Grains started the week on a down note as the rally at the end of the week met with selling pressure overnight. In outside markets, crude oil was bolstered by news of a potential supply deal between Russia and Saudi Arabia.
On Friday, FCStone raised its forecast of the average U.S. 2016 corn yield to 175.6 bushels per acre, which would be a record high if realized, from 175.0 in its previous monthly report and above USDA’s August forecast of 175.1. It also raised its forecast of the U.S. 2016 soybean yield to a record 50.1 bpa, up from its August figure of 48.8.
For wheat, there was additional pressure following as Egypt's health ministry stated they will no longer accept any trace levels of ergot on inspection of imported wheat shipments.Egypt's state grain buyer GASC cancelled its wheat tender last week after receiving just one offer after the country invoked its zero-tolerance ergot policy. Russia's IKAR agriculture consultancy said on Tuesday it had upgraded its forecast for Russia's 2016 wheat crop by 2 MMT to 72 MMT.
In China, the country's top grain province is offering farmers subsidies to rotate corn with soybeans, as it seeks to cut corn output amid huge oversupply. But observers noted that China's planned rise in soybean output would only meet a small part of demand.
Saudi Arabia and Russia agreed on Monday to cooperate in world oil markets, saying they will not act immediately but could limit output in the future, sending prices higher on hopes the two top oil producers would work together to tackle a global glut. Even if the Monday statement was short on action, it marks a significant development in the Russia-Saudi relationship. The two countries have been effectively on opposing sides of the war in Syria, while Moscow is an ally of Iran, an important rival to Saudi Arabia.
The risk of trading futures, hedging, and speculating can be substantial. Grain Hedge is a Branch of Foremost Trading LLC (NFA ID: 0307930)
