- Markets have taken a slightly more pragmatic approach to the Cypriot crisis, which appears to be heading towards a “softer” raid upon deposits belonging to smaller savers. Until a decision is reached, the banks remain closed to prevent a run on cash withdrawals, and this is expected to last until Thursday. Russian opposition has been noticeable, probably due to the fact that it transpires that around one third of all deposits in Cypriot banks are Russian owned! The IMF is supportive of the somewhat modified proposition, presumably as are smaller depositors!
- Australia’s ABARES (Australian Bureau of Agriculture and Resource Economics) and the UN (United Nations) have forecast global wheat output to grow to its second highest level on record, 690 million mt, they believe a return to more normal growing conditions, as far as moisture and temperature are concerned, is on the cards. Global end stocks are similarly estimated to rise, an additional 2 million mt is predicted to be added to bring the figure to 176 million mt. An overall increase in food supply is seen with rice output heading for a record according to the UN, and record US soybean and corn crops predicted by the USDA.
- Reuters news wires have been active with reports of up to 2 million mt of soybean shipments due to be cancelled by China following shipping delays in Brazil as a result of the much publicised port congestion. Supplier default is cited as due cause for the cancellations, and Chinese buyers are presumably not keen to extend shipment periods on, what are now, expensive purchases. It must be pointed out that the reports are, at this time, unsubstantiated, and possibly rumour only in an attempt to get prices down sufficiently to permit Brazilian soybeans to be swapped into US. Crush margins remain strong in China and demand appears to continue to be strong, so news of such wholesale cancellations could well be tactical rather than factual.
- Following on from yesterday’s Egypt news, there are reports today that the government are discussing plans to ration subsidised bread; we believe this to be linked to the ongoing IMF loan discussions. When added to the upcoming strike by bakers due to high wheat/flour prices, we could be looking at another politically explosive situation – remember the “Arab Spring” which was triggered by high grain/flour/bread prices?
- One thing is for sure, and that is we continue to live in an interesting world.