Closing Comment – #Wheat #Corn #Soybeans – 22/10/2015

Funds bought yesterday 9,000 corn, 2,000 wheat and 9,000 soybeans and it seems they were on the buy side again today, at least until the end of the overnight session. Indeed, on the afternoon, gains of previous sessions have been erased and wheat, corn and soybeans finished in red territory. Expiry of November option is pretty interesting around big strikes: 500 on wheat, 900 on soybeans, 380 in corn. Funds sold 5,000 lots of corn, 7,000 lots of soybeans and 3,000 lots of wheat. 

On the weather front, it is very dry in Texas, Oklahoma, Arkansas and Mississippi, the drought is expanding. Illinois and Indiana are a bit better. Ok, it’s good for harvest and field work but soon it will be an old story and soil moisture will be needed for the new crop or the recently planted winter wheat.

 

US Export sales were mixed. Wheat was on line with the market consensus to 359,200T, down from last week (-101,200T). Corn was lower than expected to 248,000T ( -410,400T from last week) but still good demand for soybeans, exceeding expectations to 2,032,400T, up from last week (+555,600T). There is still some demand on the soy complex indeed, USDA is likely to bump up chines exports. China macro concerns are so far proven wrong but for how long? On corn, there’s talks China will cut by 50% the purchases for state reserve and might reduce imports. So that’s a bit like a sweet and sour dish!

 

But there’s a lot of soybeans available worldwide, Agroconsult confirmed Brasilian soybeans will exceed print 3 digits to 100.6MT, +4.57% from last year.

 

MATIF resisted pretty well! +2 euros per ton. Helped by a weaker euro and the concerns in Black Sea, market not only make up the delay it took yesterday compered to Chicago but managed to finish up while Chicago was already in red territory.

 

The Russian grain lobby Grain Union is saying that 30% of the grains area is at risk due to the dry weather. Is this enough to panic? Should it last, maybe. But now, it seems a bit early, especially considering at this stage last year the risk was 37%. The crop produced was/is good enough anyway. Meanwhile, harvest is done by 97% to 104MT, total might finally reach 107MT exceeding expectancies, and infirming the fact the grain lobby said they were pressured to bump up their forecast.

 

Bangladesh has rejected again a French cargo… The 20,000T cargo was booked probably a little while ago ($244 CNF for 10% protein), the rejection reason was… Quality issue. Seems like a good old Chinese strategy, cancelling when price goes down. Or window dressing for a default. Anyway, French wheat clearly doesn’t need this kind of hurdles now. Meanwhile, in Europe, only 277,000T of soft wheat export licenses have been granted last week, 6.5MT total this season, lagging dangerously…

 

Wheat Draghi or Yellen are talking, market is moving. Today, that was Draghi’s turn. EURUSD moved down back in the 1.12’s. Market has interpreted the ECB’s governor speech indeed: more quantitative easing could come in December and he might be ready to cut rates. Slowdown in emerging markets has weakened Eurozone Draghi said.

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