- Markets have maybe played second fiddle to other news today; Deflation in Europe; the continued fall in the price of Crude Oil and the €uro making nine year lows (again) to pick the major headlines. As a consequence of falling crude prices corn has come under pressure as investors look even more closely at the economics of ethanol production which is under the cosh. West Texas Crude Oil prices tipped below $48/barrel and Brent has dipped below $50, numbers almost unimaginable a year ago! The soaring US$ vs. €uro, which almost breached 1:18 earlier in the day is making US prices look uncompetitive and it will be interesting to see if this is reflected in next week’s USDA estimates.
- In markets, corn is hovering just above the support provided by the 50 day moving average, which if broken will likely pave the way to lower levels particularly if funds decide to either exit longs or add to short positions. Wheat in Chicago is also very close to 50 day moving average support and soybeans are also closing in on the same support trigger. It seems that funds are willing to reduce risk ahead of Monday’s report.
- It is reported that China has managed to auction some of its state corn reserve which could pave the way for maybe 10 cargoes to be imported under licence and it is thought by some that S American or Ukraine origin will be most likely, despite being around $10.mt above US Gulf, due to lingering GMO concerns.
- In Brazil the first export terminal has switched to soybeans from corn as new crop availability grows. Reported yields in Mato Grosso are record large we have heard, no doubt a trend which growers hope will continue!