- What the market gives, so it takes back – or so it seems as we witness Chicago soybean and meal markets sharply higher by mid-session today. The trigger appears to have been the Brazilian truckers strike which led to fund buying as key moving averages were hit. Soybeans moved above the 50 day moving average and meal the 200 day average. Corn and wheat have followed and S American cash selling in soybeans has been very evident on the rise. The strike is over a request by truckers to remove taxes on diesel fuel, and this is still being considered.
- Latest news suggests tghat the Brazilian Government has asked their courts to rule on the legality, or otherwise, of the strike. Seemingly a federal judge has been asked to end the strike with huge penalties for truckers found to be blocking roads. The level of fine is without doubt a deterrent, $100,000 per hour, with the authorities being given the power to clear roads. A decision is anticipated today, or tomorrow at the latest. Police in Paranagua are already clearing truck blockages to allow free passage of soybeans and other freight. Most expect the strike to be ended by tomorrow night.
- Egypt once again tendered for US wheat for mid-April arrival and secured 290,000 mt of what is reported to be hard red wheat. The price is reported to average $273.11/mt basis C&F, which compares with the last wheat purchase from France and Romania five days ago at $240.25/mt. The latest deal is priced well below last weeks much commented upon offers which ranged in price from $287 to $336, and were rejected. Clearly Egypt sees value in the credit line offered by the US! The other side of the Egyptian wheat coin is that they need some “quality” wheat to blend with what they have been/are/will be receiving from EU/Black Sea suppliers.
- In Russia bread prices are reported to be 11% up on last year, which pales into the background when compared with the 41% jump in Ukraine. Both nations are reported to be considering additional export controls. Corn offers from Ukraine continue to decline, the Hryvnia slumped another 11% today, and it is becoming increasingly clear that currencies will remain a significant driver of international trade for the forseeable future.
- Today’s price rally in soybeans and meal feels as if it will be difficult to sustain if the trucker’s strike is ended, particularly in the face of the advancing S American bumper (record?) crop harvest. China will return to the market following the New Year holiday celebrations, and most do not expect them to chase the currently elevated price levels. They already have a significant soybean tonnage afloat and was active before the holiday began.