Headlines:
- Need for quality pushes Brazilian demand for US wheat
- US export warning undermines soybean rally – but wheat futures soar
Soybean futures fell after officials punctured optimism over US exports of the oilseed by warning over rivalry from South America – contrasting with optimism on wheat shipments which buoyed prices of the grain. The US Department of Agriculture, in its benchmark monthly WASDE crop report, left unchanged at 420m bushels its forecast for domestic soybean stocks at the close of 2016-17 – surprising investors, who had expected a downgrade to the figure thanks to a strong export performance. “The unchanged domestic soybean ending stocks number caught the trade off-guard,” broker Benson Quinn Commodities said. Indeed, separate data on Thursday underlined the strength of US shipment, pegging total export commitments– that is, completed shipments and outstanding sales combined – so far this season at 51.0m tonnes. That represents rise of 21% year on year, and is only narrowly short of the 55.8m tonnes the USDA forecasts for the whole of 2016-17, which is less than half way through.
- Tate & Lyle downplays threat from US-Mexico tensions
Tate & Lyle – viewed by markets as particularly vulnerable to upsets prompted by President Donald Trump – downplayed the threat from trade tensions, terming “pretty manageable” the impact of Mexican levies on imports from the US. The corn processor and sweeteners group – shares in which plunged 12% on November 9, the day after Mr. Trump was elected US president – said that it was difficult to judge exactly how US-Mexico relations would pan out, given that there “will be a number of variables in play”.
Summary:
Wheat futures started the week lower on Monday but the next three days were all up, especially today after the USDA WASDE report was released. As the new month began it did appear that funds were possibly building a position in Wheat. When Wheat turned softer late last week its strength was in question. After today’s move it looks like they have instead stepped up limit bids which has created a higher low on the price chart. The released data served as a catalyst that pushed Wheat into double digit gains. Wheat might be finally making that push to the upside that we have long been calling for. Corn and Soybean’s reaction to the WASDE report was rather muted. July Corn was down 2 cents on the day and July Beans was down 7.75 cents. Average trade estimates for ending stocks on Corn, Wheat and Soybean were at 2.335 BB, 1.180 BB and 0.410 BB respectively. The actual release number for today came in at 2.32 BB, 1.139 BB & 0.420 BB. Overall there were no real surprises in the report with world production numbers coming in very close to estimates in general.
