- Tuesday saw soybeans under pressure from follow through liquidation but found support at the new monthly low finishing higher on the day as late short covering featured.
- Corn saw the anticipated Turnaround Tuesday as it rebounded higher, but tha fact that US Gulf corn is the world’s cheapest is probably more significant. Gulf corn is marginally above Black Sea feed wheat for spot delivery. Despite the rally, funds continue with a sizeable net short, estimated at 180,000 contracts compared with 166,000 last Tuesday. Ethanol futures settled higher for the fifth consecutive day and production margins have grown to more than $1/gallon (basis spot futures). Such profitability has not been seen since around 2014 and this will likely drive production still further. Clearly the big supply/big demand picture remains intact, and neither a bullish or bearish stance has much to commend it at present!
- There are a number of global wheat tenders due to close this week, including a Moroccan US only tender and this has lent support to the market. The last Moroccan tender saw 265,000 mt of US wheat sourced and a similar volume is expected in this latest round highlighting the US’s competitive position. US Gulf prices compare well vs. Black Sea into late autumn. EU cash prices continue to inch higher with both German and French offered at $188-189/mt for spot delivery whilst US Gulf is $187 for SRW. We would expect to see global milling demand move towards the US as a reliable source of supply in coming months. There are quality concerns in Australia and Canada and there is even talk that Russia is blending its higher quality old crop supplies with new crop to meet standards. This is not a time to be bearish wheat!