Unstructured Finance

U.S. grain traders turn focus to South America

Now that the U.S. harvest is over Chicago grain traders have turned their attention to South America where farmers are busy planting corn and soybeans.
    Argentina and Brazil toppled the United States a few years ago as the top exporters of soybeans, representing 49 percent of the world’s soy trade this past season versus the United States at 40 percent. But Brazilian plantings are expected to be down this year as credit pressures are deterring farmers from planting more.
    The world grain trade is counting on South America to produce big soybean crops this season — taking up some of the slack from the United States where soy stocks have slipped to historically low levels given strong demand and a short crop in 2007.
    Dryness in Argentina raised crop concerns and underpinned Chicago Board of Trade grain and oilseed prices early last week. But as the No. 3 soy exporter saw scattered rains, worries eased and the focus turned to southern Brazil.
    Parana and Rio Grande do Sul, the second and third largest Brazilian soy states, are the driest. Both are expected to see light, scattered showers by Tuesday.
    “That rain next week is going to be an important event,” said Mike Palmerino, DTN Meteorlogix forecaster.
    While South America needs rain, Australia is for once struggling with too much. Farmers are trying to put away this year’s wheat crop but constant rains have stalled their efforts and likely reducing the quality of the crop.
    More poor quality wheat will only add to already big global supplies of feed wheat, which is cutting into demand for U.S. corn. Export sales of corn have been under 500,000 tonnes for the past five weeks and off to their slowest pace since 2002. U.S. corn exports last season totaled nearly 62 million tonnes, or 65 percent of the global corn exports.
    The final U.S. government supply-and-demand report of the year will be issued on Dec. 11, with many analysts expecting USDA to shave its 2008/09 U.S. corn export figure to reflect the slowed pace. But traders will have to wait until USDA’s Jan. 12 crop report for final 2008 production numbers.
    While the supply outlook is having a little more play on CBOT prices, the global economic slowdown is hurting employment and food spending and will undoubtedly continue to loom over the markets.
    Grains and oilseeds have traded sideways for weeks as investors moved to the sidelines, unwilling to take on fresh  positions. Cash grain traders are also still finding it tough to finance purchases from farmers amid continued tight or frozen credit markets.
    “We are in the de-leveraging process,” one CBOT cash-connected trader said this week. “No reason to think that will change before year’s end, especially as the markets move into their annual slow holiday period.”
    But grain traders in the coming week will still keep an eye on Wall Street for economic signs.
    Weekend retail sales following the U.S. Thanksgiving holiday, typically the biggest shopping period of the year will be one key economic indicator. More critical will be the government’s November jobs report, issued on Friday, which will likely provide more evidence of a deep economic downturn and possible additional interest rate cuts, which grain traders always welcome.

PHOTO: U.S. corn harvest wrapped up for 2008. Corn field in southern Wisconsin taken Nov. 29 by Chris Stebbins.

An American Girl Christmas?

Los Angeles shoppers weren’t in much of a splurging mood, except when it came to buying dolls and doll clothes at American Girl. The Grove shopping center is home to one of six American Girl stores in the United States and parents said its dolls are on every girl’s wish list. Here’s what we captured on camera:








Recession Sells: Chicago’s dinosaurs

On Chicago’s State Street, I found these dinosaurs creeping up on a Christmas tree at the FAO Schwarz section inside Macy’s:

Moving on to an empty TV section in Sears:

At Sears, Christmas decorations were already 60 percent off:

And at Charlotte Russe, more discounts:

Shoppers’ High Anxiety

As we talk to more and more shoppers over the holiday weekend, the high level of personal anxiety over the future of the economy comes into focus. We have read, and written about, the numbers on consumer confidence and retail sales performance, but these quotes give us a more individual view. Below are some of the ways in which people described for reporters Aarthi Sivaraman and Ben Klayman their fears, or even a change in attitude, regarding money, jobs and family.

Jersey City, New Jersey:

Rose Fernandez, law enforcement worker:
“Yesterday I received my social security savings (statement) and looked at it. I’m concerned. I’m going to put more away. 
Rose said her extended family was only living according to their means and were careful not to spend anything extra. She recently came out of $6,000 in credit card debt herself.

“It’s come to a point now when we are giving only to the kids. … It’s the way things have been. We have a meal together, laugh, joke and watch the little ones open gifts. When we grew up we had food, a home, a roof over our heads and a warm bed. That’s rich. In that sense, we are still rich now.”

Recession Sells: Brooklyn style

Every city has it’s way of dealing with recession. In Brooklyn, where “going out of business” sales may seem like a marketing tactic employed in good and bad times, it looks like shops are dead serious now. And they are getting more creative. We liked the VIP gift bag and the one-year deferred financing, photos via our own Martinne Geller:

Bank crunch hits end-of-year festivities – oh, and more jobs

Ahh, just when you could use a stiff drink on the company’s tab to kill the sobering mood wrought by this year’s financial carnage, you find out you’ll be coughing up for the bill yourself at the annual holiday shindig. Such is the case for scores of London’s financial workers. As Reuters’ Olesya Dmitracova reports, employees at some of the biggest names in town – Goldman Sachs, BNP Paribas, Barclays and so on – will be on the hook for their own year-end parties. A reasonable cost-cutting measure, it seems, during these often unreasonable times. Too bad, though, for those who get stuck drinking swill should their annual bonus get slashed too.

Across the pond, some employees of failed Washington Mutual received some less digestible news on Friday. JPMorgan, which bought WaMu’s banking operations in September, announced job cuts were on the way for some at the former thrift’s Seattle headquarters and elsewhere. Though overall numbers are still not known, and most will retain their jobs, at least 1,600 back-office WaMu staff who worked in California got word they’d be out of a job by March. More concrete figures and dates for others are expected on Monday. How’s that for a start to the holiday season?

Has the credit crunch hurt your end-of-year party plans?

“High School Musical” — On the cheap

Wal-Mart wasn’t the only place where people waited hours in line to get special Black Friday deals. More than 100 Disney Stores opened at midnight, drawing parents in droves.

The stores, which peddle items like Mickey Mouse toys, High School Musical and Disney Princess paraphernalia and Hannah Montana t-shirts and backpacks, offered 20 percent off every item until noon on Friday. At 10 a.m. more than 30 people were still in line to get into the Disney Store at the Glendale Galleria, a giant mall located in a Los Angeles suburb. After waiting to get into the store, bargain-hunting shoppers queued again at the register.

Disney Store President Jim Fielding said he was surprised by the response and the lines — many of which were 100-people deep or more.

Job Bank – Nov. 28

The following financial services industry appointment was announced on Nov. 28, linked where possible to personal profiles on LinkedIn. To inform us of other job changes, please e-mail moves@thomsonreuters.com.

The pan-European investment-banking group appointed Craig Leppard as head of Market Making team and Chloe Ponsonby to its Corporate Broking team. Leppard, who was previously with Numis Corp <NUM.L>, will join in January. Ponsonby joins Altium from Daniel Stewart & Co PLC.

Neuberger action moves to court

The sale of the Neuberger asset management arm of Lehman might have been agreed back in September, but it’s not quite a done deal.

The whole process has been rather messy — Lehman put a majority percentage of the prized asset management arm up for sale in August, prior to filing for bankruptcy.

The unit, one of Lehman’s best performing assets, drew interest from a number of private equity bidders such as Kohlberg Kravis Roberts, Hellman & Friedman, Blackstone, Bain Capital and Clayton Dubilier & Rice, sources previously said.

Shopping for Black Friday deals at bankrupt retailers

Our own Emily Chasan visited two bankrupt retailers — Circuit City and Tweeter etc– in Burlington, Massachusetts, on Black Friday. She sent photos and this report:

Circuit City and Tweeter sit kitty-corner from each other where Middlesex Turnpike intersects with I-95 and were telling different tales on Black Friday.

Circuit City looked almost the picture of a healthy retailer, despite its bankrupt status. Tweeter, just nine days from closing for good, was sparsely stocked and looked almost like a warehouse.