Again, that was some kind of day… Quiet night session, the impression was almost given that the yesterday rebound would struggle to maintain but when the day session opened, Wheat rallied again in a dramatic fashion! But then retraced the full movement, failing to go through the 100 day moving average (around 518 cents per bushels on Z5) and actually finished lower. Seriously? Rollercoaster, fasten your seatbelt. Purely technical, funds game. The action on corn is interesting and maybe more logic (less technical), the rebound, lagging behind wheat though, has met some fresh selling from farmers and the yesterday’s rally has been written off. Soybeans rebounded, also retracing (the other way around obviously) the yesterday’s movement, 900 seems to be a clear magnet. 

Rain in the US has hit partially wheat areas, it could have been better indeed. One of the weather focus is also the Black Sea but here also, rains are forecasted. Brazil as well is supposed to see some rains in the next few days.

 

It seems like some farmers put 32 corn head out: +16% of the corn has been harvested (to 75%), now the corn harvest is well in front of last year (+21%) and above 5 years average (+7%). Soybeans harvest ‘only’ increased by +10% to 87%, also well above last year (+19%) and above the 5 years average (+7%). No doubt that this year it will be an early completion of the harvest. On the other side, it’s been raining on wheat, so tougher to plant and winter wheat planting increased by +7% to 83%, but they are done in better conditions. The planting are exactly on the same pace than last year and only -2% behind the 5 year average. First rating is bad, 47% of G/E and 14% of P/VP, but good condition will certainly improve them drastically and quickly (last year it was respectively 59% and 7%).

 

MATIF struggled to follow Chicago wheat higher. Indeed, $200 is expensive and French farmers and coop do not specifically care about EURUSD rate: 180 euros is a good amount of money, so from this level, some fresh selling interest appeared. Also, the timing of the rebound is interesting, coops and farmers will need some fresh cash pretty soon, so at some point, they won’t be able to retain their stocks for much longer, 180 euros is then a good level to sell. But we’re entering a period where the market is going to be very sensitive to weather events and winter weather market could kick in.

 

Syria bought 200,000T of milling wheat. Bargaining is going on around the Ethiopian super tender, no purchase reported just yet. With market rallying, it will be tough to bargain, giving a free option in a tender has surely some limits. Privates in South Korea bought 115kT of soybean meal, most probably from South America and 51kT of US wheat. Jordan is postponing a barley tender and still seeks hard wheat.

 

No big move on the EURUSD, US will avoid shutdown as an agreement has been found to set the spending levels for 2 years and raise the debt ceiling until March 2017. Meanwhile, the implied probability of a raising rate in Q4 has fallen below 10%. Tomorrow’s FED’s meeting is very unlikely to have a surprising outcome.

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