- In another interesting turn we hear that Egypt has not yet made a final decision on the rejection of a cargo of French wheat that has tested positive for traces of ergot fungus. They recently decreed that “no wheat containing ergot fungus will be allowed into the country”, and the shipment, which arrived in December, is being retested.
- Chicago markets have been mixed although it remains wheat that is displaying positive prices as we approach the close. The market today was described as dull with only short covering in wheat, which came close to testing the $5.00/bu level in the July ’16 contract. Slowing Chinese demand for US soybeans has left prices lacking support and this has being seen today as has the slowdown in US crush operations. Neither factor can be construed as bullish for soybeans or products and with crush margins at or near negative levels and US stocks of soybeans at decade highs we continue to struggle when we hear others peddling bullish stories.
- Argentina continues to be an aggressive fob seller of corn through to April at levels reportedly some 15-20 cents below US Gulf, which will move buyers in their direction and remain away from the US. At the same time Ukraine is matching Argentina’s prices as they become more aggressive as farmers boost their sales. The result is that US corn exporters are struggling to find demand for their volume and to make matters worse global feed wheat is offered below the price of corn resulting in end users like S Korea to extend forward cover in wheat as far forward as June. There is too much feed grain in the world right now and price is the only means by which it can be moved – but it will have to be at lower levels that we are seeing right now!
- If Russia was to place an additional export duty on wheat exports they would have to place an official public notice for 30 days in their federal register (assuming they follow the rules!) and if decided on Friday this would leave the door open to extremely aggressive export activity in the period up to implementation (early March). This would likely see French prices undercut, maybe substantially, in a drive to secure what little volume demand is around at present, leaving EU stocks unsold.