- Life becomes somewhat more difficult whilst the US remains “closed for business”. The Federal Government shutdown of “non-essential” departments, now in its seventh day due to lapse in funding, includes thousands of crop scouts who are (or rather, were) in the process of compiling their survey data in advance of next Friday’s USA crop report and WASDE (World Agricultural Supply and Demand Estimates) report. Today the department confirmed that the report would not be released. One commentator is quoted as saying, “It leaves the market in a bit of a fog.” something of an understatement in our opinion!
- There have been rumours (unconfirmed) of significant Chinese buying in corn today, which would not be reported as normal due to the government shutdown. Cynics might view this as an “under the radar” stealth raid by Chinese buyers, although we do not subscribe to that particular theory. The rumour has, however, been sufficient to place some degree of support under the grains in today’s trade, where it is reported that Dec ’13 corn volume has reached in excess of 100,000 contracts. Soybeans and wheat have been less active, and it is believed that the lack of data is, unsurprisingly, leading towards a “risk-off” attitude.
- Once again, as a result of the shutdown, we will not be getting updates on crop condition or harvest progress, however, it is estimated that around 20-22% of the soybean crop is harvested and 19-21% of the corn crop gathered. Clearly, the more of the crops which are harvested the less important the reports will become as we will be dealing with actual harvest data rather than estimates and survey derived information.
- In the absence of hard fact we can only report that we continue to hear of Midwest corn and soybean yields continuing to provide a pleasant surprise, being better that previously thought. The prospect of a larger US soybean and corn harvest is looking more and more likely right now. This will place a cap on any price rallies, and we continue to believe these will prove to be selling opportunities when we look back.
- Russian winter grain planting acreage is expected to be smaller this year due to bad weather; rain is expected to curtail overall plantings, including wheat, which is a precursor to reduced exports in 2014 and a potential “pinch-point” for next year’s global supplies. Russian grain exports this year (2013/14) are officially expected to be 20 million mt, of which 9.1 million mt have already been exported in the July – September period. Included in this figure are 7.5 million mt of wheat and 1.2 million mt of barley. Not only is weather an issue, but domestic restocking by the government together with a reported lack of quality wheat, are all expected to lead to less competitive export activity – particularly compared with other Black Sea operators such as Ukraine.
- The Russian news has the potential to pave the way for a continuation of the fast pace of EU wheat exports with the potential for a total tonnage in the order of 26 million mt being freely discussed.