Large Sarge
23rd August 2010, 07:09 AM
http://www.marketskeptics.com/2010/08/2010-food-crisis-is-here.html
Monday, August 2, 2010
0diggsdigg*****The 2010 Food Crisis IS HERE!*****
by Eric deCarbonnel
Last December, I published a major article ( *****2010 Food Crisis for Dummies***** ) explaining why the world was heading towards a major food crisis in 2010. Well, the 2010 Food Crisis IS HERE!
Shortages have driven up prices and we are now entering the next stage of the food crisis. Some of my long time readers will remember my March follow-up entry ( *****2010 Food Crisis Taking Shape***** ) in which I laid out the three stage of the food crisis.
… What is going to happen next is simple:
A) Prices will rise driven by growing shortages.
B) The fear of price collapse in soybeans will fade away and doubts about the USDA will grow (ie: “if the USDA’s numbers are right, why are prices still going up?â€). As end-users try to get out of their underbought and oversold positions, the price rises will accelerate.
C) Panic explodes as faith in USDA numbers collapse. Everyone becomes a spot buyer.
Stage A of the food crisis (shortage-driven price spike) has occurred. Now we are entering stage B (confusion, growing doubts in government estimates, accelerating price rises). This is confirmed by Kory Melby, who asks the question I have been waiting for: Where Are the Soybeans?
Where Are the Soybeans?
29 Jul 10
Cash soybean bids remain firm in the interior of Brazil.
Soybean crushers do not have enough soybeans to make it until November.
Soybean crushers are bidding a negative margin to secure cash soybeans.
Exciting Stuff Happening In Grain Markets
Modbee reports that wheat prices surged in July by the biggest amount in a half-century.
DROUGHT SENDS WHEAT SKYROCKETING
last updated: July 30, 2010 11:05:52 PM
Wheat prices surged in July by the biggest amount in a half-century as severe drought in Russia and other former Soviet republics destroyed grain crops.
• Wheat prices rose $1.97 a bushel, or 42 percent, this month and are at their highest level since September 2008.
…
Agweb reports about exciting stuff happening in grains.
Strong Market Closes Mark Uptrend
7/31/2010
By Linda H. Smith
“We have exciting stuff happening in grains,†says Jerry Gulke of the Gulke Group. “You almost have to see it on paper to believe it. I don’t remember when I’ve seen all commodities look this bullish at once.â€
Gulke learned long ago that you can’t argue with the technicals—the charts often tell you something is going on in the markets that you can’t readily appreciate in the fundamentals. The charts for wheat, corn, soybeans, bean oil and maybe bean meal all are now long on both a weekly and monthly basis, he says. “This generally means we will see an upward bias for the next 12 to 18 months.â€
“It could be we are in about the same situation we were in 2008,†says Gulke. “Now, we need something catastrophic to happen to not be in a bull market.â€
…
AP reports that wheat prices end July with huge monthly gain.
Wheat prices end July with huge monthly gain
By TALI ARBEL (AP) – July 30, 2010
NEW YORK — Wheat prices surged in July by the biggest amount in more than a half century as severe drought conditions in Russia and other former Soviet republics destroyed grain crops.
If the gains continue, U.S. shoppers could see a bump up in prices of cereals, breads and pastas made with wheat. American wheat farmers, meanwhile, are going to get a boost in income, said Scott Irwin, professor of agriculture at the University of Illinois, Urbana-Champaign.
Wheat prices have risen $1.97 a bushel, or 42 percent, this month and are at their highest level since September 2008. Its the biggest gain for wheat contracts according to records dating back to 1959, according to the Chicago Board of Trade.
With no immediate end in sight for the drought in Russia, wheat prices could continue to rally. That makes it more likely that the surging wheat could wind up affecting prices for bread, said Ephraim Leibtag, an economist with the USDA's Economic Research Service.
The lack of rain and extreme heat in Russia has already destroyed about 20 percent of the country's grain crop in key growing regions, according to Russian officials. Russia is a major exporter, but analysts say there are rumors that the country may cut off its exports, boosting demand for the remaining grain stocks in the U.S. and other major grains producers.
Droughts are also afflicting Kazakhstan and parts of Ukraine, while heavy rains have damaged the Canadian wheat crop. The Canadian Wheat Board estimated that the 2010-11 yield would be the lowest since 2002 because about 13 million acres were either left unseeded or destroyed by heavy rains.
Expectations for a global wheat crop smaller than last year's helped propel prices for wheat up by 5.4 percent on Friday alone. September wheat rose 34 cents to settle at $6.615 a bushel.
…
"Undoubtedly this will be good news in Nebraska, out there in the West, on the Great Plains," Irwin said. If farmers switch acreage from soybeans and corn to wheat, that could also drive an increase in the price of those commodities as supply shrinks, ultimately leading to higher meat prices for livestock producers and shoppers, he said.
…
Below is the latest from Nogger. (Again, visit Nogger’s blog to keep up to date about the 2010 food crisis. It has great coverage of everything agriculture.)
Friday, 30 July 2010
German Production Estimates Cut
Hamburg-based Toepfer have reduced their German crop production estimates quite sharply from last month saying that the cold winter delayed crop maturity. In addition "dry conditions in the last six weeks and the extremely high daytime temperatures have affected the yield potential of crops in many places," they add.
…
Friday, 30 July 2010
Ukraine To Import Wheat In 2010/11?
Reports suggest that Ukraine will only manage to harvest "a maximum" of 8 MMT of milling wheat this year, well below domestic consumption of 11-12 MMT.
Having aggressively marketed and exported wheat of all grades throughout 2009/10 it will come as no surprise to hear that official records of milling wheat ending stocks from last season appear to have got lost in the post.
One report I am reading suggests that the cash-strapped Ukraine's already have commitments to export 3 MMT of milling wheat this season.
The maths on this one certainly don't add up. Even is this week's hastily introduced new regulations on exports effectively bars this 3 MMT from leaving Ukraine will clearly run out of milling wheat by spring.
The country is estimated to produce 38-40 MMT of grains this year, down 13-17% from last season's 46 MMT. …
Friday, 30 July 2010
What Will This Afternoon Bring?
You'd have expected a profit-taking month-end sell off normally, but things suddenly aren't "normal" any more. Early calls for CBOT this afternoon are higher: corn up 2-4c, wheat up 8-10c, soybeans up 6-8c. …
Friday, 30 July 2010
What Will Tomorrow Bring?
Sharply higher global wheat plantings based on these prices that's for sure. Is anyone reading this old enough to remember the dim and distant past of 2007/08? What a year that was, you'll never believe it right, what happened was prices went through the roof just like now. …
Friday, 30 July 2010
IGC Issue Revised Export Figures
[Propaganda efforts are getting increadibly desperate and obvious.]
The senile old duffers at the IGC have revised yesterday's export numbers before the ink has even had time to dry.
They've just heard that there's a drought going on in Russia, which they seem to think might have a negative import on exports out of the region this year.
They didn't hear about the drought until today as the regular carrier pigeon they usually use is on holiday, and they've got a student in to cover for him.
They've dropped their July 2010-June 2011 Russian grain export estimate from yesterday's 15.8 MMT to 13.4 MMT today. To help balance that they've upped US exports by 2.5 MMT to 82.9 MMT.
… Can you smell something funny?"
[USDA-lead propaganda is falling apart in the face of reality…]
Saturday, 31 July 2010
Wheat Monthly/Weekly Stats
It's been a stunning month for wheat, with Friday's impressive CBOT close apparently pushing wheat there to its largest monthly gain since 1959, with London and Paris wheat not too far behind:
Commodity Month Fri Cls Weekly Gain Monthly Gain
--------------------------------------------------------------------
CBOT wheat Sep10 661.50 +65.25 (+10.9%) +181.25 (+37.7%)
Paris wheat Nov10 195.25 +15.50 (+ 8.6%) + 49.50 (+34.0%)
London wheat Nov10 142.50 + 8.55 (+ 6.4%) + 35.25 (+32.9%)
--------------------------------------------------------------------
Paris corn Nov10 178.50 +10.50 (+ 6.3%) + 29.25 (+19.6%)
Paris rapeseed Nov10 367.25 + 0.50 nominal + 37.50 (+11.4%)
Paris barley Nov10 201.00 +11.00 (+ 5.8%) + 38.50 (+23.7%)
--------------------------------------------------------------------
World buyers are having flashbacks to 2007 and 2008
Agweb reports that world buyers are having flashbacks to 2007 and 2008.
…
Wheat, once again posted the largest percentage gains overall in our table. Continued weather problems in the FSU and Europe are still fueling the rally in wheat. Now that the spec funds have painfully bought back all of their short positions in wheat, some have “got religion†and are aggressively buying the market in an attempt to make back the money they lost. World buyers are also having flashbacks to 2007 and 2008, when hoarding behaviors by net exporter countries made food staples like wheat and rice very expensive and hard to buy. On paper the world stocks of wheat are still much above 2007 levels, but once burned is twice shy as they used to say. …
Weather Woes Around the World
Agrimoney reports about signs of crop damage and lower yields in German.
German yield fears help wheat prices to new highs
By Agrimoney.com - Published 22/07/2010
Wheat prices hit their highest for nigh on two years in Europe, and rose above \$6 a bushel in Chicago, after farmers reported fears of yield losses of up to 20% in Germany because of dry weather.
Farming association Deutschen Bauernverbandes, or DBV, said that wheat yields in the European Union's second-ranked producer of the grain would be "10-20% down on the year".
Initial harvest results had shown signs of crop damage and lower yields, notably in areas with lighter soils, where the impact of this year's prolonged dry weather had been particularly severe.
While the DBV did not make a production estimate, the decline implied by the data is greater than many of the forecasts so far being factored in. FO Licht analysts earlier this month estimated the German wheat crop at 24.86m tonnes, only 300,000 tonnes lower than last year's.
…
Agrimoney reports that Argentine wheat joins list plagued by dry weather.
Argentine wheat joins list plagued by dry weather
By Agrimoney.com - Published 26/07/2010
Argentina has emerged as the latest country to face potential setbacks over wheat, with adverse weather threatening its recovery from a century-low in plantings.
"A new concern is bubbling up in Argentina. It is dry," US broker US Commodities said, noting that 79% of the South American country's intended wheat acreage had been planted as of last week. Typically, farmers have all but finished sowings by now.
The concerns were echoed by Rabobank analysts, who warned of a "great deal of uncertainty" regarding Argentina's wheat crop, South America's biggest, and one typically drawn on by regional importers such as Brazil.
"Dry conditions in some areas of the country, especially in the south and west of the wheat region, might prevent planting intentions from being fully realised," the bank said.
Dry weather has already cut hopes for crops in the European Union, Western Australia and, in particular, Kazakhstan and Russia, sending wheat prices jumping on international markets.
…
More hot weather
… Russia and Kazakhstan, and potentially eastern Ukraine, are set for further hot and dry weather, with some areas forecast to receive temperatures of up to 108 degrees Fahrenheit (42 degrees Celsius).
"The forecast for the week does not remain optimistic... with a further rise of expected temperatures," Agritel, the Paris-based consultancy, said, adding that temperatures in Russia had hit record highs on Saturday.
…
Monday, August 2, 2010
0diggsdigg*****The 2010 Food Crisis IS HERE!*****
by Eric deCarbonnel
Last December, I published a major article ( *****2010 Food Crisis for Dummies***** ) explaining why the world was heading towards a major food crisis in 2010. Well, the 2010 Food Crisis IS HERE!
Shortages have driven up prices and we are now entering the next stage of the food crisis. Some of my long time readers will remember my March follow-up entry ( *****2010 Food Crisis Taking Shape***** ) in which I laid out the three stage of the food crisis.
… What is going to happen next is simple:
A) Prices will rise driven by growing shortages.
B) The fear of price collapse in soybeans will fade away and doubts about the USDA will grow (ie: “if the USDA’s numbers are right, why are prices still going up?â€). As end-users try to get out of their underbought and oversold positions, the price rises will accelerate.
C) Panic explodes as faith in USDA numbers collapse. Everyone becomes a spot buyer.
Stage A of the food crisis (shortage-driven price spike) has occurred. Now we are entering stage B (confusion, growing doubts in government estimates, accelerating price rises). This is confirmed by Kory Melby, who asks the question I have been waiting for: Where Are the Soybeans?
Where Are the Soybeans?
29 Jul 10
Cash soybean bids remain firm in the interior of Brazil.
Soybean crushers do not have enough soybeans to make it until November.
Soybean crushers are bidding a negative margin to secure cash soybeans.
Exciting Stuff Happening In Grain Markets
Modbee reports that wheat prices surged in July by the biggest amount in a half-century.
DROUGHT SENDS WHEAT SKYROCKETING
last updated: July 30, 2010 11:05:52 PM
Wheat prices surged in July by the biggest amount in a half-century as severe drought in Russia and other former Soviet republics destroyed grain crops.
• Wheat prices rose $1.97 a bushel, or 42 percent, this month and are at their highest level since September 2008.
…
Agweb reports about exciting stuff happening in grains.
Strong Market Closes Mark Uptrend
7/31/2010
By Linda H. Smith
“We have exciting stuff happening in grains,†says Jerry Gulke of the Gulke Group. “You almost have to see it on paper to believe it. I don’t remember when I’ve seen all commodities look this bullish at once.â€
Gulke learned long ago that you can’t argue with the technicals—the charts often tell you something is going on in the markets that you can’t readily appreciate in the fundamentals. The charts for wheat, corn, soybeans, bean oil and maybe bean meal all are now long on both a weekly and monthly basis, he says. “This generally means we will see an upward bias for the next 12 to 18 months.â€
“It could be we are in about the same situation we were in 2008,†says Gulke. “Now, we need something catastrophic to happen to not be in a bull market.â€
…
AP reports that wheat prices end July with huge monthly gain.
Wheat prices end July with huge monthly gain
By TALI ARBEL (AP) – July 30, 2010
NEW YORK — Wheat prices surged in July by the biggest amount in more than a half century as severe drought conditions in Russia and other former Soviet republics destroyed grain crops.
If the gains continue, U.S. shoppers could see a bump up in prices of cereals, breads and pastas made with wheat. American wheat farmers, meanwhile, are going to get a boost in income, said Scott Irwin, professor of agriculture at the University of Illinois, Urbana-Champaign.
Wheat prices have risen $1.97 a bushel, or 42 percent, this month and are at their highest level since September 2008. Its the biggest gain for wheat contracts according to records dating back to 1959, according to the Chicago Board of Trade.
With no immediate end in sight for the drought in Russia, wheat prices could continue to rally. That makes it more likely that the surging wheat could wind up affecting prices for bread, said Ephraim Leibtag, an economist with the USDA's Economic Research Service.
The lack of rain and extreme heat in Russia has already destroyed about 20 percent of the country's grain crop in key growing regions, according to Russian officials. Russia is a major exporter, but analysts say there are rumors that the country may cut off its exports, boosting demand for the remaining grain stocks in the U.S. and other major grains producers.
Droughts are also afflicting Kazakhstan and parts of Ukraine, while heavy rains have damaged the Canadian wheat crop. The Canadian Wheat Board estimated that the 2010-11 yield would be the lowest since 2002 because about 13 million acres were either left unseeded or destroyed by heavy rains.
Expectations for a global wheat crop smaller than last year's helped propel prices for wheat up by 5.4 percent on Friday alone. September wheat rose 34 cents to settle at $6.615 a bushel.
…
"Undoubtedly this will be good news in Nebraska, out there in the West, on the Great Plains," Irwin said. If farmers switch acreage from soybeans and corn to wheat, that could also drive an increase in the price of those commodities as supply shrinks, ultimately leading to higher meat prices for livestock producers and shoppers, he said.
…
Below is the latest from Nogger. (Again, visit Nogger’s blog to keep up to date about the 2010 food crisis. It has great coverage of everything agriculture.)
Friday, 30 July 2010
German Production Estimates Cut
Hamburg-based Toepfer have reduced their German crop production estimates quite sharply from last month saying that the cold winter delayed crop maturity. In addition "dry conditions in the last six weeks and the extremely high daytime temperatures have affected the yield potential of crops in many places," they add.
…
Friday, 30 July 2010
Ukraine To Import Wheat In 2010/11?
Reports suggest that Ukraine will only manage to harvest "a maximum" of 8 MMT of milling wheat this year, well below domestic consumption of 11-12 MMT.
Having aggressively marketed and exported wheat of all grades throughout 2009/10 it will come as no surprise to hear that official records of milling wheat ending stocks from last season appear to have got lost in the post.
One report I am reading suggests that the cash-strapped Ukraine's already have commitments to export 3 MMT of milling wheat this season.
The maths on this one certainly don't add up. Even is this week's hastily introduced new regulations on exports effectively bars this 3 MMT from leaving Ukraine will clearly run out of milling wheat by spring.
The country is estimated to produce 38-40 MMT of grains this year, down 13-17% from last season's 46 MMT. …
Friday, 30 July 2010
What Will This Afternoon Bring?
You'd have expected a profit-taking month-end sell off normally, but things suddenly aren't "normal" any more. Early calls for CBOT this afternoon are higher: corn up 2-4c, wheat up 8-10c, soybeans up 6-8c. …
Friday, 30 July 2010
What Will Tomorrow Bring?
Sharply higher global wheat plantings based on these prices that's for sure. Is anyone reading this old enough to remember the dim and distant past of 2007/08? What a year that was, you'll never believe it right, what happened was prices went through the roof just like now. …
Friday, 30 July 2010
IGC Issue Revised Export Figures
[Propaganda efforts are getting increadibly desperate and obvious.]
The senile old duffers at the IGC have revised yesterday's export numbers before the ink has even had time to dry.
They've just heard that there's a drought going on in Russia, which they seem to think might have a negative import on exports out of the region this year.
They didn't hear about the drought until today as the regular carrier pigeon they usually use is on holiday, and they've got a student in to cover for him.
They've dropped their July 2010-June 2011 Russian grain export estimate from yesterday's 15.8 MMT to 13.4 MMT today. To help balance that they've upped US exports by 2.5 MMT to 82.9 MMT.
… Can you smell something funny?"
[USDA-lead propaganda is falling apart in the face of reality…]
Saturday, 31 July 2010
Wheat Monthly/Weekly Stats
It's been a stunning month for wheat, with Friday's impressive CBOT close apparently pushing wheat there to its largest monthly gain since 1959, with London and Paris wheat not too far behind:
Commodity Month Fri Cls Weekly Gain Monthly Gain
--------------------------------------------------------------------
CBOT wheat Sep10 661.50 +65.25 (+10.9%) +181.25 (+37.7%)
Paris wheat Nov10 195.25 +15.50 (+ 8.6%) + 49.50 (+34.0%)
London wheat Nov10 142.50 + 8.55 (+ 6.4%) + 35.25 (+32.9%)
--------------------------------------------------------------------
Paris corn Nov10 178.50 +10.50 (+ 6.3%) + 29.25 (+19.6%)
Paris rapeseed Nov10 367.25 + 0.50 nominal + 37.50 (+11.4%)
Paris barley Nov10 201.00 +11.00 (+ 5.8%) + 38.50 (+23.7%)
--------------------------------------------------------------------
World buyers are having flashbacks to 2007 and 2008
Agweb reports that world buyers are having flashbacks to 2007 and 2008.
…
Wheat, once again posted the largest percentage gains overall in our table. Continued weather problems in the FSU and Europe are still fueling the rally in wheat. Now that the spec funds have painfully bought back all of their short positions in wheat, some have “got religion†and are aggressively buying the market in an attempt to make back the money they lost. World buyers are also having flashbacks to 2007 and 2008, when hoarding behaviors by net exporter countries made food staples like wheat and rice very expensive and hard to buy. On paper the world stocks of wheat are still much above 2007 levels, but once burned is twice shy as they used to say. …
Weather Woes Around the World
Agrimoney reports about signs of crop damage and lower yields in German.
German yield fears help wheat prices to new highs
By Agrimoney.com - Published 22/07/2010
Wheat prices hit their highest for nigh on two years in Europe, and rose above \$6 a bushel in Chicago, after farmers reported fears of yield losses of up to 20% in Germany because of dry weather.
Farming association Deutschen Bauernverbandes, or DBV, said that wheat yields in the European Union's second-ranked producer of the grain would be "10-20% down on the year".
Initial harvest results had shown signs of crop damage and lower yields, notably in areas with lighter soils, where the impact of this year's prolonged dry weather had been particularly severe.
While the DBV did not make a production estimate, the decline implied by the data is greater than many of the forecasts so far being factored in. FO Licht analysts earlier this month estimated the German wheat crop at 24.86m tonnes, only 300,000 tonnes lower than last year's.
…
Agrimoney reports that Argentine wheat joins list plagued by dry weather.
Argentine wheat joins list plagued by dry weather
By Agrimoney.com - Published 26/07/2010
Argentina has emerged as the latest country to face potential setbacks over wheat, with adverse weather threatening its recovery from a century-low in plantings.
"A new concern is bubbling up in Argentina. It is dry," US broker US Commodities said, noting that 79% of the South American country's intended wheat acreage had been planted as of last week. Typically, farmers have all but finished sowings by now.
The concerns were echoed by Rabobank analysts, who warned of a "great deal of uncertainty" regarding Argentina's wheat crop, South America's biggest, and one typically drawn on by regional importers such as Brazil.
"Dry conditions in some areas of the country, especially in the south and west of the wheat region, might prevent planting intentions from being fully realised," the bank said.
Dry weather has already cut hopes for crops in the European Union, Western Australia and, in particular, Kazakhstan and Russia, sending wheat prices jumping on international markets.
…
More hot weather
… Russia and Kazakhstan, and potentially eastern Ukraine, are set for further hot and dry weather, with some areas forecast to receive temperatures of up to 108 degrees Fahrenheit (42 degrees Celsius).
"The forecast for the week does not remain optimistic... with a further rise of expected temperatures," Agritel, the Paris-based consultancy, said, adding that temperatures in Russia had hit record highs on Saturday.
…