- As expected we saw confirmation of increased US soybean and corn exports which has reduced carryout, as well as a reduction in US wheat feeding. Immediately upon publication we saw soybean and corn markets push to new season highs which wheat was unable to follow. Some swift farmer selling together with profit taking saw prices ease back with corn closing in negative territory and beans well off the highs. Wheat followed corn and closed almost 2% lower.
- If there was any real surprise it was the 125 million bu increase in corn exports, Chinese cancellations / rejections to date and the large unshipped balance make us think lower exports rather than higher. In addition, cheaper Argy corn makes additional new sales less likely. Consequently, we believe we will see US corn end stocks higher rather than lower as forecast today.
- Brazil’s corn crop was forecast 2 million mt higher whilst Argy output was left unchanged although S African output was increased 1 million mt. The increases have, on a global basis, offset reduced US stocks (per USDA) and with Chinese stocks at 10 year highs there seems little to trouble global supplies.
- US 2013/14 soybean stocks were reduced, as expected, maybe a touch more than expectation, to 135 million bu, which is considered by many to be bare pipeline levels. Growth in exports to 1.58 billion bu (all time record) and a record import volume at 65 million bu still leaves tight stocks. Perhaps surprisingly we did not see any reduction in Chinese import volumes which were left at 69 million mt, and many expect the eventual number to be 66 to 68 million mt. Current import pace is likely to decline amid poor crush margins and oilseed oversupply.
- As a footnote, it is rumoured that Chinese crushers are to meet Thursday to discuss defaulting on Brazilian cargoes as margin pressures continue to bite the processors.
- Wheat end stocks in the US were increased as a reflection of lower 3rd quarter feed usage and imports were reduced as a result of the Canadian logistical problems. Global end stocks for 2013/14 were forecast 2.9 million mt higher at 186.7 million mt, and 10 million mt above last year.
- It is difficult to see anything other than weather being the driver going forward. Cold, wet and late planting; hot dry summer conditions impacting pollination, grain (pod) filling; or beneficial El Niño impacts providing cooler, moist and generally favourable conditions?
- It is always hard to call a market, never more so right now, but we are favouring a suggestion that we have seen, or are close to seeing, seasonal price highs and lower levels are in the offing.
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