• As a pretty general comment it seems that at current levels US January ’15 soybean prices are as much as $2.00/bu overpriced. As Brazilian planting weather improves dramatically and US harvest progresses with the promise of volumes large enough to swamp the marketplace we would expect prices to drop, and potentially dramatically. Current prices reflect a stock/use ratio of around 8% or end stocks of 275 to 300 million bu. The current forecast of 450 million bu (and possibly growing) would suggest prices have to face a decline, the question to ask is, “When?”

• Whilst the above may well fly in the face of what is currently happening in markets, specifically soybeans, it feels very much as if the “burden of proof” lies with the bulls to justify why prices should not decline.

• US weekly export data has been released with soybean figures surprisingly at double estimates, adding support to prices. The numbers are as follows:

Wheat; 299,300 mt which is below estimates of 350,000-500,000 mt.
Corn; 1,031,200 mt which is above estimates of 800,000-1,000,000 mt.
Soybeans; 2,170,200 mt which is above estimates of 800,000-1,000,000 mt.
Soybean meal; 23,000 mt which is below estimates of 150,000-250,000 mt.
Soybean oil; 10,600 mt which is within estimates of 10,000-50,000 mt.

• On the subject of exports, Brussels granted another big week of wheat certificates with the week reaching 681,003 mt, which brings the season total to 9.601 million mt. This is 804,792 mt (9.15%) ahead of the same time last year.

• As an interesting add-on to exports, whilst Matif wheat continues to rally, and it seems this is not on the back of the recent Egyptian purchase, it appears to be on a more technical delivery position. Cash premiums have shown nothing in the way of weakness in the last three weeks despite a rally of close to €20 in futures prices. This was initially explained by “farmers don’t like the prices”, but it is beginning to feel as if “they don’t have the wheat to sell”, particularly given the pace of exports leaving reduced stocks available to sell.

• Having said all this, it still does not feel like there is a big wheat rally in the offing. US wheat remains uncompetitive and there are still fund shorts in place.

• CBOT markets closed firmer on large US soybean and corn export numbers and wheat followed through with additional fund buying. There have been questions asked over the size of the soybean export number given that daily sales data this week has been zero! There has been a suggestion that the data has been “forgotten”, “overlooked”, or (heaven forbid) cajoled by the Chinese to announce the sales on a different date! Frame contract price fixing, and how individual businesses treat them, could also be another explanation for the “surprise” data today. The bottom line appears to be that it is not all new sales, just a reshuffle of existing; 2.1 million mt of new sales without a single daily announcement is as close to impossible as it is possible to get.

• Despite all of the foregoing and the surprisingly resilient price rally, we struggle to see how, with the global grain and oilseed supply position, any lasting bullish trend can be sustained.