- The week has started with CBOT and European markets settling lower, sharply so in the case of corn, soybeans and soybean meal where losses exceeded 2% in some months, and wheat followed suit although losses were confined to (only) around 1.5% in Chicago. It will be interesting to see whether tomorrow springs a not uncommon “turnaround” day and claws back today’s losses. Also of interest has been the return of some volume to the market compared with some of last week’s lighter volume days.
- What has happened to trigger today’s selling? Argentine weather has been somewhat more favourable to corn and wheat planting in recent days despite suggestions that there has been some damage classed as “irreversible” in northern wheat regions. Brazilian plantings are also progressing well. Also, we hear that Egypt is once again claiming adequate stock levels through to mid-February and their next tender is expected in the coming 2 to 4 weeks, as sceptics we wonder if this “news” will be confirmed by their actions in coming weeks. US harvest pressure is also considered to have been a factor in today’s price moves.
- Interestingly farmer selling in the US has not been a feature, storage appears to be the favoured strategy right now. It remains our belief that if this remains a feature for any significant period of time, we will ultimately see significant price declines in a late rush to sell formerly stored crops ahead of S American harvests.
- As the day has progressed selling appears to have turned to a more technical feature with some support levels being breached and (notably) Dec ’13 corn making new contract lows in Chicago.
- The likely trend in coming days is (in our view) unlikely to remain so strongly bearish in advance of the USDA report on 8th November.