What Traders are Talking About:
* China canceling Brazilian soybeans. Major backlogs at Brazilian ports that have led to soybean shipping delays have caused at least one major Chinese importer to cancel some of its purchases. The head of Sunrise Group's soy trade told Reuters his firm has canceled 10 cargoes of Brazilian soybeans that were to be shipped in January/February and will cancel another 23 cargoes for April-June shipment. In total, the firm will cancel around 2 MMT of Brazilian soybean purchases. The official did not indicate how it would replace these canceled cargoes, but it will either be through the purchase of U.S. or Argentine soybeans.
The long and short of it: Despite tight supplies, the U.S. is still the most reliable supplier of soybeans, which opens the door for some of this (and other) canceled business to come our way.
* Mild improvement in HRW conditions. The HRW crop is greening up throughout the Southern Plains and is showing some improvement following recent heavy precip through the region. But a major portion of the crop in Kansas, Oklahoma and Texas continues to be rated "poor" to "very poor." In Kansas, 29% of the crop is rated in the bottom two categories as of March 17, which is a 3-percentage-point improvement. Oklahoma posted a 4-percentage-point swing in the bottom two categories, improving to "only" 37% rated "poor" to "very poor." Texas saw no improvement over the past week, as 44% of the crop is still rated in the bottom two categories.
The long and short of it: The crop will naturally look better as it greens up, which can lead to some improvement in crop condition ratings, which are really little more than a "look" test. But while recent moisture has helped, moisture requirements are on the rise now that the crop is greening up. The HRW crop is far from out of the woods.
* Cyprus a game-changer? Markets were rattled Monday as investors reacted to the tentative bailout deal for Cyprus, which included taxing bank deposits. But by the end of the day, the initial fear had worn off and investor concerns were somewhat eased. Still, there are concerns the Cyprus deal could set a precedent for other countries throughout Europe. If depositors are fearful of their savings being taxed, they are likely to take mass withdrawals, which would trigger liquidity problems for banks and could cause banking systems to freeze up.
The long and short of it: Cyprus is not a game-changer for now, but the situation deserves close monitoring. If macro-economic headwinds build, it would become harder for grains (and commodities as a whole) to find actively buying interest.
Follow me on Twitter: @BGrete
Need a speaker for a seminar or special event? Contact me: email@example.com