Evening Comment – #Wheat #Corn #Soybeans – 20/05/2015

Difficult to keep up with all that noise about this noise about the weather. This afternoon, market was still talking about overnight freezes but also about damages of wheat in Texas due to wind (wheat basically flattened to the ground), then flooding in Texas, Kansas Oklahoma,… Kansas HRW wheat traded up close to two digits up before coming back from its high. Chicago SRW, like Panurge, decided to follow up and went trading in the green after trading all day long in the red. Problem do exist (flooding, worms, fusarium), however, the scale is very limited so far. Chicago is still unsure if it has to be up or down, trading sideways. 

Bird flu is back in the headlines. First reports of farmers piling up uneaten corn and meal are breaking through. Some are getting rid of it in in the local markets, especially in Iowa. A particular farm have lost 3.8 million birds and is selling $4 million worth of meals. We are talking about one farm representing 10% of the death toll, so extrapoling, it’s potentially $40 million worth of meal that won’t be eaten. Although some reports say the egg industry could be impacted for 18 months, one has to bear in mind birds are repopulating very fast. As well, it is still far enough from Thanksgiving (traditional big hike in birds consumption, especially turkey) to scare US consumer.

 

US Ethanol production is up from one week to another. 958,000 barrels per day (+46,000). By the meantime, stocks were higher a few hundreds barrels.

 

MATIF has been more liquid than Z5, rare enough to be noticed. Algeria’s OAIC tomorrow (August shipment), so maybe some traders have hedged their bet already. Or, MATIF just followed Chicago but has closed too early to realise those weather chats were pure farmer’s speculation. Strong close, +2.25 euros.

 

South Korea bought 55kT of optional Corn, slightly less than intended. Taiwan bought 102kT of US milling wheat while Japan is willing to purchased 15kT of wheat and 67kT of barley.

 

EURUSD has played all day long with its new toy: 1.11. There will be a huge battle in 1.10/1.11 zone. Greece may help to get out of this zone from the bottom. A deal will come but how long will it sustain?

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