TRC - KROHN Market Report

21.5.2015

CBOT FUTURES

Soybeans and soymeal were lower, with soybeans holding on near the July contract low.

The Chinese soymeal market made new lows for this year as the interior market is current heavily supplied with soymeal and DDGM products which keep arriving now in a faster pace. The settlement of the strike at Argentina appears to make progress. At least one major Union has accepted yesterday a 27 % pay increase.

Corn ended yesterday lower as well. Planting continues to make good progress as the weather remains mostly ideal.

Weekly ethanol grinds were 958,000 barrels per day, up from 912,000 last week and compared to 925,000 last year. Ethanol stocks were 20.434 million, up from 20.299 million last week and 16.990 million last year

U.S. CORN BYPRODUCTS

The cif Nola DDGM Golden market was basically unchanged. Buying interest at good premiums continues to be available for the May only. Other months are completely neglected and prices seem to be drifting lower.

The cif Nola CGFP market remains a no show. There isn’t one single offer available for any position. The interior market is still well supported and there is unchanged no reason for processors to ship CGFP to the Gulf. 

€URO-DOLLAR: 1,1120

FREIGHT

PHYSICAL & FFA

1. The BDI was down by 2.26% and closed at 606 points.
2. We began the day with Q3 fluctuating in a $7,000 - $7,150 range early morning, and by lunch time a lot of the liquidity had dried up as several traders ventured off to the FFABA here in London. In the afternoon we crept up a tad further, with June trading $5,750, July trading $6,400, Q3 up to $7,200 and Q4 $10,550 before being offered over in a very thin afternoon. Index was out marked down -$460.
3. Pmax FFAs dropped again today with June hitting $4700, Q3 $4950, Q4 $6050 and Cal16 $6000.  The index is picking up speed on the way down as the Atlantic is still under pressure.
4. Sideways movement on the Smax curve today, Q3 and Q4 trading once again at $6,250 and $7,250 respectively. Nearby, Jun held value at $6,400, despite the index losing $16.
5. Atlantic Physical: Slow week overall thus far. ECSA/WAF has little activity with some f-haul biz to emerge but for later dates. In the North Atlantic USG/NCSA/USEC some lack of prompt tonnage but then again to so much biz around. Continent market as more scrap stems still not covered MED/BSEA is slow with not much to report and tonnage availability still high. We don't expect much to change for this week. 
6. Pacific Physical: Unsurprisingly unchanged patterns in the Asia-Pacific markets today. North Asia remaining the firmer region with a relatively healthy stream of cargoes ex NOPAC and of course Nickel Ore now firmly back in the mix giving an extra option for owners with positions in the Far East. Perhaps due to the depressed levels available now but we have seen a slight resurgence in period interest this week, with a focus on medium to long duration. Not much to mention about the Indian Ocean, and although there had been an increase in enquiries the amount of spot/prompt tonnage available is easily sucking it up.                                            

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NEWS

1. Demand for coal and iron ore, the “locomotives” of the dry bulk trade has dwindled over the past few months, as a result of China’s rebalancing and moderated growth. As such, the inevitable tonnage oversupply issues has made its reappearance in the market, leading freight rates to near historical lows and the absence of any real hope of recovery, at least in the near term. According to the latest weekly report from shipbroker Allied Shipbroking, this situation has led to difficulties arising across most major trades. “On the iron ore front and despite the short rally in freight rates noted this past week, troubles keep on circulating the major Australian and Brazilian producers, while other regions such as West Africa have seen their iron ore exporting ambitions dwindled”. However, despite all this, there is a part of the dry bulk trade that could possibly continue to ramp up, even during downward trends. According to Mr. George Lazaridis, Head of Market Research & Asset Valuations, “agricultural commodities and in particular grains such as wheat, soybeans, rice and sugar are a vital part of human sustenance and as such are more directly linked with world population growth rather than economic growth. Their importance has been well acknowledged by most governments for centuries, with most keeping strict observation on their internal production as well as stockpiling reserves as a safety guard against bad harvests, droughts and the inevitable famine they may bring about. In the past this had pushed most of the major closed economies (USSR, China etc.) to plan for self- reliance and provide strong financial backing for their agriculture. However with the dawn of the 21st Century, the growing opening of trade has pushed most to find ways to open this heavily protected industry to global competition despite it being one of the last strongholds of protectionism”, he noted.
2. Finance Minister Mathias Cormann has declared he has never been in favour of an inquiry into the iron ore sector, despite saying earlier this week that an investigation into the industry could be a sensible idea. Fortescue Metals Group chairman Andrew "Twiggy" Forrest has been pushing for an inquiry into the market, arguing big mining companies are deliberately driving down the iron ore price. It is a claim strongly rejected by Rio Tinto and BHP Billiton. Independent senator Nick Xenophon has also been lobbying the Government to endorse a parliamentary investigation. On Monday the Finance Minister Mathias Cormann was asked is there should be an inquiry into the iron ore industry. "I support holding a sensible inquiry," he replied. But on Wednesday Senator Cormann voiced his opposition to a probe in an interview on Sky News when he was asked if he supported an inquiry into the iron ore sector. "I've never been in favour of an inquiry into the iron ore sector," he said.
3. Greece cannot make an upcoming payment to the International Monetary Fund on June 5 unless foreign lenders disburse more aid, a senior ruling party lawmaker said on Wednesday, the latest warning from Athens it is on the verge of default. Prime Minister Alexis Tsipras’s leftist government says it hopes to reach a cash-for-reforms deal in days, although European Union and IMF lenders are more pessimistic and say talks are moving too slowly for that. Greek officials now point to a race against the clock to clinch a deal before payments totaling about 1.5 billion euros ($1.7 billion) to the IMF come due next month, starting with a 300 million euro payment on June 5. “Now is the moment that negotiations are coming to a head. Now is the moment of truth, on June 5,” Nikos Filis, spokesman for the ruling Syriza party’s lawmakers said. “If there is no deal by then that will address the current funding problem, they won’t get any money,” he said.
4. Oil prices rebounded on Wednesday, with U.S. crude snapping a five day decline, after another weekly inventory draw but gains were still limited by a huge supply overhang and concerns about a stronger dollar. U.S. crude stocks fell nearly 2.7 million barrels last week, down for a third consecutive week, as refineries hiked output, the government run Energy Information Administration (EIA) said. Gasoline and distillate inventories also declined. While the crude draw was nearly triple that estimated by analysts in a Reuters survey, it was only about half of the 5.2 million-barrel drop reported by industry group American Petroleum Institute, disappointing some market bulls.
5. Crude oil traded NY at $58.74 vs $58.17 y-day.