- Wednesday was a “red” day with losses both sides of the pond. CBOT soybeans finally gave in to the bears as the bulls failed to decisively breach $13.50 (basis Jan ’14) despite having attempted the level a number of times. As a consequence we now have a “bearish engulfing pattern” on the chart, which could pave the way to lower levels as we have been suggesting (for some considerable while). The next target is the open chart gap at $12.92½ (again basis Jan ’14 electronic).
- News that China has rejected 600,000 mt of corn as a result of positive tests for non-approved GM presence (MIR 162) since mid-November added little to any enthusiasm. US officials have urged China to speed up the approval process; we continue to think there is a connection with the record corn harvest in China – but we have been called cynical on previous occasions!
- CBOT wheat made yet another contract low (Mar ’14) and funds reportedly sold once again as there was an absence of any supportive news. In Argentina there has been a suggestion that the government is about to release 1.5 million mt of export licences (which were paid about eight months ago!). Despite that, Brazil purchased a further 50,000 mt of US hard red wheat and continues to pick off Uruguayan because they continue to worry about Argy availability.
- Informa Economics updated its 2014/15 US acreage estimates and lowered its outlook for soybeans to 81.929 million acres, down from 83.814 last, however this would still be a record planted acreage if achieved. Output from this area, at trend yield, and consumption at current levels would leave a large surplus indeed. The potential price implications should not take much calculation. Informa’s corn estimate was 91.846 million carers, an increase from 91.546 last. Winter wheat was estimated at 42.9 million acres, down from their last estimated 43.1 million acres.
- The US’ Federal Reserve has announced a reduction in their bond purchase programme to $75 billion per month, a $10 billion decline. It added that positive signs in the employment market and an improved outlook were in large part a factor in the decision. A commitment to longer term low interest rates was also noted.