- The return to work in the US after President’s Day has left us with some interesting times. The soy complex is displaying strength whilst the grains are languishing once again in negative territory. The soy strength is beginning to create a more bullish technical pattern with prices moving above their 50 day (relatively short term) moving average. As we suggested last night it would appear that China have returned to the buying table, and are looking to secure S American supplies. With crush margins in China at or near to record high levels their buyers are keen to secure stock in order to lock in those margins whilst they exist. It was announced today that China purchased another 120,000 million mt of US old crop soybeans, which helps to illustrate the point.
- We hear of further growth in Brazil’s port lineup with tonnages hitting 11 million mt, we reported previously that the biggest proportion of this tonnage is for soybeans, and nothing has changed to date in this respect. The prospect for Brazilian logistical issues of some magnitude is very real and as a consequence we may see tonnage being switched back to the US, albeit with their tight supply position.
- Oil World have issued their latest forecast of S American soybean production with the Argentine crop estimate at 50 million mt, down from 52 million mt mom, and Brazilian output at 82 million mt which is an increase of 0.5 million mt. Last year’s output was 39.9 million mt and 66.4 million mt respectively. The detail of this year’s output should be placed into context regardless of the odd million or two, this year will be huge by comparison.
- The grain markets took a tumble today, pressured largely on much needed precipitation in the form of a snow storm in the US Plains. It was clear that the resultant price drop has encouraged further consumer covering. The top three US wheat producing states are reporting near normal winter rainfall/moisture although much more is required to replenish the summer and autumn drought fuelled subsoil moisture deficit.
- Brazilian corn and soybean producers have received beneficial rains but coverage has been mixed leaving some growers still dry. Overall it would appear that conditions have improved a touch. In Argentina some good rains have fallen over the last week but more is needed if there is to be a significant improvement in soybean and corn crop condition following weeks of hot and dry weather.