USDA WASE. Let’s go straight to the two numbers everyone was expecting: corn yield and soybean yield. 167.1 bushels per acre and 47.2 bushels per acre were respectively expected. So… The numbers are… 47,2 for soybeans, spot on! +0.1 bushels per acre from the month before. However, a decrease in the harvested area (-1.1M acres) is hitting the US crop -1.29MT. And surprise on corn, an upgrade to 168 bushels per acre, +0.5 bushels per acre. With a bit of acreage loss, this is making -0.38MT on the US production. Sweet and sour, better yield, lower crops. 

Worlds ending stocks were expected to 224.8MT on wheat, 188.7MT on corn and 84.4MT on soybeans. Wheat stocks came out above the expectations at 228.49MT, +1.96MT from the previous report, corn slightly lower than expected at 187.83MT, -1.86MT form the month before, and soybeans higher than expected to 85.14MT, +0.16MT from the month before. Wheat stocks are increasing on better Australian wheat production (+1MT to 27MT) and better Ukraine production (+0.5MT to 27MT). Corn production is seen lower in USA (344.31MT, -0.38MT) and Ukraine (-2MT to 25MT). In South-America, no change, Brazil is +1MT to 80MT while Argentine is -1MT to 24MT. World production is then down to 972.6MT (-5.5MT). Soybeans US production is taking a hit, -1.29MT to 105.81MT but it is more than compensated by Brazil (+3MT to 100MT), so world production is up +0.88MT to 320.49MT.

 

So, finally, is this bullish or bearish? There is no massive change, we’re still in a situation where the world is well supplied. Ending stocks are 28.95% of the production and 31.89% of the total use, respectively 19.31% and 19.15% for corn, and respectively 26.57% and 27.42% for soybeans. In other words, demand could cope with a bad crops for a couple of years. Although it’s a bit early to get seriously worried about, market seems to choose to focus on the next crop and the planting conditions, and market wonders if the fundamentals of this year’s crop are already integrated. The dryness in Black Sea is feeding the bulls indeed. Russia officials said some rain is needed but it is early to panic. But on their side, Ukraine said 30% of the winter planting might be replanted later with corn and sunseeds. So clearly something to follow as this year was the perfect demonstration of “rain make grains”.

 

Anyway, the initial reaction to the USDA WASDE was bullish on soybeans and wheat, corn was struggling to go significantly down due to the soybeans strength. But finally, market decided to reverse and wheat finished down, corn more significantly down and soybeans only slightly up. Market action has been really nervous!

 

Export sales were subject to a very mixed picture yesterday, wheat on line to 293,100T, corn below expectations to 466,600T and soybeans double the expectations to 2,280,200T. In Europe, export certificates have picked up on wheat, +45,000T from last week to 602,000T, this is a good news, wheat really to get away from Europe, but this is still almost 15% below the last year pace.

 

MATIF followed Chicago higher and had only 30 minutes to capture the report move and closed before Chicago reversed, so Monday, a reversal might be seen. This was a very active couple of days in options markets a lot of position adjusting ahead of the report, especially with Algeria and Egypt seeking wheat. French corn harvest is 22% completed, well in advance compared to last year (but there’s much less to harvest) and plantings (wheat and barley) are as well in advance compare to last year to 23% and 37%.

 

GASC did a sneaky one indeed, tendering on the day of a potentially market mover report is a kind of free option, if the market jumps, a lot could be booked, else, the could just buy one cargo or even cancel the tender. Price were much higher than the previous tender, close to $9 higher. “Only” 650kt was offered this time. French was once again the best FOB offer, but CNF, due to freight differential, 2 cargoes of Russian wheat and 1 cargo of Romanian wheat were more competitive. So finally, everything up to the French has been booked, 180kT total, 120kT from Russia ($205.89 and $208.24 CNF), and 60kT from Romania ($207.89 CNF). French is left on the side, in, maybe, an attempt to provide a message: with threat of not accepting higher moisture and increase the minimum protein, French wheat has to be more competitive.

 

Algeria is said to have bought at least 675,000T of wheat in this week tender. Price is said to be around $204.50 CNF. As usual, this might be more and there might be price an interesting price deviation among the sellers. Syria is tendering to buy 200,000T of milling wheat. Saudi Arabia on its side is seeking 715,000T of hard wheat. South Korea bought 60,000T of corn, $195 CNF.

 

EURUSD back above 1.1350, market seems to integrate FED will not increase the rate in December.

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