Nogger reports about monstrous soybean sales.
(emphasis mine) [my comment]
Thursday, 27 August 2009
USDA Weekly Export Sales
The USDA's weekly export sales report was out at 13.30 BST, here's what the lovable chumps had for us today:
Wheat
Net sales of 652,700 MT were a marketing-year high, up 82 percent from the previous week. That was much better than expectation of 350,000 to 450,000 MT. The main homes were Nigeria (222,500 MT), Japan (89,500 MT), Egypt (60,000 MT), South Korea (54,500 MT), unknown destinations (46,400 MT), Mexico (35,100 MT), and Taiwan (31,700 MT). Actual exports of 450,200 MT were also a marketing-year high.
Soybeans
Monster cumulative net sales were just over 2 MMT, compared to trade guesses of between 800,000 and 1,250,000 MT. The vast majority was, as you would expect at this time of year, new crop at 1,966,300 MT mainly for China (1,530,500 MT), and unknown destinations (303,000 MT). The total also included 87,900 MT of old crop beans. Actual exports of 311,500 MT were double from the previous week and up 26 percent from the prior 4-week average.
Corn
Cumulative sales of 973,200 MT comprised of 265,600 MT old crop and 707,600 MT new crop. That was in line with pre-report estimates of between 800,000 and 1,150,000 MT. Unknown destinations (275,100 MT), Mexico (172,300 MT), Egypt (120,000 MT), and Syria (85,000 MT) took the bulk of the new crop. Physical exports of 1,275,000 MT were pretty robust.
Reuters reports that soybeans stay in the spotlight as China buys.
08:30 August 24th, 2009
Soybeans stay in the spotlight as China buys
Posted by: Christine Stebbins
Soybean prices could extend Friday’s strength in coming days given China’s latest buying spree of U.S. soybeans as well as a seasonal tendency for soy prices to rise going into September.
Every day last week, the U.S. Department of Agriculture confirmed that China, the world’s top soy buyer, made big purchases of soybeans — 896,000 tonnes in all, or some 15 ocean cargoes for delivery from September onward.
“The big story has been the Chinese and their drumbeat of buying,” said Rich Feltes, senior vice president of MF Global Research.
The United States supplies 45 percent of the world’s soybean exports, followed by Brazil and Argentina. The weakness in the dollar and last week’s drop in prices made U.S. soybeans an attractive buy for China. U.S. cash soybeans are cheaper than Brazilian soy for loadings all the way through February.
The China National Grain and Oils Information Center, a think-tank based in Beijing, said on Friday the country would likely continue its brisk import pace. Traders and analysts will be watching for signs of new Chinese demand, such as rising cash markets at export points such as New Orleans.
“Tight farmer holding, hand-to-mouth users that are coming to the trough, a very tight old-crop carry-over situation, and this record pace of PRC buying of new-crop are all converging as we undertake this transition to new crop,” Feltes said.
The marketing year for U.S. soybeans ends in about a week on Aug. 31. USDA has already forecast end-season stocks on hand of soybeans to shrink to a 32-year low of 110 million bushels [nonsense, it will be much smaller than that]. For traders, that means a tricky tug of war will continue for several more weeks as exporters battle domestic soybean processors for scarce remaining supplies. The U.S. soy harvest will be late this autumn given the immaturity of the crop.
“I’m looking for prices to bounce (this) week seasonally. We seem to get a rally from August into September” amid the transition from old- to new-crop soy supplies, said veteran oilseed analyst Anne Frick of Prudential Bache Commodities.
HUGE US CORN/SOY HARVESTS LIKELY, BUT GROWTH LAGS
Tight stocks mean soy will remain the leader at the Chicago Board of Trade grain complex. But crop scouts on an annual U.S. crop tour last week underscored both the current immaturity of corn and soybeans but also the clear potential for big yields. Farm markets newsletter Pro Farmer, the tour’s organizer, forecast the American corn harvest at 12.807 billion bushels with an average yield of 160.1 bushels per acre.
That was above USDA’s forecast as of Aug. 1 for 12.761 billion bushels and 159.5 bpa yield — already ranking as the second-largest U.S. corn crop in history. The group also pegged soybean production at 3.150 billion bushels with an average yield of 41.0 bpa. That compared with USDA’s outlook earlier this month for a crop of 3.199 billion bushels at a yield of 41.7 bpa — the largest on record.
Analysts were not surprised by the Pro Farmer numbers, but said the lagging maturities of both crops highlighted the need for a warm September to ripen yields, for beans in particular.
“It’s going to be sensitive here until you know whether you get an early frost,” analyst Dan Cekander at Newedge USA said.
The U.S. Census Bureau will issue July soybean crush data on Thursday, which should confirm the struggle going in the U.S. cash markets to secure quick-delivery soybeans. Traders expect the crush — which measures the amount of soymeal (a livestock feed) and soyoil produced as well as soybeans crushed — to be 10 million to 15 million bushels below July 2008 when processors crushed 139.3 million bushels. This year, many processors extended their plant downtime maintenance in July due to both weaker profit margins and the unwillingness to outbid exporters for spot soybeans.
Soybean backwardation intensifies
CBOT Soybeans | Pr.Day | ||||
Month | Time | Sett | Chg | Sett | OpInt |
9-Sep | Aug 27, 13:41 | 1114 1/4 | 23 3/4 | 1090 1/2 | 7671 |
9-Nov | Aug 27, 13:41 | 996 | - 1/2 | 996 1/2 | 242801 |
10-Jan | Aug 27, 13:41 | 997 1/2 | - 1/4 | 997 3/4 | 57868 |
10-Mar | Aug 27, 13:41 | 993 1/2 | - | 993 1/2 | 25069 |
10-May | Aug 27, 13:41 | 985 1/4 | - | 985 1/4 | 18773 |
10-Jul | Aug 27, 13:41 | 986 3/4 | - | 986 3/4 | 19919 |
10-Aug | Aug 27, 13:41 | 978 | - | 978 | 164 |
10-Sep | Aug 27, 13:41 | 955 | 2 | 953 | 54 |
10-Nov | Aug 27, 13:41 | 936 3/4 | 3 3/4 | 933 | 22274 |
11-Jan | Aug 27, 13:41 | 941 3/4 | 3 3/4 | 938 | 52 |
11-Mar | Aug 27, 13:41 | 945 3/4 | 3 3/4 | 942 | 37 |
11-May | Aug 27, 13:41 | 945 3/4 | 3 3/4 | 942 | 2 |
11-Jul | Aug 27, 13:41 | 948 3/4 | 3 3/4 | 945 | 10 |
11-Aug | Aug 27, 13:41 | 946 3/4 | 3 3/4 | 943 | 0 |
11-Sep | Aug 27, 13:41 | 945 3/4 | 3 3/4 | 942 | 0 |
11-Nov | Aug 27, 13:41 | 942 3/4 | 3 3/4 | 939 | 446 |
12-Jul | Aug 27, 13:41 | 948 3/4 | 3 3/4 | 945 | 7 |
12-Nov | Aug 27, 13:41 | 949 3/4 | 3 3/4 | 946 | 247 |
My reaction: It will be very interesting to watch what happens with September soybean futures.
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So is this the payoff to the Chinese for not crashing our bond market? We suppress the market price as much as we can and sell them all they want?
When we don't have enough soy beans for our own use before the next harvest it is going to be ugly and I hope somebody has to answer.
Never dismiss or underestimate the power of a capitalist system, and its means of corruption.
That said, Bagbalm you might have the key...
But I always stated that in the end American food production would save her, for she is the only one the world with such massive land for food production.
Muahahaha....
It never helped africa or south america ;)
America has a large military which should help a bit.. but there is no particular guarantee that the military will serve the interests of the local population.
Democracy should help in theory but democracy is fast disappearing and has already largely been subverted by lobbyists anyway.
If we remember that this is a republic and not a democracy we will be much better off.
I'll bet all those beans are being paid for with $$ so China can dump more of their $$ reserves before the $$ tanks.
Could you do a piece investigating issues with a US default? Right now you seem to think that hyperinflation will be more acceptable than default. At least one European think tank has forecast this scenario and there are rumblings from Russia and China think along these lines.
Would a default be able to avert hyperinflation? What would the retaliatory measures/consequences that would deter the US from defaulting?
@Tian Men Pai
Think of it this way...
If the US should default...
Hyperinflation will follow...
Dig?
Beans continue to fly out of the bins in the US. The run up in the Sep futures as you have stated is evidence of that.
Movement in the basis of the commercial users also tells us that they are quite worried about securing supplies. For example, Monday, 8/24, the basis for several locations in Neb. was +80 cents, as of Thurs evening that basis has now more than doubled to +1.75-1.80. This basis is currently up until the LH of Sep and goes of the Nov contract, however with the late maturing bean crop we will see higher and higher premiums put up in the market further out. Shit will hit the fan soon...
Why would hyperinflation follow a US default?
Why the US will default...
http://www.youtube.com/watch?v=loa92ZG1KV8
http://seekingalpha.com/article/118103-u-s-debt-default-dollar-collapse-altogether-likely
http://piggington.com/us_to_default_on_its_debt_summer_2009
(some of several)
@Tian Men Pai
Because the faith in the dollar would be lost, and thus its value would be worth (close to, if not) shit.
I'd be glad if every one of those GMO crops left our shores! China is buying poison to keep their masses from starving. Neither we nor our animals need a soy-based diet to begin with.
Russia defaulted and bounced back.
Hyperinflaton vs Default.
Why not default...
@Tian Men Pai
Russia didn't hold the world currency either..
The situation is a bit different...
Also Russia had, and still does, a means of production...
America has lost most of its manufacturing sector, chasing the dream of service...
But you cannot rebuild a broke nation off of services, especially services that most of the world can do for themselves...
Or services that don't matter when people don't have the money to consume.
Russia has what oil, gas, agriculture, weapons industry...
US, has oil and gas but uses all of it, agriculture, weapons industry (more active), heavy machinery, Boeing, Government Motors/etc, lots of homebuilders, ...
So what if its the "reserve currency", it can still default.
The thing is, I and other wonder, why would the US choose hyperinflation when it can/has to default...
If Gerald Celente was taken by surprise at the extent of the stimulus package, why not Eric/etc/hyperinflationists with a US default.
@Tian Men Pai
"So what if its the 'reserve currency'..."
The dollar as the world reserve currency has allowed America to extract wealth from the entire world via taxation.
Make no mistake, being required to hold dollars to buy goods (such as oil and food) is a tax.
This, incidentally, is the very reason why America can be considered a modern empire (because only an empire can tax other nation-states).
This taxation has brought major benefits to America (as the world has to have dollars, to trade, it ensures that the dollar will stay relatively above other currencies in value) - such as cheap goods.
This is one reason why America, only being 1/5 of the world population, is able to consume 75% of the world's resources... it came cheap to the US (though military interventions did help too).
Another benefit of this taxation (aka dollar hegemony) is that it also ensures that other nation-states will buy American debt.
On top of this the dollar hegemony has also allowed America to have an immense geo-political presence in the world.
And because of this the world, to some degree, has adopted American capitalism (yes the dollar's prestige was important to the collapse of Communism, or says Kissinger).
Also because most of the world has adopted American capitalism and the dollar hegemony the world, since WWII, hasn't really went against the military intervention that America has done throughout the years.
Even today there is little resistance, when you look at the world acting against America for invading nations it has no reason to invade (unless we look at it from the standpoint of establishing the dollar hegemony in a particular region of the world, the standpoint of such an invasion as a warning to other nations, and also the standpoint to secure oil resources).
Given all these benefits that are gained, Tian Men Pai, why wouldn't the US want to retain the dollar hegemony?
"The thing is, I and other wonder, why would the US choose hyperinflation when it can/has to default..."
The answer to this question is simple...
Besides the benefits listed above...
It also comes down to which outcomes one can control more...
Hyperinflation is thought to be more controllable then the outcome of a dollar collapse (which a default would bring).
In the end a default would strip America of not only its global power, but also its way of living...
Anonymous:
America, only being 1/5 of the world population
Only China even comes close to 1/5. United States is more like 1/20.
@BlasterMillennia
Yeah your right its 1/20 or ~5% on the world population.
Where I got 1/5 or 20%?
Probably got the 1/5 marked as 5% in my head when I wrote that response.
But thanks for calling me on it, because it shows that much more why the dollar hegemony is important to maintain for America...
Centralized world power in the hands of such a small population.
You don't get it.
Maintaining is no longer a "can".
Its hyperinflate the debt or default on it. Things are at that stage. Either way dollar hegemony ends. The question is why choose hyperinflation when default is an option.
@Tian Men Pai
"You don't get it. Maintaining is no longer a 'can'."
No, I don't think you get it...
It doesn't matter to the powers that be...
You should read the book by C.W. Mills called The Power Elite it explains how the those in power think, and the steps they take to maintain that power.
"Either way dollar hegemony ends."
Actually the dollar hegemony can linger on for another decade or more... nothing is over yet.
"The question is why choose hyperinflation when default is an option.
Because they believe that the dollar can still be the world currency, and believe me they are cutting deals with nations all over the world to keep it that way.
Listen, you can believe what you want, but anytime we discuss an issue about the dollar sustainability - its not an issue about economics...
Its more about an issue of power. And that is the reason most of these people that talk about a dollar collapse are wrong.
Because you cannot undo a power structure (that includes more then the US alone) that has taken well over 50 years to create. And in that time also destroy other nation's sovereignty and ideals, ways of life.
If you think you can do that all within a year...
Well, you better be ready for war...
Bravo anonymous, great explination on the power of the dollar.
There are only one things that you wrote that has any traction to reality is
"It doesn't matter to the powers that be..."
There are quite a lot of stupes in the White House...
As to,
"Because you cannot undo a power structure (that includes more then the US alone) that has taken well over 50 years to create."
The forces of chaotic destruction is heck a lot more powerful than inertia...
If they had that degree of control, you think people will be talking about hyperinflation or defaulting?
Tian Men Pai, i would be happy if dollar collapses, but as anonymous have said.. I feel like it is status quo, issue is rather political than fundamental. Dollar collapse is predicted tens of years and it is reserve currency still.
- as numonic says, US seems to do anything to prop up the dollar
- US needs dollar as reserve currency not only to buy things by means of printing press, but they also make vassals around the world by lending big dollars to 3rd world countries against collateral
- i can not imagine China dumping dollar reserves because their allies will be angry
- US government is painting picture about end of recession so maybe it will be used to increase interest rate soon
@Tian Men Pai
"There are only one things that you wrote that has any traction to reality..."
Everything I wrote is a historical fact about the power of the dollar, America.
I see by such a statement that your not a student of history...
It matters not, for you will witness it.
"The forces of chaotic destruction is heck a lot more powerful than inertia..."
No shit, that's why what you seek only leads to one conclusion - war!
"If they had that degree of control, you think people will be talking about hyperinflation or defaulting?"
The fact that they (aka The Fed) talk about inflation (hyper or not) shows how much control they have, for defaulting (or even talking about it) would mean that they have none.
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