- CBOT markets spent much of the day in negative territory but the grains eventually closed a touch higher whilst soybeans and meal remained lower at the close.
- It was announced that China cancelled a further 174,000 mt of 2014/15 US soybeans bringing the total (as far as we can calculate) to 459,000 mt. There is talk that the total will reach 1.5-2 million mt of cancellations/switches in the 2014/15 crop year! Chinese crushers that import more soybeans than they have ability to crush are reported to be experiencing difficulties in opening Letters of Credit, which could force the pace of cancellation/deferral/switch in coming days and weeks, which will further pressure prices.
- It feels that weather premium is being removed from the market place, justifiably in our opinion, as S American patterns turn more favourable. With Mar ’15 soybeans trading and closing well below the $9.91level (which we mentioned last week) the next downside target is $9.50 and with funds as noted sellers today this does not look to be an unreasonable target in the short term.
- Corn’s Mar ’15 target now rests at $3.75 and Mar ’15 wheat has traded at its $5.25 target although it closed 10 cents higher and we would prefer to see a close at or below support to confirm this target has been reached.
- Aside from Chinese soybean cancellations there is little in the way of fresh news. Ukraine is still actively offering corn for sale, specifically to SE Asia and N Africa and our information suggests they still have as much as 4.5 million mt left to sell into the mid-summer period.
- Australia has reduced its El Niño alert and are looking for more normal conditions going forward. This leaves a potential for increased dryness in the S and C Plains in the US and this needs to be watched going forward.
- US wheat and corn exports are lagging behind the pace necessary to reach the USDA’s latest forecast and the impact on end stocks and potentially prices should not be ignored!
- Finally, the Russian Rouble was weaker, Ukrainian Hryvnia nominally unchanged, military tensions resurfaced in Ukraine, crude oil fell, the EU announced no let-up in sanctions against Russia and later in the week we expect to see the ECB’s decision on Quantitative Easing as the €uro awaits its fate.