This report is good for the bin… USDA WASDE report should we say. Market failed to be impressed indeed, but there’s a few interesting stuff in it anyway. On the paper, it was bearish wheat and beans, neutral corn but bearish US corn. But market was kind of unimpressed. Soybeans closed up 1 cent, Corn down 1 cent and Wheat 1 to 2 cents. Minneapolis edged higher a couple of ticks. MATIF was still very heavy, clearly not helped by the current rally in EURUSD. It will be interesting to see when trade house are going to replace bullish bets and when farmers and coop just refuse to sell physical. FOB levels at $165 are indeed very low so trade house might be tempted to put back some bullish bets but at 150 EUR, that’s basically no profit for farmers. In Chicago, funds sold only 1,000 lots of Corn and 2,000 lots of Wheat while they bought 3,000 lots of Soybeans. Night session is very dull, nothing major to report.


On wheat, US exports are lowered -0.68MT to 21.09MT, this is pretty shy but at least they acted.  Production in Argentina is now seen as 11MT (+0.5M) but it’s offset on their balance sheet by higher feed (+0.2MT) and higher exports (+0.5MT, they’re now pegged to 6.5MT). Canada feed is down -0.2MT and exports up +1.5MT. India total use is decreased by -2.9MT, Ukraine production is up +0.25MT while the Kazak’s one is down -0.25MT. Russia imports are increased by 0.15MT. So more or less, nothing, this would make the wheat world balance sheet slightly heavier by roughly +0.5MT… But, there’s a but indeed! Add China in the equation, and it’s tough to assess the accuracy, is this some kind of USDA’s magic? Beginning stocks are increased by +2MT, multiyear revision in total use USDA said, and current crop use are down -4MT. With import raised by +0.3MT, that’s their ending stocks +6.3MT which basically drive the world balance sheet. World ending stocks are indeed up +6.83MT to 283.87MT. They are now 33.58% of the total use and 32.47% of the world production, this is a very comfortable level. Wheat galore indeed! To be noted, Australia crop is still seen at 26MT while market is more betting on 24MT.


Moving to corn, in the US, imports are up +0.25MT, use up by +0.64MT (driven by higher ethanol consumption) and exports down a very shy -1.27MT to 41.91MT. So US stocks are high +0.89MT. Moving abroad, Argentinian production is up +1.4MT to 27MT, Brazilian production is up +2.5MT to 84MT. Total use is also down respectively -0.3MT and -1MT. It’s offset on their balance sheet by a revision of beginning stocks (respectively -0.3MT and -0.5MT), and higher exports (respectively +1MT and +2.5MT). So Argentina is gaining +0.4MT on their ending stocks and +0.5MT for Brazil. And now comes the usual adjustment variable: China! Higher use: +2MT, in contradiction with wheat. World ending stocks are marginally down -0.13MT to 208.81MT, they are 21.53% of the use and 21.58% of the production. Still a very comfortable level.


Finally on soybeans US balance sheet is heavier +0.27MT on lower crush. No export change here. Main global move, which is very little, is coming from Argentina: higher production (+1.5MT to 58.5MT) offset by higher crush (+0.65MT). So work stocks are up +1.14MT to 80.42MT (25.57% of the total use and 25.09% of the production). Brazil is still pegged at 100MT.


What is interesting now is to recompute the pace of export inspection with new exports figures. Obviously soybeans are unchanged, 73.92% of the objective is reached while 42.31% of the year has elapsed. Corn is now 29.59% but still the year has 42.31% elapsed. Wheat is at 65.28% of the target but 69.23% of the year has elapsed. In other words, there’s still a lag of 0.8MT for wheat and 5.3MT for corn, so US exports story is far from being over.


GASC story is not over yet, Bunge said they will seek legal action over the rejection of their cargo. They are adamant their cargo was below the maximum of 0.05% of ergot. Meanwhile, GASC confirmed again any shipment until 0.05% will be accepted and past rejections were due to ergot above tolerance. As usual, Jordan mad no purchase in a tender to buy 100,000T of wheat. Tunisia is seeking 67,000T of soft wheat and 75,000 of feed barley. Pakistani private importers bought around 30,000T of Canadian canola.


EURUSD is on a bull run and bad stats from Europe are not putting any pressure. French industrial production was down -1.6% (after -0.9% last month and +0.2% was expected, this is a big miss). It comes after German industrial production was also down, -1.2%. In the US, the Job Openings and Labor Turnover Summary was better than expected to 5.61M. So there’s probably quite a lot of technical bounce here but fears about the sustainability of the US economy and more QE in Europe are leading investors to dump some US dollars. EURUSD slightly lower this morning, evolving around the 1.1250’s.


Crude Oil is back below $30 in the mid $28. There’s still a bit of panic in Russia. Meanwhile, Iran said they’re open to talk with Saudi Arabia. On freight, Baltic Dry Index keeps digging inexorably. It’s been now 27 consecutive days it has not been up and is now down year to date -39.12%. Financial markets are still volatile and YTD the picture is pretty nasty: Hang Seng -11.85%, Nikkei -13.34%, Shanghai -22.65%, Shenzhen -24.68%, Athens -26.21% FTSE 100 -9.79%, CAC40 -13.04%, DAX -17.15%, Dow Jones -8.10% and Nasdaq -14.05%. Market is focusing a lot on macro and is very nervous indeed.

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