- Headlines from both Reuters and Bloomberg suggest that China is on the verge of approving MIR162 corn in the near future. Whilst there is no date or time reported, it coincides with the Chinese delegation visiting the US at present. Headlines suggest that 2 to 2.5 million mt of fresh US corn demand could arise from any approval, in addition DDG export demand could well increase to 150,000-350,000 mt/month which would offset some of the recent Turkish lost business following discovery of GMO material almost two weeks ago.
- Russia’s AgMinister remains tough talking against Russian wheat exports; no official ban has been announced but fears continue to grow that restrictions could be imposed as intervention stocks are rebuilt. The Rouble managed to bounce following a massive decline to 80:1 vs. US$, the Russian Central Bank raised its overnight borrowing rate to 17% from 10.5%, but fears still abound that severe recession will hit the country lasting well into 2015. News that Russian intervention price is to rise to 10,100 Roubles/mt from 6,750 Roubles/mt did little as the new price remains well below current domestic cash bids. There is a glimmer of hope that crude oil is forging a bottom, temporary or otherwise, and talk of a $50 low is rife.
- In Brazil the Real reached 2.75:1 vs. US$ and farmers were huge sellers of new crop soybeans and corn, volumes are reported to be the biggest since March earlier this year when the harvest was in full swing. The decline in the value of the Real has elevated soybean values to close to last year’s levels – enough for farmers to say, “Thank you!”
- In Chicago today the wheat/corn spread reached $2.25 wheat premium on the back of concerns over Russian supplies but global surplus stock should keep further upside in the spread limited. Front month spreads may well widen a touch, but relative values appear to have reached a level from which it is difficult to see much more upside.
- In Europe cash soybean meal was as much as $10 down today, from Monday, on the back of easing S American cash markets. Buyers were not very much in evidence on the break as the expectation is for further easing in prices as market fundamentals become more influential. Cash premiums for soybean meal in central US are, without doubt, easing – and fast, By comparison January soybean meal from Paraguay is offered at about $57/ton below comparable US Gulf levels whilst Mar/May Paranagua is currently about $55 below the Gulf. These price levels point to US exports losing competitiveness and a slowdown in volumes will likely follow.
- Ukraine corn was offered into northern EU/UK/Eire at €167, this is around €15 below French and it is becoming clear that suggestions of limited Ukrainian corn supplies are incorrect!
- In conclusion, there appears to be increasing evidence that global currency issues (Russia, Ukraine, Brazil – to name but a few) argue strongly for large acreage increases and deflation-led demand reduction. As a consequence, growing global stocks will see further additions and the ags look set for a return of the bear trend.