GLOBAL - Global crop markets have been relatively quiet this week, but weaker due to the potential of record US corn output and supported by tensions in Ukraine, reports David Sheppard, Gleadell’s Managing Director.
However, the rumour that Moscow had agreed a cease-fire with Ukraine was enough to send all markets down to new contract lows. It was later clarified that presidents Putin and Poroshenko had agreed steps towards a cease-fire.
All eyes will be on the USDA report due out next week, with the expected increase in US corn yield seen pushing US stocks above 2bn bushels (305 mln t).
EU markets have mainly been concentrating on sorting out quality issues. Markets, already pressured by the strong export pace coming out of the Black Sea, saw a few crumbs of comfort with an aggressive offer of French wheat to Egypt. While 60,000t was booked, more was offered, reiterating not only the quality problem the French have this season, but also a potential storage problem as traders/merchant try to segregate the various qualities to suit the feed/milling and export homes.
The UK remains in a stop-start harvest as growers try to get the last percentage of the crop. The delays in harvest, coinciding with a return of wetter weather, mean some sort of drying will be needed. Domestic demand still remains far from robust, even with LIFFE slumping to a four-year low, as end-users and traders alike concentrate only on nearby positions.
In summary, the news of the hoped-for cease-fire between Russia and Ukraine could be the final straw to break the markets’ back. The threat of increased tension and potential export restrictions had provided some level of support, but with this threat now somewhat abated, it could signal the next downward price movement.
As mentioned above, the USDA is expected to produce an increasingly bearish corn/soy report, with wheat playing second fiddle. Egypt may have given France hope, but this may be short lived unless a shortage of storage forces more aggressive offers. Finding a bullish argument is hard at present, with only the potential of Russian intervention, or a return to hostilities in the Ukraine, the most likely.
TheCropSite News Desk