Markets moved higher to start the first full week of 2015 in some sort of response to the 2014 year end drubbing although the fundamentals continue to point lower. There was presumably some post holiday euphoria in Chicago, interestingly many of the buyers were last week’s sellers! Front month Jan ’15 soybeans pushed back to the 50 day moving average, wheat remains well below December highs whilst corn has clawed back around half of last week’s losses. Will the first Tuesday in 2015 display classic “Turnaround” tendencies?

Matif wheat bounced to close at seven month highs supported by a nine year low in the €uro and suggestions that last week’s Algerian tender saw in excess of half a million mt sold at a price believed to be at or very close to full replacement. Black Sea prices for Russian origin wheat were well supported with shorts prepared to pay up of January shipment in order to beat the February tariff deadline. There is also news that Ukraine has decided to halt VAT reimbursement, which when added to the severe cold forecast for the US all added support. One piece of good news lies in the reported level of EU/Black Sea snow cover which is shown on the attached graphics and appears significantly better than a year ago.

S American weather continues to attract discussion, as would be expected now that the US is done and dusted – all bar final counting. There is some dryness in Bahia (far NE Brazil) which accounts for around 4 million mt of soybean production. The remainder of Brazil and primary crop producing regions of Argentina have enjoyed near to above average rainfall and a lack of any real heat. The bottom line is that the crop has potential for record yield, and like the US crop now requires some “finishing” rain to allow it to mature. There will be a requirement for dry weather across N Brazil post 25 January to allow harvest to progress speedily.

It is reported that China is to hold an auction for some of its 5 million mt (???) reserve corn stocks, and there is an expectation that this may well encounter difficulties due to the age of the stock (2 – 3 years old) and the fact that it is stored outdoors! If demand for their stock is limited it will impact China’s issuance of import licences negatively limiting the volume of exports from the majors, US and Brazil.

It has already been an interesting start to the year.