are late but have started. with all the harvested crops that are not in an actual storage facility I wonder how much spoilage will result from the moisture.

DBA down 2.29% this am and the indicies are down 1.78, 2.15 and 1.98 respectively.

Until this trend de-couples, I will not add to my DBA and will continue to hold AGA, which is up 20.79% since I purchased it has a hedge on 06/04/2009.

Nice timing, Steel!

So, China has the best crop in it's history........


BEIJING, June 18 - China, the world's largest wheat consumer, imported 70,968 tonnes of wheat in May, a 103 percent rise from April, official Customs figures showed on Thursday.

China's wheat imports begun to pick up since December from almost no imports in 2007 and 2008. Lower prices of the grain in the United States and Australia had spurred imports by Chinese flour mills to buy high-quality wheat for blending.

Severe drought in China's wheat areas earlier in the year had also caused worries over the quality of the domestic harvest. Flour officials expected the country's imports this year will exceed 500,000 tonnes but the amount was still far below imports of about 7 million tonnes in 2003/2004. [ID:nPEK210567]

Customs figures also showed China's total wheat imports in the first five months were 226,952 tonnes. The country was expecting the sixth year of bumper harvests this year.[ID:nPEK323397].

China also imported 594 tonnes of wheat flour in May. Imports in the first five months fell 15 percent to 3,829 tonnes, figures from the General Administration of Customs showed.

China's imports of soyoil and palmoil in May fell from April.

http://news.alibaba.com/article/detail/a....

If the crops were as good as what they said they were what the hell are they doing bringing any wheat at all into the country for milling. granted it is not a massive (relatively) amount but really.....

Wait, where's Mliu telling us we're all gonna starve to death in short order??

(mliu )

Well I was wrong. I said "it is not the best short out there" around the middle of last month. As it has played out the grains have been one of the best shorts in the market. I expected downward movement but was quite surprised with how violent the move was. This could set up a bit of a snap back rally as some profit taking is done by the shorts but I am not confident enough in that one to make a play on it.

The potential for major disruptions to the food chain is still out there but this looks like a trading market for the time being.

I still don't believe any .gov's numbers and still have no commodities positions.

add me to the being "wrong" list. i had forgotten how the USDA under this type of Admin policies could instantly kill off the grains. Cheap Food policies are now back in place it would seem. hopefully a lil over 3 years is all we will have to endure them this time round?

what really bothers me is though...........how can the market players not notice what a complete farce that report was? the market is made up of 1000s of people and lot's of groups who throw at lot of money at researching the funnymentals and thus is why grains where holding on as so. in the weeks before the USDA report you have several Private Groups issue their findings with none of them finding what the USDA with did. and for that latest report, all the USDA's finding where based on a phone call survey to a small % of selected farmers! this was not based on actual reported acres by ALL farmers as the deadline for all acres to be reported to the FSA was June 30th. the USDA made those surveys in early June 1-10th. Yet, with a few numbers changes the USDA blows it all up like it never mattered?

just a bunch of fooey!

Do think a multi week DBA low is setting up. Probably just an ABC move into a lower high.

The USDA has let it be known by their last reports that they are going to be bearish towards the commodities for the time being. Like cat said the cheap food policy is back on. After the last series of reports I expect some magical numbers to appear for yields and acreage totals. So I am not expecting DBA to be making any new highs in the next while. This is barring a frost, flood, meteorite, alien invasion or GS being long the market before the end of the crop year.

Our next likely potential for a run up will be November when all stocks on hand are counted up (if not fudged) with the start of the chinese and indian crop year. There could be a lot of surprises between now and then but I am not putting a big play on the table for it. That being said in this arena with the stocks still being relatively tight there is potential for upward movement. However continued bearish press coming out also gives room for more downside to come.

Basically right now I am saying I don't have any idea in hell where the prices are going. If I knew where GS and the like were placing their trades I would be able to tell you with a fair degree of accuracy; I think they get their hands on the reports before the release date. Someone was short that market and it did not seem to be the people who had done their own research.

As far as the ABC's I am not a good enough EW guy to respond to that question, someone else here likely is. It is a good idea to look at the charts of the underlying as well as the DBA charts.

To add a little more from above:

Basically we are not going to starve to death in the next six months or so. N america is not going to pull in it's best crop in history however with a lot of luck may almost make average if everything goes problem free from here on in. North american crops look to have overcome some **** weather at the start of the year again. It would not surprise me if we traded in a relatively narrow (compared to the last year and a half) range until some new crops go in or come off. Way out of the money and in close calls are not something that I am interested in right now.

Europe's crop looks like it is going to come off in reasonable shape. Not the crop they had last year but weather is not looking so bad. France has a crop, spain does not, england probably will, germany's outlook improving, all crops expected to yield less than last year. It will be interesting to see what the yields and bushel weights coming out of eastern europe, I don't think they poured the inputs on quite like they have in the past. So basically europe looks like maybe an average crop which, without new weather issues will likely keep things inside a range.

Another addendum:

If we get into a nasty de-leveraging environment don't expect the ag commodities to be immune. If the de-leveraging stops short of mad max we will be going long like a mofo. Too many moving parts to the global food production machine to not have a major economic situation affect it.

The biggest risk out there to things really going to **** is eastern europe. they are likely to be the weakest link in the chain and the least likely to be able to react in a way that will assure the farms get the $ for inputs. Most eastern block countries had to threaten their banks this year to give the farmers the loans. If complete economic chaos breaks out they are much less likely to be able to do that again. Despite the reported health of the banks in the farming belt of north america if there is a serious situation that unfolds prior to next year's crop going in things could get rather sporting.

A lot of this will depend on timing. The majority view here on TF is that we are headed for something rather ungood. If this happens during the late winter the chances of a recovery significant enough to provide for inputs this crop year get smaller. If there is some form of meltdown in the fall it is likely that India and China will get a crop in the ground and get some kind of reasonable yields out of it and allow the americas and europe time to right the ship enough to provide the capitol to put the inputs on. All a wait and see game.

In actual, not theoretical discussion Argentina's wheat crop is expected to be the lowest seeded acreage in 100 years, down 35-40% from last year due to financing issues, drought and the .gov*****ing everyone off. Rumor has it that Canada will be exporting wheat to Brazil. Brazil usually imports about half of it's wheat from Argentina as it does not produce enough for it's domestic market. With last year's issues in Argentina they were unable to fill the demand from Brazil.

Goodlander................................very rational and balanced views you have offered. being biased as i am, let me add some fodder to "my" side.

Along with Argentina's historic cut in winter wheat acreage, they remain in a drought of historic proportions. because of how bad their Gov has screwed their export program & farmers financial situations up, it looks as though they will plant mostly soybeans this coming spring. i will be in Cordoba the last week of July so hopefully i can see & feel exactly what's up there?

the crops here in US? well, i would wager that a majority of corn & soybeans farmers cut their fertilizer applications to some degree this past planting season? i know i did and nearly everyone i spoke with did also. in the areas that have had excellent conditions, a small cut would most likely not show up? but if there is stress from weather, late plantings, early coolness this fall...,,,etc,,,,,,,,,,,,,,,,,those cuts most likely will have some correlation to shorter yields? the USDA was out to lunch on SRW acres and yields and the approaching seasonal is for a post harvest wheat rally anyway???

attended a small dinner meeting earlier this week with the head of a major global commercial's marketing division. needless to say, the recent USDA piece of TP caught them in some wrong positions and left them shaking their heads like many of us. this mornings USDA report could help distort the view even more, who knows what those clowns will come with from here on. anyway, the USDA has warped the big picture so much now, it will take a while before much of the big money flower's become aggressive again in the grains i would presume?

no doubt parts Ia, Mn & Ne with decent finishing wx will have some nice crops. but, either the CBOT or local basis levels are gonna have to do their part to help move those areas crops into the areas that did not produce up to par. lot of time left yet in this season and with the times we are living in today, i would not place a bet on any direction being a sure thing?

I am completely on your side cat. I highly doubt it is possible for this incredible string of "good luck" with the world crop situations to continue. Eventually there will be a slip up somewhere and with the stocks as tight as they are even the USDA and their comical reports will not be able to keep a lid on things.

I agree with you that the crops likely had their inputs cut this year. Waltie's fertilizer pricing updates were a sure tell on that one. The only question is where and how much. a little cut still leaves most in the flatter upper area of the response curves but will for sure have some effects.

It is likely going to take something pretty severe and overt before any admissions are made that things are not as rosy as we are led to believe. this will be a matter of timing. being right and early is still being wrong.

Not brand new news and so far limited effects on the markets however could have impacts down the road.

Government allows state-run firms to export wheat news

04 July 2009


With the monsoon reviving after a dry spell in the first few weeks of June, the government has now allowed state-run firms to export 900,000 tonnes of wheat. The government also allowed private trade to export another 650,000 tonnes of wheat products.

State-run trading firms MMTC Ltd, STC Ltd and PEC Ltd, will be allowed to export wheat till March next year, Directorate General of Foreign Trade said on Friday, adding, exporters will not be eligible for any subsidy.

Indian wheat would cost more than $240 a tonne in Southeast Asia and the Middle East - $20-30 more than Black Sea and US wheat. This would make exports outside the neighbouring SAARC countries unviable.

Wheat product sales, on the other hand, looks viable for Roller Flour Mills Federation of India, but they want the government to detail how it would monitor exports.


India, however, is nursing a huge accumulated stock after a bumper harvest last year and had plans to export wheat once the stocks rose further.

The government, however, is evaluating the progress of the monsoon, which is expected to be around 93 per cent of the long-term average.

Source: http://www.domain-b.com/economy/trade/20....


They will not be moving huge volumes of wheat out of the country right away as their internal prices makes it uncompetitive at present if it needs any kind of transport. This could put a short term ceiling on prices should they rise to the point where it is profitable for india to export. A part of getting some exports moving may have basis in trying to get some of last year's crop out of makeshift storage and into a real bin or other actual storage facility. The .gov is reportedly wheeling and dealing with whoever has any kind of space at all to put the crop.

They are also discussing the possibility of starting rice exports however .gov officials are saying that they are waiting for monsoon precip totals before making this decision. From what I am reading there is quite a bit of opposition to restarting food exports. India is claiming a thirty month supply of grains exists in their country. Rats in india eat as much wheat every year as Australia produces, with this much grain being in questionable facilities the spoilage number will set new records this year.

Just across the tape India has CANCELED wheat exports!

New Delhi (PTI): India on Monday reimposed a ban on wheat exports and set up a ministerial group to ensure food security - on a day when the Prime Minister reviewed crop situation as also monsoon, which the weatherman says will improve this week.

"The briefing that India Meteorological Department made this morning (on monsoon situation, I can say the) entire week will be a good week. If this prediction is correct, then I can definitely say we are out of trouble," Agriculture Minister Sharad Pawar told reporters.

He, however, said that the country has still not switched to 'Plan-B' although the Prime Minister asked officials to put in place a contingency plan.

Hours later, an official release said an Empowered Group of Ministers, led by Finance Minister Pranab Mukherjee, will look into foodgrain procurement and management. Separately, the Directorate General of Foreign Trade issued a notification that cancelled a July 3 order allowing exports of wheat.

The government had slapped a ban on export of wheat and wheat products in 2007 to boost domestic supply, but had relaxed it 10 days ago - when it allowed export of up to nine lakh tonnes of the food grain through three state-owned firms.

Sources said Prime Minister Manmohan Singh was apprised of the crop situation and officials expected 95 per cent of sowing to be completed this month. Paddy sowing has not reached last year's level. "I'm keeping my fingers crossed," Pawar told reporters separately.

DBA breaking out or is this just the affects of the dollar tankage? Near 27, hasn't been this high in a while.

Dx is for sure having an effect on this one. It is probably agriculture's day to have money thrown into it. There are issues with getting the corn and soybean crops in the bins through a big swath of the midwest. Expectations are for at least another ten days of cool and wet weather. The soybeans are at highest risk of losses during this time. Fortunately for the farmers (who have drying equipment) the price of natural gas is very low right now allowing more drying to be done. Wheat seems to be coming along for the ride.

Not much is happening in sugar, putting in highs but inching up.

This should be a bit of a quieter time in the grains. Corn and Soy are coming off in the midwest but not really that much else happening worldwide. Generally you will get harvest selling creating some weakness right now but does not seem to be the case. Might be a case of the big boys shaking loose some retail shorts who were expecting the harvest dip.

Info on DBA:

http://www.indexuniverse.com/sections/ne....

Old DBA
Commodity Weight
Corn 25.00%
Wheat 25.00%
Soybeans 25.00%
Sugar 25.00%

New DBA
Commodity Weight
Corn 12.50%
Live Cattle 12.50%
Soybeans 12.50%
Sugar 12.50%
Cocoa 11.11%
Coffee 11.11%
Lean Hogs 8.33%
Kansas Wheat 6.25%
Wheat 6.25%
Feeder Cattle 4.17%
Cotton 2.78%

WTF?!?????!!!!

This should flatten out the chart quite a bit! Why the hell would they start putting livestock into the mix? this makes no sense whatsoever. then coffee and cocoa too? This is stupidity. So much for anyone who had any leaps on this sucker. Why not go to some foreign exchanges to get some cereals/oilseeds exposure instead of animals? Probably a law against it? Guess it is futures or nothing to make a play on ag sectors now.

They ran into contract limits when it ramped to a double top in 2008.

I don't have supporting data, so I know nothing about JJG, or how it's holdings are structured.

I heard in an audio file that JJG holds only corn, wheat and soybeans.