Wheat fell sharply, while corn fell and oilseeds firmed.
In other markets, Black Sea wheat was down USD 7/tonne and soybean meal was up 2%. The Dow Jones Industrials Average strengthened by 1 pc.
Wheat was in risk aversion mode, influenced by Russia indicating that it had no intention of invading Ukraine. Regardless of the outcome, last night’s price action shows what drives prices, and it’s not the fundamentals. Rain has fallen on the American plains, but it’s also set to be freezing cold in the SRW belt, all the way to Texas, which is expected to see minimum temperatures drop to minus 15-18 degrees Celsius.
The USDA announced the increase in soybean sales in China. This, along with more private analysts slashing estimates for the South American soybean crop, fueled the buying. AgRural reduced its estimate of 133.4 million tonnes (Mt) to 128.5 Mt, citing still high temperatures and low rainfall. From the perspective of the global vegetable oil balance sheet, palm oil has an eye on the growth of COVID cases in Indonesia. Indonesia is bracing for a third wave of infections as the Omicron variant leads to a surge in new cases.
Technically, soy is overbought; the Relative Strength Index highlights the recent investment that must now be justified. Export sales will be closely watched and, as we have seen with wheat, the bulls need to be fed. The freight market found some support on Monday, but not before hitting 12-month lows last week and rounding out January 2022 with the biggest monthly decline in two years. Labor shortages in Australia are leading to supply disruptions in the iron ore trade, resulting in lower freight demand. Australia accounts for 60% of China’s iron ore imports, while Brazil supplies 20%.
A mixed bag of local trading activity kicked off the week yesterday, with slightly firmer values on the boards across the wheat and barley markets. Canola was the main focus in the market yesterday as a major buyer pulled out and backcountry sites were back above $800/t. A small volume traded late on the Clear Grain Exchange at $890/t in the Portland area of Victoria.
The weather continues to look wet for large parts of Queensland and along the New South Wales border region, with a widespread forecast of 50 millimeters, while the decline is expected to be dry for the next eight to 10 days.