Early Thoughts

21/04/11 -- The overnight grains are mixed, mostly a little higher. The dollar is particularly weak, with the pound closing in on the 1.65 mark, a level not breached since December 2009. The Chinese yuan has hit an all-time high against the dollar overnight.

Further dollar depreciation looks on the cards as the Democrats and Republicans continue to fight and squabble over budget cuts and the House/Senate split makes getting any legislation passed at all a struggle.

That was clearly a contributory factor behind Monday's surprise ratings downgrade for the US from S&P. "More than two years after the beginning of the recent crisis, US policy makers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures," said S&P credit analyst Nikola Swann.

China's soybean imports seem to be waning, March shipments were 3.51 MMT, down 12% on March 2010. They've also been cancelling South American cargoes this week, with reports of 6-8 purchases for Jun/Jul delivery getting scrubbed.

Some reports now suggest that soybean imports will be around 53 MMT this year, 4 MMT below the USDA's current estimate and 7 MMT less than some private estimates.

At the same time South American soybean production estimates are creeping higher, with the Argy Ag Ministry yesterday raising theirs from 50.0 MMT to 50.4 MMT, 0.9 MMT higher than the current USDA number.