Weekly overview:

• We end a second week without the usual data stream from the USDA as the Federal Government continues in its shutdown, which resulted from budgetary disagreement. This state of affairs continues to hamper trade to some extent with many feeling they are “flying blind”, and there has been a reduction in risk appetite by many.

• The good news is that harvest in the US is picking up pace and reported yields continue to surprise to the upside and this is being taken to heart by traders and appears to be capping rallies. Some growers are reporting record or close to record soybean yields and the weather has remained favourable this week with some 50 to 60% of the soybean acreage expected to have been harvested by the weekend. There is, in the absence of USDA figures, much talk of the US soybean crop exceeding 42 bu/acre and corn topping 160 bu/acre, clearly only further time will prove, or disprove, these numbers.

• On the other hand, we are seeing some strong spot demand for both corn and soybeans as new crop supplies become available and this has provided some slight degree of support to nearby futures contracts.

• It has been rumoured that the US corn based ethanol which is blended into gasoline may have its mandated inclusion lowered in 2014 from14.4 billion gallons to 13 billion gallons. The potential impact upon corn grind for ethanol would be to see a decline from of some 500 million bu, and this was sufficient news to trigger some selling in the market.

• Egypt’s GASC returned to the wheat tender market for the first time in a month, only to walk away from any purchases due to “high prices”, which the market is attributing to a lack of quality supplies from Russia. It is widely expected that they will return to the market place as and when prices ease back. Clearly there is no such guarantee that prices will move in their favour and the key question has to be, “Is there sufficient wheat of the required quality in the Black Sea region to meet the needs of Egyptian buyers?” Should the answer be “no”, then it will likely fall to French exporters to fill the gaps.

• Brussels granted another huge week of wheat export licences, maintaining the record pace of exports, with 866,791 mt bringing the season to 8.095 mmt, which is close to 3.4 mmt ahead of last season (72.4%).

• In summary, we continue to look for further price pressure on both soybean and corn prices as the US harvest progresses. In wheat there is less direct pressure, as Egypt have found this week, and it may well be that we need to see significant pressure from corn prices to trigger a downward trend in wheat prices.