Morning Comment – #Wheat #Corn #Soybeans – 20/07/2015

US and Canada weather are improving. It’s almost the end of July and there’s no report of Drought. Well there’s some serious concerning Drought in California, Nevada, Oregon, Idaho and Montana but there are only 0.3% of the total corn in these states, so as far as corn is concerned, it’ ok! Drier weather is a relief indeed for Corn and Soybeans while wheat harvest can go around the clock. However, crop rating tonight might be surprising tonight, big question is Corn! Chicago night session started on a very soft note. 

The story of French wheat in Mexico is having a psychological effect. MATIF was excited on Thursday (but corrected Friday), we’re talking about a few cargos, balance sheet won’t be massively shaken off if it’s a one off. But more importantly, this means the US SRW is not competitive and/or too low in term of quality for the neighbours! Will US be in a similar position than France last year? Canadian wheat had to be imported for to satisfy French millers specs.

 

In Brazil, private analysts are expecting to see the soy area to increase by 3.6% compared to last year. Argentina will increase by 4MT thr corn export licences.

 

Quiet Friday on the MATIF on Friday, a lot of Europeans traders are enjoying beach holidays. It should not be allowed to take holidays during the harvest! Market is expected to start the week lower. Winter wheat is 75% G/E in France, unchanged compared to last week and this is 3% better than last year. 38% of the Crop is harvested, farmers seem happy about the yields, a slight dilution of protein but quality seems to be very decent. A few logistic problems are to report in some area, wheat is piling up in courtyards because some silos are full. Winter barley harvest is reaching the end, 96% is harvested, 86% is G/E, unchanged compared to last week and this is 13% better than last year. Spring barley has been downgraded, dry and hot weather is to blame, a small -1% down of G/E to 65%, while harvest is pacing up to 17%. Corn has been suffering, silking process is kicking off in tough conditions, farmers seem to complain their corn is too short. Rating of G/E is -4% to 67%, well below last year (84%) while 11% is rated P/VP, +7% compared to last year.

 

Russia harvested 10% of its acreage of grains and there’s 17.6MT (12.1MT of wheat and 2.5MT of barley). It is behind schedule, last year, the amount harvested at this stage was 20.1MT. Similar pattern in Ukraine, wheat and barley are 31% harvested, lagging 16% from last year.

 

Taiwan Flour mills are tendering to buy 104,350T of US wheat. Japan bought 137,847T of US, Canadian and Australian wheat in tender. China still tries to sell the Corn stocks, it’s going very slowly, out of more than 5MT offered, only 65kT have been purchased.

 

EURUSD weakened and went back in the 1.08’s as Greeks banks are reopening today (there are so much crowd, banks give tickets like in the post office) and VAT hike is taking effect today. Stock market is staying closed though. The bridge financing might be a bit short, the 7 billion euros awarded have been spent almost entirely (6.8 billion) to repay central banks, ECB and IMF. So basically creditors have made a new loan for an old loan to be reimbursed… Everything is going well in Europe…

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