- At last the day has dawned, the USDA will unveil “Super WASDE” at 5pm UK time today, the first such report since September – hence the title. The big question is, “what will it contain?” If trade this week is anything to go by, it seems that the trade is expecting a large US corn crop as the market has made a succession of new contract lows (basis Dec ’13 contract). To counter this, the net fund short position can only be described as huge, and, as we have mentioned previously, anything other than confirmation of trade expectations could well see an upward hike in prices. On the other hand if the report confirms the trade view, we are unlikely to see a further big move downward as the crop size is already priced in.
- Soybeans this week (basis Jan ’14 contract) hit their lowest level since mid-August, coming close to filling an open chart gap, before rallying Thursday making some strong gains as shorts took cover ahead of the report and in the midst of further strong US weekly export sales data. The strong pace of both domestic crush demand as well as exports, which will potentially limit closing stock levels, tempers anticipation of a larger soybean crop. S American soybean output potential continues to improve with another record crop in prospect, which is weighing on deferred prices.
- In wheat, US prices have continued to be pressured as global weather conditions continue to be viewed as beneficial. Concerns that previously existed over weather-delayed plantings in Ukraine and Russia have all but disappeared as Ukraine this week reported winter plantings to be complete and Russia not far behind. The outlook for global wheat supplies in the coming season would appear to be pretty good.
- In terms of other news this week, the US Food & Drug Administration (FDA) proposed a ban on artificial trans-fats in processed food products. Their decision was based upon such fats being considered responsible for unnecessary deaths from heart disease. The market reacted to the news with soybean oil prices dipping sharply before recovering some of their losses. The timing of implementation of such a ban, if approved, is not known at this time.
- Egypt returned to the tender market once again as anticipated, and purchased 60,000 mt from Romania for early Dec ’13 delivery. Their decision on 10 October to “pass” on any purchases, as prices were “too high” has clearly backfired somewhat as their most recent purchase this week has cost close to $7.00/mt more than the earlier offers. It is gratifying to see that it is not only ourselves who make poor trading positions, but we are pleased ours are not quite as public as GASC’s!
- Brussels continued the trend of large weekly export licences with 494,286 mt bringing the season total so far to 9.874 million mt. This is 3.404 million mt (52.6%) ahead of the same time last year.
- In front of the USDA’s figures later today, we have seen Brazil’s CONAB estimating their 2013/14 corn crop higher at 78.5 to 79.8 million mt, an increase from 78.4 to 79.6 million mt last month. The soybean crop was also forecast higher at 87.9 to 90.2 million mt, which was up from last month’s 87.6 to 89.7 million mt. Private forecaster Michael Cordonnier has also estimated Brazil’s soybean crop at 90 million mt.
- In summary, the market is anticipating this afternoon’s report perhaps with something of a more optimistic frame of mind as the current evidence would suggest that global stock building is actually under way – at last!