- Apart from weather issues, which have dominated markets (and our updates) in recent times, one of the other major issues has been currency moves and relationships. The US$ has undergone a major correction recently and other currencies are getting somewhat stronger; including €uro, which has acted to firm up cash wheat prices. Ahead of S America’s planting season beginning mid to late September it would be wise to keep an eye on currency and its ongoing impact.
- Soybeans were a shade higher overnight following the decline in crop ratings having been as much as 19 cents higher although closing only 4 or so cents up on the day. Canadian canola (rapeseed) made gains, more so than in soybeans, and it is canola that could well have the more bullish balance sheet. Drought stresses look to be intensifying in conditions not seen since the 2002 drought there. Weather forecasts continue to vary, but there seems little immediate prospect of improving crop condition, which works against yield and ultimately output.
- Corn, like soybeans, ended the day a shade higher in the wake of the crop condition report, and traders are somewhat skeptical of the latest weather forecasts. The question remains, what has been, and will be, the impact of heat and dryness in July on US national corn yield. The US corn balance sheet is likely to need a revision – downwards unless we see a material improvement in precipitation.
- Global cash wheat markets were mixed apart from spring crops, which rallied a further 14 cents/bu, and global futures prices were generally a much lower on the day. There is little in the way of market moving fresh news to stimulate direction. A fresh 12 month high in the €pro sent EU cash markets to some gains and Australian markets also jumped on further output concerns as drought conditions in W and S Australia intensify. Some are forecasting Aussie output this season just under 20 million mt vs. 35 million a year ago. Egypt secured 300,000 mt of wheat from Russia, Romania and France at prices fractionally above their last purchase earlier in the month (basis average fob). This price is the highest paid in some years, and it should not be overlooked that Egyptian purchase prices set, or are extremely influential upon, global levels. Indeed, recent prices paid correlate well with the trend in global cash levels this year.