- We looked at early trade this morning and saw low volumes and a mixed approach that suggested markets were searching for fresh news input. Central US weather forecasts look warmer with showers promised for the parched and dry areas within the W Plains and from a purely weather perspective we see a slightly bearish input. Global cash wheat prices also suggest bearishness as Russian and EU farmers look to empty bins/stores before the new harvest arrives and pressure the merchant trade with volume offers.
- Vegoil markets have been pressured higher by Malaysian palmoil but early trade saw prices ease a touch as the June contract failed to make new highs. We await March Malaysian production and stocks data as trade expectations suggest a decline to 1.98 million mt, plentiful on an historic basis but low in recent terms. There is potential for a seasonal “top” to be seen forming right now and this could impact soybean oil and the soybean complex in general if this is actually the case.
- EU/Russian/Ukraine weather forecasts suggest that a mixture of rain and sunshine will aid and assist crop development in the next fortnight and Russian sources hint at 2016 wheat output in the 61-63 million mt range given normal weather into the end of May whilst EU grain and oilseed crops have high output potential as weather conditions remain favourable. Our view is that we are seeing a seasonal top forming in global vegoil prices unless weather conditions intervene.
- Tonight has seen mixed fortunes with soybeans lower and the grains either side of unchanged. US farmers are watching soil temperatures closely, currently they are too low for germination but fieldwork is under way and it is now just a question of timing before planting gets going in earnest. We know from an historic standpoint that when the US farmer wants to plant he can now cover huge acreages in quick time.
- There is a question mark over dry conditions that may be starting to impact Brazilian winter corn output although, although the corn crop is reported to be in good/excellent condition in adequate soil moisture. Latest estimates suggest that even if there is a 4-6 million mt hit to current output we will be looking at a crop of 80-81 million mt, which would still allow for sizeable export volumes.
- We see little in the way of fundamental change in market direction at this time.