- Chicago markets are starting the week on a slightly firmer note as fund buying continued after the weekend break. Seemingly buying by the funds started in the Kansas wheat market and spread to remaining markets including soybean oil. As we approach not only month end but also quarter end the funds appear willing to shed more of heir net short position than many would have anticipated. Some of the data coming from the Kansas wheat crop suggests losses are inevitable although largely inconsequential in volume terms when placed into perspective of a globally oversupplied market and record stocks.
- On a slightly different note Chinese soybean crush margins are at their lowest level in two years, some $1.35 below last year. Soybean meal prices are at eight year lows and imports of soybeans in the coming few months will be at record levels pressuring prices with supply. Consequently, we maintain Chicago prices will struggle to maintain the current rally.
- There is an expectation of Chinese reserve stock sales to be announced by 1st April and as much as 50 million mt of corn and 6 or 7 million mt of corn could well be made available – AND it is suggested that the large volume of stock will not be replenished.
- We would be looking for a very classic turnaround Tuesday tomorrow as Chinese demand for S America soybean and meal supplies is reported to be slowing at the same time Argentina is becoming more aggressive in its export offers. Low Chinese margins and prices combined with huge (potentially record) supplies looks as if we are close to a seasonal high in prices right now.