Let’s not reinvent the wheel, just two words to describe Monday’s session: risk off. Nothing more. USDA WASDE report on Wednesday and super short CFTC’s COT, this was enough trigger. Market finished up across the board. But it’s quite noticeable they closed well below from their highs. And it’s what rally are about these days, they quickly meet some decent selling. There’s no real fundamental news these days to sustain a rally. Funds were actually even on Corn, bought 4,000 Soybans and 2,000 Wheat. MATIF followed, and after Friday’s sell off this was also expectable. Night session is so far a traditional Tuesday reversal, MATIF also opened lower.


For last week decent enough exports sales, I said what actually more matters is export inspections. They were above market expectations for corn and wheat (respectively to 443kT and 953kT), but market was quite pessimistic. However, this is still not very encouraging, wheat was shy roughly 40kT of what was needed and corn shy 90kT.… Indeed, 12 weeks to go on the wheat marketing year. In other words, 77% of the year has elapsed and the USDA’s target is only completed at 72%. Wheat need now to average 487.5kT per week to fill the gap. Similarly, corn has 25 weeks to go and delay is piling up: 52% of the year has elapsed and only 38% of the USDA’s objective has been shipped. Corn need to average 1,047.9kT per week to fill the gap. Unless a miracle is happening, this is highly unlikely and we are heading, once again, towards a decrease of US exports in one of the next WASDE, maybe tomorrow, who knows? (Well, USDA does…). No immediate issue for soybeans, 1,067kT were shipped las week and only 257.99kT is needed per week to reach the objective.


Talking about USDA WASDE… US balance sheet is seen heavier. Ending stocks of wheat are expected to be up +245kT, corn up +432kT and soybeans marginally up +54kT. This is likely to be driven by mainly lower exports. World ending stocks are seen on average at -0.1MT for wheat. Will US lower exports and potentially EU lower exports be offset by a long expected Australian adjustment? What?!? USDA is smoothing the data?!? Main expected movement really is expected on corn, ending stocks are seen at +1.1MT. Lower US exports and production +0.2MT in Argentina and +0.5MT in Brazil would be the main drivers. Soybeans ending stocks are seen at +0.5MT, mainly coming, once again, from Argentina (+0.4MT) and brazil (+0.1MT). It should not be a market mover really, but weak signals keep on being sent to the markets, so will funds who short covered recently will reinstate their short? This is quite a possibility.


China imported 4.51MT of soybeans in February, down -1.15MT from January, but still up 5.9% from last February. It comes as China cut its growth target, to between 6.5% and 7%. Obviously, China’s macro is still a concern… Meanwhile, China said they will expand their Ethanol output to 14MT by 2020, they would have to multiply by 4 the capacity, but considering the amount of old corn available, this make sense.


UK’s AHDB said rapeseed planting will dramatically decrease (-10%) in England, expecting the lowest surfaces since 7 years. Pretty good yields last year ansd lower prices are pushing farmers to rotate their crop. A trivial calculation shows the problem: rapeseed is 2.3 times the price of Wheat but wheat yield is 2.5 times the rapeseed’s. Considering the easiness of growing other crops compared to rapeseed and the problem of flea beetles the are encountering due to the EU restriction in insecticides, they won’t bother too much this season. Meanwhile, European Commission sees the next crop at 21.3MT, just down -0.1MT from last season.


Talking about European Commission, they also forecast lower corn imports for next season to 10.5MT (-0.5MT), higher soft wheat ending stocks at the end of the next season (to 17.4MT, +0.2MT) due to lower exports (they are pegged 27MT, down -2.1MT) and lower crop (142.4MT, -8.4MT). Demand has to collapse, else it doesn’t add up…


Egypt is working on getting the confidence back from the market. The head of agriculture quarantine authority has been replaced and it’s been reminded that the tolerance is 0.05%. The shambles started when the now former head said there was no policy. However, it’s still hard to believe this is the only problem keeping the traders away, there’s also probably some cash issues underling. Meanwhile, they will work with FAO on wheat ergot legislation. Anyway, tender to expect soon as the supply is still pretty tight. By the way, it’s been confirmed the Bunge rejected cargo is rerouting to Spain.


Still no result about the 70kT Ethiopian tender, lowest offer was $206.13 CNF FO. Also no news from Jordan in the 100,000T hard wheat tender. Also, the results of the Indian corn tender is overdue and expected. OAIC is tendering for feed Barley, Syria is on for milling wheat financed by Iran. Tricky tender! In Iraq, the Canadian origin is thought to be the lowest offer at $236.91 CNF.


EURUSD has rebounded above the 1.10 level, GBPUSD is also rebounding. There’s still a lot of time to the June Brexit referendum, so early panic has been probably over the top. However, this is the main concern for EU currently and should the UK leave, some volatility is to expect on the both currency pairs.


The show is going on Freight. Baltic Dry Index BADI is still in its recovery mode, +6 on Monday, to 354. Up +22% from its low but still -26% in 2016. Gold is still on its bull run, approaching $1,275. NYMEX Crude Oil has touched $38 dollars, it did not happen since the 4th of January. Brent is above $40 dollars… It’s softer in the today’s early trading. Competitiveness of gas will gradually come back should these level sustain.

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