Markets have again continued in liquidation mode led, this time, by Chinese futures prices dropping overnight. There has been little, if any, significant fresh news – and as we said last time – lower prices will trigger consumption which the market, from a supply perspective, can ill afford.

Harvest is in full swing in the US and in addition to fund liquidation we are seeing physical deliveries by farmers to their elevator which is triggering futures selling (as a hedge by the elevator) which adds to the current downward pressure right now.  We are seeing a short term pressure triggered by an abundance of supply which will not offset the longer term fundamental supply tightness.

We maintain, if a little stubbornly, adding to cover rather than falling into the trap of believing the market is in free fall is the way forward.

S American crops will be required in abundance in order to restore global stocks to adequacy, and the dry Australian picture right now does not add to confidence levels right now.

If the market behaves in the way we expect, we believe that we will see a “low” at some time in the very near term which may well be viewed enviously, in coming months, by those who missed it.