- Reports last night suggested yesterday’s meeting in Argentina had brought agreement between unions and industry, but so far the required green light from the Government appeared to be lacking. Clearly for the market this issue is now about how long it goes on and the opposing near term/long term consequences: the nearby will see further strength in spreads and basis, but the longer Argentine beans stay off the market, the more negative the eventual impact when the problem is resolved. In a separate move yesterday, and one which may or may not be linked to the strike issue and the attendant revenue losses, Argentina retro-actively raised the April export tax on bio-fuels to 13.2%, from 5% in March and 8.9% in February. We should not forget the ostensible reason for lowering the tax in March, which was to give support to the industry following the loss of the EU export markets!
- News today suggests that a compromise deal has been agreed but it is still not yet officially confirmed that the Government has committed to the deal – so the debacle continues. There appears to be a general acceptance in S America that a return to normal working will be seen by early next week with many striking workers resuming their jobs tomorrow. The danger of one union negotiating a sizeable settlement is that it encourages members of other unions to follow suit in the hope that they too will make gains. The Chicago soybean and meal markets eased back from earlier highs on the back of the news.
- For varying reasons, the world soybean market has been trading near-term logistics issues against longer term negative fundamentals for the last five months, and despite all the complications, it’s the long term that continues to win out with Nov beans down $1.25 since the start of 2015 and down 50¢ during the month of May. For now it’s the Argentine strike which is causing the near term problems, but Chinese demand is slow as evidenced by open export slots in Brazil in June, and we are now just one month from the USDA’s June plantings report where the trade expects NASS to find additional acres (the NASS survey for the report begins next week).
- Two weeks ago, the Algerian wheat tender looked cheap as we reported, but now looks like it was a good sale. The first new crop wheat tender by Egypt’s GASC saw a total of 240,000 mt awarded for shipment 1-10 July with Romania picking up one cargo and Russia the other three. Prices on a C&F basis equated to an average of $199.28/mt, which is just over $5.00/mt below the prices paid on 18 April. Limited volume was offered by France and Poland, and was not competitively priced on this occasion.
- Brussels has issued a reduced volume of weekly wheat exports presumably due to the recent holiday breaks. This week’s tonnage reached 253,455 mt, which brings the season total to 31,056,141 mt. The season to date total is now 3.066 million mt (10.95%) ahead of last year.
- Finally, the IGC today raised their forecast 2015/16 global wheat output figure by 10 million mt to 715 million mt. They also added 10 million mt to 2015/16 global corn output with their latest figure standing at 961 million mt. Whilst both crop forecast figures were a reasonable increase they remain below last season’s bumper levels (wheat 721 million mt, corn 997 million mt).