Morning Comment – #Wheat #Corn #Soybeans – 04/08/2015

Yay, Tuesday reversal! Well… To be fair Soybeans and Wheat actually closed in green territory yesterday, so market going up during the night session is not a really a reversal! Indeed, after MATIF closed, market came back from their low, despite export inspection being lower than expected on wheat (298kT) and just fair for soybeans and corn (respectively 146kT and 921kT). The August USDA WASDE report is not really far away and market might enter in a waiting phase with no real trend. New short seemed to take some profit while remaining long is still holding and hoping. The wheat bounce could be attributed to the decrease of spring wheat condition. 

On the crop progress and condition, no real surprise. Spring wheat is 8% harvested (+6% week on week) and winter wheat 93% (+4% week on week). Spring wheat is slightly delayed compared to the 10 year average (16) but winter wheat is on its way to be the earliest winter wheat crop harvest ever! But the condition is down 1% to 70% of G/E, it is similar to last year and well above 10 year and 20 year averages. Corn not reported yet as kick of is very in localised spots. Corn Crop condition has not moved, 70% of G/E and 9% of P/VP. If this is below the 10 year and 20 year average, is far from being the worst condition ever and it is still very decent. Soybeans G/E is up 1% to 63%, well below last year (71%) but significantly above 10 and 20 year average.

 

Temperatures are still below season’s average, no stress for corn and soybeans. A little rain is forecasted and seems to be favourable. So really, everything is going smoothly. More and more optimism is surfacing on Corn. North Florida is expecting the best year ever, Louisiana is starting to harvest,… It is still e very early start, the main part could still be hurt by a drought. But once again, everyday elapsing is a good news!

 

Funds sold 7,000 lots of Corn, 1,000 lots of soybeans and were even on Wheat.

 

Silo operator Senalia is halting milling wheat intake, once again. This being a silo for the exchange, get ready for some very funky U5/Z5 spread move as it’s typical situation when one market operator is out, the rest of the market will be held by just a few operators, great condition for cornering. It means silos are full during the harvest and there’s only a weak export demand. Indeed, harvest is going fast, yields are surprisingly good despite the scaremongering of June and July about the heatwave, wheat in France might be significantly above 38MT. MATIF went down following the early bearish movement of Chicago but we’re clearly on the harvest price pressuring mood.

 

Crude oil is around $45 and brent fell below $50 as well. More anfd more analyst sees sustainability of theses level, a few bull are thinking about $80, the worst bears are talking about $35. Oil is in a context of heavy shale gas supply, aggressive OPEC, Iran will return to production,… On a long term perspective, ethanol margin may seriously suffer.

 

EURUSD still ranging below 1.10, it’s like a lost puppy since a while, it doesn’t know where to go. Waiting on big fundamental news most probably.

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