After a day of pause, Soybeans were back on free falling mode, as the USDA WASDE report day is approaching. It will be the day of the month the fundamentals matter and with the May report it’s usually very true as this is the first showing new crop data. Market is widely expecting to receive a refresher: world is well supplied and despite a couple of issues here and there, will be well supplied. So Soybeans were down 22 cents on the close. There is still a long way to go and market wonders what is the current acceptable prices of Soybeans taking into account the South American damages. Wheat followed slightly behind but it’s probably even more justified. Wheat had rebounded with no story at all, just being sympathetic of the Soybeans and the bounce since early April is almost erased (low of 453 on N6), which is fundamentally quite justified, next bearish objective is the low of March, 442.25 on N6, with a bearish report, this could be quick! Corn lagged also behind and was in the red territory for -3 cents but is now on the area of the 61.8% retracement of the recent early April rally. Funds sold 8,000 Corn, 16,000 Soybeans and 4,000 Wheat. MATIF followed down and failed to find support from a correcting EURUSD.
US exports sales were as weak as expected on wheat: 318.9kT. If rally had trigger panic purchases, prices going down are putting the market in a wait and see mood. Eyes will be on the export inspections on Monday for sure… It’s also the case for corn, number was below expectations to 829.8kT. As per soybeans, there’s still a bit of panic mode: 1,245.8kT, with two third on the current crop. On the other side of the pond, another good week for soft wheat: EU cleared 848,000T of export licenses. It’s more than needed for what was needed (more or less half a million tons) to reach the USDA target, last weeks are going to be captivating!
In the US, first yield estimates are coming from field survey and this is not bullish by any means. It looks like the lower surfaces could be compensated by higher yields. Kansas is pegged at 48.6 bushels per acre, +32% versus the last year USDA’s estimate, and +24% above the 5 years average, This is outstanding, it will surely evolve in the next few weeks but this is very encouraging. It’s very close to the 49 bushels per acre record yield… And US Drought monitor has improved from last week in wheat areas and also in the MidWest. There is no comparison with last year and the year before, this is far better. It seems more and more that there is no bullish story as far as the US next balance sheet is concerned.
Very quiet night session, a big Friday laziness with a mood of holidays as these week had a few public holidays here and there.
US Ethanol output was off by 4,000 barrels per day to 923,000 barrels per day and this has not prevent sock to go up: stocks were up indeed by 572,000 barrels t0 22.2M barrels. A low demand week. It follows on Wednesday Crude Oil inventories: they were higher than expected to +2.8M barrels. NYMEX Crude is in the higher $43’s and ICE Brent in the mi $44’s.
On Freight, Interesting Baltic Dry Index BADI: a reversal? Index fell to 642. On its side, Gold has now came off well above $1,300 and is back around $1,275.
EURUSD has come back from its spike and is now battling with the 1.14 level. NFP and unemployment rate in the US can bring a bit of action, yesterday, unemployment claims were higher than expected to 274k.