The Morning Vibe

01/03/13 -- The overnight market is mixed at 9am UK time, with wheat showing gains of around 3-5 cents, corn 2-3 cents firmer on old crop at least and soybeans 2-3 cents easier.

EU wheat exports are running 4 MMT ahead of last year's levels (or up 44% if you prefer) at 13.1 MMT based on last night's weekly export license data from Brussels. Corn imports meanwhile are 4.55 MMT ahead of year ago levels at 7.85 MMT.

Dow Jones are reporting this morning that Ukraine may resume wheat exports in April. The Ministry did say some time ago that they intended to review the situation in the spring, and might allow a bit more wheat to be exported if they are confident of having a good crop in 2013 once they saw how winter crops emerged from dormancy, so it could happen.

The pound has just fallen off another cliff at 9.30am, down below 1.51 against the dollar on "shockingly poor" manufacturing data. Following the slating that sterling took in the Sunday papers last week I'm surprised it hasn't gone below 1.50 this week. Mind you, the day isn't over yet! This will probably support London wheat today.

China has announced it will sell 100,000 MT of rapeseed oil from state reserves next Friday. Talk persists that they will also release 1 MMT of beans from reserves before the end of the month. CNGOIC estimate China’s March soybean imports at 3.5-3.8 versus 4.83 MMT in March 2012.

Other than that fresh news is pretty thin on the ground so far this morning, although next week promises to be potentially much more interesting, culminating in Friday's USDA WASDE report.

How can they increase exports from the existing 36.6 MMT without also decreasing ending stocks? They aren't going to go any tighter than 2 weeks worth of supply (which is where we are at now) are they surely? Brazil has the beans but they don't have the infrastructure to supply them in a timely manner. US soybeans could virtually disappear by the middle of April at current export/sales rates.

Taking into account the shipping problems in South America, and the potentially record crop in Brazil and near record crop in Argentina then these guys could be active and aggressive sellers later on in the season than is normal. IF the US does get a decent crop this year AND South America still have plenty left to sell come September/October time then we could see the soya market under significant pressure later in the year to coincide with the US harvest.