Morning Snippets
20/03/13 -- The overnight grains are firmer, with May 13 wheat up 8 1/2 cents to a near one month high on ideas of a pick up in world demand for US wheat, and also the notion that next week's US stocks report might come in lower than anticipated thanks to increased domestic US feed usage. Funds have built up a sizable short in CBOT wheat over the past couple of months, leaving the market vulnerable to an upside correction, that appears to be what we are getting ahead of next week's stocks numbers.
Tunisia are said to have bought US soft wheat in it's 67 TMT optional origin tender, one where you would normally expect France to be favourites to win. Algeria, Jordan, Bangladesh and Iraq all also have wheat export tenders pending.
Soybeans are also firmer in overnight trade, which is probably also down to a mini correction following recent losses. May 13 corn meanwhile is pressing on to it's highest levels since early February as news filters through of more US ethanol plants coming back on stream, increasing demand and keeping stocks tight.
News that the BoE's MPC voted 6-3 in favour of keeping QE unchanged this month has given the pound a little boost this morning ahead of the budget. Some thought that the split may have been closer than that. The pound went from 1.5030 to 1.5130 versus the dollar following the release if the minutes of the meeting shortly after 9.30 am.
Early doors European trade sees May 13 London wheat up GBP2.25/tonne; May 13 Paris wheat up EUR2.75/tonne; May 13 Paris rapeseed up EUR2.50/tonne; May 13 Paris corn up EUR1.75/tonne.
Whilst there's already talk of it being too wet to get early spring crops sown in southern US states, it remains far too cold in the north. "Early morning temperatures in Canada and the Northern United States bottomed out below zero F (-18 C). A thick layer of snow persists in the northern latitudes. Extreme cold in March is worrisome for delays in spring fieldwork and planting in the Canadian prairies and Midwest," say Martell Crop Projections.
Elsewhere in the US: "Portions of the Midwest corn belt are still affected by drought. This may be another deterrent to obtaining a profitable corn yield. Top yielding corn districts in Iowa and Nebraska still are very dry, the subsoil drought a lingering effect from last summer. Nebraska has accrued a 7-inch moisture deficit accruing from mid July through winter," they add.
According to Oil World, Argentina’s biodiesel exports were down by more than a half to 376,000 MT in the October 2012 to February 2013 period. They estimated EU February biodiesel imports from Argentina at 36,000 MT versus 145,000 MT in 2012, saying that "Argentine exports of biodiesel are plummeting owing to reluctance from EU importers." They pegged March biodiesel imports from Argentina falling to only 20-30 TMT.
Also in Argentina, Oil World say that "Argentine farmers are still very reserved sellers of soybeans. The difference between the fixed exchange rate and the 'blue dollar' has further widened to 2.94 pesos."
The 'blue dollar' rate being the black market value of the peso vs the US dollar. Farmers exporting beans have to take the official exchange rate. With Argentine inflation raging, and an export tax on beans on top of this it's no wonder that Argentine farmers are reluctant sellers of beans.
With US soybean exports already at 97% of the USDA target for the season, China cancelling large Brazilian purchases, Argy reluctance to sell (and them having their own logistical problems when they do) the recent collapse in Chicago soybean prices is all the more surprising. Particularly at the front-end.