- CBOT markets were moderate in volume and mixed with corn and soybeans lower with wheat picking up support from what is being described as threatening Plains weather forecasts. Wheat vs. Corn spread trade unwinding has been noted.
- As we reported some weeks back, it was likely that weather would become a significant market driver, and it seems this is now becoming more of an issue both within the US as well as globally. It is probably fair to suggest that the trend in demand for wheat, corn and soybeans from a global perspective is both static as well as stale, and it is supplies that are coming to the forefront of trader’s attention, particularly as we approach the upcoming USDA stocks and seeding report scheduled for release at the end of this month.
- It should also be borne in mind that funds are holding a large (in relative terms) net short position in wheat (63,589 net short) as we head into the new crop norther hemisphere season. Dry conditions in the Plains, parts of the EU and FSU are going to come under even closer scrutiny in coming weeks. Weather forecasters are not promising and relief at this time, which could leave us watching a round of fund short covering and all that goes with it – higher prices!
- The US saw today’s NOPA (National Oilseed Processors Association) report which showed the February soybean crush at 146.97 million bu below estimates of 148.537 million bu and down from 162.675 million bu month on month.
- In Brazil we have seen farmers actively selling freshly harvested soybeans as the Real continues to decline vs. US$. It is suggested that 15 million mt of Brazilian soybeans have been sold in the first half of March, which if correct would be a record volume. The volume of cash sales has been sufficient to fill supply pipelines and looks to be contributing to a weakness in cash export basis prices. Interestingly this year China has been a measured buyer of S American supplies which is certainly capping price rally potential.