- Chicago markets have been pretty lacklustre today, maybe they are anticipating the arrival of 3 feet of snow that is forecast to hit parts of eastern US in one of the worst storms in living memory. Aside from the snow in the US, global weather conditions remain benign and non-threatening, and “finishing rains” continue to remain in both the forecast and are materialising on the ground in S America.
- US exports for the marketing year through to last Thursday show corn to be at 562 million bu (up 9 million year on year), wheat at 539 million bu (down a massive 260 million year on year) and soybeans at 1,312 million bu (up 197 million year on year). It should be noted we are fast approaching the US soybean export season end as S America takes up the volume in coming weeks.
- Russian domestic wheat prices have declined from their early January peak and the government is failing (in spectacular fashion) to secure its 3 million mt of intervention purchases as domestic price levels remain higher than intervention price. At current exchange rates it seems Russian exporters can pass on the full export tariff at prices of $255/$260/mt, which translates to a cap of $5.60/bu basis CBOT contracts. The physical market seems undisturbed by controls on Russian (or Ukrainian) wheat exports.
- Also noteworthy, in an otherwise lacklustre market, is the fact that ongoing warmth and above normal precipitation across Europe, Ukraine and Russia looks likely to leave wheat winterkill levels below average so far this season.
- We continue to argue that it will take a significant weather disaster somewhere in the world to change what we believe to be a fundamentally bearish pattern right now. Lack of fresh market moving news or information is likely to see prices somewhat rangebound and any rally attempt struggling as we move deeper into S America’s harvest.
- Oh, finally we nearly forgot the Greek election, which saw the anti-austerity vote win the day in Sunday’s election! The early decline in the €uro (150m points) was reversed into a 70 point gain on the day. The Ruble fell a further 3% and Russian debt was again downgraded by S&P in the face of further sanctions. Matif wheat declined but rumour that Egypt’s GASC may be about to return to a max 13% moisture level left cash premiums on the defensive. There is little to point towards higher cash wheat markets at this time.