- Markets have shown a degree of strength today following Friday’s late announcement that Egypt had purchased one cargo of US soft red wheat (the first US sale to Egypt of the marketing year), which triggered some short covering. Weekly soybean export inspections were above expectations and rain prospects in southern Argentina have been trimmed back a touch. Following the decline in markets last week these pieces of news were all it took to set the bulls running, although it is premature (and significantly so) to suggest there is anything bullish in the longer term outlook. Producer selling on the back of elevated prices is very evident and will likely cap the upside.
- Argentina has approved 1.5 million mt of wheat exports with the prospect of a further 500,000 to 1 million mt to follow. Half a million tonnes is scheduled for immediate release, the balance to be shipped at a slower pace according to reports. The intention by Argentina is to prevent a rapid drawdown on domestic stocks as was the case in mid to late 2013.
- Fears that Russia may be about to bear the brunt of freezing conditions, which could leave winterkill a serious issue following abnormally mild conditions, appear to be receding. Snow is forecast ahead of the cold snap, and that would provide an insulating blanket to help protect crops. Saratov, a key wheat producing district in the Volga region, is expecting –18℃ (–1℉) later in the week, this is some 5 degrees warmer than previously expected. Many have raised the question of wheat hardiness after delays in planting although the mild conditions have assisted crops reach dormancy. Autumn precipitation across Russia and Ukraine winter wheat zones has been close to non-existent although it has improved over the last couple of weeks. Southern Russia, where the majority of wheat is grown, is experiencing drought conditions. The last month has accrued a 30 mm deficit and 67 mm deficit over the last three months in Stavroplo, Krasnodar and Rostov.
- The soybean harvest in Brazil is under way and picking up pace. Early planting, despite dry conditions, was a feature as farmers were keen to get an early crop in an attempt to be able to plant a second follow on soybean crop. Some local analysts have suggested that the yields in Mato Grosso could be the best ever.