- Tonight the market is displaying a wall of red as lower levels prevail across both European and US markets. The “rot” set in as soon as Chinese GDPO figures were published, these showed what some might consider enviable growth, but the market construed as a potential slowdown. Expectation was for 8% growth, but 7.7% was the reported level. The lower level is perceived as a possible precursor to further global slowdown with all that will follow. It has not only been agri commodities which have borne the brunt of today’s declines, metals and energies have also suffered sharp losses. Gold markets have shed over $130/oz and crude fell over $3.00/barrel as markets sold off on the news.
- Following on from our recent commentary on Egypt’s absence from the market in recent weeks, it was reported today that their central bank sold (to the banking sector) what amounts to five times the normal weekly foreign exchange volume in its weekly auction. The weekly sales are made to allow foreign trade to continue in basic commodities, including wheat. The $600 million sale could well be a signal that Egypt is about to return to the international wheat market after an absence of some weeks, we will watch with interest. Interestingly, GASC have stated that they expect to import more than half a million mt more wheat in 2013/14 than in the current year.
- In Brazil’s congested ports there is an additional problem looming with the threat of a one day strike by port workers. Proposed reforms have been delayed and the workers have threatened a stoppage which would do nothing to aid the congested soybean export programme.
- China is reported to have purchased close to half a million mt of US soft red wheat for the 2013/14 marketing year, the secant such sale in under a week. Some question whether this is an indication of less than anticipated production in China, or simply further growth in domestic consumption by the increasingly urbanised and wealthy population who demand more westernised and processed foodstuffs. Reports suggest that China is seeking as much as a further 1 to 1.5 million mt, which may add some credence to the latter if it is proved correct.