- Midday comments:
- Yesterday and overnight saw wheat trade either side of unchanged in a period of relatively limited fresh news. It feels as if the wheat market has been looking to the corn market for direction in the absence of other drivers. Some snow and heavy rains in the northern Plains and Canada may possibly provide a degree of support as talk of quality and production downgrades surfaces once again although even higher Russian output ideas and a drier outlook over the next ten or so days in Argentina offers a contrary viewpoint. Monday evening’s crop condition and progress report showed spring wheat to be 74% complete vs. 58% a week ago and the ten year average of 85%. Winter wheat is 12% done vs. 3% last week and the ten year average of 13%, the highest recorded was 22% in 1987, and the lowest was 9% in 2012. Egypt announced a further wheat tender after the close last night, this time for mid-October shipment, the results are expected later today, and we will hopefully be in a position to report on them in the evening update.
- Corn, like wheat, traded either side of unchanged yesterday and overnight with some speculation that the FSA (Farm Service Agency) report would indicate lower corn acres in future USDA reports and thereby limit market downside. Weather conditions rare somewhat mixed with this week trending drier across the Midwest for most of the week and temperatures normalising, rain in the western Plains could well return by the weekend adding to already wet soil conditions potentially raising an potential harvest delay issue. Old crop supplies remain adequate and a “soybean like” squeeze feels unlikely. Corn was rated 74% good/excellent, which is unchanged week on week and compares very favourably with the ten year average of 57%, the highest rating was 85% in 1986. Harvest progress remains unchanged on last week at 4% vs. the ten year average of 11%. The cool and wet conditions this season, whilst pushing up potential output, have also had the knock-on effect of slowing development and maturity somewhat but the forthcoming war and dry conditions should provide some benefit this week.
- Soybean markets saw some short covering on colder weekend weather, wet harvest soil conditions and suggestions that the FSA report may trim acres, volume trade was described as “thin”. Short term nearby cash levels remain firm as processors “pay up” rather than face short term closure whilst awaiting new crop supplies – still. In S America, Brazilian farmers are officially able to plant early maturity soybeans and conditions have been ideal with good showers and soil moisture levels. These soybeans would typically have an end-December harvest and would add to the “wall of supply” that will face the market in the latter part of this year. There was an anticipation of a drop in the soybean crop condition following a cold and wet week, but the good/excellent rating remained at 72%, unchanged week on week, and well above the ten year average of 56%. The highest rating previously was 74% in 1994.
- Evening update:
- Egypt’s GASC secured 180,000 mt of wheat, in what turned out to be an interesting tender, from France at an average of $247.79, a C&F price that was cheaper than all but one of the Russian FOB prices. To see seven Panamax size vessels of Russian wheat at GASC spec for a shipment just four weeks away is surprising to say the least, and interestingly, US soft red was on a par with Russian (to Egypt). Russian premiums are a record high to French at present although prices did dip following the tender.
- Corn prices in Paris closed a touch higher but good weather across the EU and weaker Chicago markets kept a lid on the advance. There is a belief that the French crop will come in well above 17 million mt, and the EU crop will top 70 million mt, alongside a huge feed wheat crop and increasing ideas of barley production. There is little to suggest anything other than a huge surplus of feed grains!
- CBOT wheat and soybeans closed lower whilst corn finished just in positive territory; all fading from earlier short covering rally attempts. News that China had signed an agreement for 4.8 million mt of US soybeans to be supplied over the next year was seen as bullish, and Nov’14 beans rallied almost to $10.00/bu. This volume represents around 6% of China’s annual imports, and as a “frame” agreement is less important that the market initially considered. However, the onset of harvest and ongoing huge yield reports paved the way for the bears once again as the market retreated lower. The harvest is spreading across the Midwest with reports that the E Midwest will begin harvesting in earnest by the weekend or early next week at the latest. The W Midwest is still 10-14 days off but once under way will see a deluge of supply hit the market. Early Midwest yields are coming in at 65-90 bu/acre for soybeans and 185-270 bu/acre for corn, trends that were seen in the Delta and southern states and are being replicated further north – for now.