It’s probably Adam Smith invisible hand regulating the markets these days… Sometimes, market is tough to understand! Yesterday, funds bought 3,000 corn, bought 6,000 soybeans and sold 4,000 wheat. Soybeans were up with corn following, and wheat had a two sided session: started up to finish down, again. Spread between Kansas and Chicago decreased again, the both were close to parity. Minneapolis short on Dec continued to cry yesterday, with spread widening 5.5c/b. The backwardation between Z5 and H6 finished at 19c/b… Ouch… Squeezy! Although Chicago was down -0.8%, MATIF was up again in USD! +0.5%… Just down a couple of ticks in euro. AT the time the MATIF closed, it was $19.41 higher than Chicago (H6)… This is unlikely to be sustainable. 

And today it slightly decreased $18.69 at the time the MATIF closed. MATIF Wheat closed down despite a lower euro, mainly following SRW in Chicago. US Wheat is falling indeed in the US today and some fresh contract lows were met, technical, lack of export demand, heavy S&D,… Minneapolis Z/H spread is still very volatile, nervous roller coaster. Wheat went back from its low though it is still a very nervous session, but apart from Minneapolis, this is still down. Corn is following wheat down, while soybeans are marginally up. The focus is clearly wheat.


Market stays very technical, spreads very close to physical delivery are clearly introducing some noise. Cannot wait for Z5 to be out of the picture. There’s a bit of pressure on farmers on this year end, on the both side of the Atlantic, they need a bit of cash flow to pay some bills. Surely European farmers are on a much better situation! Meanwhile, South American farmers and Russian farmers are still enjoying a very low local currency.


US weather is not that cold in some part and wheat dormancy is delayed. No big deal if snow comes later anyway to protect emerged wheat when temperatures becomes seriously colder.


NOPA crush was strong again on cheap soybeans prices and Chinese demand, +26% in October (compared to September). Although this was strong, this was below expectation, you give an inch, they want the arm! Come on, it was the biggest October ever! On their side, Brazil have exported 1.44MT of soybeans and 4.76MT of corn, a very strong November compared to last year! Logistic is a bit trick, but once again, you cannot have it all: too wet on some areas, too dry on some other. Meanwhile, Argentinian farmers will probably sell at a higher pace now the export tax policies are clearer. Also, some surfaces switches from soybeans to corn could happen next season, a simple tax arbitrage. Market is talking about 10% increase of corn surfaces indeed. US Ethanol production was on its side down 52,000 barrels per day from last week to 956,000 barrels per day while stocks were up 320,000 barrels to 20 million barrels. Meanwhile, there’s a slowdown in biodiesel production in Europe (not really what COP21 want to hear) and this could take some pressure off the rapeseed, but on the other side the lower availability of rapeseed meal would mean importing feed of meals.


They did it! Yes! Jordan bought 100,000T of optional wheat at $235 CNF, and double whammy, they retender because they want more. Meanwhile, EU commission is forecasting soft wheat exports to decrease by -0.9MT to 26.8MT and provided and estimate for 2025: 26.5MT. Ambitious…


EURUSD is expecting and fearing the tomorrow ECB’s Draghi speech with nervousness. Will the ECB move be minimal or not? Anyway, it’s a very long time ECB and FED have not taken the same month contradictory decisions, and this way it’s clearly putting pressure on the EURUSD. Euro is down, trading around 1.0575. Market seems more concerns about the FED and ECB decision rather than the USDA WASDE report, where no major move is expected (a downgrade of Aussie production will be the only major move).

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