Morning Comment – #Wheat #Corn #Soybeans – 12/11/2015

Quite a bit to talk about this morning but market wise a very mixed and dull day ahead the reports of condition and planting and the today’s USDA WASDE.


US Export Inspections. Beans continue to export well 263kT and was above market consensus (130/250 expected). Wheat (378kT) and Corn (1,136kT) are within what was expected. That being said, wheat is far behind last year (21.4MT vs 29.6MT) and still slightly below the USDDA target. Watch out the exports on the tonight’s USDA WASDE report. Corn is in the same situation (28.8MT so far this year versus 30.5M last year). However, it seems to pace up compared to the last few weeks. Beans are going out pretty well and will for sure reach and probably exceed USDA expectations (46.2MT so far, 41.7MT last year, 48.7MT expected by the USDA). But we need to bear in mind that beans are producing more than needed…


We are talking about the short wheat in Chicago… But if Kansas Wheat is added, it is close to 150,000 contracts short. With Corn exceeding the 100,000 mark short as well, they’d better be right because if market changes its mind there will be damages! It’s a very unusual situation, being that short before the crop is a huge bet. So far they’ve been proven right though.


75%! This is the number everyone was looking at in the Crop Progress report. 20% of the corn has been planted last week. It’s a very decent pace and it’s +20% compared to last year, +14% compared to the 10 and 20 years averages and +18% compared to the 5 years average. So most likely it will be a very early planted crop. At this pace, it might be earlier than the 2000 crop. Wait and see next week. As per the soybeans, 31% is planted, +18% compared to last week, +13% compared to last year, and +10% compared to the 10 and 20 years averages and +11% compared to the 5 years average. It can slow down but as well, it seems it will be planted early and shows that US farmers are still keen on planting soybeans. The initial fears of more acreage on corn and less in soybeans seems to vanish. And the hat trick: 87% of the Spring What is planted, it is, wait for it, +54% compared to last year, +36% compared to the 5 years average, +27% compared to the 10 years average and +30% compared to the 20 years average. Spring wheat is still online for being the earliest planted ever.


Winter Wheat condition has improved 1% to 43%, still obviously far better than last year (30%) and close to the 10 years and 20 years average (respectively 47% and 49%). Poor and Very Poor wheat stood at 20%, so poor yields of the WQC crop tout, floods and night freeze did not have an impact just yet. 54% of the spring wheat is at the germination stage, +14% compared to last week, +43% compared to last year, +29% compared to the 5 years average. Same pattern on corn, 29% is on the germination stage, +20% week on week, +13% versus last year and +5% compared to the 5 years average. Winter wheat are on their side 56% emerged (+13% week on week, +14% compared to last year, +11% compared to the 5 years average). Early seeding and early development. Some US farmers are joking saying they’ll be able to do another crop this year.


In France, Germany and the UK, weather is seen as favorable and crop condition should stay very good or improve. The only minor area of concern is Spain where it is a bit dry. US weather forecast are online with what can be expected at this season. Slightly wetter. Nothing worrying. El Nino seems to be back, potentially bad news for Australia and South America. Good for the US.


Strike talks in south America still gives worries about logistics. Algeria bought 200kT of Durum, likely from Canada or Mexico, Egypt has received 2.2MT of the domestic wheat, additional 1.7MT are expected. China will offer 3.8MT of the state reserve on Corn. Last week, only 425kT of the 3.4MT offered has been bid. Taiwan is tendering for 130,000T of Corn.


Finally the MATIF Wheat K5 is out of the board, it’s been painful to watch. Front month (U5) is now new crop so it will be interesting to see it’s behavior. As well, we’ll see if Z5 stays more liquid than U5. Low volume and quiet option markets yesterday.


EURUSD rebounding, coming back above 1.12. Quiet night session on the US markets, slightly down before the report, the calm before the storm? WASDE 8pm Dubai time.


WASDE US wheat should see an increased in old crop ending stocks (10 million bushels, wheat export are to blame indeed) and ending stocks of new crop increased as well (to 755 million bushel, bigger crop and better yields will exceed increase on usage). World stock for old crop might increase slightly as a consequence of lower US exports. New crop, lower crop (-5 or -6MT) but final stock would increase on lower exports (199/200 MT, close to 28% of the production). US corn, no big change for old crop, maybe a slight decrees in feed (not more than 25 million bushels) increasing mechanically the ending stocks. New crop, slightly lower crop (-0.5%) might lower the ending stocks. Picture worldwide, old crop ending stocks should be raise by about 3MT mainly on Brazil and Argentina better production. New crop production should be down 3%, still above 960MT though. Lower demand should help the ending stocks to resist, still printing lower probably around 180MT. Soybeans… It might be a wake up cal. There are plenty of them! US old crop ending stocks will be decreased on better export and better crush. New crop ending stocks might show something close to +30%! Better carry over and production indeed. Worldwide, old crop prod and stock will be marginally increased. Lower production on the new crop but he ending stocks will be above the 3 digits marks, roughly +14% expected.

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