Today has been VERY interesting in a number of ways! That’s always a good opener to grab attention and make sure that everything is read!
Despite little in the way of fresh news it would seem that fund liquidation has dried up, for now at least. Watching CBOT markets like a hawk today has been insightful, they have declined to a level and rebounded higher on a number of occasions, albeit a conservative rebound, but have stayed for the most part in the green, or positive territory. The “gap’ on the Nov ’12 soybean chart is still not yet filled and the bears are struggling to get there right now. If this price action is repeated tomorrow we may well be confident in saying, “the lows are in.”
Sentiment today was underpinned by Moody’s confirming Spain’s credit rating at Baa3 despite their caveat of a negative outlook. The rating was supported by the ECB’s willingness to purchase Spanish government bonds.
Anecdotal evidence of fund buying in corn, wheat and soybeans today has filtered our way although volumes have been on the light side. Cash basis levels in the US remain very firm which is indicative of tight supply into a strong demand.
Japan has reportedly purchased US corn this week as the outlook for Brazilian availability continues to decline with loading delays. Given our opinion on tight US supplies, this will only tighten them further and, when prices break to the upside, will push them further still.
Algeria has been reported to have purchased 400,000 mt wheat from unspecified sources for Dec ’12 shipment. We understand the French offers to be too expensive which points to Argentina as the likely origin; given their export commitments on barley and corn over the same time frame we question the sense in making the sale, at discount prices, when latent demand on the doorstep already exists! It is indeed a strange world in which we live!
Egypt has stated it plans on importing up to 4.8 million mt wheat having committed to 2.3 million mt so far this season. It would seem that the US is a likely origin in coming tenders as the spread between US and other origins continues to narrow.
Finally, Farmer’s Weekly have published a statement indicating that bio-ethanol producer, Ensus, is accepting wheat down to 60kg/hl this season. Last year it took grain down to 68 kg/hl and plans to review the situation once it has evaluated extraction rates from lower specific weight grains. The plant currently processes 75,000 mt a month and average bushel weights are 68 kg/hl, the expectation is that intakes will rise to 90,000 mt/month by the end of the year.