- Markets showed an early inclination to set lower levels albeit these were frustrated later in the session as prices moved upwards and eventually closed in the green for another day.
- It has been a day of confusion as reported data was not fully believed by the market, and in some cases was considered to be diametrically opposed to the “facts”. The two main items involved were a reported sale of old crop US soybeans (568,000 mt) to “unknown” destination, which many felt was old news or would not ultimately ship, and others felt the report should have referred to a cancellation. However, later reports suggested the buyer to be China, which left still more confusion in the market. The other piece of news was a reported cancellation by Egypt of 110,000 mt of soft red wheat, which triggered selling as traders questioned (once again) both solvency and further demand in Egypt.
- The soybean sale (to China) makes little sense in view of their current stock position and scheduled arrivals as well as their efforts to either defer or cancel nearby shipments as crush margins continue to decline rapidly. Brazilian soybeans are on offer at good discounts to US supplies, hence the confused reaction to the news.
- The Egyptian cancellations are believed to be by private buyers rather than by GASC. The news hit shortly after Reuters reported that the Egyptian government has approved financial guarantees amounting to over $75 million for wheat imports. This has led to speculation that a further 500,000-700,000 mt could well be tendered for before new crop supplies become freely available. Once again we hear that Egypt’s stock is “sufficient” to last until mid-June, although we have heard that before!
- There is little in the way of fresh news with the Brazilian harvest progressing well; it is expected that close to 40% will have been gathered by the weekend and yield data to date supports a crop in the region of 89-91 million mt. EU and Black Sea regions have seen little in the way of weather damage to overwintering crops, although it will be springtime before a complete assessment can be made. Ukraine appears to be reopening for business and the risk premium associated with the recent uprising has eroded fast although is is reported that Moscow is “angry” over the recent events! The east/west political split within Ukraine will bear watching in coming weeks in case it escalates once again and raises the spectre of supply disruption once again.