On Thursday there was no major move on Soybeans and Wheat (bot finished marginally up) for a change but the star was Corn. Still weather related and the focus is back in the US. Despite the fact the last crop progress showed farmers had planted twice as much corn as the same time last year, market (well farmers…) are still talking about slow plantings and potential delay as it’s been raining in the Midwest. True, it’s been raining, however, the advance was such that it’s likely the next crop progress won’t be disappointing. It will most probably be a slow week indeed, but the advance might sustain. But hey, market is right even when it’s wrong! It was also fueled by dryness in Brazil (unlucky, next door it’s pouring the rain in Argentina). Corn finished up +7ish cents. Funds are estimated to have purchased 12,500 lots of Corn. It’s been a few weeks there were big swings of funds positions. Funds bought 2,000 Soybeans and 1,500 Wheat. MATIF have bounced on its side as it’s feared the cold snap is threatening the crops. It seems overcautious. It was also fueled by good export sales in the US and good export incenses in EU.
Quiet day to day, spreads essentially as K6 contracts are approaching expiries and notices. Markets are slightly weaker generally, but nothing drastic, a couple of cents here and there. However, MATIF is on its side seriously correcting, reverting the yesterday’s movement, helped by a stronger euro.
French wheat have lost a bit of its G/E ratings, the cold snap is to blame: 88% is G/E, -3% from last week and is now below last year. But historically this is still a very good quality. Anyway, history has demonstrated the impact of the quality has more effect on the cash basis rather than on the financial market, more sensitive to the quantity. Also, logically, it has lost a bit of its advance, 86% is at the 2 nodes stage while it was 80% last year. However, French corn seeding is well behind schedule to 27% while last year it was 69%.
US exports sales were good yesterday, it seems that higher price triggered panic purchase. Wheat was 806.5kT, corn 2,600.6kT and soybeans 946.5kT. Export inspections next week will be to be monitored closely. On the other side of the pond, EU cleared 599kT of exports licenses, season’s total is 25.08MT so far. It is just wat was needed and for the rest of the season, 555kT is needed on average per week. Hopes are allowed especially if there’s some panic purchases and some aggressive selling to make a bit of room in the silos when the new crop is arriving. EU also cleared 174kT of barley export licenses, 66kT of corn export licenses and 109kT of corn import licenses.
IGC raised global grains production for next crop by +0.5% getting above 2 billion tones: 2.008bT. This would be also higher than the old crop (2.005bT). Interesting to put this in the perspective of the current volatility. The improvement of the forecast is due to better weather in EU and Black Sea and is mostly focused on wheat. IGC is pegging corn crop to 998MT (+5MT versus their previous estimates and +15MT versus previous crop) and soybeans to 319MT (+1MT versus previous estimates, including a cut of -5MT in Argentina). Wheat is pegged at 717MT.
Ethiopia has received some offers, best one is said to be 60,000T at $292 to be delivered in inland silos. Tricky execution there, there is some congestion reported in the port of Djibouti. Promising is said to be once again on the lead. Indonesia is stopping accepting French wheat.
Baltic Dry Index BADI is struggling above 700. The freight index is falling to 703 this Friday (-7). Gold is approaching $1,300 on US dollar weakness. Oil is still well above $45 despite the fact the tap is open like never and the inventories are building up. Oil traders begin to feel it’s a bit toppish as US shale gas operators are now back to profitability.
EURUSD is sharply higher. French GDP was better than expected (+0.5% q/q) while US GDP was not as good as expected (+0.5%). US unemployment claims were 257k, marginally better than expected. So euro found naturally some bids. But wait… Greece is coming back into the headlines, as the creditors need more efforts to fulfil the budget objectives.