US wheat and corn markets have declined ahead of tomorrow’s market report which is anticipated to be bearish. Soybeans gained a degree of strength on short covering but has failed to regain and sustain positive territory so far this session.
Of note was the dismal level of corn exports, 400 mt, higher sales levels were recorded but were offset by cancellations from “unknown destinations”. Soybean sales however have reached 77% of the USDA’s annual forecast with 50 weeks of the marketing year to go! Destinations other than China have featured although it was reported that China have secured further supplies for this season delivery. There still appears to be little, if any, evidence of slowing demand and we believe there is little Brazilian supply to help alleviate the situation.
EU wheat is believed to be the source for Algeria’s 700,000 mt purchase and it was reported today that EU exports last week were 365,000 mt, bringing the season total so far to 3.3 million mt.
Other wheat news includes no rain in the forecast for W Australia into next week and an absence of rain in the forecast for the Black Sea region into mid-October. The current market decline does not seem to reflect the conditions which seem to be developing right now!
Turning to tomorrow’s report we fear that the 1st Sep corn stock figure will reflect some early harvested new crop material and, on the face of it, look better than it truly is. If this transpires to be the case we would expect to see further sharp declines as traders absorb the news. However, we still expect the October output figures to reflect lower figures, particularly in corn. Any growth in soybean output is likely to be more than fully absorbed by the massive pace of exports being experienced right now.
The bare facts still remain pretty clear; we have had a devastating drought year, not just in the US, end stocks in the US and more globally are going to be tight even from a historic perspective and soybean export pace still shows no sign of diminishing. The conclusions we draw remain unchanged on the basis of this outlook.