- Today has seen soybeans putting in a strong(ish) performance much of which is attributed to badly positioned long corn/short soybean trades. The soybean/corn spread was a much touted trade with 2015 corn acres estimates at 88 million (or lower) and soybeans at 87 million (or higher). Today’s rally has triggered some buy stops and funds have followed according to our sources.
- In contrast wheat pushed to new year lows as Black Sea prices continued to display weakness on a FOB basis, although prices have moved higher into the close. The Russian export tariff continues to be discussed, with the latest rumour suggesting that the tax could be lifted as soon as June 1st. Key players are waiting for formal confirmation before making decisions – a wise move in our opinion!
- The EU parliament voted in favour of a cap at 7% on first generation biofuels (those based upon grains, sugar, veg oils etc) with the possibility of lower levels at national level. One commentator suggest that 2015 will see biofuel incorporation at 4.6% at an EU level with 5% for bio-diesel and 3.4% for bio-ethanol. It is not expected that the outcome of the vote will make any market moving impact.
- US weekly crop conditions and progress show winter wheat rated as good/excellent to be 42%, which is unchanged for another week. Spring wheat is 55% planted, up from 36% last week, 17% last year and compares with the ten year average of 29%. Corn was reported to be 19% planted, up from 9% last week and 17% last year, and compares with the ten year average of 25%.
- As an aside, US spot CBOT oat futures have fallen to their lowest level since 2010. The monthly oat chart below reflects the sharp fall in oat prices in recent months as producers shed old crop stored supplies and end users await new crop supply. The next downside price target rests at the monthly trendline at $2.09 which would nearly reach the 2010 lows. Long time grain traders argue that oats lead the CBOT. We are not sure of that direct correlation, but freely admit that commercial oat participation makes this grain a lead indicator. Oats and wheat are both trending lower and without adverse world weather, bottoms are not expected until June.
