- Today has been somewhat uninteresting with CBOT markets trading either side of unchanged and as we head into the close it is corn which is lower, wheat and soybeans showing some slight gains albeit in minimal volume trade. Clearly the prospect of next Monday’s stocks and seeding report is looming large in the sights of traders and fresh risk appetite is on the wane. Additionally, next week is a short one in the US with the 4th July Independence Day celebrations creating another holiday and long weekend. Next week’s report has the potential, as we have already highlighted, for explosive price action but it is a racing certainty that the weather will be the biggest influence going forward. Unexpectedly bullish news will likely be seen as a selling opportunity as potentially record large corn and soybean harvests appear to be just around the corner.
- There are still fresh cargoes of soybeans and meal en route to the US from Argentina, Paraguay and Brazil helping alleviate the season end tightness. Interestingly, this time last year the waiting time to load soybeans in Brazil was 64 days, this year it is six! This makes further Brazilian shipments into the US a distinct possibility should Monday’s report spring any bullish surprises.
- Our view, right now is that bullish surprises will be unlikely given news which we are receiving on glowing reports of soybean and corn crops outside the recently flooded regions (which are few and far between).
- Sales of new crop grain from Russia are ahead of seasonal norms as a consequence of good harvest prospects and farmers looking at the prospect of reduced prices in coming months and speeding up forward sales. In contrast, Ukraine has seen traders exercise caution due to the political situation and farmers offering aggressively low prices, and new crop sales are lagging behind normal pace. The Black Sea producers of Russia, Ukraine and Kazakhstan, three major global wheat exporters are expected to see a further season of large crops despite concerns over Ukraine’s ability to produce in the face of recent upheaval. It is worth noting that Ukrainian exports have continued without interruption so far this year. The reluctance to make forward sales is a direct result of uncertainty in the political arena as well as lack of clarity over VAT refunds on exported grain – a not insignificant factor!