- The new month and new week has brought little in the way of inspiration to markets today as Chicago has traded in a mixed fashion. It appears that a very large buy stop was seen in corn in the early hours and this was sufficient to rally prices although not for long. Soybeans and wheat tried to follow but selling pressure has put a lid on upside and new crop hedge pressure from Brazil added to upside limitations.
- There is some support noted in crude oil, particularly stateside, as the biggest US oil workers strike since 1980 enters its second day. The union which represents around 10% of US refinery workforce has walked out. Some stricken plants remain open using non-union labour and this has escalated tensions and a national walkout is being discussed, which would likely pressure upside still further. This would also likely place support under bio-fuels and potentially support corn and soybean oil as a result. Whilst it is still early days, the fundamentals are unchanged, this is a “fly in the ointment” of the supply chain.
- The next fortnight looks promising in Brazil with soaking rains forecast across the dry regions of Bahia and Minas Gerais later in the week. The forecast appears to be bring a favourable mix of sunshine and rain across both Brazil and Argentina aiding soybean and corn development. Any weather related threat appears limited to beyond the next two weeks, and of little consequence right now.
- Saudi Arabia purchased a reported 690,000 mt of wheat, for shipment April/May, over the weekend and suppliers were given as EU, N America and Australia and sellers reserve the rights over origin. FOB prices are difficult to calculate as origin is unknown but CIF averages around $254/mt, if EU origin this would calculate back to around $238/mt. There are also rumours of some 5 to 8 Panamax size wheat vessels from the UK to Asia having been agreed. Russia’s export tariff is now in place and it seems their July to January total stands at 17.9 million mt. Seemingly a number of vessels did not make the date deadline and disputes will doubtless arise as a consequence, but this is largely immaterial to the rest of the marketplace.
- In corn, European futures hit fresh three-month lows, cash premiums were broadly unchanged and the corn vs. feed wheat spread into Eire is €15, but consumers can only purchase once, and most appear to have already done so. Black Sea prices are at season lows and carries are minimal at €1 or 2 per month and there are clearly some bargains around for those who can take advantage.