- The two key weather models (EU and GFS) have trended wetter across the dries parts of Goias and Minas Gerais, which account for some 20-25% of soybean output in Brazil, in the coming ten days. Whilst this will relieve current dryness the longer range forecasts suggest dryness will remain an issue. Rainfall of three to five inches per week will be needed to maintain Brazilian yield potential and we do have some concern that there is a building soil moisture deficit.
- US Exporters typically ship 30% of final corn shipments by this point in year; last year 20%; this year 30% of USDA’s target shipped so far.
- US Exporters typically ship 58% of final wheat shipments by this point in year; last year 58%; this year 58% of USDA’s target shipped so far.
- US Exporters typically ship 51% of final soybean shipments by this point in year; last year 53%; this year 59% of USDA’s target shipped so far.
- Chicago traders are starting to take more notice of S American weather with corn, wheat and soybeans all higher at midday. We have previously suggested that S American weather was a likely trigger for price moves, and is appears that we are witnessing just that at this time; whether this is the start of a lasting trend change or not remains to be seen but we would not wish to be short here! In addition, it seems that additional money is moving into the ag commodity space, adding to upward pressure. Today has also marked a noticeable lack of producer selling in both S America and the US. With US farmers estimated to have sold as much as 70% of their soybean crop it remains for long holding fund managers to take their place as sellers, and with early signs that an upward trend may be about to start in earnest we would not hold our breath waiting for this to happen.
- S Korea, which has culled up to 30 million birds in the last six weeks due to avail influenza, has cut its egg import tariff to zero with immediate effect to combat sharply rising egg prices. Prices have risen buy as much as 50%in recent weeks.
- Have we seen the lows in markets, particularly soybeans? Difficult question to answer, and an adventurous trader may well be inclined to jump onto this move with a view to higher prices in the coming few weeks as N Brazil stays dry and Argentina sees excess soil moisture and flooding in some areas, all of which has the potential to limit yields and output. As ever, we would wish for some certainty over likely S American crop output before making a final recommendation, but our gut says higher prices appear likely for now.