Afternoon Comment – #Wheat #Corn #Soybeans – 16/09/2015

Yesterday, funds bought 5,000 soybeans, sold 4,000 corn and 2,500 wheat, technical, profit taking, realizing USDA WASDE report was not that bullish, realizing that the staggering amount of wheat in the world could cope with a bit less corn,… Strange day today, wheat and corn tried to continue the yesterday’s movement during the nice session, but after the tea break, market came back almost in positive territory but is currently keen on going back clearly on the downside. Soybeans were trading sideways, currently up, holding up on good crushing data. Indeed, August NOPA crush was slightly higher than expected to 135 million bushels were expected and it was actually 135.304 million bushels. That’s lower than July (142.2 million bushels) but much higher than August last year (110.6 million bushels). And the next week will be the annual China soybean rush in the US, export sales are expected to be pretty good for a couple of weeks and this time the Chinese President will be there so maybe he’ll make sure it will be a year to remember! 

No sign of early night frost in the US, so no worries for corn and soybeans, no worries for wheat plantings. Brazil colder temperatures at night is more worrying for the coffee rather than the wheat. Early coffee flowering was concerning and potentially could be hurt by frost but the market doesn’t seems as concern as it was a few weeks ago, in one month Arabica Coffee lost 16%.

 

MATIF was in a mood of selling the rebound, helped by a lower Chicago. Premiums are still heavily discounted (spot is -13 euros in Rouen and -11 in La Pallice) and it makes sense that coops are selling and see in rebounds a bit of relief. It will be interesting to see if FOB Rouen is approaching again $170. MATIF is trading mostly down today, a bit of indecision with Chicago coming back from its lows.

 

Wheat is actually concerning, European exports are lagging behind last year with higher availability, US exports are 20% behind last year while USDA is expecting an increase, Australia will produce a very good amount, there is seriously wheat everywhere, competition is great, but demand is not really following. Do we have to expect a bigger balance sheet again in the October USDA report? If US Corn is finally not too bad, this could be even worse, we’ll know for sure soon as harvest is slowly kicking off.

 

In Russia, farmers are skeptical about the crop data published by the state. Indeed, 72% progress with 84MT of grains, to make only 103MT, a huge decrease in yield is needed, because at this yield it would be more than 115MT. The head of Grain Union, a farmer lobby told Reuters “Farmers are complaining that the local authorities are pressing them to over report harvest figures”. He think the real output won’t actually be much higher than the 100MT mark. Ukraine harvested 38MT of gains the Minister said and winter wheat planting has kicked off.

 

And Jordan strikes again, after the hard wheat yesterday (100,000T at $224 CNF), Jordan did buy 50,000T of feed barley at $209 CNF, shipment second half of December.

 

EURUSD still playing around 1.13, nothing to expect before the FOMC, but is there really something to expect from FOMC? A 25 basis point hike is a given, if it can be a psychological turn, will this have an actual effect?

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