- In a slow day we saw soybean futures push sharply higher as the July ’14 contract found support near last week’s lows. There still appears to be a fine line between the “enough/not enough old crop supply in the US” debate and this is creating ongoing volatility. Historically high cash basis for soybean meal also adds to soybean price support. Fund buying in soybeans and products was also evident, and relatively strong. The volume of S American supplies heading to the US will doubtless place a top in prices, the question being “when”, key at that time will be the formation of an “exhaustion top” and a likely sharp collapse in prices.
- Corn traded in a narrow range with decline limited by the strong soy market as well as stronger weekly ethanol production data. Favourable EU/Black Sea weather conditions left the bulls little to get hold of and the market feels as if it wants to retreat to lower levels. Rain across Nebraska, Oklahoma and Texas will replenish soil moisture levels and planting is likely to accelerate across the northern Plains regions into next week. Thereafter forecasts call for normal precipitation for the next two weeks and warmer conditions will lift the crop condition rapidly. The S American corn harvest will limit US export sales as their pricing represents a healthy discount to the US Gulf and we would expect to see lower price levels and further fund liquidation (which should hasten the process) unless a significant weather event arises.
- Wheat markets across the world are battling with good and improving weather forecasts. The heat across the central and Volga regions of Russia looks to be coming to an end with welcome rain in the forecast. Import demand has surfaced with cheaper Black Sea sellers winning against US offers. Chicago prices held onto technical support, should this be breached the only way for prices looks to be lower, unless (as with corn) we see a significant adverse weather issue.
- Finally, a Reuters survey suggested that the 2014 EU soft wheat crop would reach 137.5 million mt, which is an increase on last season’s 134.3 million mt, and the highest in six years.