Sideways and choppy… Technical support and bearish fundamental news (macro and crop) in the US made corn and wheat trading sideways while only soybeans stand to its guns and finished lower. Late bounce could be due to November option expiries. Funds sold 3,000 soybeans, 1,000 corn and 2,000 wheat. Harvest of corn and soybeans will be soon an old story. Also rain has arrived indeed on the dry parts of the south plains, reestablishing soil moisture at the best moment before the dormancy of wheat.
No bearish news though from Argentina. Government said corn planted will be 5.3M hectares (-0.7M hectares from last year), wheat will be 4.1M hectares also down from last year (-1.16M hectares). Corn is 25% planted, slightly behind last year (29%) and well behind the average (40%). Meanwhile, wheat harvest sees good yield but it seems like a lot of wheat is at the frontier between feed and milling.
MATIF resisted very well, mainly helped by a weaker euro, despite rain coming in Black Sea. December finished at 179, which is now $197 while on Tuesday, 3.25 euros lower, it was actually $3 higher so it’s not completely absurd but still a pretty interesting bullish wave in euros. The big question for the end of the year and the start of the new one is: how much (if so) Russia and Ukraine will suffer from these past few weeks drought? On one side, it’s an open door to some upside seasonality on winter weather market, on the other side, the world as known 3 very well supplied years in a row and could easily cope with one year of more modest crop.
In France, 58% of the wheat is planted, slightly in advance compared to the 5 year average but nothing too extraordinary. Barley is planted at 78% and corn is harvested at 58%, far in advance compared to last year (32%) but there’s much less corn to harvest!
Iraq extended the deadline of the tender to the middle of the next week, no purchases has been reported yet, Russian wheat is said to be the most competitive. Ethiopia is tendering for 4 clips of 250,000T of wheat, optional origin. This will be tricky on the execution side as the country has no coastal access (mainly using the port of Djibouti) and is not use to import so much at the same time. Private importer in South Korea bought 50,000T of Australian wheat for May shipment and seeking an additional cargo for March. Thailand mill bought 125,000T of US wheat, December shipment, Philippines bought 60kT and Malaysia 40kT.
China surprised the market by cutting interest rates in a bid to stimulate the economic growth. This is the sixth time in a row, 1 year benchmark bank landing is now set up to 4.35% and deposit rate to 1.5%, both down 25 basis points. Some say China becomes desperate but global financial markets did like it and rebounded sharply. EURUSD continued to sing on the fear/hope there will be new quantitative easing by December, it is now approaching 1.10 dangerously. Meanwhile in Athens, Francois Hollande addressed the Greek parliament and said “Grexit is behind us”. A Blomberg economist fairly reminded he’s not the guy with the best track record of predictions,…