- The reopening of markets following the US Presidents’ Day weekend holiday saw an early rally which quickly uncovered cash selling in wheat, corn and soybeans that saw prices lower by midsession. Volumes have been unspectacular and soybean meal has been the mainstay of higher levels in the face of EU buying/pricing trade.
- NOPA’s latest US crush data saw the January crash rate at 162.67 million bu, slightly below expectations but the fourth largest monthly total on record, and the largest ever January figure. The crush has clearly been fuelled by ample supplies from the recent large harvest and strong export demand. Being below expectation the number was viewed as being on the bearish side.
- The S American weather forecast contains little change and holds a favourable mix of sunshine and rain in the next couple of weeks. N and C Brazil will see enough dry weather to allow harvest to expand at a rapid pace whilst S Brazil and Argentine crops will see enough rain to allow crops to mature. Despite some recent pessimism over S American soybean output, Oil World’s latest estimate stands at 91-92 million mt for Brazil, and we still anticipate record yields in both Argentina and Brazil in the wake of one of the best growing seasons in a decade.
- Today’s fund buying in soybeans has seen an uplift in prices as they target the 100 day moving average (basis Mar ’15 contract). Given the supply side fundamentals we see this as a selling opportunity rather than a rally to be chased, and cash seller emergence would tend to support this view.
- France’s AgriMer has reported the French soft wheat crop to be 92% good/excellent, which compares with last year’s figure of 74%. We have heard that the Russian government has managed to buy a very limited volume for intervention and given the likelihood of end stocks there rising to 10 million mt, of which 1 million mt may be government held, harvest time is beginning to look potentially messy. Perhaps the aggressive stance taken by France in recent weeks will pay off for them in the longer term!
- With S America effectively closed for carnival celebrations and China and much of Asia beginning Lunar New Year celebrations international markets are likely to be subdued for the remainder of the week .