- Midday comments:
- Wheat markets showed a potential for recovery with triggers coming from increased activity in global markets as well as the current extremely oversold market condition. These triggers helped to pick the market up from new contract lows made Tuesday. The wheat/corn spread has also been active with world wheat attempting to stay competitive in the oversupplied global feed grains marketplace. SE Asia has stepped in and “dipped a toe in the water” and it feels as if the market is attempting to keep buyers interested and cap corn rallies. Yesterday’s Egyptian tender resulted in offers in excess of 1 million mt, higher than the previous tender which was bombarded with 775,000 mt. Given the competitive French price, and their success, it could well be that Russian and Ukraine supplies are overhanging the market for longer than usual this season.
- Yesterday’s corn bounce was assisted by suggestions that acres could well be reduced from the USDA’s latest update although the big picture remains fundamentally unchanged. The impending huge harvest and massive global supplies will limit US exports, or at least keep them in check. Harvest progress is being limited by weather at present but the outlook for the next week or so looks more promising. The likelihood of farmers selling soybeans rather than corn due to strong spot demand may well lend some short term additional support to corn prices.
- Soybean markets remain in an extremely oversold position but a switch in focus to weather and yield reports as harvest picks up looks likely to leave the downward price trend intact – for now. Rallies based upon tightness nearby are likely to be short lived in front of high yield expectations as well as growing talk of an even bigger S American acreage and potential output adding to what appears to be the growing US end stock position.
- Evening update:
- Reuters subsidiary, Lanworth, today released their latest report which showed 2014/15 global corn output at 1,005 million mt, 17 million mt above the USDA’ latest. 2014/15 global soybean output at 317 million mt, 6 million mt above the USDA’s latest. 2014/15 global wheat output at 717 million mt, 3 million mt below the USDA’s latest. 2014/15 global rapeseed output at 70 million mt, 1 million mt below the USDA’s latest.
- Stratégie Grains have reduced their forecast for EU 2014/15 wheat imports by 30,000 mt to 3.2 million mt. The decline in price of French wheat now places it more competitive into Spain than Ukrainian, which has been the front runner so far this season. Soft wheat output was revised higher to 146.6 million mt, an additional 2.5 million mt compared with their August estimate. With exports revised upwards by 600,000 mt to 24.3 million mt vs. 29.1 million mt last year (we think this optimistic) end stock look set to grow by 700,000 mt to 18.7 million mt vs. 10.8 million mt in 2013/14.
- CBOT soybeans and wheat closed a touch higher whilst corn edged lower in quiet trade today. Traders are awaiting crop yield data, looking for confirmation of some of the monster numbers which have been recorded in the southern states. These numbers should be forthcoming in the next week, and will help determine future price direction. The weather outlook appears to be favouring the Central US soybean and corn harvest in the next 7-16 days, and will aid crop maturation.
- Russian wheat harvest appears to be progressing well, and the outlook for 63 million mt continues to look reasonable vs. USDA’s 59 million mt. A similar picture appears to be emerging with their corn crop, despite it still being early days, yields look good and an extrapolated output of close to 14 million mt looks possible vs. USDA’s 12.5 million mt.