- It’s been another “green” day as far as prices are concerned as CBOT markets close in positive territory as do EU grains. Key factors appear to have been short covering in advance of tomorrow’s export report and concerns exist over larger than expected numbers. Today has seen reports of soybean sales to Russia which have come as something of a surprise to the market, although to be fair this has been highlighted as Russian feed demand grows to feed the increased demand for pork and poultry meat.
- Corn consumption for ethanol production, according to latest figures, is high as profit margins are sufficiently high to encourage production. Reductions in corn price are only likely to add to demand for corn used for ethanol production.
- The looming 8th November USDA crop report has probably more significance than usual given the omission of the October report and the data vacuum which that has created. To put this into perspective we would expect position sizes to be reduced, and a combination of short covering and reduction in longs will no doubt be a feature in coming days.
- Australian weather has become more newsworthy in recent days with the dry conditions, intense heat and wildfires combining to create headlines. Eastern Australia has experienced worsening drought with the added pressure of above average temperatures, which has elevated crop moisture stresses. The last three months have yielded just 40% of normal precipitation. Concern has grown over national wheat output with the latest ABARES forecast in September reduced to 24.5 million mt which is a little more than 3% down on their earlier June output figure.
- EU winter crop conditions are generally favourable with both planting and early development benefitting from what can only be described as almost ideal conditions across the region. Eastern Ukraine and southern Russian conditions have improved markedly following early snowfall and the concern which that raised over plantings. Soil moisture levels have received a benefit from snow melt, and temperatures have risen to levels allowing good germination and development of recently sown crops. The Volga and Black Earth regions of Russia however have experienced more serious planting delays as a result of wet conditions with some 150-200% of average rainfall. Freezing night time temperatures and low daytime temperatures have also been far from beneficial for wheat crop development. Anecdotally, less than the fully planned winter wheat area has been planted which will adversely impact final output.
- The Reuters forecasting arm, Lanworth, has elevated its latest 2013/14 global wheat crop forecast to 707 million mt from 706 million mt. Their corn output number is also increased to 955 million mt fro 952 million mt a month ago. Global soybean output is forecast higher too at 288 million mt from 286 million mt last month.