Friday’s Comment – #Wheat #Corn #Soybeans – 03/07/2015

Independence day week-end in the USA, US market are closed today and will reopen Monday morning (4pm Dubai Time). But everything will be different… Thursday was the last day indeed of futures open outcry. This is the end of an era and a part, Chicago won’t ever be the same anymore. But market will keep going on, only 1% of futures were being exchange through the pit. 

Thursday was once gain a volatile day. Funds official position will be very interesting to know as funds bought an estimated of 9,000 corn, 2,000 wheat and 2,000 soybeans. Same concerns: dryness in Canada, wet weather pattern in the US, El Niño in Australia, Dryness in Europe,… Market was trading sideways, profit taking of the new long before a long week-end, farmers selling, but short covering and weather market on the buying side led to a roller coaster session.

 

MATIF went up on dryness concerns on once again a very decent volumes (more than 70,000 lots), option markets was very active as well with outright call and puts, combos (fence), strangles, call spreads, put spread. Everyone is hedging their bets and adjusting positions on this volatile and uncertain market. Once again, market seems to worries more than coops and producers in France and Germany as far as wheat and barley are concerned. Barley harvest reports are pretty good, very satisfactory both on quality and quantity. For wheat, if France is losing quantity on the dryness, it still largely expected to be above 37MT. Corn silking is a couple of weeks away and this could become a concern indeed. And interesting to look at the MATIF Wheat Corn spread, it seems to reflect this, more concern on Corn than Wheat with wheat premium to corn reducing violently. Also, Spain is getting very dry, some parts are very dry and haven’t seen rain since week. If local crop was hurt, it could raise the imports. Usually Spain imports around 10MT but could raise to 13MT or 14MT if there was real damage. And next season, there probably won’t be some French cheap premium (or just the leftovers of previous crop) so that could lead to some interesting basis price action.

 

US export sales where 363.9kT for wheat, 833,2kT for corn and 117.2kT for soybeans. EU cleared 304kt of wheat export licences (-57kT from last week), 439kt of barley and 82kt of corn. Marketing year is over for wheat in Europe, and the winners are France and Germany. Out of the 33.44MT, France exported 32% and Germany 28%.

 

Only MATIF open today, might be a quieter day: typical Friday? But sometimes big move happen these days… Wheat opened softly, profit taking before the week end would make sense.

 

GASC bought 60,000T of Romanian wheat at $212.47 CNF. Iraq seems to have officially cancelled the wheat tender. According to the Ag Minister, Ukraine grain exports could reach 37MT next season (+2.3MT compare to what is already a record year). While Interfax sees Russian grain exports to 30.5MT (including 21MT of wheat) next season. Still in Russia, Ag Minister said grain crops could be cut from the expected 100MT if the drought is persisting in the area of Volgograd, Saratov, Samara and Orenburg where an estimated 1 million hectares could be suffering. Informa cut wheat crops in Canada to 29.8MT from 32.3MT and farmers on twitter says it is still overestimated (but they are talking like their position, obviously long).

 

EURUSD just above 1.11, nothing new on the Greek frontline, but big day Sunday, stay tuned! Will market wake up with a 4 big figures move on the result of the referendum? Largely expected the YES to answer, however, undecided could still prove the polls wrong. Interesting days ahead for the European currency, the Eurozone and Europe.

 

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