Late Comment – #Wheat #Corn #Soybean #GASC – 18/09/2015

Yesterday, funds sold 3,500 lots of corn, 2,400 soybeans and 2,100 wheat. As for today, the main move of the day is soybeans, there are concerns that purchases from China won’t reach the expectations. As well, some yield survey are coming back actually pretty good and optimism is coming back. SAFRAS in Brazil raised its soybeans production forecast to 3 digits to 100.5MT (+0.7MT). Corn is following while wheat is showing some strength, traditional profit taking and short covering after the past few days. 

Corn is helped in its resistance versus soybeans by ethanol data. Production is still a nice 961,000 barrels per day (+3,000 compared to last week) and stocks were lower: -300,000 barrels to 18,3 million. Harvest will now seriously kick off in the US.

 

Eventless day on the MATIF, Front month flat, second month down two ticks, third month up one tick,… Market recovered from is low maybe on the hope some French wheat would finally be sold to Egypt.

 

Egypt’s GASC showed up for second half October shipment indeed. This time, offers were totalizing below the million tons (945kT) and price were higher. Best FOB (and CNF) offer was for some wheat from Ukraine, $174.95 FOB, making it $187.19 CNF. With $177.74 FOB ($190.87 CNF), French wheat was not far behind (cash premium was only MATIF -10.5 euros) and were in a position to compete! 175kt of Russian wheat was following slightly behind (between $183.40 and $184.88 FOB, $192.28/$193.43 CNF) but better quality than the French wheat with higher moisture. It’s been reporter GASC tried to bargain, best offer from Venus was lured with higher quantity, French wheat was bargained to be bought for the first time this season while Russian, higher in price due probably to the export tax, was the choice of the heart… It’s been a very long process for this one, results were known much later than usual, after US market closed. And nice purchase, hat trick of origins and first time for the marketing year French wheat has been purchased. GASC bought indeed 230,000T at $191 CNF average, 55kT form Ukraine (Venus), 60kT from France (Soufflet) and 115kT from Russia (Glencore and Olam).

 

Meanwhile in Russia, the Deputy Prime Minister said that market intervention would be old story if grain harvest, in the future, is becoming 120MT to 130MT. Government still expects 103MT this year, with farmer lobby saying they are pressurized to inflate the data. Anyway, official data is still puzzling, 84MT with a 72% completed harvest, if extrapolated, 103MT will be clearly overshoot, so how this data is going to evolve is going to be very interesting!

 

Corn is still the concern. Ukraine is not expecting more than 23MT this year, it’s basically a 20% decline. In France, the corn crop is downgraded -1%, only 55% of French corn is now G/E.

 

South Korea’s flour mill bought 51kT of Australian wheat for Q1 16 delivery.

 

EURUSD is finishing the week higher. On the FED decision, EURUSD rocketed to 1.14 but this has not sustained and it came back in the mid 1.13. Fundamentally, has anything changed? If the last chance of the FED is before the end of the year, market consensus now think a rate hike will only happen in 2016, after elections. Concerns on China and volatility of financial market were obviously taken into account in the FED decision. Financial market did not welcome well the decision. All red in Europe (apart from, ironically… Greece) with the DAX losing -3.06%, the CAC40 -2.56% and the Footsie 100 -1.34%. US markets are globally between -1% and -2%. Only Asia was showing some green, shy, but green, apart from the Nikkei, -1.96%. Joke of the day is coming from the CFTC: it announced that for they recognize bitcoin and other virtual currencies as proper currencies. Might just issue my very own!

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