Afternoon Comment – #Wheat #Corn #Soybeans – 22/09/2015

It got interesting only when night session was over yesterday, nice recovery and bounce! Wheat led the pack on short covering and technical buying. Not sure if the expected winter wheat planting small delay was a factor as it is still very early to take a delay into a bull consideration. Indeed wheat is 19% planted (+10% versus last week) but -4% behind last year and -1% behind the 5 year average. Corn and Soybeans followed, helped by a strike in Brazil and fears of fears of US night frost, and bargain hunting on soybeans with the Chinese in town. As well, Mexico bought 488kT of US corn, and we still do not know for sure if some French wheat sneakily made it to Mexico again last week. Else nothing much really. Funds bought 11,000 corn, 6,000 soybeans and 7,000 wheat. 

On the harvest side, Corn was on the lower range of the estimations (10% harvested, +5% from last week): it is still above last year (7%) but below the 5 year average (15%). But nothing to get worried about just yet. US farmers can harvest very quickly. Meanwhile, soybeans harvest kicked off as well: 7%, in front of last year (3%) and spot on with the 5 year average. Small (pleasant surprise), soybeans ratings improved +2% of G/E to 63% and -1% of P/VP to 11%, this is still a worse condition than last year. Corn ratings were unchanged, as expected to 68% of G/E and 10% of P/VP.

 

MATIF followed US higher, helped by a lower EURUSD. Maybe some traders got excited about the 60kT of French wheat to the GASC but this would be premature, we’ll see at the end of the season how much French wheat made it.

 

Traditional Tuesday reversal on the both side of the Atlantic so far today.

 

MARS raided the yield for Corn EU harvest to 6.43T per hectare (+0.03T per hectare), nothing to get excited about, the crop will be lower by a fifth compared to last year and still -8.5% below the 5 year average. Wheat yields unchanged to 5.81T per hectare, not sure EU needs more wheat anyway. Interesting fact, yields of all European crops are down from last year, apart from corn, a few big numbers: rye -12.1%, rape -10.2%, sunflower -13%, potato -9.5%, sugar beet -8.5%,…

 

Russia agriculture Minister gave a new tight forecast of the grains crops: 101MT to 102MT and implied 31MT to 32MT of it is exportable. But with 74.2% of surfaces harvested totalizing 86.1MT of grains, something still need to happen to be below 105MT, either a collapse in yield either a better accuracy of reports (which would prove the claims of the main grain lobby true). Also, the Economy Mister made clear he was opposed to reduce again the export tax. This follows statement of Agriculture Minister saying that objective is to make more than 120MT of grains and to forget about any tax. But the chances of some sort of new tax cut are still high.

 

Indian corn has suffered from the scattered Mansoon and a cut in 15% of the production is expected.

 

EURUSD is coming back down after it’s hike on FED decision. Mid 1.11’s currently. Nothing has change really, some macro concerns are there. And meet the new boss same as the old boss in Greece… ECB seems to be keen on pursuing new quantitative easing.

 

Financial markets are nicely down in Europe. Volkswagen basically hacked 11 million of its own vehicles to fake the results of the carbon emissions tests specifically on diesel engines. This ‘mainstream’ stock probably holds the record of the upside move and downside move. On the 27th of October 2008 it gained +146.62%, on 28th of October 2008 it gained again 81.73%, it was when Porsche sneakily acquired stakes through options deliveries, karma strikes back! There will be prosecution, resignation and the survival of the company is actually at stake. However, rumor begin to spread that VW might not necessary be the only car manufacturer concerned by this issue… If it was a widespread behavior, this would be very harmful for the diesel industry and potentially good for bio fuels. Getting short of VW / Corn spread would be going a bit far though!

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