Today has been something of a “down” day with much of the selloff attributed to “Frankenstorm” Sandy the hurricane which is approaching the east coast of the USA. The storm is reputedly one of the largest in recent memory and, to give a perspective, if superimposed over the EU would cover the vast majority of it!

As a consequence, the NYSE LIFFE trading floor in New York and the ICE exchange in lower Manhattan have closed ahead of the storm making landfall. Markets have fallen as funds liquidate positions ahead of possible market closures Tuesday and to generate cash to meet potential margin requirements later in the week. Volumes have been thin and today’s fall has prompted further attention from Chinese soybean buyers looking for value on a scale down basis. On the other hand cash basis levels have firmed as growers hang on to their crops in store looking for higher prices in coming months.

We have heard today that there is a possibility that China may fall short of the USDA’s forecast soybean output by as much as 2.7 million mt which would add to their potential import requirements heaping further pressure on already stretched supplies.

On the wheat front continued wet conditions are hitting Argentine output and quality as fields flood and fungal disease spreads. Dry conditions are impacting newly sown Russian crops in southern regions, which is impacting emergence; this will leave the crop vulnerable to winter-kill much as is the case in parts of the US Plains region.

On balance, we see the dip as temporary and would expect a sharp recovery when “Sandy” retreats.