Morning Comment – #Wheat #Corn #Soybeans – 04/09/2015

Red close across the board with corn and soybeans managing to contain the bearish wave thanks to endless speculation about yields. Wheat fell 3% and reached a 5 year low. US exports sales were mixed. Wheat was in the lower range of the expectations (277.9kT, -251.7kT from last week), corn was lower than expected (441kT, -413.8kT from last week) while soybeans were actually stronger than expected to 1,472.3kT (+146.5kT). Informa raised US corn and yield estimates. Corn yield is now raised from 165.4 bushels per acre to 168.8 bushels per acre. Basically matching the USDA number. For soybeans, informas sees now 47 bushels per acre (previously 45.4 bushels per acre) which is +0.1 bushels per acre compared to the USDA. Canada wheat stocks at the end of July are down -32% compared to last year, to 7.1MT. However, this is slightly more than expected, the market consensus was betting on 6.5MT. As well, Canola stocks are down, 23% to 2.3MT and this time it is a million shy of what was expected. Funds sold 8,000 lots of wheat, 8,000 lots of corn and 3,000 lots of soybeans. Night session seems keen on rebounding. 

Nothing major on the US weather. Elsewhere, El Niño, despite being strong, is struggle to prove its adverse effects so far.  


French wheat was close but still a bit shy to make it to the GASC. Egypt purchased indeed 170,000T of Russian Wheat at $188.02 CNF on average. Best French FOF offer was aggressive, Soufflet at $174.74 was still not enough due to higher freight. So MATIF did no really like it, we cannot blame it. And reached new lows. THE low? Historically, $170 FOB seems to be a minimum and trading houses seems keen on playing the rebound on these values, and we’re not far! MATIF Z5 closed at 166.50. with a FOB Rouen at -€10 that makes it close to $170! MATIF opened and went down straight away to 164.25. Minus 11 converted in dollar this is a $170 handle! Bingo? As well, the U5/Z5 closed at almost -€20. At these levels, some basic cash and carry becomes very tempting. Been there. Done that. Rebound this morning then. Market need to take a breather, whatever this rebound will be sustainable or not.


Meanwhile, Russia confirmed that 100MT of grains is a given and forecasting up to 103MT of grains. Exports might reach 25% to 30%. But no sign of export tax decrease just yet.


EU cleared 190,000T of wheat export licenses, -87,000T from last week, totaling 3.3MT so far this marketing year, pace is needed to reach the USDA target. No one wants European or US wheat… Logistic issues and lack of competitiveness. 108,000T of Corn have been imported, 1.4MT total this season. Nice pace, the fact there will be less corn in Europe is clearly well integrated and compensated. Talking about corn, condition in France worsened – again – to 55% of G/E (-1% week on week). Last year it was 87%. Finally, EU cleared 227,000T of barley export licenses, 2.6MT so far total this season.


Iraq is extending its offer to buy 50,000T of hard wheat as actually no purchase has made yet, Russian and Australian wheat are said to be currently the best offers. KFA in South Kora just bought 61,000T of corn, optional between US or South America. Jordan is seeking 100,000T of hard wheat and 100,000T of feed barley.


EURUSD back to 1.11ish. ECB will keep for one more year to purchase €60 billion per months. Meanwhile, FED is supposed to hike the rate this month. Will it happen?

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