- Today’s biggest new was probably the report from StatsCan who released their latest crop estimates which included a record breaking all wheat output for 2013 at 37.53 million mt, which is way above estimates of 33.8 million mt, a 37.9% increase from 2012′s 27.21 million mt. Canola (rapeseed) at 17.96 million mt also set a record and is an increase of 29.6% from 13.87 million mt in 2012. Year on year gains of 10.32 million mt and 4.09 million mt for all wheat and canola (rapeseed) respectively are clearly significant and the only negative note that is being placed upon them is a question mark over the ability of Canada’s export infrastructure to cope. We believe the data, which we presume to be correct, can only be construed as bearish from a price perspective. The prospect of a global record large canola (rapeseed) crop in addition to large US and S American soybean output should not allow for significantly higher prices than we are seeing at present.
- Yesterday’s news of non approved US GM corn being found in material shipped to China has resulted in rejection of 121,000 mt of material according to Reuters. This volume amounts to the largest recorded rejection, is in addition to last month’s 60,000 mt rejection, and could well point towards a sharp decline in new business. There have been suggestions that the Chinese government may well wish to slow import pace in the face of stronger than anticipated supplies. The news must have shippers, who have close to 2 million mt of material on the way to China, somewhat nervous, and shipments will no doubt be subjected to stringent sampling and testing prior to being accepted at destination. The GM event, MIR 162 or Agrisure Viptera which is an insect resistant strain, has been in the US supply chain since 2011 and is approved in Japan, S Korea, Russia and even the EU who are slow in issuing approval of GM events. We consider the news to have longer term bearish implications for corn pricing, particularly if there are further rejections in coming weeks.
- It is probably evident from the above that we continue with our longer term bearish outlook.