This was a much quieter session yesterday after to pretty crazy days but still mostly everything was red across the board. Funds sold 8,000 corn, 8,000 soybeans and 3,000 wheat. Wheat funds seems to go back slowly but surely over the 90,000 contracts short, so funds scared themselves on Monday but it seems the retracement is clearly on… Market is in a situation where all the bearish news are long time known, analyzed and digested, but the lack of real bullish news is killing any technical rebound. US weather is good one day, bad another day, this is creating only noise at the moment, nothing is really concrete.
If Chinese demand on soybeans is a concern, China is now keen on investigating a dumping on imports of US distilled dried grains, this could have a negative effect on corn and soybeans demand. Chinese is forecasting its grain demand to grow 2.6% per year, from 600MT in 2014 to 700MT to 2020 according to their new five year plan.
Ethanol data was mixed: production was down to 944,000 barrels per day (-7,000 barrels per day) but stock fell 599,000 barrels to 18.273M barrels.
On the South America side, soybeans planting are lagging. Also, the unusual vessel has left from Brazil to deliver 54,000T of corn, exceeding one shot the amount of Brazilian corn imported last year. This is an unusual vessel, a bit like sales of French wheat to Mexico, new rumors are surfacing (well, French wheat need to go somewhere, there 41MT of it!)
MATIF went down as well, losing 3.25 euros since Monday night. Structural long in euros (French coops and farmers) do not care by any means about the EURUSD rate and look at their price in euros, and there was indeed some significant selling above 180, being a huge relief from the bottom of 164.25 early September 2015 on MATIF Wheat Z5.
EU through MARS had a sweet and sour analysis. They said panting has progressed “without major problem” in France, Germany and UK but pointed the concerning “dry conditions” in Poland, Lithuania, Ukraine and Russia. However, it is very early to get concerned, the final production is much more depending on the rains in spring rather than the dryness during planting. And as pointed earlier, last year the concerns were even bigger and saying the crop has slightly recover afterwards would be an understatement! However, market is always right but sometimes, patient traders have the last laugh! Talking about Black Sea, planting is above 80% in Ukraine and above 91% in Russia. Finally in Russia, after harvest numbers were strongly suggesting it, grains crop will reach 105MT, matching the record of last year. Will the lobby Grain Union have something to say about it? Ruble went up almost 10% since its low of August 2015 but it’s still volatile (down 1% today) and Deputy Agriculture Minister said there won’t be any decision on wheat export tax as long as the FX is volatile “irrespective of rising or falling”.
And a couple of big day downs, Egypt’s GASC is showing up! Still very consistent with its strategy (the GASC purchaser cannot be blamed to be inconsistent), GASC is seeking wheat for early December shipment. French wheat is more likely to compete this time (and lower EURUSD is a good timing), it will just depend on how keen on selling Black Sea will be. It’s going to be interesting to see the MATIF reaction if French wheat is booked. Will market go crazy celebrating the victory or will it be a “so what?” reaction? Indeed, even if some French wheat finally make it properly to Egypt (only one vessel made it to the GASC so far), export program it’s still drastically lagging and Egypt GASC is not the exception. Well it will be interesting also to see if French wheat is not booked!
Finally USDA will put itself on line with market expectation for Aussie wheat, forecasting 24MT. No market impact really expected, market did not trust the 27MT of the last USDA report anyway.
Philippines bought 55kT of US feed wheat, South Korea is seeking 55kT of soymeal, Iraq extends – again – the deadline of the tender while Jordan made – again no purchase on wheat,
EURUSD went down below 1.10 after the FED’s meeting. Indeed, door is not closed to a December rate hike. German unemployment, preliminary US Q3 GDP and weekly US unemployment claims could bring some spice as well today. Also, bid day today for energy companies: Shell, Total and ENI are reporting Q3 results.