- After the close yesterday Egypt’s GASC tendered for wheat, for mid March shipment,in the wake of its rejection of US supplies earlier in the day. It became clear that they were prepared to accept French grain at 13.5% moisture and continue to do so for another six months, which came as something of a surprise. Jumping forward, the result was that France was awarded 180,000 mt and Romania secured 60,000 mt at an average price of $240.25 basis C&F, which compares with yesterday’s US offers that ranged from $287 to $336 including freight. Little wonder yesterday saw Egypt “pass” on the US offered levels!
- Today has seen the USDA’s Outlook Conference release its new crop acreage projections, and a bullish surprise comes from the soybean seeding forecast of 83.5 million acres, half a million below December’s baseline numbers. Corn was put at 89 million acres, 1 million up from December. The lower than expected soybean acres saw markets jump 15-17 cents with corn following 3-4 cents and wheat tagging along for the ride. Trend following funds jumped on the bandwagon as soybean prices pushed through both 50 and 100 day moving averages. It is probably fait to suggest that Outlook numbers with actuals, last year Outlook put soybean plantings at 79.5 million acres, below intentions of 81.5 and final acres at 83.7. Tomorrow will see more data including balance sheets and it is quite possible that we will see a price reversal – again.
- Brussels granted weekly wheat export licences totalling 930,377 mt, which brings the season total to 21.094 million mt. This is 776,391 (3.82%) ahead of last year. Prices lifted in Paris on the news. The Russian “news machine” is either long new crop futures or needs a hedge against an, as yet, undefined problem with talk of a “more than 40% drop in this year’s winter crop”. The Soviet propaganda engine is clearly not yet dead unlike many in the eastern regions of Ukraine!
- The big picture suggests that in corn we have a marked lack of weather issues in S America coupled with steady demand, which is keeping the market two sided and choppy. There is a lack of direction and uncertainty over US acres (we are now talking the “real”world not Outlook). The big risk sits with fund liquidation as the funds continue to hold a long position. Wheat however appears to offer little short term risk to the bears, demand news could probably not get worse for the US who were humiliated on the global market yesterday with Egypt’s rejection of all offers despite the lure of a credit facility (which we believe is tempting – but not at any price). Soybean prices continue to have the Sword of Damocles hanging over them in the form of the fundamental oversupply position despite today’s Outlook projections offering some short term support. The market has to decide which is the greater long term driver of price direction.