Another very nervous day before the USDA WASDE report, wheat was trading sideways: morning in negative territory and afternoon in the green. Corn finally managed to slightly disconnect itself from wheat and traded slightly lower (and corn prospects are quite good in the US so far), while soybeans reacted very positively (price action wise) to the delays in finalisation of the plantings. Been seeding and wheat harvesting are the two main concerns, this week end, rains will come back.
Wheat Corn spread begins to be quite high (167 cents per bushel on N5). One would expect some shortage of wheat or some damage on the wheat protein to justify this level.
What to expect in the USDA WASDE? Small adjustment on old crop, US wheat and Corn stock might be increased marginally while soybeans decreased but this will be quite minor. No major move expected for old crop world ending stock either. More or less, we now know everything about the old crop. South America crops could be slightly increased though but nothing significant. On new crop, we’re heading to a downside revision of final world stocks on wheat, soybeans and corn. Market doesn’t expect that more 2MT of wheat, 1MT of corn and soybeans will disappear, so pretty small changes.
The big picture won’t change, heavy supply. But surprises can come from the US corn yield, milling wheat downgraded to feed wheat in the US, Russian productions and Indian imports. So let’s get ready. July and August report tend usually to move more but never say never!
MATIF traded sideways as well and did not really know where to close: front month down a tick, second month flat, third month up a tick… All over the place. MATIF has followed Chicago higher despite a stronger Euro and now US Wheat may become competitive compared to the European origin on international markets.
EURUSD slightly lower but no major move. Huge surprise, a deal will be found with Greece… Yawn… Greece seems to promise tough austerity targets and basically postponing a handful of billion euro debt to March 2016, when obviously all problems are going to be salved… Sigh… Situation is clearly more about politics than economy, European Union cannot take the risk to see the European Common Currency sinking, and Greece knows it. This is buying, at least, some time.