- Yesterday saw Coceral update their quarterly EU crop forecasts, 2015 soft wheat was estimated at 148.2 million mt, which is an increase from 140.6 million mt whilst corn was reduced to 59.5 million mt from 67.5 million mt last quarter.
- Friday saw Chicago grains and oilseeds sharply higher on fund short covering on the back of what was described as “technical considerations”. Chart resistance for both corn and soybeans is being tested, although not yet breached, and a break higher will likely see inevitable follow through buying and higher levels.
- Aside from the technical picture, the only fundamental bullish input comes from dry conditions in parts of the Black Sea region and Australian wheat growing area. We saw wheat rally once the 50 day moving average was broken as funds followed and covered short positions. We struggle to believe, at this time, that any lasting rally can be realistically be sustained on the limited bullish input. The bulk of the US corn and soybean crops are yet to be harvested with yield trends improving and, as we have stated on many occasions in recent weeks, the world is awash with supplies. US export prospects remain limited and unless this situation changes, the pressure will remain in place.
- On a practical note, we can find no correlation between Chinese signed letters of understanding for US soybean purchases and final Chinese demand. It appears that these promissory notes are just that…… promises between two commercial parties. In fact, there is no way to determine that China really follows through with its promises to secure US soybeans! Caveat Emptor!
- Finally, Black Sea wheat prices closed the week at $190/mt for November which is up some $7.00 from the lows. The Black Sea is following the French wheat market upwards now that harvest is virtually completed. Ukraine feed wheat is offered at $167/mt against US Gulf corn offers at $178/mt. There is no evidence of increased demand to validate the Black Sea rally!
- Our latest Brazilian outlook is attached as a pdf file, please click on the link to download it: