- Tuesday has seen something of a classic “Turnaround Tuesday” style of trade with pricing boards deeply green as soybean meal has led the advance on active EU and US domestic end user pricing that has to be fixed before December’s first notice day. The action in soybean meal has been sufficient to lift the entire grains complex. As prices rose active corn elevator selling was noted and producers took the opportunity to cash in on higher levels, potentially for volumes they may struggle to store.
- Brazil is reported to have now planted 74% of its soybean acres, a mere 2% behind last year and 4% behind their five year average. The regional breakdown shows Rio Grande du Sul at 44% and Mato Grosso at 95%. The current weather will permit planting to continue with little interruption, and it is expected that as much as 88% could well be in the ground by December 1st. With the sharp fall in the Brazilian Real vs. US$ it is expected that 2015 winter corn seedings will rise on the back of improved margins.
- Reuters today reported on the significant increase expected in Brazilian farmer’s usage of farm storage bags. The large, sausage shaped, bags used for on farm storage are expected to see increased usage by as much as 30% in 2015 as corn stocks reach record levels and soybean sales stagnate in hope of improved prices. Argentina has been using these bags for decades but usage in Brazil is a relatively recent storage alternative. Storage space has not kept pace with the growing output of corn and soybeans in Brazil and conventional silos are either full or too expensive for many farmers.
- US winter wheat was reported to be 58% good/excellent compared with 60% last week and 62% last year. Crop emergence is 92% vs. 87% last week and the five year average of 89%. Corn is all but harvested with 94% now gathered compared with 89% last week and the five year average of 92%. Soybeans are likewise well harvested at 97%, last week’s level was 94% and the five year average stands at 98%.
- Whilst it is recognised that US/global wheat yields have a strong correlation with spring weather rather than winter temperature or crop establishment there has been much discussion over recent dryness across Russia’s winter wheat belt. Precipitation in October and November ranges from 30-60% of normal across the Central and Volga regions to 90-110% of normal across the Southern region. Some suggestions that producers in Central Russia have abandoned a significant area to be replanted to barley, corn or oilseeds have been heard. It is certainly clear that Russia’s wheat yields are variable, changeable weather conditions and the fact that a vast region, in excess of 2,500 miles, embraces differing climates will almost always provide a variety of outcomes. Current thoughts are that the harvested wheat area will be lower on account of reduced winter wheat offset by more spring. Yield is anticipated to be down a touch and output potentially 6 million mt lower than 2014/15, I.e. 52.9 million mt vs. 59 million mt in 2014/15. Higher end stocks are thought to partially offset the yield reduction. However, for any lasting bullishness to be construed it is likely that output will have to drop below 49 million mt.