Analys
SEB Jordbruksprodukter, 13 maj 2013

45 mt högre veteskörd globalt och 6 mt högre lager är USDA:s första prognos för säsongen 2013/14, som kom i fredags klockan 18:00 svensk tid. WASDE-rapporten indikerar att rätt pris för vete, sojabönor och majs är väsentligt lägre än dagens höga priser. Lantbrukare som inte prissäkrat sin skörd av spannmål eller raps borde göra det, åtminstone till en betydande del.
Vete
Priset på vete stängde ner på Matif på den halvtimmes handel som var möjlig efter att WASDE-rapporten publicerats i fredags. Det tekniska stödet vid 210 euro lär kunna brytas när handeln drar igång på den nya veckan.
Decemberkontraktet på CBOT steg inför rapporten upp mot motståndet på 758 cent, men föll sedan tillbaka på fredagen efter USDA:s rapport.
Ser vi på den senaste veckan förändring av terminskurvorna, ser vi att terminspriserna framåt i tiden gått ner ungefär lika mycket oavsett löptid i Europa. I USA, däremot har bara de kortaste terminskurvorna sjunkit. Från och med mars-leverans nästa år ligger priset högre i USA än i Europa. Som vanligt får man alltså bättre betalt om man säljer nästa års skörd via Chicago-terminerna än om man säljer Matif-terminerna.
Nedan ser vi USDA:s estimat för global produktion enligt den senaste rapporten som publicerades i fredags klockan 18 CET.
USDA gjorde inga förändringar för 2012/13, men det var första gången de gav ett estimat för 2013/14. Den visar 45 mt högre produktion än förra året och något högre än för två år sedan. Det är lite lägre skörd väntad i USA än förra året, ganska mycket högre i EU (över lokala estimat här). Fd Sovjuetunionen väntas stå för den stora ökningen, med +30 mt. Indien väntas ge lägre skörd än förra året, men mer än för två år sedan.
Med den här ökningen av produktionen är det inte konstigt att utgående lager ökar. Men med 45 mt högre produktion, är ökningen av lagren med 6 mt ganska låg. USDA räknar med att foderefterfrågan ökar med 7 mt. För att få en så mycket högre konsumtion av vete i världen totalt sett som USDA räknar med måste priset vara riktigt lågt. Jag tror att de har estimerat utgående lager för lågt, eller varit för optimistiska om den stora ökningen av skörden i fd Sovjetunionen och kanske i USA. Men hur som helst är detta en rapport som indikerar väsentligt lägre pris på vete framöver.
Nedan ser vi priset på decemberkontraktet på CBOT i cent, i förhållande till estimat för utgående lager.
Slutsatsen är att vi behåller vår säljrekommendation på vete.
Maltkorn
Priset på maltkorn med leverans i november har ännu en vecka fortsatt att visa mer styrka än höstvetet / kvarnvetet på Matif.
Majs
Majspriset (december 2013) som testade en trendvändning uppåt för en vecka sedan föll tillbaka när det i måndags kväll stod klart att sådden trots allt tagit ett större kliv framåt än befarat. När WASDE-rapporten så kom i fredags föll priset ytterligare. Det finns ett starkt tekniskt stöd vid 530 cent och vid den här nivån har vi också bottennoteringarna från förra året, innan torkan och prisuppgången i juli. Det är psykologiskt viktig nivå. Men icke desto mindre – om WASDE-rapporten blir verklighet borde priset ligga på en ännu lägre nivå. Kanske till och med på 400 cent per bushel.
Sådden ligger kraftigt efter i USA. Nedan ser vi såddens framåtskridande i USA. 6-årsintervallet sträcker sig från 2007 till 2012. Förra helgen var 12% sått.
Nedan ser vi USDA:s estimat, som publicerades i fredags för majsproduktionen. För 2012/13 noterar vi de inte justerade ner Argentinas skörd, men höjde Brasiliens skörd med 2 mt. Det är också första gången som USDA rapporterar något för 2013/14. Som vi ser är det en rejäl höjning av global produktion, från 857 mt 2012/13 till 965 mt med start i höst. Vi ser att USDA väntar sig en rekordskörd i USA, 80 mt högre än förra året och större skördar både i EU och i fd Sovjetunionen.
Nedan ser vi USDA:s estimat för utgående lager.
Som vi ser är det väsentligt högre lager den sista augusti nästa år i USA, som USDA förväntar sig. Trots detta väntar sig USDA att foderefterfrågan på global basis stiger med 44 mt. Lägg därtill 7 mt ökad foderkonsumtion av vete. Det är knappast rimligt att vänta sig detta, om inte priset är väsentligt mycket lägre och gör att köttefterfrågan ökar radikalt. De hot som finns är att vädret i USA drar ner skörden i USA från vad USDA väntar sig nu. Det skulle få priset att bli högre. Å andra sidan är det inte sannolikt att foderefterfrågan blir så stor som USDA nu räknar med och då ökar utgående lager, med lägre pris som följd. Utgående lager förutspås bli så stora att det är svårt att se att priset ska kunna gå upp nu. Nedanför ser vi priset i cent per bushel på decemberkontraktet på CBOT i förhållande till utgående lager.
Som vi ser kan priset mycket väl gå ner till 400 cent utan att vara ur led med tidigare års förhållande mellan lager och pris. Slutsatsen är att vi behåller vår säljrekommendation på majs.
Sojabönor
Jag har vecka efter vecka hävdat att sojabönorna (november 2013) befinner sig i en stabil negativ trend. Efter WASDE-rapporten i fredags bröts ett litet tekniskt stöd, vilket kortsiktigt kan leda till att marknaden tar ett trappsteg ner i prisnivå igen i veckan som kommer. WASDE-rapporten i fredags indikerar, om den slår in, ett pris som är ca 200 cent / bushel lägre än idag.
Nedanför ser vi USDA:s estimat för sojaproduktionen i världen.
USDA sänkte Argentinas skörd 2012/13 med 0.5 mt. För första gången gav USDA också estimat för 2013/14. Vi ser att USDA väntar sig högre produktion i alla regioner / länder utom i Kina. Global produktion tar ett kliv upp med drygt 15 mt till 285.5 mt.
Den här ökningen av produktionen leder till en ökning av utgående lager 2013/14 med nästan 13 mt. USDA väntar sig också att Kinas import ökar till 69 mt. Jag tror det är en lite för stor ökning, med tanke på de animali-mat-problem som landet har. Man misstror inhemskt kött, inhemsk mjölk och kyckling konsumeras i vissa områden inte alls pga den pågående fågelinfluensan.
Än så länge kan mycket hända med produktionen, eftersom så stor del odlas i Brasilien, där det sås först i höst. Till dess kan vädret ha slagit om till negativt (eller ännu mer positivt). Men allt annat lika just nu, ser det ut som om den ”bear market” som har börjat, kommer att fortsätta. Nedanför ser vi priset i cent per bushel på decemberkontraktet på CBOT i förhållande till utgående lager.
Som vi ser är lite drygt 1000 cent per bushel ett rimligt pris vid den här lagernivån. Slutsatsen är att vi behåller och upprepar vår säljrekommendation på sojabönor.
Raps
Rapspriset föll på Matif i veckan, men studsade på det tekniska stödet på 415 euro per ton. Med tanke på WASDE-rapportens ordentligt negativa siffror, tror jag ett nytt test av stödet kommer i veckan.
Nedanför ser vi kvoten mellan rapsterminspriset (nov) mot sojabönspriset (nov). Vi ser att raps fram till maj månads början handlades allt dyrare i förhållande till sojabönor, men att detta, som vi påpekat börjat normaliseras genom ett större prisfall på raps än på sojabönor. Ännu finns det extra fallhöjd i rapspriset, eftersom rapsen fortfarande är dyr i ett historiskt perspektiv, i förhållande till sojabönor.
Skulle det tekniska stödet på 415 euro brytas, är detta en rejäl säljsignal. Jag tror att rapspriset kommer att falla. Dels för att sojabönorna bör ha en lång tid av fallande priser framför sig och dels för att rapsen är ovanligt dyr i förhållande till sojabönor.
Mjölk
Fonterras notering har nu vänt ner ganska kraftigt och terminsmarknaden på SMP och mör på Eurex har också handlats lägre. Jag tror att vi sett slutet på prisuppgången. Priserna på Eurex ligger ännu kvar på en hög nivå. Den som är snabb kan hinna med att säkra produktion på attraktiva nivåer innan priserna hinner falla tillbaka igen.
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Analys
The Trump diesel charade
Brent higher last week and today as fresh attacks by Iran and the Houthis shattered a sense of temporary normality exports from the Persian Gulf. Brent crude traded in a range of $97.06 – 105.92/b and closed the week at $104.72/b. The Brent Dec contract gained $2.47/b on the week. Fresh attacks by Iran on ships in the Gulf and the SoH probably reduced exports of oil through the SoH last week. Exports from the Persian Gulf had reached close to normal levels in the second half of September and into early October. This has led to a large increase in oil on water globally which has helped to ease and reduce November and December prices over the past month. The sense of some kind of normality of exports from the SoH was shattered last week. Fresh attacks by the Houthis on Saudi Arabia added to this and helped to lift prices. It is well known that the US and its allies in the Gulf are running low on defensive rockets. Hard choices over what to defend will increasingly have to be made: Oil infrastructure, military installations, royal palaces, civilian airports or other. The US will also have to decide how many defensive rockets it can provide to its ME allies versus what it needs for its own defenses. Ukraine is at least not getting any of these defensive rockets however much needed for defense against a continuous barrage of Russian attacks on Ukraine. The front-month ICE Gasoil 10ppm (essentially ULSFO Diesel) is down 3.8% this morning (due to Trump’s diesel charade) to $1427/ton ($191/b) which is where it traded last Thursday.

Trump’s diesel charade. The site ”535” now puts the probability for control of the US Congress and Senate following the midterm elections at 99% and 61% respectively. Trump’s war in the Middle East with high or record high gasoline and diesel prices at the pump in the US is largely to blame. Trump’s diesel deal with Russia is clearly Trump trying to shift the blame from his own war in the ME to Ukraine instead. He could of course have placed the blame on Putin and Russia for its war against Ukraine, but no, it is Ukraine who gets the blame and not the least Zelenskyy. Physically it is of course correct that it is Ukraine who is destroying Russian refineries to the point where 45% of Russian refineries are out of operation. The result is that there is too little gasoline for domestic Russian consumption and no diesel, VGO and Jet fuel left over for exports. Russia normally (pre-war 2022) exports some 1.3-1.4 mb/d of diesel products of which a lot used to go to Europe.
Russia/Putin would happily export diesel products to the world, but it can’t because Ukraine is destroying its refineries. Russia implemented export restrictions of diesel already in July this year and the plan was to extend that to early 2027.
The only way that Putin/Russia can start sustained diesel exports, is if Trump is able to discipline and prevent Ukraine from attacking and destroying Russian refineries. Then Russian refineries can be repaired, ramp up, produce more diesel and potentially export what ever is of surplus to the world. Trump has threatened Ukraine that if it doesn’t stop its attacks on Russian refineries, then there will be no more indirect sales of weapons from the US via Europe to Ukraine and the intelligence which US currently is providing to Ukraine will stop.
It is clear that if Russia stops its attacks on Ukraine, then Ukraine is prepared for a energy infrastructure cease-fire.
Trump very well knows that he has himself to blame for the terrible stats for the upcoming midterm elections where Republicans looks set to lose both the Senate and the House. This is a charade for the US public to shift the blame over to something or someone else than himself. His easy choice falls on Ukraine and Zelenskyy for which he has shown little love, affection and support. Nothing of the one way bromance which Trump has shown versus Putin.
At most a three-week holdup in Ukrainian attacks on Russian refineries. Ukraine accepting to play scapegoat. Ukraine’s attacks on Russian refineries and oil infrastructure is a key element of Ukraine fighting back and defending itself against Russia. Ukraine has no choice but to continue its attacks as long as Russia keeps attacking Ukraine. But maybe there can be a three week holdup where Ukraine is forced by the US to step down its attacks on Russian refineries to please Trump until the US midterm elections are behind us. I.e. Ukraine accepting to be the scapegoat for Trump’s missteps in the Middle East for a three week period. Thereafter it will revert back to well thought out strategy of attacking Russian oil and refinery installations.
Trump under increasing pressure as there is increasing probability for Democratic victory in US midterm elections. Desperate times and desperate measures from Trump as a result. More to come

Large increase in oil on water heading for consumers around the world following a sharp increase in exports of oil from the Persian Gulf to close to normal from mid-Sep. Lower exports last week after new hostilities most likely.

Crude, products and natural gas prices in USD/boe. ICE gasoil slightly lower today, but still $195/b

Analys
The price of crude oil in Europe today is $140/b
Last week’s oil price action distorted by rolling of the November contract last week. The December Brent crude oil contract rose $4.8/b, or 5% last week. Much of that gain was due to the roll-yield as the November contract rolled off as the M1 contract to be replaced by the Dec-26 contract. The backwardation between the Nov and the Dec contract averaged $6.5/b over the last three days before 1 October and the rolling of contract. The ”gain” over the week was thus not much of a gain at all. If we just look at the M1 contract it instead fell 2% Friday to Friday though that disguises the change in the underlying contract over the week. The Brent M1 contract closed the week at $102.25/b. The announcement of 100 mb of oil from G7 SPR helped to ease prices at the end of last week. Though that effect seems to have faded today.

More barrels from Strategic Petroleum Reserves or really barrels which were supposed to be released previously? Nonetheless, Trump seems to be content and is backing down from diesel export ban. Trump threatened the world, but especially Europe with a US diesel export ban unless Europe agreed to release diesel from strategic reserves. G7 last week decided to release 100 million barrels of oil from strategic reserves. But here the obscurity starts. How much of that will be diesel? ”Substantial release of diesel within 20 days” was the statement. If it happens late in this 20 day period, it would bring us very close to the US midterm elections which of course is what Trump is worried about here. IEA members promised to release 425 mb of oil from strategic reserves of which 125 mb was to be oil products. But a significant portion of that was never really released. The question is thus whether these ”new” 100 mb release will really be new or if the lion’s share of the ”new” 100 mb is really just part of the old 425 not yet fully released. Well, it looks like the promise, irrespectively what it really is, has averted a US diesel export ban for now. And it did also help to ease prices a bit at the end of last week. An effect which looks like it has mostly faded this Monday.
$140/b is the price of crude oil in Europe today. Back to the complete distortion of oil and product prices in time and geography. The Dated Brent ”spot” price averaged $123.3/b last week. But that is really the average Day_10 to Day_20 of the ”daily Dated Brent” forward curve. But since this curve is in very steep backwardation, the real prices for physical oil cargoes at the very front-end of this daily curve sits well above the average of this daily curve. The physical premiums for Oseberg and for Fortis crude takes this steep backwardation into account. The full price average for Oseberg and Fortis last week were thus $142.5/b and $140.2/b. That is way, way higher than both the Dated Brent ”spot” price last week and the average of the Brent futures price, the M1 contract, which averaged $103.2/b last week and is trading at $102.4/b
Extreme prompt tightness may fade or get much worse. The extreme prompt tightness and backwardation we see in the market today is a display of today’s prompt situation and not necessarily a guide for the future. The much more relaxed Brent M1 contract (today December) at $102.4/b is maybe a reflection of an oil market either betting or expecting that today’s problems will be resolved somehow over the coming three months. Or, that the current flow of oil out of the SoH at 17.5 mb/d (close to normal) will be sustained or even increase over time. But we don’t know exactly why the flow of crude, products and LNG out of the SoH has been able to sustain at around 17.5 mb/d since mid-September (it seems). Is it because shippers are better at managing the risk or more willing to take the risk of transiting? Is it because the US military assistance is better? Or is it because Iran is paid by exporters and is allowing exports out through the SoH? It seems plausible that Iran expects the US to attack again after the US midterm elections. If so, then Iran may engage with fresh attacks before that date. Physical crude in Europe today is $140/b, or 2x the ”normal” price of $70/b. But if tightness escalates further, then price of crude in Europe could go to 3x, 4x or even 5x the normal level. Let’s hope that the US is able to keep the SoH ”open” at a rate of 17.5 mb/d and that another 100 mb of oil from G7 helps to shield against that upside risk.
The global oil-stock cushion is getting ”scarily thin”. Looking at the Brent M1 Dec-26 contract, one gets the impression that risks may be fairly contained. Looking at physical spot prices in Europe however of around $140/b, the sense of stress rises substantially. The latter better reflects Amin Nasser, CEO of Saudi Aramco, when he recently said that the cushion capacity of global oil stocks are getting ”scarily thin”.
Some key questions helping to keep the Brent M1 price above $100/b: Will Iran initiate fresh attacks before the US midterm elections? Will the US attack Iran after the elections? Will the US be able to keep the SoH close to open at 17.5 mb/d? Will the Houthis re-attack the Saudi east-west pipeline and ships trying to traverse the Bab-el Mandeb Strait as the Saudi-backed Yemen government tries to retake areas along the Red Sea recently taken by the Houthis? How far will this have to go before China finally decides to step in as a peacemaker in ME negotiations?
ARA Crude oil, diesel and nat gas prices in USD/boe

Physical crude oil premiums for Fortis and Oseberg in the NSea in USD/b premium over the Dated Brent index

Analys
Oil prices are rising, but a picture of the future ME order may start to emerge
Spot crude oil prices at very high levels. The Brent 1M (November) contract yesterday traded between $103.76 – 108.83/b before settling the day at $105.28/b. This morning it is trading up 1.4% to $106.8/b. That is not much of a price given that the ME crisis has been ongoing since 28 February. The Dated Brent spot price however settled yesterday at $123.78/b and averaged $120.6/b last week. Even stronger were the individual North Sea spot crude prices where Johan Sverdrup crude averaged $144/b from 21 to 24 September. And Johan Castberg was said to have traded at a premium of $32/b to the Dated Brent price last week which potentially would have placed it closer to $150/b.

A steady trend higher since $70/b in early July. Crude oil prices have been on a steady trend upwards since they bottomed out at around $70/b in early July following the discharge of some 200 million barrels of crude, products and liquids from the Persian Gulf during a two week MoU window. from 20 June to 7 July when hostilities again resumed.
The oil market today is split apart in time, space and molecules. Financial crude oil prices for November delivery are trading at $106/b (Brent) and $93.3/b (US WTI) and $107/b (Oman). But spot crude oil prices are much higher at $120-150/b as described above. But consumers do not consume crude oil, they consume diesel and gasoline and other products. And diesel prices are closer to $200/b in ARA due to destruction of Russian refineries and locked-in refineries in the Persian Gulf. Oil markets are very stressed with respect to products, but not so stressed with respect to crude oil. But refineries are eager to pay up for crude deliveries right here and now so they can convert that crude to products and make a killing profit. They are not willing to pay up for November crude deliveries in the same way as uncertainties on the Middle East situation is so high. Exorbitantly expensive VLCC freight rates is also driving prices apart. VLCC freight rates are today running at 500,000 to 1,000,000 dollar a day rather than the normal 20,000 a day. This typically adds $10-20/b for crude oil between the point of origin and the point of delivery some 30-50 days out in time when the crude is delivered. This creates a lot of confusion of what really is the price of crude oil these days. Prices are very different in time and space.
Bonds and equity markets are starting to feel the heat. The Middle East crisis is starting to feed risk and pain into financial markets where the US 10-year rate is rising along with crude and product prices with equity market indices starting to pull back in response.
The risk is rising that the ”Trump war” in the Middle East may lead to the ”Trump recession”. A legacy Trump would not likely want to have. Feed-through to financial markets, rising risks for US financial and economic recession, rising risk to Trump’s legacy, declining US stocks of Patriot and THAAD rockets could be forcing mechanisms towards a resolution of the Middle East crisis.
A picture of the future Middle East order is starting to emerge. There seems to be a lot of discussions between different parties going on and a picture of a new Middle East order is starting to emerge. A post Middle East pax Americana order. Where the different countries in the Middle East are taking much more responsibility for the security order in the region. The US provides intelligence and sell weapons to the region but is reducing its military presence. Iran is recognized as a regional power, but not the dominant one and is part of the security order in some ways. Trump can say that he reshaped the Middle East order. Exports of oil restored. The region now paying for its own defense. US soldiers pulled out to a minimum. China part of the diplomatic solution and taking some responsibility for keeping Iran in check.
Time to some kind of ME resolution? Forcing mechanisms: Declining stocks of defensive US rockets + rising crude and product prices + rising economic and financial pain and rising risk to Trump’s legacy. A window of resolution could be November to January maybe. Markets will likely increasingly price in a resolution as the picture of the future security order in the Middle East emerges further.
Crude and diesel prices in USD/b

European M1 refinery margins at record high.

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