- The weekend news has been dominated by reports that Cyprus may be forced by Eurozone finance ministers into making depositors in Cypriot banks share in the costs of the latest bailout. The Euro fell to its lowest vs the US$ this year and the rise in the US$ has left commodities under pressure throughout the day. Reaction has largely been one of a “flight to safety” as gold has risen over 1% in value, being viewed as a “safe haven” – for now!
- At the same time the IMF is in talks with Egypt with a view to making loans, necessary to allow government backing to wheat importers, when they make purchases (notably absent in recent times). The nation’s past refusal of loans is believed to be because of the stigma associated with implied austerity measures and the potential domestic disturbances which could follow. We have referred in recent days to the news that Egypt has been publicly stating it has large wheat stocks, and added our sceptical view that this could well be a “smokescreen” to mask the true reason for their lack of recent wheat tenders.
- Reuters today reported that Ukraine may be about to extend its current (informal) grain export cap leaving the government free to exert greater control over domestic price levels. The limits imposed on 2012/13 export volumes were brought about by a combination of drought reducing overall output and growth in foreign demand around the world, both of which conspired to potentially leave Ukraine with insufficient stocks to last until the 2013 harvest.
- Brazil’s top soybean producing state, Mato Grosso, has benefitted from its recent dry spell which has permitted swift progress for the harvest, but could well prove to be the undoing of the “safrinha”, or second, crop of corn which is traditionally planted following the soybean harvest. Soil moisture levels, essential for successful germination and development, have suffered following the recent dry period. March, a traditionally very wet month in Mato Grosso, has seen little, if any rainfall so far. Pre-planting estimates of Brazilian next corn harvest have been similar to last year’s bumper crop, which reached a record 73.5 million mt. Unless rainfall materialises, and soon, these sort of output levels will be unlikely as dry conditions will not permit the crop to get as good a start as it received last season.