- We provided an initial comment earlier today, so a brief update follows. Today’s volume in Chicago is much reduced on yesterday where we saw some big price declines, and today has seen some recovery in soybeans and wheat with corn a touch lower (with under half an hour to go). Market length is still being taken out of corn and there was evidence of short covering in soybean and wheat, which would explain today’s moves to a large extent. Unless we can see markets close on their highs it feels as if we will continue to see prices pressured lower in coming days and into month end on Friday. We lack any substantial confidence in a sustained rally amid favourable Midwest weather conditions with rain falling across the drier areas of IA/MN. This rain will help to ensure higher soybean and corn yields in the W Midwest and the market is becoming more accommodating of a 164-167 bushels/acre corn yield.
- Russian wheat yields are surprising to the upside with some analysts placing the crop at 58-59 million mt. There appears to be a similarity to last year when yield/production also came in above expectation, and if the trend remains we could well see Russia as an active exporter particularly as the Rouble continues to remain weak. To that end it should not be forgotten that the Rouble/Hryvnia are at 4 and 3 month (respectively) lows in the run up to winter planting decisions, which does not suggest that we will see acreage declines.
- In Europe we saw both London and Paris wheat futures markets pause for breath, particularly Paris as the €uro was slightly weaker. Perhaps of interest is the growing estimate of feed grade wheat in the Balkans and the EU 2015/16 feed S&D is starting to look somewhat complex in the context of a substantial drop in the corn crop as well as some restriction in grazing/pasture land across much of Europe. This is an area that will be worth watching in coming months.