- We currently see Chicago markets best described as “big crop, big demand” and believe that this will be our mantra in the coming few months. We are facing a supply push bear market and a demand pull bull market, both at the same time! Right now we have to comprehend and compute the size of the US crop before any demand pull price rally truly kicks in. Consumers want to gain a better understanding of the US crop size in the August WASDE report before adding to current position length. Regardless of the report contents we would expect additional consumer cover to be taken post report release, with the potential for upward price momentum as a consequence.
- Right now we are seeing corn prices at two year lows with potential for US soybean export volumes to be such that there is little room for S American crop issues. It is our belief that S America needs to produce and harvest a record (or close to record) 2017 soybean crop if global supplies are not to be depleted. One further area of question is whether or not the US has adequate out-loading capacity to cope with the anticipated growth in soybean export sales.
- Black Sea wheat prices have risen a quick $7-9/mt in the past six trading sessions amid improved demand and tightening supplies as Russian and Ukraine farmers do not appear willing to sell their recently harvested cash wheat at current low prices. Additionally, due to the acute French and S German crop quality issues, E European wheat is being booked on small vessels into W France. All of a sudden it’s a race for quality wheat. The rally in world wheat prices is placing US wheat in a more competitive export position. Note also that Russian 12.5% wheat at $168-169/mt spot is still trading $3-4/mt below US Gulf corn. It never makes good sense to be short of the cheapest quality grain in the world at decade lows!
- Egypt’s GASC received 10 offers on an overnight wheat tender that were some $10/mt above their past tender on rising Black Sea offered prices. Including freight, the CIF offers stand at or above $178/mt compared to $168/mt on July 12th. The GASC tender provides yet more confirmation that world wheat prices are rising, even as some raise their estimates of the 2016 Russian wheat harvest to 69 million mt. Seasonal lows are being forged in world and US wheat values!