Yesterday, market was green across the board in the US, helped by a lower US dollar. Funds bought 7,000 corn, 9,000 wheat and 6,000 soybeans. A definitely more quiet day today, still on the bullish side though. Wheat corn and soybeans are up and MATIF continued to feel the pressure, this time on a higher euro. Market are very focused on currencies, whether it’s justified or not, but it should last until the FED’s meeting. It’s still very technical days with Z5 expiries continuing to roll. This continuation of the bullish wave is also fueled by US weather. 

In the US, temperatures are forecasted to be above average indeed for the next week or two, with higher precipitations as well. Not concerning as long as snow will come before the freeze, but for sure, we’ll soon hear some scaremongering about winter kill. South America is still slightly wetter than the usual. Black Sea rains have improved the situations but it is stlill pretty poor overall. Big flood in India around Madras, impacts on agriculture is limited at the moment.


Main fundamental news of the day on ags was definitely Stat Can. This was a bearish news across the board. All wheat output has beaten market consensus: StatCan is expecting 27.59MT (market was expecting 26.7MT). However, it’s still -6.2% behind last year but considering the summer dryness, the worst have been avoided. Barley is seen at 8.23MT, +15.5% compared to last year and Canola to 17.23MT, +5% from last year. ICE Canola took a hit and is declining by more or less 1%.


In Argentina, the cut of 5% to 30% of the soybeans export tax is likely to include soybean oil and soybean meals (currently taxed at 32%) but official confirmation is still awaited. In Brazil, Safras & Mercado sees soybeans crop at 100.4MT (-0.1MT from their previous estimates) and Corn crop to 89.3MT (+0.7MT compared to their previous estimates) and is significantly above USDA’s expectations (81.5MT).


Export licenses left MATIF wheat unimpressed. Although soft wheat has published yesterday the biggest amount of the year (1MT), this is still 23% behind last year! However, the gap is filling after 3 weeks of good exports: 2 weeks ago, exports were lagging 30%. There’s a long way to go. And with Corn importing at a very high pace, it means they switch to wheat is not really working efficiently so the lack of corn in Europe is unlikely to come to the rescue of wheat.


In France, the first official estimates of surfaces has been released… Soft Winter Wheat has been planted on 5.222M hectares, this is +1.54% from last years. Planting have been done in excellent conditions, ratings are very high (98% of G/E versus 93% last year),… Will we see a second record crop in a row? Very early to get excited though, spring will give a better idea. However, it’s something French farmers (who are still reluctant to sell) should take into consideration as MATIF wheat seems to be holding artificially high thanks to lower EURUSD, but how long will it last? MATIF wheat down yesterday, down today more significantly, but also to be noted, the spread with Chicago reduced significantly today, when MATIF H6 closed, it was $16.79/T above Chicago, it was above $19 yesterday night…


Bird Flu in France is not really a concern at this stage. But, some are scared about it and Japan has just banned the import of French foie gras, just before the holiday season. This is a bad news as Japan is the first importer of French foie gras.


Ethiopia is expected to return to the wheat market soon. They didn’t purchase as much as initially thought in there super tender and still want more wheat on El Niño adverse dry effects. Japan bought 126,000T of wheat (US and Canadian), Jordin still seeks 100kT of wheat, Bangladesh 50kT.


Market is still digesting the ECB news, but EURUSD went back down below 1.09. Was it a spike that will fade? Bottom line, ECB will continue to purchase 60 billion per month for an extended period of time and have lowered the deposit rate. Mario Draghi said more could come. Although investors were unimpressed and disappointed, it is tough to qualify the fundamental news as bullish for the euro. Meanwhile, we’re approaching the FED decision also, some say FED will raise the rates to have more lever to get it down later if necessary. Interesting point of view but that’s most probably sarcasm. However. Last time they were supposed to raise it and did not do it, it’s been bearish for the US dollar so if they decide not to raise the rates, back to EURUSD 1.05 or 1.00 could become unrealistic in the near future.


Does OPEC cares about low oil price? Not sure. They decided to maintain the production at the current level and they increased the daily production ceiling to 31.5M barrels per day, which is +5% (they were already over the ceiling so even if it looks like an increase, it’s a ‘de facto’ unchanged output). But one of the most interesting takeaway of the OPEC meeting is the statement that to reduce production “non-OPEC exporters must participate, Iraq has to participate, and the Iran output picture has to be clear”. WTI is ticking just below $40 (a bit more than -2.5%). Brent is also down, a bit less, -1.5%, to just above $43.

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