Mid Day Comment – #Wheat #Corn #Soybeans – 08/09/2015

The week is (re)starting on a positive note across the board. A bit of short covering his happening, positions are squared before the USDA WASDE report on Friday. The focus will be US soybeans and corn yield and, European corn production, and global wheat availability. There’s big market chatters indeed about the US yields. It’s expected to go down… Previous USDA reports estimated corn at 168.8 bushels per acre and 46.9 bushels per acre for soybeans. Bloomberg survey is respectively 166.5 and 46.1. This would cut US corn production by more than 4.7MT and US soybeans production by more than 1.8MT. Most probably the market impact would be more significant on corn, world S&D slightly tighter than soybeans. As usual, truth will probably be in the middle. Let’s watch out as well where is pegged the EU and former FSU corn production, and if it’s partially or completely compensated by bigger wheat availability. 

MATIF was opened yesterday and has rebounded on technical, the movement is continuing so far today. Market was very quiet yesterday, MATIF seem lost and sad when his Chicagoan buddy is away!

 

As usual, Reuters I coming back with more. Algeria’s OAIC actually probably bought 555,000T. From July to Nov shipments, this is now close to 3MT.

 

Egypt Agriculture Minister resigned and got arrested over allegations of corruption. Meanwhile, in Russia, still no sign of a wheat export tax decrease. With Ruble still very low (USDRUB is at 68.5), international wheat market collapsing and huge availability, this is the worst scenario and exporters are clearly awaiting a government decision. By the way, IKAR decreased forecast of Russian wheat crop to 60.6MT from 61.8MT. Russia is still on its way to exceed frankly 100MT of grains this season. Ukraine Agriculture Minister says exports of wheat will be up +4.7MT to 15.9mT this season. Corn exports, according to them, will be down -1.9MT.

 

Australian new crops estimates are raised, El Niño is to ‘blame’. Australia forecast his wheat production to 25.28MT (+1.68MT versus previous estimates), canola to 3.15MT (+0.19MT versus previous estimates). Australia Summer crop will suffer though, from excessive wetness (cotton for example, forecast is cut by 50,000T to 470,000T). El Niño is said to be one of the strongest ever recorded.

 

South Korea Major Feedmill Group is seeking 65,000T of feed wheat, optional origin, shipment Q116.

 

Still a lot of focus on China’s macro, financial markets are still very bumpy in the east. In August, China imported 7.78MT of soybeans (versus 9.5MT in July). It’s +8.81% compared to the last marketing year, while USDA is forecasting +9.4%. Barley imports are forecasted to be 6.5MT only, versus 9MT last year, while corn crop is expected to be 229MT (-3MT versus previous year, versus 225MT for the USDA).

 

EURUSD tried to rebound and failed maintaining itself above 1.12 and is now back mid 1.1150’s. The main even of the month will be the FED decision, largely expected to be a rate hike, but a minimal one. This won’t mean end of easing by any means.

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