- Today has been another “up” day with prices rising both here and in the US, sharply so in some instances. Technical levels have been breached triggering further upside as spec buying pushed markets higher. Sellers have been active too, taking advantage of higher levels at which to secure additional cash sales with prices being viewed as attractive. End users are notably absent and appear unwilling to add purchases at these higher levels. China remains on holiday, celebrating the Lunar New Year in an extended break, and it will be interesting to see what slant they add when they return in force next week.
- StatsCan’s latest estimates surprised the market, adding impetus to the bulls, 31 Dec ’13 wheat stocks were reported at 28.38 million mt below estimates of close to 29 million mt although still well above last year’s 20.61 million mt. Canola (rapeseed) stocks were put at 12.6 million mt, above estimates of 12.3 million mt, and up from 8.1 million mt last year. The latest figure would represent a new record high. Unfortunately logistical constraints appear to be continuing to deprive the world of material, wheat is flowing across the border into the US but canola shipments are struggling, and as a consequence Australia is seeing additional demand for their current crop.
- Weather concerns have been growing in some southern and eastern Brazilian states as lack of rains and higher temperatures weigh on opinion. This could well be one of the triggers for the current rally in prices. In addition, Argentine farmer selling policy remains an unknown, which is supportive from a price perspective, particularly for soybean meal, Argentina being the world’s largest exporter. Recent Peso depreciation has had little impact so far as farmers continue to hold stocks as a “store of value”. Market conditions currently provide elite in the way of incentive to stimulate large scale farmer selling. However, income requirements and storage space for the new crop will undoubtedly become an issue in the not too distant future. The Argentine government is reported to be suggesting that fines may be levied upon farmers who don’t sell in accordance with their obligations – clearly life in Argentina is currently less than a bed of roses!
- On the other hand, Mato Grosso is currently harvesting soybeans at record yields according to a Reuters report. Some farmers are reporting yields as much as 30% above estimates made as recently as last month. AgroConsult are confident that the Brazilian harvest will exceed that of the USA (89.5 million mt).
- As ever, there are two sides to pretty much every story, and that is what makes markets! However, we remain of the opinion that the S American soybean harvest will be gathered, and when viewed in the cold hard light of day it will be big by almost any standards. To that end, we continue to look at price rallies, such as we see right now, as selling opportunities, and would not recumbent consumers to chase prices higher, particularly in deferred positions.