Evening Comment – #Wheat #Corn #Soybeans – 12/05/2015

Main event of the day is of course the WASDE.


The May report is really tricky. Old crop is more or less done, minor adjustments, while the first estimates of the new crop is not easy: anything can happen this summer! So USDA has not taken any risk and the report is in line with the market chatters, estimates and guesstimaes. Basically, a lot to expect, a few delivered! 2015 US Corn yield is stay unchanged indeed, USDA admitting that summer weather conditions are too determinant.


On the old crop US stocks on wheat are up 25 million bushels, that is +3.7%, slightly more than expected. Corn is up 24 million bushels, +1.3%, in line with expectations. On soybeans, US old crop stocks are lowered as expected, -5.4%, it is slightly more than expected. Worldwide  old crop stocks are as expected in wheat and corn: they are raised respectively +1.9% and 2.1% thanks to lower US Wheat exports, higher Brazil and Argentina Corn productions (respectively +4% and +2%). On soybeans the picture is more or less what was expected. Despite an Argentinian increase, the soybeans old crop stocks are down -4.5%.


But everyone was waiting on the new crop projection. Slight disappointment as it is often the case in long awaited events. Noting really captivating indeed. US stocks are up 11.9% from one crop to another on wheat. USDA sees the winter wheat production to 1,472 million bushels, this is up +6.7%. Corn stocks would be down -5.7% while soybeans up 42.9%. Worldwide, wheat stocks up 1.2% to 203.32MT, Corn marginally down -0.3% to 191.94MT and soybeans up to 96.22MT, this is +12.5%, slightly less than expected but still close to 11MT. Stock/Production ratio would be for Wheat, Corn and Soybeans respectively 28%, 19% and 30%.


Lower world wheat crop, slightly lower than expected (-1%, 7.52MT), lower corn crop but better than expected (-0.6%, -6.29MT). Marginal higher soybean crop to 317.3MT.  


Picking and choosing a few numbers let’s mention Russian new wheat crop. It is estimated at 53.5MT. Market was expecting between 58MT and 60MT. There is a big uncertainty on Russian and Ukraine numbers indeed, USDA might have been conservative. Record in Brazil for Soybeans in the new crop: 38.5MT.


To sum up, the report is bearish for the three commodities, with the soybeans clearly leader of the pack on the huge availability. Soybeans is printing two red digits while corn and wheat have been trading sideways but are currently in the green (market was not really surprised by the numbers, largely expected). A bit of short covering happened before the release, helping the market to rebound. And even bearish, the shorts are already at a very decent level so a new wave of massive shorting was not really expectable but that doesn’t mean the market as finished its bearish trend by any means. Bottom line, wheat and soybeans supply continues to increase significantly.


MATIF ended up more or less flat, after trading all day long up in line with Chicago. Thin volumes and interesting, Z5 still more liquid than U5. Euronext might be proven wrong – again – about the awkward positioning of this expiry.


Tunisia is tendering do 168kT of soft wheat and 168kT of durum.


El Niño seems to show up. Bad news for southern hemisphere, better news for the northern.


EURUSD still up in the mid 1.12, GBPUSD up as well. Everything seems fine in Europe… Meanwhile, Greece Minister of Finance declared the cash reserve was 90 million euros and that they’d need to raise more funds to pay salaries at the end of May. Indeed, everything is fine!


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