- Yesterday’s GASC wheat tender resulted in a purchase of 420,000 mt, by some way the largest of the season so far. Russia secured 180,000 mt, Romania the balance of 240,000 mt at $193.40/mt and $192.50/mt respectively (both basis C&F for early December shipment). By way of comparison the Egyptian season total stands at 1.6 million mt vs. 2.8 million mt last year when the average price then stood at around $209.00/mt.
- There has been a suggestion that Russia’s wheat crop may be as much as two to three million mt overstated by the USDA, which is adding a touch more support to pricing today. Consequently, our view that downside risk in wheat is limited is strengthened a notch or two today. US Gulf wheat pricing now looks comparable to Black Sea, Russia and Ukraine levels thereby limiting downside. US Gulf corn is now at a $0.10 discount/bu to Black Sea as far forward as February, which again suggests downside risk is limited.
- Chicago markets have today seen fund buyers, once again, active with the soybean complex leading the way and indeed with soybeans closing almost 2% higher. This “bounce”, for want of a better description seems all about solid demand, and the “big crop” vs. “big demand” story could well be taking a turn in favour of the demand side at this time.
- In Argentina the weather is leaning favourable for dry conditions, which will benefit planting in the coming week across the wettest areas. Meaningful rains are also forecast across C and N Brazil where frequent showers are a feature for the next two weeks. A welcome, and needed, boost in soil moisture levels across key areas of Mato Grosso, Gois and Mato Grosso do Sul is on the cards as are near to normal temperatures.
- Soybean future are close to or just above what seems to be fair value and the longer term thought process remains, namely price rallies will attract additional non-US production. Already we are hearing of price stimulated acreage expansion in spring plantings, although this is very speculative at this time. As prices rise, specifically in soybeans, we believe that there is an opening for downside unless there is a fundamental input to support a longer term bullish trend.