- Chicago markets have been somewhat uneventful with soybean markets finding chart based support at $9.95 basis May ’17 soybeans and remaining weak at midday. EU wheat markets have closed weaker despite a slight weakening of the €uro and we would expect global cash wheat markets to follow suit. Quite how long Russian fob offers can remain supported at $190/mt remains to be seen as all origins search for a seemingly non-existant demand. EU and Black Sea exporters will have to remain acutely aware of normal spring and summer weather conditions that appear to be on the cards.
- Other news tidbits include Egypt now rejecting a total of ten cargoes of optional origin wheat, either at ports of origin or at discharge due to insect/grass levels. They will find it more and more difficult to obtain reasonable fob offers with forthcoming tenders, which are likely to resume in bulk in late summer. Note also that the Egyptian pound has fallen to the weakest level since early February, and financing will remain an issue for Mid-East/N African importers.
- Low pathogenic bird flu has been confirmed in KY, and has now been found in a total of four US states in 2017.
- The S American weather forecast continues to add rain to C and N Brazil in the first week of April. The GFS at midday features cumulative precipitation of 1-3” across the entirety of Brazil’s safrinha corn belt, including Mato Grosso do Sul and Parana, areas that have been drier than normal in the first half of March. Climate work continues to point towards normal/near normal rainfall into May, and total S American corn production estimates, and in turn exportable surpluses, look as if they will be/should be be revised upwards.
- We maintain that price breaks lower should not be chased in the near term, with Gulf wheat by far the world’s low cost origin, and with declining soybean futures slowing down S American producer sales. However, news that has been available since mid-March, along with weather forecast updates, have been negative, and it really does take an expansive N Hemisphere weather problem to attract fund buying or short covering, which would in turn see prices higher.