Morning Comment – #Wheat #Corn #Soybeans – 06/05/2015

Egypt’s GASC finally lifted two ships (120,000T). Vitol was clearly in front with its Russian wheat at $203.62 CNF and Cargill apparently revised half a dollar down its offer on the Romanian to make $207.90 CNF. Price difference is $4.58, it could have been expected GASC would only buy the best offer. Surprise as well on the French wheat. Traders seem ok with keeping it, no real discount was given to make some space in the silos. A few hours after the lineup was disclosed, there was some persistent rumors that Russian Agriculture Minister proposed to cancel the export duty from May 15th. A ‘no comment’ official statement was published. Egypt done, now Algeria OAIC’s turn: 50,000T of durum wheat, optional origin.

 

Obviously MATIF and US markets reacted on the downside. Wheat went sharply down, corn resisted just before the close on spreading action. Soy complex still showing some strength (south America logistics, China,…).

 

There is a lot of wheat still to come out from Russia, and with no export tax, the pace might increase. MATIF finished sharply down. An K5 began its usual erratic behavior: close to the expiry of the last futures contract of the old crop, it’s always a rollercoaster. With huge availabilities, it make sense the old crop is becoming cheaper than the new one. Will the spread pay the quarry? Nice for the K5 still short waiting for the last minute to roll. Lower pace on the rolls, only 2,500 K5 to U5 and Z5 spreads. MATIF still very active on options, a lot of buying interests in Puts and there are a lot of volatility trades occurring.

 

Informa released its May report for the Crop 2015: +1MT of Corn in Europe, +2.5MT of wheat in Russia, +2MT of Wheat in Ukraine.  World Wheat is at 718.6MT, world corn is at 981MT: it will be interesting to compare with USDA next week.

 

Quiet night session, small rebounds on wheat and corn, soy complex still on its bullish momentum. MATIF is taking a breather but the K5/U5 spread is now negative indeed.

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