- The week has started with Chicago grain markets soaring higher, led by wheat and corn tagging behind whilst soybeans and products (meal and oil) are all trading lower. Wheat started higher on technical considerations and soybeans fell on unwinding of spread trades (soybean/corn, soybean/wheat) that were popular in the last few weeks. Caution needs to be exercised here as sub $8.80/bu soybeans look difficult to justify right now given what appears to be significant Chinese demand at current low prices. A further 120,000 mt were sold to China today for 2015/16.
- We are picking up news of another major Brazilian trucker’s strike planned to start on 9 November. The truckers are complaining of low rates and lack of profitability, which could lead to another lengthy dispute. Corn movement to ports as well as transport of crop inputs, fertiliser and chemicals, required for seeding will likely be impacted. The main concern is that it rumbles on into February and March, the heart of the soybean harvest period.
- The US’s weekly soybean export total was the second largest on record for an October figure at 98.1 million bu. The overall record was set in November last year at 114 million bu, and it seems China is ramping up demand at current prices, which are low in relation to recent years. Some are estimating total Chinese imports as high as 84 million mt, some 5 million above the USDA’s current forecast. Clearly China is a price buyer.
- US harvest progress figures will be released later tonight, and it is expected that soybeans will be over 86% and corn over 75% harvested.
- Friday’s Commitment of Traders report, which provides us with the data for our published fund position report, has come under question today. It was described this morning as, “A shocker”, with a much larger than expected net short wheat position, and a less long corn position, which has acted to support the grains in today’s trade.
- Despite today’s price action, we continue to struggle with finding sufficient fundamental information to support a lasting rally in global grain prices (aside from fund buying). As a final note, US unleaded gasoline is trading 27 cents below the price of ethanol!!!