- News today has come from in a variety of guises, US exporters reported further sales of 2014/15 soybeans to “undisclosed” destinations and at the same time China was reported to have cancelled another 120,000 mt of soybeans for the same delivery period. Read into that what you will!
- Ukraine’s AgMin has suggested that their grain exports for 2014/15 will reach 37 million mt, which is 4.2 million mt more than last year’s total and somewhat higher than may have been anticipated given geopolitical tensions and suggestions of export restrictions.
- Markets in Chicago have seen soybeans trading lower as did the grains although as we approach the close (45 minutes to go) wheat is finding a touch of support and is just in positive territory. Soybeans have probably traded lower on fast declining US export sales and favourable weather forecasts into mid-February as well as reports that both harvest and safrinha corn plantings are proceeding well. Global soybean consumers are slap bang in the middle of a north to south hemisphere transition and even small price adjustments make a big difference.
- The big picture remains pretty much unchanged; there is an ample supply of soybeans in the world although it seems farmers continue to display a reluctance to sell with all that brings with it. However, as prices remain elevated (relative to potential end stocks) we are facing additional encouragement to plant ever large areas and the consequences to S&D’s can only be viewed as longer term bearish – the question is one of timing, when are we going to see prices break lower? Forecast corn acres in the US and trend yields (8 bu/acre below this year) suggest a 2015 crop of around 13.3 billion bu vs. a demand of some 13.5 billion bu, clearly at these levels there is little to suggest any significant price upside at this time. In wheat there still remains too much supply chasing too little demand and the potential for Russian supplies to come back and overshadow the market is beginning to look very real.
- Wheat markets in Europe led the way lower with London shedding £2.00 plus and Paris €2.50 in reasonable volume trade. The technical chart picture does not look bullish for either origin, and the Chicago chart looks even more vulnerable to lower prices despite being somewhat oversold right now. This could indicate that there is room for a bounce in the short term although the fundamentals do not support this greatly. Yesterday’s suggestion of a change to Egyptian moisture specifications appears to have unnerved the market, particularly the French!