- As we start the holiday shortened week it has been noteworthy only by lack of news! CBOT markets have traded lower with corn, in particular, slipping on technical selling and a high potential for the December contract to be hit with big deliveries if prices were to remain higher. Wheat prices, whilst lower into the close, have traded either side of unchanged with a cheap Saudi Arabian tender capping rallies and cold/snow across N Russia is lending some support. Market volume is lacklustre even by holiday week standards.
- The Saudi wheat tender was 345,000 mt and is likely from Germany for Feb/Mar shipment. The price quoted appears $9-$12 below Friday’s quoted levels. There is a suggestion that Canada could be a possible origin, but the FOB levels would have to be some $15/mt lower in order to offset dearer freight costs. The point being made is that world wheat is being offered and traded at cheap levels in a market awash with supplies. It is hard to envisage any serious bull market in the absence of serious new crop weather problems.
- Scratching for news it was reported that the US sold 235,000 mt of soybeans to China and 174,000 mt of soybean meal to Thailand. The significance of the Thai sale is that it makes Thailand the second largest destination for US meal this year at 516,000 mt, and the latest transaction is in a deferred position which suggests that US crushers are prepared to compromise prices in order to compete with S America and lock down volume and margin. It was also noted that interest from China is slowing and the latest business is merely filling a few gaps having already secured their US tonnage. Some argue that China will cancel 1.5 to 2.5 million mt of US origin soybeans if S American logistics support February/March shipments, which would clearly impact the US S&D adversely.
- We should remember that Brazilian export capacity has ramped up significantly in the last few years, and that loading delays such as were seen a couple of years ago now appear to be a thing of the past. A number of new ports on the Amazon River have opened, and speed of loading at Paranagua has grown as a result of investment. One estimate has suggested as much as a 40% speed gain has been achieved in the last few years and Brazil is in an excellent position to supply the world with soybeans and meal commencing mid-January when the first new crop supplies become available.