- Markets have continued to decline as long liquidation following yesterday’s USDA report persisted throughout the day. Early trade offered some respite as there was evidence of value being picked off by consumers as well as some shorts taking cover, however the fund sellers have had the upper hand and prices decline although at a lower rate than previously.
- A glimmer of hope lies in an anticipated strong soybean export figure to be announced Thursday. China continue to actively source soybeans to feed their now profitable crush albeit at the expense of end stocks in the USA. The potential for the USA having to import soybeans later this season to meet domestic crush requirements is looking a real possibility, unless prices rise sufficiently to ration demand as we have mentioned more than once.
- One respected commentator has raised a significant question, “How can Brazil be expected to supply corn, soybeans, soybean meal and sugar all at the same time?” The export capacity of the country is not sufficient to meet these simultaneous demands and shippers could well be faced with significant shipping delays and associated demurrage costs. Clearly the answer to tight global supplies will not be found if we expect Brazil to provide ALL the answers.
- We expect to see further consumer buying on this price break, US wheat is at a five month low and competitive in the global marketplace, and with the fundamentals continuing to look tight much better value exists in prices today than has been the case for some time.