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

Hat trick: wheat, corn and soybeans all closed up. No fundamentals, traders are adjusting their position before Friday: short covering, technical buying,… Indeed, nothing exciting on the crop progress and ratings of yesterday night (delayed to Tuesday indeed as Monday was Labor Day). Spring wheat harvest is close to completion to 94% and even winter wheat planting has begun: 3%. Corn harvest is approaching fast, 20% of the corn is mature. 68% of soybeans are G/E while 63% of Corn are G/E, in other words, no change from last week and anyway there’s only one thing everyone is interested in this week it is the corn and soybean US yields! USDA in August was pegging Corn at 168.8 bushels per acre and 46.9 bushels per acre for Soybeans. Bloomberg survey for the Friday’s report is respectively 166.5 (range is 161 to 170.5) and 46.1 (range is 45 to 47.11). So in other words, market is skewed on a downgrade but has basically no clue. Funds bought 4,000 wheat, 6,000 corn and 7,000 soybeans. Market is trading sideways this night session. Wheat and Soybeans currently slightly up and corn showing little red. 

Export inspection were below expectations on Wheat and Beans (respectively 371kT and 93kT) while corn was steady to 895kT. Note the marketing year just started for corn and soybeans. Last year (sounds like a long time ago, it’s actually last week), soybeans shipment finally exceed by 0.25% the USDA target and Corn fell 4.83% short.

 

FC Stone is forecasting a record soy crop in Brazil, 100.9MT this would be +4.7MT from the year before.

 

On CME the excitement was elsewhere yesterday, Live Cattle limit up! Short covering and technical buying.

 

MATIF continued its rebound on technical on bargain hunting and following Chicago. Movement is continuing this morning. France shipped 683,513 tons of soft wheat outside the EU in July, +58% percent compared with July 2014 year and the biggest July volume since 2011! Total exports (including EU) are 1,242,700T, this is +263% compared to July 2014. France exported 934,000T of Barley in July, +19% compared to July 2014, 75% of it to China. So there is huge availability but it’s going away anyway despite the lack of competitiveness facing Eastern Europe and Black Sea. But there is still issues, silos are still at a very high level and corn crop is around the corner, if there is less corn in Europe, it will still need some room in silos…

 

Ukraine harvested 37.5MT of grains so far on 71% of the acreage. The likelihood of a 60MT harvest is becoming pretty high, 40% being wheat.

 

After the hat trick of Jordan, this seems to be four in a row. Fourth tender of milling wheat with no purchase. Groundhog day! South Korea MFG, on their side, managed to buy 65kT of feed wheat at a reported price of $199.50 CNF.

 

Looking backward, El Nino, despite being a big one, as scared grains rather than actually damaged them so far. Too wet in Australia for cotton, to dry in Ivory Coast and Ghana for cocoa, dry Indonesia and wet in Brazil, not good for coffee (which is flowering early in Brazil and very sensitive to a cold snap),… Grains escaped most of the trouble but other markets might be impacted indeed.

 

EURUSD is still in the mid 1.115’s and tried to play with the 1.12 level, unsuccessfully so far. More and more some traders are taking the contrarian bet that FED won’t finally hike the rate… If they’re right, it will surely pay, but the likelihood is still high, minimal hike but hike.

 

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