Headlines:
- First notice day for November futures is Monday, October 31st
- SocGen forecasts sharp drop in soybean prices
Societe Generale maintained its bearish position on soybean price prospects, despite the recent demand-led rally, as it flagged the size of the US harvest, and downplayed any crop threat from La Nina in South America. The bank doubted that “slightly stronger demand for soybean in the near term” will offset the “exceptional yields” in the US harvest. The bank forecast prices to fall by almost $1 a bushel in the near term, under pressure from the ample US harvest. And the bank forecast the US Department of Agriculture to increase its estimate of the US soybean crop, following heavy yield reports.
- Large Egypt wheat order highlights reviving grain – and freight – prices
Egypt’s Gasc, attempting to fill a void in wheat imports left by a fungal future, made its biggest purchase in nearly three years, at a tender which underlined a recovery in both prices of the grain and in shipping costs. Gasc, grain authority for the world’s top wheat-growing country, purchased 420,000 tonnes of wheat – its biggest such order since the 535,000 tonnes bought at a tender in early January 2014. The purchase, of Romanian and Russian wheat, took to 780,000 tonnes the volume of wheat that Gasc has bought since Egypt in mid-September ditched a zero tolerance policy on cargo contamination with the ergot fungus, which can cause hallucinations if ingested in sufficient quantities. The policy had seen the country in effect blackballed by global grain merchants, given the difficulty of guaranteeing ergot-free cargos, with importing nations – as Egypt now does – typically allowing contamination of up to 0.05%.
Summary:
Today, Russia’s Energy Minister Alexander Novak declared that that a potential deal to cap or curb oil production was unlikely following Iraq’s claims that it would not curb its out. Crude futures had been moving up well from its September 20th low until it double topped on October 10 & October 19. Today’s low is sitting right on support but if it is not able to turn high by the end of the week the supply narrative could send prices lower back down to previous lows. The US Dollar Index reached 99.119 yesterday and has traded slightly lower today. Our price projections still have the Index with the potential of reaching 99.70 in the coming weeks.
The combination of a weaker greenback and demand fund buying helped the grain markets return to strength today. We have long been calling for Wheat to make a bottom and our Wheat cycles point to a possible low this week. After a big drop on Monday, we were very impressed with the manner in which Wheat recovered off its lows yesterday also side of the big move up today. The December contract put up 7 cents in gains today. Soybean posted the largest point and percentage gain on the day adding 18.75 cents on the November contract and 18.25 on the January contract. December Corn was up 1.5% adding 5.25 cents of its own. It is worth noting that we can still see some pressure return with Brazil competing with the US with exports to China. The perceived build up in Oil reserves because of Russia and Iraq could also make for some price pressure as well.
