- The day, and holiday shortened week, started out with CBOT prices sharply higher on the back of limited rainfall in the ten day forecast for central US cropping regions. With soybeans the most needy for moisture it was little surprise that they led the pack higher with Dec ’13 soybean meal trading limit ($20/ton) up early on. Corn and wheat tagged along. By mid-afternoon (UK time) the meal contract had given back $6 of its gain and the grains turned into negative territory.
- The long weekend weather, which was always going to be watched closely, contained varied rainfall in terms of both quantity and coverage. Some areas received more than anticipated whilst others received less. The forecasts for the next week to ten days offer some limited rains across the central and south Midwest with the possibility of some falling across the northern parts of the Midwest. We have seen forecasts of rain failing to materialise in recent weeks and until there is rain in the gauge we doubt traders will ease up on their endeavours to prop up prices, particularly in soybeans and meal.
- It becomes harder, as time marches onwards, to continue to believe that the world is well supplied with grains and oilseeds (as we have frequently stated). However, the potential crops in the US, following on from S America’s harvest and their upcoming planting intentions, which are being talked up, suggests that our view remains plausible. We will continue to stand by this position for the time being.
- Today Stratégie Grains revised their projection for the French maize crop which has benefitted from warmer temperatures permitting a degree of “catch-up”. Their revised estimate at 15.6 million mt is nearly 360,000 mt below their last figure issued on 9 August. Yield at 8.8 mt/ha is lower than the 9.14 mt/ha previously forecast although the acreage has been increased slightly, which offsets some of the yield decline. If achieved, the revised forecast tonnage will almost equal last season’s output.
- With yesterday being a holiday in the US we did not report on the latest wheat tender by Egypt’s GASC, who secured a further 355,000 tonnes for 1-10 October shipment. The “usual suspects” were successful, Romania with 120,000 mt, Ukraine with 60,000 mt and Russia with 180,000 mt. The only other offers were French, and these were $4 and $10 per tonne more expensive on an FOB basis and also appear to have a $7/mt freight disadvantage making the overall offering around $12 to $18 too much.
- Very interestingly we received a report from Brazil’s main grain producing state, Mato Grosso concerning their bumper corn crop. It appears that storage facilities are bursting at the seams which, at first glance, may appear good news and highlight their advantageous position in being able to double crop. However, the Mato Grosso Safrhina second crop appears to be at a record 21 million mt, an increase of 18% on last year, and accounts for some 45% of the country’s total crop. The bad news is that the port and road infrastructure is struggling to cope with the volume leaving farmers with crops standing in fields and local prices falling sharply. We have picked up reported levels equivalent to $1.79/bu, which compares with CBOT Dec ’13 at $4.72 today. Crops stored in the open are reported to be a common sight, and buyers are cautious in the extreme. Government auctions have helped to cover the difference between market and world prices, assisting growers and it would appear likely that this will be repeated and by all accounts there will be a large acreage planted next season. Clearly we are living in a very strange world!