Grain Prices Rise on Russia Pullback
(WSJ) Grain prices surged as Russia said it planned to limit exports, renewing concerns about the country that roiled markets by banning sales last year.
The news from Russia fed traders' nervousness as they looked ahead to Wednesday's U.S. government crop report. Recent reports from the U.S. Department of Agriculture have whipsawed agriculture commodity markets.
Corn futures for December delivery surged 40 cents, or 6.6%, to $6.45 a bushel on the Chicago Board of Trade, the largest one-day gain allowed under exchange rules. Wheat and soybean futures, which largely have been taking direction from the corn market, jumped as well.
Russia's plans to limit exports fueled expectations that foreign buyers will turn to the U.S. for wheat and corn. Russia has been dominating the global wheat market by undercutting other sellers, including the U.S., with low prices.
The news also sparked memories of last year, when Russia banned grain exports in response to a drought that cut output and sent global grain prices soaring.
"Essentially in the minds of traders, they're actually putting on an embargo again," said Tim Hannagan, analyst for PFG Best.
Analysts also attributed some of the rally to traders exiting short positions, or bets the market will fall, to book profits ahead of Wednesday's crop report. A short position is exited by buying a long position, which can cause prices to increase.
"More than anything else, I think it's people covering" short positions, said Sid Love of Kropf & Love Consulting, an Overland Park, Kan., agricultural advisory firm.
Corn futures have dropped since the start of September on concerns over demand amid economic uncertainty. Further declines came after a Sept. 30 government report showed larger-than-expected U.S. grain inventories, causing corn prices to fall to their lowest level of the year: $5.725 a bushel for December delivery.
Analysts generally expect the USDA on Wednesday will make only modest changes to its forecasts for the size of the corn and soybean harvests. Expectations are for the government to keep production nearly flat compared with a month ago, making a slight reduction in the number of harvested acres and a similarly small increase in the number of bushels produced per acre.
Soybean futures for November delivery finished up 58 cents, or 4.9%, at $12.355 a bushel, while wheat for December delivery settled up 49.25 cents, or 8.1%, at $6.6075 a bushel.
http://online.wsj.com
The news from Russia fed traders' nervousness as they looked ahead to Wednesday's U.S. government crop report. Recent reports from the U.S. Department of Agriculture have whipsawed agriculture commodity markets.
Corn futures for December delivery surged 40 cents, or 6.6%, to $6.45 a bushel on the Chicago Board of Trade, the largest one-day gain allowed under exchange rules. Wheat and soybean futures, which largely have been taking direction from the corn market, jumped as well.
Russia's plans to limit exports fueled expectations that foreign buyers will turn to the U.S. for wheat and corn. Russia has been dominating the global wheat market by undercutting other sellers, including the U.S., with low prices.
The news also sparked memories of last year, when Russia banned grain exports in response to a drought that cut output and sent global grain prices soaring.
"Essentially in the minds of traders, they're actually putting on an embargo again," said Tim Hannagan, analyst for PFG Best.
Analysts also attributed some of the rally to traders exiting short positions, or bets the market will fall, to book profits ahead of Wednesday's crop report. A short position is exited by buying a long position, which can cause prices to increase.
"More than anything else, I think it's people covering" short positions, said Sid Love of Kropf & Love Consulting, an Overland Park, Kan., agricultural advisory firm.
Corn futures have dropped since the start of September on concerns over demand amid economic uncertainty. Further declines came after a Sept. 30 government report showed larger-than-expected U.S. grain inventories, causing corn prices to fall to their lowest level of the year: $5.725 a bushel for December delivery.
Analysts generally expect the USDA on Wednesday will make only modest changes to its forecasts for the size of the corn and soybean harvests. Expectations are for the government to keep production nearly flat compared with a month ago, making a slight reduction in the number of harvested acres and a similarly small increase in the number of bushels produced per acre.
Soybean futures for November delivery finished up 58 cents, or 4.9%, at $12.355 a bushel, while wheat for December delivery settled up 49.25 cents, or 8.1%, at $6.6075 a bushel.
http://online.wsj.com
Posted by Colvin & Co. at 10/13/2011 5:30 AM 
Categories: Food Security
Tags: farmland wheat exports Russia
Categories: Food Security
Tags: farmland wheat exports Russia
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