- Today appeared quiet in the aftermath of Tuesday’s USDA report and the “holiday season” looms large. As we know, month end, quarter end and year end, all of which occur in a few short weeks, tend to lead to length in positions being reduced as money is withdrawn from markets to pay dividends, bonuses and the like. New or increased positions are unlikely before the New Year.
- Egypt tendered for wheat once again and secured 300,000 mt, 180,000 mt from Romania and the remaining 120,000 mt from France. No Russian or Ukraine offers were made despite additional load ports being added to the list, and the premium paid for French was as large as we can remember at around $8.50 on a C&F basis. Also of interest was the fact that no US offers were made. It looks very much as though both Russia and Ukraine are now done for the season and, given last week’s Romanian cancellation, they may be getting close to the bottom of the barrel. Potentially we are looking at a battle between France, Germany and US supplies to see Egypt through to new crop.
- The GM issue in US corn arriving in China continues to rumble on. A further cargo has been blocked and three more could potentially be barred after further positive tests have detected MIR 162. The issue appears to be developing into a full blown trade dispute rather than an approval/non-approval issue as it is suggested by some that there is a focus upon particular sellers, although it must be stressed that this is unconfirmed. Arriving vessels are said to be delaying discharge until tested and the cargo approved in order to reduce possible cost implications should rejection occur. News that China is anticipating a record corn crop and a surplus as a result of reduced consumption by the animal feed sector presumably have no bearing upon the issue!
- Staying with China, yesterday Deutsche Bank warned of a change in farm price support policy in China, which may have potentially significant global price implications. The policy change could see a reduction in agricultural commodity stockpiles created by the minimum state procurement values for the likes of corn, pork and wheat, which bear little relationship to international values and create market anomalies and their knock-on effects. The suggested policy change could well see a switch away from price setting to insurance incentives or direct payments to farmers. The change, if implemented, could see domestic prices move more in line with international levels and see a reduced incentive to import.