For once, Chicago won’t have the headline. MATIF has gone wild indeed! It closed up +€7.25. At the time of the close, on U6, it was trading at $31.21 premium of Chicago (SRW), $34.70 over Kansas (HRW) and $6.04 over Minneapolis (HRSW). In other words, on the international scene, the French wheat won’t be very competitive. Of course there will be less to import, but even for France, consumption, US and Canadian wheat could calculate as it did in 2012. RCG said fairly that French ‘could cause stir but won’t alter the landscape’. There is fears about the quality, the test weights are quite low and it could trigger operators to go to the physical delivery of MATIF to get sure about their specific weight. There’s also a panic component for sure and it is still unclear how sizeable will be the French crop is now assessed between 32MT and 34MT. France AgriMer showed ratings are falling again: 42% only of the wheat is G/E (-7% from last week) and winter barley ratings are down -2% from last week to 42% G/E. 17% of the soft wheat has been harvested so the first picture is getting clearer and there’s a lot of potential bad areas to be harvested. As per winter barley, harvest is virtually completed: 95% is done indeed.
On the US side, this was a pretty boring day in comparison, Soybeans and Wheat rebounded, mostly on technical, taking a well-deserved breather, finishing respectively up around +7 cents and +5 cents. Corn finally decided to continue the slide after trading sideways. The heatwave in the US is not seen damaging as fields are also going to be showered and some most optimist are talking about a record yield while more and more market feels the current yield prospect (168 bushel per acre) could be increased. However, a lot can still happen and long term meteorological models are expecting higher temperatures than the average for the next 2 months. Funds were still on the sell side for Corn, selling 9,000 lots while they bought 3,000 Wheat and were even on Soybeans. COT later tonight as of COB Tuesday will be surely compared to what is market expecting: Wheat short at 123,000 lots, Soybeans long at 133,000 lots and Corn short 13,000 lots.
Night session is back in the downside in the US with Soybeans -16 cents and Corn and Wheat lagging behind just a couple of cents down. Interesting to see how MATIF will open, so far expected to tick up but either panic mode or profit taking will be the theme: in other words, no clue just yet!
Mixed picture on the US exports sales: wheat was as expected to 477.9kT, Corn lower than expected to 851.4kT and soybeans higher than expected to 1,326.5kT… Soybeans is including a sale of 324.9kT of old crop, adding to the amount of beans that needs to be shipped. For sure, Monday US export inspections data will show again the issue: a lot will be rolled to the new marketing year… If not cancelled!
According to Buenos Aires Exchange, 53% of the corn harvested is completed and 98% for the soybeans. They haven’t changed their estimate on the Argentinian crops: 56MT of soybeans (-0.5MT below USDA) and 28MT of Corn (same as USDA). Wheat is 83% planted and the 4.4M hectares area is maintained. Meanwhile, there’s the risk of another truckers strike.
US ethanol production reached 1.03M barrels per day last week, up 25,000 barrels per day. Consumption was also higher as stock only rose 26,000 barrels to 21.16M barrels. It comes after US Crude Oil inventories decreased more than expected on Wednesday by -2.5M barrels. Ethanol futures were not massively impressed and fell more than -2%, reaching its lowest level since April. Oil also is not really impressed and NYMEX Crude is currently in the low $44’s while ICE Brent has just breach down $46.
After failing to book 100kT of hard wheat, Jordan reissued its tender. Pakistani private importers bought 330kT of Brazilian soybeans over the last couple of weeks. Tunisia is said to have bought 92,000T of milling wheat at $178.74 average, 109,000T of Durum at $261.07 and 75,000 T of barley at $165.14. India’s PEC received only one offer to its tender to buy 120kT of Corn.
US PPI month on month was better than expected to +0.5% and unemployment claims was better than expected (lower then) to 354k. Market hopes of a Q4 FED rate hike is slowly but surely increasing. US CPI month on mount today. No major move on the currencies so far, EURUSD is still just above 1.10 and GBPUSD is back in the mid 1.32’s.
McDonald is stopping to sell Big Macs in Venezuela as there’s no more flour available to bake the buns. The country is in deep trouble, IMF expects -10% on the GDP, 700% inflation, foreign reserve are only $11.9 billion… Meanwhile, bond expirations in October and November will totalize $5 billion. Default is looming…