- CBOT markets, and European grains, are all trading in positive territory tonight as wheat leads the way forward. Technical triggers, namely trading above the 50 day moving average, have stimulated fund buying and this has lifted corn and the soybean complex to higher levels. Added to this there are concerns over recent Argentine frost and the potential for further demand from China (estimated at a further 1 million mt above existing commitments) which the bulls have taken to heart. Recent news that Russia is shortly to embark upon an intervention purchase programme also lent another degree of support to the positive tone. The final bullish note comes from news that Brazil may add to its waiver of import tax upon non S American supplies of another 600,000 mt of wheat, this is more than likely to be of benefit to US hard red wheat, hence supportive.
- In Russia, the AgMin reported that 76% of their wheat area has been harvested with output at 46.9 million mt. Whilst it is wrong to extrapolate this information into final output, we felt duty bound to do so! The answer, for those interested, reaches 61.7 million mt – however, before becoming too excited, it is important to remind that yield data to date is unlikely to be replicated on remaining acreage (unfortunately).
- Reuters crop forecasting arm, Lanworth, today updated their forecasts with 2013/14 global corn output increased 7 million mt to 949 million mt; Brazil is forecast to account for 75.9 million mt and Argentina 28.2 million mt. Their latest global soybean output numbers for 2013/14 stand 3 million mt higher at 284 million mt, Brazil accounting for 88.3 million mt and Argentina 56.9 million mt.
- To put the other side of the equation, early US corn yields continue to impress although the pace of progress is behind hoped for levels, but with positive weather prospects in the near term. Soybean harvest data is still to early and too scant to suggest any sort of trend however, initial numbers are encouraging. On the back of both corn and soybean new crop availability the previously strong cash basis continues to weaken as buyers back off and await supplies coming to them rather than chase availability.
- We find ourselves watching a seasonal “cat and mouse” affair which will continue to unfold in coming weeks.