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| While exports continue good, our soybean shipments should slow as the SA harvest is underway, being delayed by the rain in N Brazil, the large harvest is still a month distant.
USDA will issue new S/D numbers Friday..
Record bio oil prices are beginning to see rationing in the bio-fuels, but in food, the major international publication cites the continued growth in world demand still out pacing growth in supply.
Quote:
Northern Brazil: “The month of January ended up with 19.0 inches of rain and 18 days with measurable rain. At the end of the month it rained for twelve straight days with a total of 11.4 inches during that stretch.” .
Direct quote from $$$ friend.
With regard to long term fundamentals, it is never too early to take note of some upcoming potential structural changes. Here are some things to consider for the long term. Record high global wheat values were due to production restraints in a few key regions over the past 2 seasons. At the same time, high corn prices produced a major production response in the US. The end result is a record wide wheat-corn price differential.
We are likely to see a much more significant global recovery in all wheat production this year.
On the corn side, prices are high, but have yet to make history. Looking ahead, record high soybean and wheat values will draw “some acres away from corn” in 2008. This raises the possibility that the 2008-09 season will be highlighted by larger global wheat and soybean crops, vs. a reduction in corn output! If/when this expectation becomes more and more like reality is when corn will once again become the price leader rather than the follower
On the demand side, in absolute numbers, corn usage is increasing more than wheat or soybeans. Wheat as a food, is inelastic, but wheat as a feed is much less so. Feed demand and ethanol demand for corn will remain strong and collectively will increase annual corn demand more than wheat or soybeans.
So what does this all mean? It means I will be closely watching, in the months ahead, the Dec08 and forward positions is a spread of Long Corn vs. Short Wheat. Timing will be very critical as this spread relationship is very volatile.
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Early Notes.
