- A few more weeks away might be just what this market needs given the change which we have seen over the last fortnight. The headlines are scant on bullish, crisis fuelled, news from Ukraine although it would be fair to say the issue is not yet over. It appears that the fast approaching new crops, which seem to be going through “ok” sowing, germination and development and look to be facing “ok” weather conditions, appear to be a less attractive long to the spec community than the tight old crop. Hence, the eventual liquidation of old crop longs looks unlikely to be replaced with new crop longs, indeed we could well be staring at new crop shorts if our market whispers are proved correct.
- US weekly crop condition reports, released yesterday, showed corn to be 73% planted, 1% behind expectations but ahead of last week’s 59% and last year’s 65% but behind the five year average of 76%. Reports from the ground suggest that the crop is going into excellent seedbeds and conditions for germination and early development look encouraging. Soybeans are 33% planted, 2% behind expectation but up from lats week’s 20% and 21% last year but behind the five year average of 38%.
- Tuesday’s CBOT prices, into the close, look to be lower pretty much across the board as fresh selling and commercial hedging pressured levels. We are looking at trades taking both technical support and resistance levels as well as moving averages into account in some choppy trade.
- China has reportedly sold as much as 81% of its weekly soybean auction stocks which brings the cumulative total to nearly half a million mt over the last fortnight. Forward purchasing by crushers in China has been more active as margins appear to be somewhat more favourable than in nearby positions.
- Russia’s SovEcon has reported their latest 2014 grain crop expectations at 90 million mt, of which wheat would account for 50 million mt, a 2 million mt improvement month on month. This figure, if realised, would be a reduction from 92.4 million mt year on year, what was 52.1 million mt last year.
- In “catch up” mode:-
- Informa’s latest US acreage estimates showed soybeans 900,000 acres up at 82.1 million, which is 600,000 ahead of the latest USDA number.
- EU wheat export certificates last week reached a total of 27.15 million mt, 7.974 million mt (41.6%) ahead of last year.
- Argentina’s RGE (Rosario Grain Exchange) increased their soybean output estimate to 55.7 million mt, an 800,000 mt increase, which places them close to the BAGE figure and 1.7 million mt ahead of the USDA’s latest number. Their estimated corn output was also raised to 23.9 million mt.
- Overall, we continue to see little in the way of significant threat to northern hemisphere crops and remain of the opinion that pressure will continue to influence prices lower.