20-11-2012 10:47 AM | Arable, Cereal, Crops, Market Reports, News

Fund money exits commodities over fiscal cliff and Israel tensions



EU grains closed firmer, consolidating from recent losses with Nov 12 London wheat up GBP1.75/tonne to GBP216.75/tonne, May 13 up GBP1.00/tonne to GBP221.75/tonne and new crop Nov 13 GBP0.25/tonne steadier at GBP187.75/tonne. Jan 13 Paris milling wheat added EUR1.00/tonne to close at EUR270.25/tonne.

Fund money continues to exit commodities in general as we nervously approach year end against a backdrop of concerns over the US "fiscal cliff" and escalating tensions in the Middle East.

The net long position held by the Managed Money in the 5 major Ag markets has dropped 285,000 contracts (over 43%) to 364,000 since Sep 18th, says Tregg Cronin of CHS Hedging, Inc.

The American wheat market snapped a run of six straight declines, adding a bit of support to European wheat. The trade is expecting Egypt to use the recent decline in prices as a buying opportunity and tender for wheat this week, and that US wheat could find itself competitively priced after spending 2012/13 thus far in the Egyptian wilderness.

Ukraine slightly confusingly said that it had "no plans to restrict wheat exports" despite Egypt saying last week that it had received official notification that such measures were to be introduced on Dec 1st.

This seems to have more to do with appeasing the WTO than anything else. Regardless of what the Ukraine government officially says, it seems pretty clear that there will be no more wheat exports from them after the end of the month, until new crop 2013 becomes available.

They will continue to export corn though, the harvest of which is said to be 89% complete, producing 17.97 MMT in bunker weight so far. That suggests a best case clean weight scenario of around 19.5 MMT, according to Agritel (1.5 MMT less than the USDA currently predict).

Agritel forecast Ukraine corn exports at 12.0-12.5 MMT this season, versus the USDA's 12.5 MMT and the local Grain Association estimate of 12.5-13.5 MMT. Corn exports in 2011/12 were 15 MMT according to the USDA.

Rosstat say that the Russian corn harvest is 70% complete, and that the nation's total grain harvest currently stands at 72.3 MMT in bunker weight, down 23.5 MMT on this time a year ago.

A let up in the rains has seen the French corn harvest advance to 92% complete, according to FranceAgriMer, who also now estimate winter wheat plantings at 88% complete and those of winter barley at 97% done.

The Australian Oilseeds Federation forecast rapeseed production there this year at only 2.697 MMT versus output of 2.82 MMT last year (according to ABARES and the USDA) despite a 23% hike in planted area due to drought.

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