• Markets started the day a touch weaker as rumours spread that China had cancelled a number of US soybean cargoes – music to the ears of the bears perhaps! Fund demand soon put an end to the brief spell of weakness as prices moved back into positive territory. It appears that technical, chart based, buying is dominating at the present time rather than prices taking direction from the usually dominant fundamentals.

• Cash markets in the US have seen a sharp decline in basis as farmer selling on the recent rally has been particularly active. Current price levels are thought to be a significant driver that will maintain US planted acres and potentially see an increased soybean area.

• Informa Economics have today released their latest estimates which include the following:

Brazilian 2013/14 soybean output at 88.8 million mt, down from  89.7 million mt.
Argentine 2013/14 soybean output at 54 million mt, down from 57 million mt.
Brazilian 2013/14 corn at 65.45 million mt down from 66.55 million mt.
Argentine 2013/14 corn at 22.6 million mt, which is unchanged.
On a more upbeat note, Indian wheat output for 2014/15 was estimated at 108 million mt, an increase from their last forecasted 99 million mt, and a huge 15.5 million mt above last year’s output. The pressing need for India’s export volume to grow has just been raised a notch or two.

• The Ukraine crisis has not gone away, the last piece of news we picked up is that Russia has tested an Intercontinental Ballistic Missile from the southerly Astrakhan region near the Caspian Sea and the dummy warhead hit its target at a proving ground in Kazakhstan. If this is not provocative, we don’t know what is! Clearly the “test” is another flex of the biceps in what is proving to be a difficult situation. However, out loading of grains continues albeit we are towards the end of the season, and it will be a few months before new crop movements become front page news.

• Markets remain nervous, and we now have a built in risk premium. Some of the new “longs” are questioning what they are going to do with their newly acquired position. It seems that we are at a potentially critical point of balance in markets right now.