- We are looking at another “down” day in Chicago as the soybean complex leads prices lower. The market is bracing itself for Sunday’s Argentinian presidential election and all that might come with the ultimate outcome, with many expecting a win for opposition leader Macri. If he is elected there is an expectation of a rapid cut in soybean export taxes and a Peso devaluation. The polls appear to favour Macri but there is an uncertain history of accuracy over Argentinian presidential election polls and there will be an indeterminate period of time before any changes are enacted.
- The funds have never held a larger short ag position than as of today! The chart below reflects non-commercial net ag positions in livestock, grains and oilseeds. Notice that as of last Tuesday, non-commercials held a net short of just over 300,000 contracts, larger than the low going back to June. Funds have been aggressive sellers of a host of commodity markets following the recent strong rally of the US$. Fund shorts by themselves are not a reason to be bullish. What is lacking is a fundamental catalyst to spark any short exodus. The heady fund position argues that sellers should be cautious entering new short positions as we have advised previously.
- Stratégie Grains have reduced their estimate of EU wheat imports in the 2015/16 year by 400,000 mt to 3.1 million mt. Improved competitiveness of EU wheat, particularly in the south when compared with Ukraine. At the same time an increase of 300,000 mt is seen in EU 3rd country exports to 26.8 million mt, mostly featuring N Africa as the destination. Note that this compares with the latest USDA estimate of 33.5 million mt, a somewhat large difference!