Grain Market Report: 1Feb2011

Tanner Sheahan
CPS Tangent

I'll follow the Stripe Rust update with Dan Steiner's market reports for yesterday and today.  Prompt bids are running from $8.00 to $8.45 from now through June with new crop still holding at $8.20.  This is the first time on Dan's report that I have seen a 2012 price set...$8.21.  This may be shaping up to be a good disease year but this is also a very valuable crop for growers in the WIllamette Valley and it appears good prices may be around a little while.

We rolled our bid sheet to February, so be sure to look at the bids closely. Unrest in Egypt is not over. One thing is certain, more change and volatility is on the way. It seems highly likely that we will see more of this type of thing in the future. US $$ was up (seen as relatively safe). The board has recaptured all of Friday’s losses. USDA surprised the market announcing it may accept up to 4 myn more acres into CRP. The price I read was $55/ acre….it is one of those ‘stroke of a political pen’ which no doubt has helped sagging wheat futures. Meanwhile the HRW country remains dry and even though there is a massive blizzard moving in on the Midwest, the western part of the HRW belt looks like they will only get very cold temps (potential winterkill)? This La Nina cycle has now been rated the 2nd strongest dating back to 1917/18. COT report was uneventful in that there were no big surprises…all the movement was anticipated. The biggest change was profit taking from the specs in corn (selling 650 myn bu since last weeks report). Sounds like they might be re-loading. The inspection/ shipment report was uninspiring with only 18.7 myn bu of corn shipped. We need to average 40.6 to hit USDA projections. Wheat shipments weren’t bad at 21.3 myn bu. (we need an average of 31.8 to hit USDA). On the week we shipped: 5.4 DNS, 10 HRW, 2.1 SRW and 3.7 SWW.
           Russia said they would release 18 myn bu from wheat reserves (not available for export). Argie
and Brazil will continue to get good rains. Brazil bean country will see about 85% coverage. They will have a HUGE bean crop. The Argie farmer strike continues, effectively shutting down ports. At some point, this product WILL come to market. Meanwhile, no relief for parched areas of China. One member of the Chinese gov’t claims that they have a 1 year supply of wheat on hand. Hmmmm. Egyptian ports are operating only during day light hours, with grains and containers still being moved. Other Mediterranean ports are taking up the slack. There has been a lot of concern over the safety of the Suez Canal. If the canal is compromised shipping cost will escalate very quickly.
***Didja Know: 7% of the world’s cargo moves through the Suez Canal? I’m not sure about recent stats, but as of just a few years ago, the income from the Suez Canal was the #2 income source for Egypt…Oil was number 3…TOURISM was a far and away distant #1.
The unrest in the Mid East spreads. Jordanian President Abdullah fired his entire cabinet. He had promised reforms, but they were slow in coming. Hundreds of 1000’s leave Egypt until the politics stabilize. Egyptian banks and their stock market is closed. Crude presses on toward $100/ bbl. As the Mid East situation stabilizes grain imports may increase as availability and price of food will become even more important. The FAO released a report Chinese grain stocks are understated, which should not be a surprise. BDI hit the lowest level in 2 years. Fleet expansion is up 13% while worldwide demand is up only 6%.
           Winter storm is bearing down on the US. US crop scores are unch’d ahead of the storm with G-Ex ratings of: Kansas 27%, Okie 21%, Nebraska 42%, Texas 17%.
***Didja Know: CFTC leveled fines of $2,000,000 against 2 rice traders….What makes up the price of a gallon of gas? Exxon says: Actual crude is about 71%, refining is about 5% of the price. Distribution and marketing is 10%, and taxes make up about 14%.