- It has been an “interesting” Tuesday with the macro picture coming to the fore. We have seen some sharp losses in the value of crude oil and the US stock market whilst the US$ soared higher. In a move which took many by surprise we have seen the value of US wheat fall, sharply, as S Plains weather improves and funds queued up to make sales ahead of harvest. It is also interesting to note that global wheat prices have not fully followed the Chicago rally underlining its fragility, and as last week’s low was penetrated volume selling returned once again.
- Support in July CBOT wheat this morning stood at $4.95½, which was broken today, and the next level looks to be $4.87¼, tomorrow’s trade will be interesting. This morning’s support for December corn stood at $3.72¼, which was breached but the market closed a whisker above this level, the next level of support sits at $3.65¾. The trend appears lower with no weather issue to reverse it at present. In soybeans the market is clearly oversold at present but there is again no weather issue to reverse this right now. Support sits at $8.73½, some way below current closing levels but given everything we see right now this looks vulnerable as does the potential for growth in the fund net short, which may, just may, post a significant new record before too long.
- In Argentina strike action is providing some support to the front month soybean meal contract. It appears that the Oil Worker’s Union and crush/export industries agreed to a 36% wage increase (that included a bonus above the 27% wage increase) this morning, which was promptly vetoed by the Argentine Government. The reason is that other Government affiliated unions agreed last week to a 27% wage increase and the non-affiliated Government Oil workers Union cannot be seen as getting more from its employers. As such, the parties don’t know what to do next as the negotiated deal cannot be blessed by the Government. New meetings are being set for Wednesday for all involved – including the Argentine Labour Division. The hope is that some sort of work around can be found.
- In Europe Matif markets were open Monday but traded volume was very thin and prices pretty much unchanged whilst losses kicked in today on the back of the slump in Chicago levels. The Senalia silo has announced a back to normal status on intake, which should help matters somewhat although timing, as they say, is everything! The €uro dipped 150 points on the prospect of an impending Greek default to the IMF. The Brussels crop unit, MARS, upped its 2015 EU wheat yield to 5.93 mt/ha (from 5.89 a month ago) which compares with 6.07 mt/ha last year. Given the lack of area estimates from MARS it is impossible to calculate an overall production making the figure a bit pointless – but gives a sense of direction.