- Firstly, a happy St Patrick’s Day! The markets may not be patriotically supporting St Patrick as they (Chicago at least) displayed a wall of red rather than the traditional festive green normally associated with the Irish saint! In Europe markets were extremely quiet and it would seem appropriate to assume celebrations were under way but more likely it was down to the reversal of prices in the US.
- In addition to St Patrick’s day we would like to wish Crimea a happy 1st birthday under Russian rule, how time flies!
- Fund selling was active and noted in Chicago as weather forecasts changed for the better (fickle or what?) and long liquidation was the order of the day. US (and world) export demand remained sadly lacking and that has added downward pressure.
- CBOT soybeans broke below their January low, by some way, and confirmed the significance of this by also closing below the level. This points to a test of the late September/early October lows in the fullness of time. May ’15 soybean meal has formed a bearish “head and shoulders” chart patter which should see a test of $295 some $23 below tonight’s close and very close to support formed last September/October (at the same time as soybeans).
- Much is being talked of how poorly wheat is coming out of dormancy in Russia due to lack of pre and post planting rains. It is our considered view at this time that it is too early to make such judgement as it is rainfall in April and May that makes (or breaks) Russian wheat crops. We see no reason for this to be different this year. However, what is clear in wheat is that we are in the early stages of a weather dominated period and with a close to record fund net short position and fears of an extension of the Russian export tax, volatility will probably remain high and price swings potentially violent.
- Corn markets saw around 200,000 mt purchased by S Korea for early October arrival at $193 C&F, which calculates to $167 FOB Brazil. This price makes Ukraine supplies (the recent cheapest global origin) look expensive – AND potentially this price calculates into the US. Are we about to witness the world’s number two exporter selling to the world’s number one exporter in US new crop positions? As prices decline and planting economics move ever closer to favour soybeans could we witness the US as a net importer of corn? (Our comment is made with our tongue firmly in cheek – of course!)