Saturday, August 15, 2009

Wheat Futures Prices Near Term

Wheat Futures Prices

Wheat futures in the U.S. should continue to go nowhere for some time ahead unless something extraordinary happens where huge losses come about, which could probably only happen in Australia.

Production estimates for wheat continue to increase while demand decreases, cutting back significantly on wheat exports.

The USDA estimated 2009 U.S. wheat production was raised to 2.184 billion bushels from its July estimate of 2.112 billion, while the global wheat crop increased to 659.3 million tons from 656.5 million tons last month. The USDA's estimate for global ending stocks -- or what is left over after supply and demand are accounted for - also increased.

Wheat prices have plunged over the past year as global supplies have increased, and there is little sign of anything changing.

The continuing bearish information strengthened "the prevailing tone of the wheat market - one adrift in search of a persuasive fundamental storyline and dependant upon direction from other commodities," J.P. Morgan analyst Lewis Hagedorn said. "Absent a large decline in Australian production or demonstration of increasing global demand for protein wheat, prices appear likely to continue a gradual downward slide."

CBOT wheat will probably continue to experience new contract lows, although losses will be limited during the medium term by possible strength in CBOT corn and soybeans. Wheat prices should generally remain rangebound during the next couple of months.

Projections are it's possible September wheat could drop as low as $4.50 or December wheat to touch $4.75. The top end of the contracts' ranges should be about $5.25 for September, assuming a rally in beans and corn comes about.

A lot of negative things would have to happen across the world in order for any type of rally to happen, along with El Niño drying up Australian wheat fields, a continuing wheat disaster in Argentina, and an ongoing rain shortage in the Black Sea Region

But even with all of that happening, there's no surety, as the other places in the world have shored up their domestic wheat production, which is the real mitigating factor in the overall scheme of things.

At best there would be a mild recovery of wheat prices assuming all the above happens, but that doesn't guarantee the U.S. would be getting that business.

Wheat Futures Prices

Monday, August 10, 2009

Wheat Exports in Slow Start

Exports of U.S. wheat promise to be down significantly for 2009-2010, according to the USDA, as projections are for about 925 million bushels of wheat to export during that time period, where the marketing year began on June 1.

Assuming this is accurate, which it seems it's close, that would be 90 million less bushels of wheat exported this year over last, and a huge 339 million less than the 2007-2008 year.

At this pace it'll be the third worst year of wheat exports in 25 years.

Wheat export inspections for the first 9.6 weeks show that they're at 130.7 million bushels; almost 100 million bushels under last year at this time. The weekly average wheat inspection has been at an anemic 13.7 million bushels.

This is even far below the USDA export projection of 925 million bushels, as the average needed to reach that is 18.7 million bushels for the rest of the year, which will be difficult to attain.

While some say this isn't a good comparison over the very quick rate of wheat exports last year, it still is far behind what would be needed to reach projections. As fo the end of July, the USDA said outstanding export sales of wheat stood at 148 million bushels, while last year it was at 276 million bushels.

The USDA’s weekly U.S. Export Sales report breaks down exports and export sales by where the wheat is headed and by class of wheat. Through July 30, export commitments compared to those of last year plunged by 60 percent for hard red winter wheat, 63 percent for soft red winter wheat, and 26 percent for hard red spring wheat. Export commitments were 17 percent larger for white wheat and 15 percent larger for durum wheat. Commitments for all classes of wheat were down by a huge 46 percent.

Among its largest wheat trading partners, commitments have dropped significantly; 27 percent to the Philippines, 45 percent to Japan, 48 percent to Mexico, and 87 percent to Egypt. Egypt buys only soft red winter wheat from the U.S.

Exports of wheat globally are down this year because a number of countries have significantly increased wheat production domestically, so diminishing the amount of wheat needed for its citizenry outside the countries.

Much of the recent low wheat prices has been attributed primarily to the decline in export demand for soft red winter wheat, which doesn't look to change this year.

As far as wheat inventories globally, they are expected to grow by 8 percent this year, which equals 512 million bushels. Of that, China will account for 80 percent of the wheat inventory increase.

Saturday, August 8, 2009

Chevron Angola Oil Discovery

In what is at this time only being identified as a major oil discovery, Chevron announced that the find off Angola's shores still needs to be confirmed by further drilling, but the prospects of a significant oil field are pretty much ensured; it's only a matter of how much oil the field holds, which in cases like this are usually considered over 500 million barrels.

The oil and natural gas field is located off the Cabinda coast of Angola, enlarging the already significant portfolio Chevron has in the African nation.

Its affiliate Cabinda Gulf Oil Co made the find, of which Chevron has a 39.2 percent stake in. The state oil company of Angola - Sonangol owns 41 percent of Cabinda, while Total SA of France owns 10 percent and ENI SpA of Italy has a 9.8 percent stake in Cabinda.

This find continues to underscore the West African nation's growing importance to Chevron and the country's rising stature as an energy producer as its neighbor Nigeria continues to deal with militant attacks on its oil pipelines, which has cut oil production by 20 percent over the last three years.

This is one of many oil and gas discoveries off of Angola, which produced 1.85 million barrels of oil a day in July 2009.

Chevron, which now pumps over 500,000 barrels of oil a day from Angola, said the discovery, in Block 0, was drilled in March in 397 feet of water to a total vertical depth of 13,000 feet. It encountered over 225 feet of net hydrocarbon pay in the Upper Pinda formation, according to the company. Overall, Angola's output stands at about 2.1 million barrels of oil a day, which is a huge 53 percent increase from 2006.

Chevron also said the 79-3XST1 discovery well had a flow rate of 11.6 million cubic feet of natural gas and 2,550 barrels of liquid hydrocarbons a day.

Monday, August 3, 2009

Mutant Corn's Natural Defenses Enhanced

Genetically Enhanced Corn Natural Defenses

Using a plant gene from oregano which sends out a chemical call for help from the western corn rootworm (in reality a beetle), which studies show have proven to be effective deterrent when parasitic roundworms respond and start to kill the pests almost immediately.

Researchers say this could lead to solid corn harvests with less need for expensive pesticides.

How the research was conducted was regular corn was planted alongside the mutant corn and beetle larvae released among them. After that nematodes, or otherwise called roundworms were released as well, and results were the beetle larvae had been killed in three days.

As far as damage during that time, the genetically modified corn incurred far less damage than regular corn, and the numbers of beetle were 60 percent less on the mutant corn.

"As soon as the nematodes hit [the genetically modified plants]—within three days the larvae were killed," said study co-author Ted Turlings, a zoologist at the University of Neuchâtel in Switzerland.

It's postulated that the selective breeding used in the U.S. to produce faster-growing plants, along with pesticide use, may have slowly gnawed away at the natural defense mechanism in U.S. plants, in contrast to corn varieties used in Europe; although that's far from proven in any way.

Genetically Enhanced Corn Natural Defenses

Global Demand for Wheat Down

Wheat Market

Wheat futures continue their downward slide as they are down a whopping 33 percent from the same time last year, and the overall market looks to continue to be bearish, as international demand continues to slide.

“The wheat market is in a slumber,” Stuart Richardson, Australian commodity management spokesman for the Melbourne- based company, said today. “Flour mills around the world have generally entered the new season with greater stocks in their supply line than the year before.

“There is plenty of wheat available competing for limited demand, so the fundamental market picture is bearish,” Richardson added, which updated estimated wheat prices for Australian farmers. “Production risk is diminishing in the northern hemisphere, with the winter wheat harvests almost complete in the U.S. and well advanced in the European Union and Black Sea region.”

For the second month in a row wheat futures have fallen, and wheat speculators and hedge fund managers are increasing their short positions in the golden grain, believing they haven't yet reached their lows.

Wheat Market