- Today has once again been interesting with the US soybean market again giving little credence to what at first appeared to be bullish news, the first “real” news in some time, and placed more importance upon the more bearish fundamentals. It seems that the looming harvest and availability of physical supplies is having more of an impact upon prices than the FSA’s reported increase in abandoned spring plantings caused by the wet weather. The implied knock on effect is one of a reduced harvested acreage and lower output. Offsetting this is the latest, wetter, weather which has created mixed opinion on whether or not here will be any benefit to soon to be harvested crops.
- It remains our view that soybean prices are overpriced, particularly in relation to corn and other oilseeds (sunflower seed especially). There is a supply pressure particularly from Eastern European farmers who have a significantly reduced storage capacity when compared to their S American and US soybean farming counterparts, which ensures that their crop reaches market early in the season. Prices for rapeseed (and canola) still appear to be looking for a bottom and with news that the Canadian crop could yet exceed earlier estimates of output potentially adds to downward price pressure.
- Yesterday Informa Economics reduced their forecast for 3013 US corn output to 13.8 billion bu from 14.013 last. They also lowered their estimate for the US soybean crop to 3.22 billion bu from 3.239 last estimated some 11 days earlier. The reduced forecasts were attributed to acreage adjustments following release of the FSA data together with their update on yield.
- Reuters commodity forecasting arm, Lanworth, today raised its US corn output estimate slightly to 13.843 billion bu with a yield of 152.9 bu/acre. They attributed better projected yields in some states to their upgrade. For comparison the USDA’s latest estimates are 13.843 billion bu for corn and 3.149 billion bu for soybeans.
- Of interest is the news that Brazil has purchased (unconfirmed) two cargoes of wheat from Poland. The logic of ongoing purchases of US wheat at significant premium prices has been questioned by us in the past, and the obvious question is, “how much volume can this become for EU exporters before prices align across the Atlantic?”
- UK wheat imports to start the 2013/14 season were at their fastest pace for over 20 years with 328,500 mt imported in July. Early purchases amid poor crop prospects and a delayed harvest were probably the principle cause of the increased tonnage. In addition it is likely that millers decided to secure quality supplies to ensure suitable grists were available pending confirmation of domestic quality. Questions are being raised as to the possibility (???) that the UK will ultimately be an exporter of low grade milling wheats later in the season.