- Midday comments:
- Wheat markets traded lower overnight despite the USDA report on Friday offering a supportive tone whereas weakness in corn and soybeans may well contribute pressure as the week progresses.
- Corn markets look vulnerable with expectation of higher yield in next months report as well as the return of improving harvest weather for the next two weeks. Furthermore there is an added pressure coming from the need for US markets to regain competitiveness in global export markets. Despite some headline data looking supportive the market fundamentals continue to lean to the bear camp with the bulls having virtually nothing to get their teeth into.
- Soybeans, as with corn, saw a lower close Friday despite some supportive USDA headlines and the immediate post publication rally, and this (we feel) gives the bears the edge going forward.Near term harvest delays will keep cash levels supported as buyers active in order to meet existing commitments, but the weather outlook is improving and we should see drier weather later into the week and next week which will help speed harvest pace.
- Evening update:
- Despite some early market nervousness, the latter part of the day has seen something of a rally. Rains in the US have limited hedge selling, which would normally keep a lid on the market. It truly feels as if we will see a “Turnaround Tuesday” tomorrow because the market fundamentals do not support a rally of any strength or duration.
- Grain futures in Europe lost value in the face of oversupply, Friday’s Egyptian tender saw good volume from a number of directions and there is a marked lack of buyers around to start the week.
- Weather conditions in S America are slowly showing that the wet season, which is currently delayed, should commence in earnest in coming weeks (described as seasonally normal). Forecasts are not overly wet across Mato Grosso, Goias and Bahia into Nov 1st but it is key that the blocking high pressure over central and north Brazil fades by the weekend, which will allow the wetter pattern to unfold. The crop boosting El Niño phenomenon (as far as S America is concerned) looks as if it will remain in existence, although not at full strength, through to mid/late spring.
- Finally, corn and soybean yield reports received over the weekend are off the charts/stratospheric, take your pick which superlative you wish, rain is slowing harvest right now and that is what has triggered buying and higher prices today. We do not expect this to last.