- The latest modelling does not expect that La Niña will strengthen or persist into 2017. The current La Niña is one of the weakest and shortest lived on record. Notice that in the IRI ENSO modelling argues that La Niña will die by late year with a neutral ENSO forecast into July. This would reduce the chance of a dire ‘17 Midwest drought and any sharp rise in CBOT agri prices. However, the Pacific Decadal Oscillation is shifting to a warm phase (cold since 2012) which along with warmth in the Atlantic argues for elevated dryness worry.
- Today began with Chicago markets higher with the soybean complex leading the way on rising global vegoil prices whilst grains saw things a touch easier. Cash corn movements in the US remained limited with few willing or happy to hold long positions ahead of the advancing harvest. The bulls appear happy to take short term profits on rallies and the market appears to have the feel of one unable to sustain either rallies or price breaks as the trade continues to estimate the actual new crop size. We expect the choppiness to continue until some certainty can be found.
- It was interesting to note that Egypt’s GASC received a grand total of zero offers in its latest, unusual, Sunday tender. Clearly the zero tolerance on ergot contamination and a couple of rejections are weighing on the previous willingness of exporters to make offers. There will soon be a time pressure upon the Egyptian government to make a change, and act upon it, if the country is not to endure a tightening of stocks. At the same time the global supply position on quality wheat is fading due to adverse weather and the feed wheat stockpile appears to be growing.
- “Buy the humps and sell the dumps” is the best message to trade the Chicago according to one commentator today! This is a big crop/big demand marketplace with CBOT prices continuing to chop. It’s premature for a sustained recovery with the US harvest dead ahead, but on the other hand, buyers are waiting for breaks to buy. Slowly the markets are forging a bottom, but it will take time unless the US soybean yield ends up being above 51.5 bushels/acre. This is no time to make new sales and become bearish as we maintain the downside price risk is becoming limited.