Mid Session Comment – #Wheat #Corn #Soybeans – 19/08/2015

It was actually an eventful day yesterday! Pro Farmer Crop Tour is on and it’s leading traders to think the USDA yields are over estimated especially on corn. Corn was resisting while soybeans and wheat was falling. The Crop Tour began with huge expectations and actually it seems to be averageish, comments about dryness are frequent, with a few deceases, very variable rates, all over the place. If it might be true, can the market really be that surprised? With only 63% of Soybeans G/E and 69% for corn (P/VP are respectively 11% and 9%) one cannot be surprise to see some pretty ugly fields! Anyway, the end of the tour is expected to be much better, finishing in areas where the weather have been much better. Ohio Corn is estimated at 148.37 bushels per acre, South Dakota 165.94 bushels per acre, Nebraska at 165.16 bushels per acre, Indian at 142.94 bushels per acre: this is quite lower than what USDA is forecasting. Nothing spectacular in the pods counting for Soybeans but South Dakota and Nebraska seem above the 3 year average. India soybeans has reached 12 million hectares, an old time high. In a already well supplied market, some analyst actually begin to thing sub 900 cents per bushels is not science fiction… 

Weather is still dry and market is debating on whether it’s too dry or good for the crops that have been over wetted earlier this year. Some rains are expected by the end of the week and here everyone agrees: it cannot be bad!

 

Reuters said funds bought 8,000 corn, sold 8,000 soybeans and sold 4,000 wheat.

 

Very quiet night session, small rebound across the board.

 

MATIF wheat followed Chicago lower. Silos are full, physical premium is actually physical discount these days… Rouen Milling Wheat is at -11 euros, La Pallice at -10 for spot shipment. Difficult to expect a very bullish market in these conditions. Options market was busy, trade house, coops and millers are hedging their position, it’s a bit of a panic, no one really knows what’s going on. German Farmers Association said the barley and wheat are exceeding expectation, still down from last year on collapsing yield, the worst have been, to their mind, avoided. They add the rapeseed production is down -7% and corn will be down 25%.

 

Ukraine has harvested 36.7MT of grains, Russia is 43% complete to 59MT og grains (including 43MT of wheat). Russia has only exported 3.2MT of wheat this year, this is comparing to 4.7MT last year. Market down and rouble down equals higher export tax, this is having here an adverse effect: one can wonder if they are not going to decrease tax soon! Anyway, a lot of countries will be hungry to export, nice battle at the next GASC tender?

 

China continues to worry, financial market is still very choppy. Most of the market operators are expecting another intervention to stimulate the economy. As well, there was some contradictory information about their stockpiling program on corn, there might be some changes coming. USD was going down, not helping the market in USD. EURUSD topped its range and seems to be keen on coming back at the low of the range. Well. Keep ranging. Small rebound of EURUSD this morning.

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