- Today’s US markets have been marked by wheat futures falling to fresh seasonal lows as the winter wheat harvest progresses and rainfall, which is much needed, is forecast for the drier regions of Russia. Wheat crops in Europe and China look to be record large and news that Brazil will also produce a record 7.37 million mt crop, reducing their import needs. Egyptian financial troubles pose suggestions of “soft” import demand, particularly for the early season, and the market is now looking for price levels at which demand might get some stimulation.
- Brazil’s CONAB increased their 2014 corn output estimate to 77.89 million mt, the second largest on record, and it is interesting to note that the early season estimate was only 70 million mt on account of declining profitability. Economic drivers and government support increased safrinha acres by almost 4%, which has added the additional output. This level of output will doubtless pressure global export prices as Brazil will compete with US, Argentina and Ukraine in an already competitive marketplace where wheat is also expected to compete for space in animal feed diets.
- CONAB also estimated 2014 soybean output at 86.05 million mt, a decline from last month’s estimate of 86.57 million mt.
- Soybean futures have seen some support, no doubt based upon pre-USDA report pricing despite the fast approaching first notice day on the July contract where open interest is fast declining. The expectation is that the USDA will announce few, if any, surprises, and the June data has historically shown little tendency to “upset the apple cart” and this Wednesday is not expected to buck the trend. Price action post-report is expected to remain focussed upon weather, both US and global.
- France’s AgMin reported an upbeat rapeseed output figure for 2014 at 5.2 million mt, which is an 18.8% increase year on year, and at the same time estimated winter barley output at 7.9 million mt, an 8.2% increase year on year.
- Tomorrow’s USDA report will be published at 5pm UK time tomorrow, and we will provide an update when we have had an opportunity to look over the data.