Friday’s Comment – Wheat Corn Soybeans – 01/05/2015

A lower USD did not help to maintain the prices up. The close was red across the board. But markets clearly came back from their lows. A lot of spreads and positions adjustments on month end.

 

The Argentinian strike was actually a non-event for the soybeans markets. Good weekly export sales did not help either and fund sold 3,000 lots of soybeans. Bird flu talks in Iowa. The recent bounce was fed by Chinese demand and by technicals. The mood stays bearish on ample supplies. Wheat and the weird exports sales have been sent down sharply, funds selling an estimated 8,000 lots! The might approach the 120,000 lots short. Wheat Corn spread got hammered once again (maintaining the corn). US corn planting, not too bad wheat condition, ok weather… There is no reason for the funds to turn bullish just yet.

 

No panic on the weather indeed, in line with what is expectable for an early month of May. US Drought Monitor shows there are only big concerns in California and Nevada but that is another story, no grain here. Next crop progress on the 3rd of May. To be monitored carefully. But really, the week after is going to be even more thrilling: Crop Progress on the Monday (the 10th, we should be well above 65% on corn at this time) and USDA WASDE on the Wednesday with first estimates of Crop16. Watch out the funds behavior, will they cut some of their short?

 

Still good volume on the MATIF, more than 43,000 lots traded on the first four expiries. And only 5,000 spread K5/U5 and K5/Z5. Still the short K5 are putting some pressure on the spread which is widening. They are in a favorable position though, rolling their short is comfortable when market goes down, no panic. MATIF is closed today, labor day in France. The month of May is usually very quiet, with public holidays on 1st of May, 8th of May and 24thMay, a lot of traders are going to be away from their desks. UK traders will be off on Monday.

 

Again! French silo operator Senalia is stopping wheat receptions indefinitely due to lack of loading demand. In other words, silos are full. This is an unusual timing as it is not even harvest time in France. Senalia is one of the delivery silo for Euronext (MATIF). It is not the first time indeed… Back in September 2014 they did it. Soufflet through Socomac did follow just after in October 2014. As crops are growing, it is becoming slightly obvious that Euronext need more delivery points. The question has already been raised last year, but Euronext thought that facing big quantity and poor quality, the urgency was to open a premium wheat contract. Future will tell if it was a good strategy as the open interest on premium wheat is 268 lots total… Competition will be interesting when CME will be there with a European Wheat contract…

 

Quiet night session, Soy and Corn still down, wheat showing little up as a yesterdays’ reversal. Not a lot to expect from today with a lot of traders away. A typical Friday…

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