- The week has started generally lower, CBOT and EU markets all saw losses in some shape or form. Wheat and corn led the way lower in Chicago whilst July soybeans traded either side of unchanged and the new crop was pressured by favourable weather conditions. Front month wheat in Chicago broke below its 50 day moving average triggering further sales including funds. If fresh seasonal lows are scored we will doubtless see additional fund participation with further selling. July corn tested and made fresh contract lows although it actually closed at a level equal to the previous contract lows. The signs look strong for a retest in coming days.
- There have been rumours of additional Chinese DDG defaults as Chinese importers experience “difficulties” in opening Letters of Credit. There are suggestions that China is preparing to drop the minimum corn price loan to farmers and offer a heavily subsidised rail price to allow movement of corn stocks from the heavily stocked NE into the SE of the country. Importers and end users are consequently more cautious on new purchases as well as shipping of existing contracted purchases. Soybean meal prices in China slipped again to a fresh eight year low.
- Australia’s ABARES issued a revised 2015/16 wheat crop forecast 800,000 mt lower at 23.6 million mt. They also reduced their canola (rapeseed) forecast by 290,000 mt to 2.97 million mt. Both reductions were attributed to the onset of El Niño conditions, which are expected to impact output negatively with its likelihood of dry conditions.
- France’s AgriMer placed the wheat crop at 87% good/excellent, which is a 2% reduction week on week although an improvement from 73% year on year. Winter barley, which is due to begin harvest any day now, was also rated 2% lower week on week at 86% good/excellent. Spring barley saw a bigger reduction at 86% good/excellent, down from 91% week on week. Corn was rated 84% good/excellent, again a 2% week on week reduction.
- European weather conditions saw rain continuing to push north today as only the northers third of France, N Germany and NW Poland without. The rain is forecast to move east bringing significant precipitation on Tuesday into the Balkans and W Ukraine. This is expected to continue Wednesday leaving most of Europe dry. Thursday and Friday sees significant rain in N Germany, Denmark and Poland and N France appears to have to wait until the weekend to see any volume of rain. Fortunately, there is a lack of any appreciable heat, which could be damaging in dry conditions. S Russia appears to be blessed with regular rainfall most of the week. All in all, the forecast appears to be beneficial to current crop production.