- Most of the day has seen CBOT markets displaying green numbers signifying higher price levels. This, despite improved Plains soil moisture levels following recent rain and snowfall. The latest USDA crop condition report shows improved wheat condition in Kansas and Oklahoma.
- The market continues to look at S American conditions, and despite March improvements (early days) due to better rainfall in Argentina it may be overly optimistic right now to forecast bumper harvests. Planting delays and extremely dry conditions in the mid summer period will likely have taken their toll on potential. Recent rains will, no doubt, have improved the crop outlook but overall output will have been compromised to some degree. We do not have to look back too far in time to recall sodden fields leading to planting delays and crops ultimately being sown in less than ideal conditions.
- As a consequence we received news from Argentina’s RGE (Rosario Grain Exchange) reducing their estimate of soybean output to 48 million mt from 53 million mt last; corn output was also reduced to 25.5 million mt, a 1 million mt reduction.
- US soybean prices appear, despite recent gains, to remain attractive with exporters reporting sales of 345,000 mt to China in 2013/14 and a further 330,000 mt in the 2012/13 crop year to “unknown destinations”. These sales appear to have provided markets with a degree of support, albeit there is a suggestion that the interest in US supplies could well be driven by Brazil’s port congestion issues. Prices have today moved above the $15/bu level (basis March ’13 contract) before easing in the last hour of trading. A close above this level ($15/bu) would likely trigger further upside moves with technical targets above $16/bu looking possible.
- It appears there is some recognition surfacing in the marketplace that the US S&D can ill afford these additional exports, end of season soybean stocks are already forecast at historically low levels, and additional export sales will only add further pressures.