- Chicago markets saw mixed trade this morning with soybeans making gains as the grains, corn and wheat sagged. It was larger than expected weekly soybean exports that rallied the market to testing $10.15-10.20 basis Nov ’16 futures. The grains were unable to follow where soybeans led. Long soybean vs. short grain trades are featuring today. Any close above $10.21 in Nov ’16 soybeans will likely trigger further chart based buying. The market is very much focussed upon big demand in soybeans and grains are lagging behind on big crop prospects.
- We have today heard that the Russian Minister of Economy has issued a statement supporting the elimination of there export duty on their wheat exports. It appears that the the odds are growing that by the end of harvest, in mid-September, the duty will be scrapped. Despite the duty not having a substantial impact upon wheat exports, a record harvest of some 72-73 million mt and lack of funds for more than maybe a million mt of intervention purchases will likely continue pressure Black Sea prices. Maybe, just maybe, the duty will return in July 2017 with the new harvest, but Russia is in the throes of becoming even more competitive (and aggressive) in global grain export trade. Consequently, the news is being taken bearishly in both Chicago and EU wheat markets.
- In summary, US soybean exports were huge for the week ending Aug 18th at 35 million bu. We have cut our 2015/16 US soybean end stock estimate to 225 million bu and 2016/17 to 300 million bu amid a 30 million bu export bump. Thus, a 50 bushels/acre US 2016 soy yield would not hike 2016/17 soy stocks above 400 million bu! This implies that a seasonal low price was scored at $9.43 basis Nov ‘ 6 futures. Our immediate upside target if $10.25-10.40 basis Nov ‘ 6. Corn/wheat have also forged lows, but will likely chop irregularly higher until the summer row crop harvest commences.