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March 01, 2012


Latest CME Group Prices

Corn (May12) 654
Wheat (May12) 664
Soybeans (May12) 1322.5
Soybean Meal (May12) 355.5
Soybean Oil (May12) 54.27
Oats (May12) 309.25
Rough Rice (May12) 1424.5
Lean Hogs (Apr12) 89.425
Live Cattle (Apr12) 129.75
Feeder Cattle (Apr12) 160.175
Lumber (May12) 279.1
Ethanol (Jul12) 2.349
*Data as of 2:30 CT Source: Dow Jones & SIX Telekurs


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In This Newsletter

Australian Bureau Warns Of Heavy Rain, Floods In NSW State

USDA Says 120,000 Tons Of HRW Wheat Sold To Iran In 11-12

Offering Of 3M Shares From Green Plains’ Largest Holder Prices At 8.3% Discount

Cargill Says Took Nearly 880,000 MT Of Sugar Delivery

UK Crops Not Greatly Affected By Recent Cold Snap – HGCA

Spring Road Restrictions Seen Limiting Grain Movement In Western Canada

Venus International Chairman Acquitted Of Grain Profiteering


Friday’s Calendar

9:40 a.m.
Federal Reserve Bank of Chicago – Chicago Fed President Charles Evans live TV interview
9:40 a.m.
Chicago Fed Pres Evans discusses current economic conditions and monetary policy in Chicago
9:45 a.m.
Feb ISM-NY Report on Business US ISM-NY Business Index (previous 60.1)
8:00 p.m.
St. Louis Fed Pres Bullard gives BMO Bank of Montreal lecture in Economics, “The U.S. Economy in the Aftermath of the Financial Crisis” in Vancouver



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Market Recap


US corn futures ended lower, succumbing to profit-taking pressure amid fears of slowing demand. Lower than expected weekly export sales and concerns about low ethanol margins are threatening demand outlooks, encouraging traders to take some profits off the table, analysts say. Expectations for a hefty increase in 2012 US corn plantings and concerns futures were overbought after failing to challenge Wednesday’s multi-week highs attracted selling as well, analysts add. CBOT May corn ended down 4c at $6.54/bushel.


US wheat futures end mixed, with winter-wheat contracts slumping on bearish supply outlooks. Ample world supplies make it hard for wheat in general to rally, particularly with improved weather conditions for winter-wheat crops in the Plains, analysts say. Spring-wheat futures meanwhile, were underpinned as the higher-protein product continue to see good demand, notes Sterling Smith at Country Hedging. CBOT May wheat falls 4c to $6.64/bushel while May KCBT drops 2 1/2c to $7.06 and May MGEX climbed 6c to $8.17.


CME Group Market Commentary provides more >


US soybean futures ended higher, continuing to draw support from smaller South American crop forecasts. The smaller crop outlook fuels speculation of increased US demand that will lead to a tighter US soy balance sheet out through 2013, analysts say. The need to keep soybean prices competitive with corn to entice farmers to maintain adequate US soybean acres added support for prices as well, analysts say. CBOT May soybeans ended up 2 1/2c at $13.22 1/2/bushel.

Soybean Meal/Oil

Soy-product futures end mixed as traders continue to take profits on long soyoil/short soymeal spreads. Soymeal rose to 5-month highs, buoyed by concerns that smaller South American soy production will generate fresh demand, but lower-than-expected weekly export sales limited gains, analysts note. CBOT May soymeal rose $2.60 to $355.50/short ton while May soyoil dropped 0.20c to 54.27c/pound.


CBOT oats ended lower. Oats for March delivery closed down 2 3/4c to $3.27 1/4 per bushel.

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U.S. rice futures end mixed, with deferred contracts stumbling amid poor demand. Weekly export sales announced were lackluster, an analyst says, reinforcing what has been a bearish theme in the market for months. Losses limited, however, by worries about how much rice farmers will plant given lackluster rice prices and soaring soybean values. CBOT March rice ends up 3 1/2c to $14.20 1/2 per hundredweight, May rice closes down 21 1/2c to $14.24 1/2.

Pork Complex

Lean hog futures reversed losses during much of the trading session to extend a prior-day rally, pulled upward by surging cattle futures. Despite some doubts among veteran traders, investors have seized on the notion that rising gas prices and record-high beef prices will push cash-strapped consumers toward lower-price pork. CME Apr hogs close up 0.9%, to 90.20c/lb. CME Jun hogs rose 0.7% to 99.30c/lb. Futures survived a drop in wholesale pork prices on Wednesday as they fell to 3-week low.


The surprising strength of cash cattle markets so far this year has served to spark another rally in futures. April cattle rose another 0.9% to $1.3095/lb after closing up 0.8% in pit trading on Wednesday. April cattle also hit all-time intraday high for the spot contract at $1.31/lb. There are signs that packers are still facing competition for fresh supplies despite near-record prices for cattle. Wholesale beef prices were close to unchanged at midday, with select-grade pointing to ninth straight fresh record. March feeders up 0.9% to $1.5857/lb.


CME lumber futures closed higher in a rebound from losses the previous session amid renewed optimism for demand as the year progresses. Higher quotes from some mills for lumber dimensions other than 2X4s contributed to buying interest, a broker said. Short covering, or exiting of previously sold positions, also helped lift futures. Some first-of-month new buying was seen as well following Wednesday’s mild sell-off. March closed up $4.90/ 1,000 board feet, or 1.8%, at $270.70. May rose 1.4% to $279.10. Cash prices unchanged at $270 to $275.


Ethanol futures ended slightly higher, with the March contract closing up $0.004 to $2.264 per gallon.

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Australian Bureau Warns Of Heavy Rain, Floods In NSW State

The government’s Bureau of Meteorology updated its severe weather and flood warnings for a vast region of central and southern New South Wales state.

The heavy weather is already forcing evacuations in some country towns.

The area includes some of Australia’s prime agricultural land, and includes irrigated horticultural districts, rice growing areas and big licks of ground suitable for winter crops including wheat. It also includes cities and towns that service farming and other industries.

The floods and heavy rain will disrupt the movement of livestock to sale yards in the short term, but longer term will underpin vigorous pasture growth and favorable planting conditions for the start of the winter cropping season in April and May, a spokesman for a rural merchandiser said by phone while requesting anonymity.

The severe weather in central and southern areas of the state follows floods across huge areas in the north, with these still working their way downstream through swollen river systems. These floods have already damaged summer crops including cotton and sorghum.

The rains this year come after what the Bureau of Meteorology reported was Australia’s “wettest two-year period on record” in 2010 and 2011, fueled by back-to-back La Nina events.

A rain band with embedded thunderstorms now extends across much of southern and northwestern New South Wales, and areas of heavy rain within the band are likely to produce flash flooding over the coming days, the bureau said in a statement issued late Thursday morning.

Among heavy falls already recorded, both Albury city and Nowra town received more than 100 mm in the 24 hours ended 2200 GMT, it said.

Three-day rainfall totals to Saturday are expected to be in the range of 70 millimeters to 200 mm within the warning area, with isolated larger totals possible, the bureau said.

There is a greater than 70% chance of flooding in a host of river valleys throughout the state over the rest of this week, it said.

Heavy rain may also lead to flash flooding in Victoria’s East Gippsland and North East districts, the bureau said.

New South Wales state emergency service has issued evacuation orders for parts of Cowra, Goulburn, Cooma and Queanbeyan, and said similar orders are likely to be issued for low-lying areas near the Hawkesbury Nepean River System, northwest of Sydney.
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USDA Says 120,000 Tons Of HRW Wheat Sold To Iran In 11-12

Private exporters reported to the U.S. Department of Agriculture export sales of 120,000 metric tons of hard red winter wheat for delivery to Iran during the 2011-2012 marketing year, the USDA said.

The 2011-2012 marketing year for wheat began June 1.

U.S. exporters are required to report to the USDA any export sales activity of 100,000 metric tons or more of one commodity made in one day or quantities totaling 200,000 tons or more in any reporting period to one destination, by 3 p.m. EST (2000 GMT) the next business day, according to the USDA’s Foreign Agricultural Service. Any export sales under these quantities must be reported on a weekly basis.
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Offering Of 3M Shares From Green Plains’ Largest Holder Prices At 8.3% Discount

An offering of three million shares from Green Plains Renewable Energy Inc.’s largest shareholder priced at an 8.3% discount to its Wednesday close, pushing shares lower.

Shares of the ethanol producer were recently off 6.1% to $10.66, approaching the $10.41 offering price. While within striking range of the stock’s recent trading levels, the pricing values Green Plains shares at less than half its 2007 highs.

Green Plains won’t receive any proceeds from the sale from Ireland-based NTR PLC, which invests in renewable energy and sustainable waste management businesses.

In addition, Green Plains disclosed that it has agreed to buy back 3.7 million of its shares from NTR, also at the discounted $10.41 offering price.

If both deals are completed, NTR would control roughly one million Green Plains shares, reducing its ownership stake to about 3.5%.

Green Plains, which went public in 2006, has lately faced an ethanol glut that has weighed on its margins. The company last month reported a fourth-quarter profit that fell more than analysts expected, though Chief Executive Todd Becker said then that the company felt it had the resources to manage a sustained downturn.
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Talking Points

Cargill Says Took Nearly 880,000 MT Of Sugar Delivery

Commodities trade giant Cargill Inc. took delivery of every lot of sugar delivered against the March contract on the ICE Futures U.S. exchange, a company spokeswoman said.

The delivery of 17,325 lots, more than 880,000 metric tons, was the largest delivery since last May.

“They have a place for the sugar, I assume, or they could also maybe have concerns about future supply from Brazil,” said Mike McDougall, senior vice president at Newedge.

Cargill had also taken delivery of nearly 1 million metric tons of sugar against the March contract a year ago.

“Following the expiry of the ICE March raw sugar futures contract yesterday we can confirm that Cargill took delivery of 17,325 lots which comes to just over 880k tons,” said a Cargill spokeswoman in an email.

Sugar was delivered from Brazil, Thailand, the Philippines and several Central American countries.

Sugar for May delivery on the ICE U.S. Futures exchange is down 1.5% at 24.64c/lb., below the key psychological level of 25c/lb.

“I think (the market’s) taking the delivery maybe a little negatively, but generally we’ll get a little trend move off the hype,” McDougall said.
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UK Crops Not Greatly Affected By Recent Cold Snap – HGCA

U.K. crops weren’t greatly affected by February’s cold snap, the Home Grown Cereals Authority said, as low temperatures would have killed some disease and slowed growth of plants that were looking a little over developed.

Farmers are currently applying fertilizer and fungicide applications, the HGCA said, as the weather has turned very mild and so crops have exited winter dormancy quite quickly.

The country’s winter wheat crop is well established with good growth over the season, the HGCA said in its latest report, with the majority of crops well tillered with good plant population.

However, it added that mild winter conditions had favored the development of mildew, yellow rust and brown rust, with septoria present in most crops.

Nevertheless, the HGCA said very cold weather in early February provided a check on these diseases and their development will be monitored closely in coming weeks.

Spring planting has begun in the U.K. with very good conditions, the HGCA said, but soil moisture is lacking in some areas so rains are needed over coming weeks to continue the promising progress of the country’s crops.
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Spring Road Restrictions Seen Limiting Grain Movement In Western Canada

Spring road restrictions in the Western Canadian provinces of Alberta, Saskatchewan and Manitoba have been, or are, in the process of being implemented and are expected to limit the producer’s ability to move grain for the next couple of months, according to industry officials.

There have already been select roads in Alberta which have had weight restrictions implemented.

An official with Alberta’s Transportation Department said the spring road restrictions, which have been implemented, will likely be kept in place until the end of April or May, with the actual lifting of the limitation dependent on how soon the frost is out of the ground.

Depending on the highway, there are different restrictions, the official said. The limitations to be implemented range from 75% of legal weight to 90%.

Meanwhile, Saskatchewan Highways and Transportation has issued an advisory to all truckers, farmers and drivers carrying heavy loads warning that spring road bans have been implemented in select areas of the province.

Typically, restrictions are implemented in early March in the southwest of the province and progress in a north-easterly manner across the province, the official said. Road restrictions may be in place for up to six weeks from the date of implementation.

The official said the restrictions apply to secondary weight highways only.

The road restrictions will likely be in place until May, but the limitation in the southern regions would probably be lifted first and then gradually move northwards.

Spring road restrictions for all of Manitoba will be implemented March 11, information from Manitoba’s Highways and Transportation said.
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Venus International Chairman Acquitted Of Grain Profiteering

The chairman of Egyptian grain trader Venus International has been acquitted of allegations that he used dubious ties with the country’s former Minister for Trade to profiteer in the grains market, the company said in a statement to stakeholders.

“Interrogations and audit carried out by the Supreme State Security Prosecution and Illicit Gains Bureau with Mr. Chairman and all company’s transactions with governmental and non-governmental entities since the company commenced its activities to date revealed and proved its integrity on all levels and in all directions,” the statement to stakeholders and emailed to Dow Jones Newswires said.
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