- Post USDA report market rationalisation has to agree that the released data confirmed combined stocks of corn, soybeans and wheat will hit record large levels and these form the pillars of global grain and oilseed markets. Soybean end stocks, at more than 90 million mt, showed the largest growth. Global bio fuel demand is now a mature market, we have to see growth in caloric intake to kick start a demand led bull market and this is looking less and less likely right now as China is the only hope of additional soybean demand, and we are not overly optimistic of any significant upside right now. The big picture is that there are simply too many grains and oilseeds, either as stocks or as growing crops, too allow for any sustained price recovery – unless we see significant adverse S American weather, and that is looking less and less likely right now.
- Attempts at a “Turnaround Tuesday” correcting Monday’s declines have proved (with 20 minutes to go) unsustainable as all markets trade in the red. Corn has led the way lower on little in the way of fresh news with funds noted as sellers of corn, soybeans and meal and buyers of wheat and soybean oil. Corn breached the 50 day moving average, which sparked some further selling and eyes are on the weekly close (albeit some way off) which may well confirm season highs have been made. If confirmed, we could well see something of a sharp selloff as long liquidation takes place.
- The report from Reuters that Ukraine’s AgMin has asked traders to limit milling wheat exports has (so far) not impacted markets. The requested cap at 200,000 mt is actually at the upper end of volumes exported in the last three years, and as such not of huge significance – also we understand not mandatory at this time.
- As we approach the close in Chicago the charts looks extremely vulnerable to lower levels, particularly in corn, but also wheat and soybeans, as prices decline. The pattern in the remainder of the week will be key to direction into early spring.