Evening Comment – #Wheat #Corn #Soybeans – 21/05/2015

In the principle, it’s a copy and paste of yesterday. Kansas wheat on fire, Chicago following slightly behind. Corn has not a lot of choice but to follow while soybeans are doing the ‘down’ quota for the day. Soybeans / Corn ratio took a serious hit from 2.75 to 2.58 in a few days, similarly wheat protein being at risk by the market Wheat Corn Spread moved from 102.75 to 162. 

Market is still talking about wetness. Texas, Oklahoma, Kansas and Nebraska, rains have been pretty heavy. Fusarium, worms and wheat laying on the ground is among the talks. But winter wheat rating in the US could improve – again – anyway on Monday. On the other side, there is nothing alarming on the US drought monitor. Well Nevada and California are quite worrying but the matter has obviously no effect on grains. Added to the face Russia is talking about dryness… It’s still long time to the harvest (we’ll know for sure the extent of damages quality), one will have to be patient and holding to positions can be difficult in volatile markets. A least in France and Germany, weather condition are good. France might even be close to a record wheat crop, 38.1MT is now expected (+0.6MT).

 

Soybeans planting should reach 60% by Sunday. While spring wheat and Corn will be close to completed.

 

US exports sales were minimal for wheat (203kT), reaching the low of the range of the expectations, better than expected for corn (893kT) and weak for beans (243kT). On its side, EU cleared 647,000T of wheat export licences last week, totalizing 29.1MT this season. This is better than last week (+170kT) and it better be, there is a lot of wheat to get rid of before the harvest and added to this, Black Sea is very aggressive to get its wheat out: some sales to Asia were CNF $50 cheaper than Australian Wheat.

 

Egypt has now bought 300,000T more than expected on its local market… And season is not over! Indeed, the program has now reached 4MT while the full year was expected to be 3.7MT. Tunisia, Algeria and Egypt will face excellent crop and protecting the local market is definitely the way forward. And Morocco is seeking 171kT on its local market as well. Talks about India buying more Australian wheat.

 

Potential record crop in France, stock piling, aggressive selling Black Sea, EURUSD up,… Against any kind of logic, MATIF up 2.5% reaching one month high. Maybe it’s not justified but as the proverb says, market is always right! The movement is just an obvious correlation to Chicago.

 

Algeria is not usually publishing a result of the tender, OAIC was looking to buy between $200 and $210 CNF. Sure some French wheat has to be in.

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