Headlines:
- Food prices hit two-year high, amid ‘mixed’ grain crop outlook
Food price inflation made a strong start to 2017, driving values to their highest in nearly two years, fueled by the sharpest rise in grain prices in three years, amid “mixed” prospects for 2017 crops, the United Nations said. World food prices rose 2.1% last month to hit their highest level since February 2015, the UN food agency, the Food and Agriculture Organization, said. The rise, which took to 16.4% the rebound in food prices from a low reached in January last year, reflected largely a rise in sugar values, which “surged” 9.9% last month “underpinned by firmer expectations of a global sugar production shortfall in 2016-17”. The FAO noted “expectations of protracted supply tightness… in some of the key sugar producing regions, specifically in Brazil, the world’s largest sugar producer and exporter, as well as in India, the world’s second largest producer, and Thailand”, which is the second biggest sugar exporter.
- Australian barley exports to surge after record harvest
Chicago soybean futures may “fall sharply” if the US enters a trade war with China – but prices in Latin America would benefit, Societe Generale said, terming the risk of a levy battle a “major concern”. The mandate voters have given Donald Trump, who became US president last week, to “correct the trade balance” with countries such as China, Japan and Mexico from which the US imports far more than it exports “has raised concerns about a trade war”, SocGen said.
Summary:
Corn and Soybean were only slightly lower today and Wheat managed to eke out a very small gain on the day. All three markets moved back and forth between small gain and small loss throughout the course of the day. The trade is trying to weigh the significance of the move from yesterday. Our findings show that the January USDA report often foreshadows what we can expect from the months coming shortly thereafter. The general feel from this last report was on the bullish side and it remains to be seen if the strength that was present in January will continue.
We are now past the halfway mark for the week and tomorrow is the last trading day prior to heading into the weekend and the Asian markets will begin to reenter the markets in strength next following their New Year’s celebrations. The fundamental picture remains heavy for Brazilian crops. There have been no fresh concerns in South America suggesting that a big crop is on its way. Weather in Argentina continues to be pretty beneficial with rains forecast into the weekend after dry spell last week.
