Wheat extended a collapse and corn and soybeans also fell as traders speculated that a jump in energy costs caused by protests across North Africa and the Middle East will curb growth and demand for grains.
Riots already ousted leaders in Egypt, the world’s biggest wheat importer, and in Tunisia, and opposition groups have seized control of eastern cities in Libya. While wheat traded in Chicago dropped 11 percent in the past four sessions, crude oil jumped 13 percent on the New York Mercantile Exchange.
Grain prices surged last month as North African and Middle East nations bought more shipments to damp a surge in domestic prices that helped spark the protests from Morocco to Bahrain. Speculators including hedge funds last week cut their bets on higher wheat prices by 20 percent, U.S. Commodity Futures Trading Commission data show.
“Investors continue to exit grain positions in favor of energy and financial markets due to anxiety over political unrest in the Middle East and North Africa,” Jim Gerlach, president of A/C Trading Inc., said by phone from Fowler, Indiana. “The markets are focused on the negative impact that higher energy prices may have on the global economy and food demand.”
Full Story
Showing posts with label Wheat Demand. Show all posts
Showing posts with label Wheat Demand. Show all posts
Thursday, February 24, 2011
Drought Increases Chinese Wheat Demand
DROUGHT across five provinces responsible for more than half China's 100 million tonne wheat crop could trigger a major foray into global markets - including Australia - by a nation which prides itself on being largely self sufficient in wheat.
Shandong Province, which traditionally grows 20 per cent of China's wheat, is facing its worst drought in 200 years. In other areas the big dry is the worst in 60 years.
Chinese Government agency, Cofco, is understood to have already bought about 200,000 tonnes of feed wheat from Australia this year, while other grain purchases around the world have also begun.
Although a regular and significant importer of soybeans and some corn, China has been relatively self-sufficient in wheat for two decades, but now has about 6.75 million hectares of key wheat country in drought according to its Office of State Flood Control and Drought Relief.
The Chinese government is spending about $1 billion to boost emergency water supply and irrigation resources in drought areas.
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Shandong Province, which traditionally grows 20 per cent of China's wheat, is facing its worst drought in 200 years. In other areas the big dry is the worst in 60 years.
Chinese Government agency, Cofco, is understood to have already bought about 200,000 tonnes of feed wheat from Australia this year, while other grain purchases around the world have also begun.
Although a regular and significant importer of soybeans and some corn, China has been relatively self-sufficient in wheat for two decades, but now has about 6.75 million hectares of key wheat country in drought according to its Office of State Flood Control and Drought Relief.
The Chinese government is spending about $1 billion to boost emergency water supply and irrigation resources in drought areas.
Full Story
Tuesday, June 8, 2010
Wheat Woes Continue, Plunge to Three-Year Low
Good weather has resulted in a strong wheat crop, and consequently wheat futures plunged to a 3-year low as harvest in the southern U.S. Great Plains States begins.
Precipitation was the major factor in the bumper yields, as there was four times as much rain in the last month than normal, according to National Weather Service data.
Wheat futures for July delivery fell 3.5 cents, 0.8 percent, to $4.3225 a bushel on the Chicago Board of Trade, after reaching $4.31 a bushel, the lowest price for a most-active contract since April 3, 2007.
With the growing number of wheat farmers around the world and bumper wheat crops, there continues to be little reason prices will increase going forward, and makes you wander why farmers continue to plant the grain, other than government subsidies.
Precipitation was the major factor in the bumper yields, as there was four times as much rain in the last month than normal, according to National Weather Service data.
Wheat futures for July delivery fell 3.5 cents, 0.8 percent, to $4.3225 a bushel on the Chicago Board of Trade, after reaching $4.31 a bushel, the lowest price for a most-active contract since April 3, 2007.
With the growing number of wheat farmers around the world and bumper wheat crops, there continues to be little reason prices will increase going forward, and makes you wander why farmers continue to plant the grain, other than government subsidies.
Wednesday, March 10, 2010
Wheat Outlook Dismal on Supplies
Wheat Inventory High
Stockpiles of wheat are leaving the industry reeling even more, as the largest inventory in over 20 years is emerging from the heavy wheat harvest.
Projections are there will be close to 1 billion bushels of wheat in the warehouses and bins when the harvest comes in; 20 million bushels beyond the estimates of the USDA.
The already low prices will drop even lower, as farmers continue to plant the grain based on prices from several years ago, rather than prevailing market conditions.
This is expected to finally correct the over-planting of wheat as farmers look to other areas to generate profits, as wheat hasn't been doing it for a few years.
The reasons for wheat being so abundant is lower exports as many countries are planting wheat and getting good results, and American consumers aren't consuming as much, driving domestic demand down. That and just too much wheat being planted is the issue driving the huge wheat inventory.
Wheat Inventory High
Stockpiles of wheat are leaving the industry reeling even more, as the largest inventory in over 20 years is emerging from the heavy wheat harvest.
Projections are there will be close to 1 billion bushels of wheat in the warehouses and bins when the harvest comes in; 20 million bushels beyond the estimates of the USDA.
The already low prices will drop even lower, as farmers continue to plant the grain based on prices from several years ago, rather than prevailing market conditions.
This is expected to finally correct the over-planting of wheat as farmers look to other areas to generate profits, as wheat hasn't been doing it for a few years.
The reasons for wheat being so abundant is lower exports as many countries are planting wheat and getting good results, and American consumers aren't consuming as much, driving domestic demand down. That and just too much wheat being planted is the issue driving the huge wheat inventory.
Wheat Inventory High
Monday, August 3, 2009
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
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
Wednesday, July 15, 2009
Monsanto Looking to wheat
Monsanto Looking to wheat to drive share prices up
Looking for more ways to increase their share price, Monsanto is looking to wheat as a significant means of doing that, and recent aquisition of WestBred LLC is the first significant step in that direction, although it could take a decade before the investment pays off.
Knowing it needs a way to expand market share in wheat, Monsanto a Monsanto analyst, citing expectations that the company's $45 million acquisition of WestBred LLC won't add to earnings until 2016, and will add less than a dime a share by 2025.
Privately held WestBred, with offices in Montana, specializes in wheat germplasm, the genetic material of a seed.
Monsanto said about the investment that it will strengthen the future growth of Monsanto's seeds and traits platform; and allow farmers to benefit from the company's experience in drought-, disease- and pest-tolerance innovations.
This action by Monsanto, the world's biggest provider of seeds, signifies the company's re-entry to the wheat market, but will only increase earnings several years down the road at best.
Assuming Monsanto has a 20 percent share of the certified seed market by 2025, estimates are wheat could only add between 7 cents and 9 cents a share to earnings a share by 2025.
"Clearly, Monsanto needs to find ways to drive significant market share gains, wheat platform should not be accretive to earnings until 2016 or later."
Managing expectations, Monsanto is calling the acquisition a long-term investment that won't add to earnings until the middle or latter part of the next decade.
Monsanto Looking to wheat to drive share prices up
Looking for more ways to increase their share price, Monsanto is looking to wheat as a significant means of doing that, and recent aquisition of WestBred LLC is the first significant step in that direction, although it could take a decade before the investment pays off.
Knowing it needs a way to expand market share in wheat, Monsanto a Monsanto analyst, citing expectations that the company's $45 million acquisition of WestBred LLC won't add to earnings until 2016, and will add less than a dime a share by 2025.
Privately held WestBred, with offices in Montana, specializes in wheat germplasm, the genetic material of a seed.
Monsanto said about the investment that it will strengthen the future growth of Monsanto's seeds and traits platform; and allow farmers to benefit from the company's experience in drought-, disease- and pest-tolerance innovations.
This action by Monsanto, the world's biggest provider of seeds, signifies the company's re-entry to the wheat market, but will only increase earnings several years down the road at best.
Assuming Monsanto has a 20 percent share of the certified seed market by 2025, estimates are wheat could only add between 7 cents and 9 cents a share to earnings a share by 2025.
"Clearly, Monsanto needs to find ways to drive significant market share gains, wheat platform should not be accretive to earnings until 2016 or later."
Managing expectations, Monsanto is calling the acquisition a long-term investment that won't add to earnings until the middle or latter part of the next decade.
Monsanto Looking to wheat to drive share prices up
Friday, January 16, 2009
Wheat Prices Will Fall as Demand Dries Up
Some traders are looking for any tidbit of information to keep the wheat prices up, but I don't think they can hold for too long.
Much of the argument for wheat prices holding is the dry weather in a couple regions in South America.
But with prices higher now than the fundamentals warrant, it's hard to believe people seriously think losing a little bit of the global crop will really make much difference. There's so much wheat available that it would take something of epic proportions to keep prices up.
Even add in the possibility that the cold front in the U.S. may damage some wheat crop if there isn't any snow cover, and that still doesn't change the fact of the huge global supply available.
Most of what's been driving the prices up over the last couple months has been the re-entry of some funds into the market, along with the soybean rally. Over the last 6 weeks wheat futures have risen approximately 25 percent.
With demand so low, I don't see that being able to continue in any sustainable way in the months ahead.
The one unknown is when the U.S. dollar will start collapsing under the weight of the huge amounts of money being used to stimulate the U.S. economy. That would of course make exporting wheat much cheaper, and could increase sales.
The problem is there's no way of knowing how long that will take, so it can only be watched for, not counted on, as far as timing goes. When it does happen though, it will be a boon to commodity producers in the U.S.
Concerning demand, the USDA on Monday projected the ending stocks for U.S. wheat in 2008 - 2009 stand at 655 million bushels, an increase of 32 million from December's estimates. With nowhere to really send that wheat, as demand is so soft and wheat so plentiful, it will stay in storage until there's someone to sell it to.
Even that will continue to be a challenge as for the same time period, wheat consumption accroding to the USDA estimates, are being lowered.
Livestock markets have no interest at this time in buying either, as they're struggling as much as anyone else, with exports down and profits under pressure. Cost inputs and lower priced global wheat remains major factors in these decisions.
While there's nothing that can be done about it now, the real problem stems from last years' prices, where everything went right for U.S. wheat farmers, and supply was down globally. Farmers responded predictably by putting more wheat in the ground for this season, contributing in part to the current glut.
This wasn't too smart, as the chances of having two years in a row like that are almost nil, and they knew foreign farmers would respond the same at lower costs. Farmers, as well as anybody in business must learn if they missed it this time around, there's not much guarantee they hit it the next.
It's expected that spring wheat acreage planted this year will drop, especially if prices don't come back, which they are highly unlikely to do.
Much of the argument for wheat prices holding is the dry weather in a couple regions in South America.
But with prices higher now than the fundamentals warrant, it's hard to believe people seriously think losing a little bit of the global crop will really make much difference. There's so much wheat available that it would take something of epic proportions to keep prices up.
Even add in the possibility that the cold front in the U.S. may damage some wheat crop if there isn't any snow cover, and that still doesn't change the fact of the huge global supply available.
Most of what's been driving the prices up over the last couple months has been the re-entry of some funds into the market, along with the soybean rally. Over the last 6 weeks wheat futures have risen approximately 25 percent.
With demand so low, I don't see that being able to continue in any sustainable way in the months ahead.
The one unknown is when the U.S. dollar will start collapsing under the weight of the huge amounts of money being used to stimulate the U.S. economy. That would of course make exporting wheat much cheaper, and could increase sales.
The problem is there's no way of knowing how long that will take, so it can only be watched for, not counted on, as far as timing goes. When it does happen though, it will be a boon to commodity producers in the U.S.
Concerning demand, the USDA on Monday projected the ending stocks for U.S. wheat in 2008 - 2009 stand at 655 million bushels, an increase of 32 million from December's estimates. With nowhere to really send that wheat, as demand is so soft and wheat so plentiful, it will stay in storage until there's someone to sell it to.
Even that will continue to be a challenge as for the same time period, wheat consumption accroding to the USDA estimates, are being lowered.
Livestock markets have no interest at this time in buying either, as they're struggling as much as anyone else, with exports down and profits under pressure. Cost inputs and lower priced global wheat remains major factors in these decisions.
While there's nothing that can be done about it now, the real problem stems from last years' prices, where everything went right for U.S. wheat farmers, and supply was down globally. Farmers responded predictably by putting more wheat in the ground for this season, contributing in part to the current glut.
This wasn't too smart, as the chances of having two years in a row like that are almost nil, and they knew foreign farmers would respond the same at lower costs. Farmers, as well as anybody in business must learn if they missed it this time around, there's not much guarantee they hit it the next.
It's expected that spring wheat acreage planted this year will drop, especially if prices don't come back, which they are highly unlikely to do.
Wednesday, November 5, 2008
Wheat Drops to Lowest Level in Three Weeks
The price of wheat in the U.S. fell to its lowest level in three weeks as traders aren't optimistic about the comming Department of Agriculture report on export sales data.
Expectations are the global crop will dampen the demand for American wheat, as production has increased in emerging countries.
Wheat that was inspected for export from the U.S. came in at about 13.2 million bushels for the week ending October 30, a drop of about 40 percent from the week ending October 23.
India is especially making an impact on exports this year, as it announced it will probably make about 2 million tons available on the export market. India could end up with a record wheat crop this year of 78.5 million tons.
Worldwide wheat production through June 30 is projected to leap by 12 percent to a record 683 million metric tons. That's the equivalent of about 25.1 billion bushels.
Wheat for December delivery dropped to $5.372 a bushel today on the Chicago Board of Trade.
Expectations are the global crop will dampen the demand for American wheat, as production has increased in emerging countries.
Wheat that was inspected for export from the U.S. came in at about 13.2 million bushels for the week ending October 30, a drop of about 40 percent from the week ending October 23.
India is especially making an impact on exports this year, as it announced it will probably make about 2 million tons available on the export market. India could end up with a record wheat crop this year of 78.5 million tons.
Worldwide wheat production through June 30 is projected to leap by 12 percent to a record 683 million metric tons. That's the equivalent of about 25.1 billion bushels.
Wheat for December delivery dropped to $5.372 a bushel today on the Chicago Board of Trade.
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