Friday’s Comment – #Wheat #Corn #Soybeans – 24/07/2014

Quite a boring two sided day yesterday actually. Wheat went up. Why? There’s no fundamental reason so markets says technical buying. That being said, after 10 bearish sessions, market need to take a breather. Dead cat bounce? Corn was slightly up but sideways, while soybeans went down more firmly. Probably a bit of buying the corn soybean  spread or ratio around there. These three markets are however in a positive – from a crop point of view – momentum, indeed, weather concerns are – sorry for the pun – drying out. Indeed, weather is getting dryer, warmer, but it’s far to be a tough summer in the US, Although there is some serious drought in the West, it is not a concerns for grains. Added to the lack of competitively of the US wheat and the persistent higher dollar, this won’t help grain prices to recover sharply. MDA Crop cast reduced its US soybeans estimates by 0.8%… To 99.7MT , from 100.5MT Not enough to give support to soybeans, they are evolving in an ample supply complex. Night session is red across the board it might be a typical boring and eventless Friday of the end of July.

An interesting systematic econometric model is circulating these days (from ec2ce) on corn yield, it’s up to 163.7 bushel per acre from 163.2 the week before, this is still below USDA of 166.8 which is much less dynamic and which have a discretionary component.

My favourite data of the moment, funds sold 6,500 lots of Soybean (AgRessource), unless it’s 11,000 lots (Reuters and FC Stone), Corn sold 6,500 lots (AgResource) or 6,000 (ADM) unless they were even (Reuters and FC STone), and wheat sold 4,000 lots according to Reuters and FC STone. This is become a joke… At least Reuters agrees with FC Stone, well, it’s probably FC Stone who provided the data!

Canola fell as well, there is a relief in Canada as well as far as weather is concerned. AgResource is expecting 14.1MT, 0.5MT below USDA, it would be 4% below last year, the worse seems to be avoided.

But exports sales were decent in wheat, 502,800T and exceed expectations. On the other side corn, was slightly below expectations to 534,800T. Summing up the price movement of the day really. Soybeans were as forecasted to 322, 600T. In Europe, export licences were 325kT for wheat, average need to pace up to meet USDA’s target but it is only the beginning of the season, any speculation on this would be really premature. Corn license were 185kT on the import, decreasing compared to last week, good sign, no special panic while watching  the corn silking. As per exports, 31,000T. Barley exports were at a nice 475kT, up 188kT compared to last week, nice pace, well above USDA’s exports targets but once again it is early.

MATIF traded up yesterday to finish unchenegd. It’s holidays time in France so it can be expected there will be lower volume. Less volatility? Not sure! Big movment may happen easily when the order book is empty, especially in the context of worries on corn silking. Everyone seems happy about wheat and Barley in France. Wheat harvest should be completed very soon. MATIF flat at the opening, beach holidays mood indeed.

Ukraine grains harvest is 55% completed, so far 18.5MT of grains have been harvested, similar to slightly better yields than last year. Argentina is seeing a decrease of 4% of next season wheat acreage and 0.3% of soybeans.  104,350T of US wheat will heat to Taiwan in September/October 2015, while 130,00T of Brazilian corn were booked for Q4. South Korea bought 69kT of corn (optional origin), $195.87 CNF.

Oil still below $50. EURUSD still ranging below 1.10 before the next Greek event. Banks will need to receive some capital by mid-august so there’s no room for much more drama, On a longer term once again, it’s likely History will repeat itself.

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