- A big jump in CBOT soybean prices was the feature of today as old crop prices made big gains. The whole soy complex followed August futures higher as it closed limit up at new contract highs. The August contract has gained $59.50 since the July contract expired, but is still $33.00 below the expiry price level. Clearly old crop pressure is still very much in evidence. The outlook remains for strong old crop futures as cash soybeans remain significantly more expensive than futures, we would (and do) believe that new crop prices are somewhat overvalued above $13.00, and anticipate this being addressed as and when the soybean harvest is underway.
- Interestingly, despite a strong soybean complex, corn once again tested recent lows ($4.91 basis Dec ’13) before closing a touch higher and positive rainfall was doubtless helpful as was the two week forecast which has little in the way off stress inducing heat or dry conditions. Wheat prices dipped lower alongside corn, and the Paris MATIF market closed at 12 month lows.
- In other news, the “mothballed” Ensus plant is reported to have been sold to German based CropEnergies for a sum reputed to be under 5% off the £250 million construction cost, and paid in shares – not cash. That must have hurt! Assuming the new owner will want to see the plant actually run, we can expect anything up to 8% of the UK wheat crop, which is expected to be around 12 million mt, to go into Teeside. Add to this the capacity for the Vivergo plant and we can see another tight UK S&D situation becoming tighter. Reliance upon imports will be a feature once again, the key question will be what premium over EU mainland prices will be required to ensure adequate supplies in the UK. One further question remains, and that is, will either plant use corn in place of wheat, we know the Ensus plant trialled the use of corn prior to the last shutdown – time will tell.
- Finally we would like to offer our congratulations to the Duke and Duchess of Cambridge upon the safe arrival of their son.