Friday morning musing

[charliep]

USDA day today with numbers pretty much as expected. Wheat carries on with its free fall - know lots will disagree but feels more like 2002/03 pooling year with every passing day. Will note the call for an increase in initial payments has stopped.

Also saw an interesting quote of the week in emalt that somehow made me think of grain marketing.

"Profit is an illusion. Cashflow is fact."

[charliep]

In my Friday market review, I go over e-malt. Excellent publication for anyone who is a regular grower of malt barley. Would encourage to subscribe to the freebee.

http://www.e-malt.com/

Lots of articles this week talking about world malt barley supplies (tight) and the implications for next year (more barley acres). Have dealt with the extreme shortage of hops issue in the past.

Also found the following article interesting. Note Canada is not mentioned as a country expanding malting capacity.

World: Malt capacities not enough for next 3 years
Apart from the precarious supply situation of malting barley, malt capacities will not be enough for two or three years to come, according to analysts, November 2.

There are quite a few announcements of new constructions, but as per our information only factories in Germany 75.000 tons, Spain 100.000 tons, Russia 100.000 tons, Argentina 140.000 tons will be operational in 2008. Further projects for Belgium, France, Germany, Poland, Romania, Russia, Ukraine and Australia will be realized between 2009 and 2011.

[TOM4CWB]

Charlie,

I can't help but feel this is a different situation than 02/03!

"US wheat futures ended the week mixed, with nearby contracts at the MGE ending slightly higher, while the CBOT and KCBT ended down from the previous week's close. A falling dollar led futures higher early in the week, but the market moved sharply lower Thursday following a bearish USDA export sales report. The USDA placed old crop export sales at a paltry 14.6 TMT for the week, which was significantly less than trade estimates for 350.0 to 550.0 TMT. The MGE nearby closed 5 cents/bu ahead of last week's close, while the CBOT and KCBT ended off 17 and 22 cents/bu, respectively."
http://www.uswheat.org/priceReports/doc/A6B258CAA1F7C9268825738E008145EB?OpenDocument#

$1.48/bu PNW over the MGE futures is not a weak basis by any stretch!

These folks are simply sucking down the US grain supply... and the Snake River barge shut down had a big effect on exports this week!

It is simply amazing the US would ship this amount of wheat that fast!

If anything goes wrong... anywhere... this thing is through the roof!