Monday is always an interesting day to start the week: export inspection and crop progress! And Finally! Soybeans are showing a decent number: 700.7kT! With 6 weeks to go, soybeans need to be shipped at a pace of 484.3kT per week. Is that a reason to get over optimistic? Not sure: another way to see it is to compare to the old crop export sales.  Last week, they were 324.9kT. In other words, the amount of unshipped soybeans are only brought down -159.4kT and the issue is still there, they will likely be a huge number of rolls and cancellation can be feared, especially with prices collapsing. So let’s not get excited after one week with good data. Corn shipment reached an expected 1,306.4T, slightly above the last 10 week pace but this is still not enough: 6 weeks to go and 9.209MT still need to be shipped, this is more than 1.5MT per week. Nothing much on wheat, showing early season momentum and reflecting aggressiveness (better ship sooner rather than later considering the competition), reaching 549.9kT.


Indeed, the big wheat harvest is entering silos and bins pretty quickly: 7% of the area have been harvested last week, reaching 83%, 1% in front of last year and 4% above the 5 year average. Wheat seems like is going to do a hat trick: early, big, quality. Spring wheat is slightly suffering but no real issue: 68% is G/E 9-1% from last week, last year was 71%) and 8% is P/VP (+1% from last week 7%).But really, wheat was not the data to be focused on, corn and beans obviously were more interesting. And despite still drought and heat talk, ratings haven’t moved. Still 76% G/E for corn and 71% for soybeans. Back in 2012 pop corn crop, on the 24th of July, ratings were only 26% for corn and decreased only by -2% until the 20th of September, despite 24 days being above 90 degrees Fahrenheit (Des Moines, Iowa data) which is 32.2 degrees Celsius. In other words, the critical stage were corn can be badly hurt by a drought seems behind us, sensitive silking stage is 79% completed (8% in advance from last year and 9% in advance from the 5 year average) and 13% is doughing (0% last week, 12% last year, 13% for the 5 year average). So it seems corn is developing pretty well. Similarly, soybeans are in advance, 76% are blooming (59% last week, 67% last year, 66% for the 5 year average) and pods are setting at an incredible pace: 35% (18% last week, 29% last year, 26% for the 5 year average). So when it’s hot, if the rain is good enough, no worries.


On top of this, there was the EU Crop Monito report, MARS. France was expected to take a hit. It did. But interestingly enough, farmers and coops are adamant that the wheat yield will be at least -20% lower than last year (bringing the crop between 28MT and 32MT), EU Environment Agency says it will be only -6.9% down (to 7.37T/ha). Rains are lack of sunshine are blamed. Who is right? EU or Farmers? On social media, it seems there’s a catastrophic bias. Those who are badly hit seem to be more outspoken than those who see their average yield. So there’s a possibility the sample showing off on social media is not exactly representative. It’s a bad year, for sure, but on can be skeptic: there are genuine strong doubts the crops could be lower than 32MT, but hey, everything is possible and the first source of information is the field, so worth keeping an eye on it. But after all, their interest is that the higher price compensate the loss of revenue from the lower yield… Anyway, another good news from the MARS report is that the average European yield forecast is revised higher, from 6.10T per hectare to 6.07T per hectare. In other words, the French issue is compensated and we’re not even talking about Russia and Ukraine. French bad yield is compensated indeed by record yields in Bulgaria and Romania. EU soft wheat yield is lower than last year (-2.9%) but it would still be a very good year! It’s +4.6% above the 5 year average. Barley yield is cut to 4.99T/ha from 5.01T/ha, -0.6% from last year, +5.8% compared to the 5 year average. Corn yield is raised to 7.42T/ha from 7.35T/ha, a relief compared to last year (+17.8%, the crop was hit by a drought) and +7.1% compared to the 5 year average. Rapeseed yield is revised down to 3.22T/ha from 3.24T/ha.


So, what about markets? Soybeans continued to sink, and finished -22 cents, the whole curve settled lower than 1,000 cents per bushels. Still to be noted, it’s still in backwardation, this situation should relax in a bear market but there’s still a bit of tension on spot availability. Corn finished only a couple of ticks down as Wheat was on a technical rebound (finishing +2 to +7 cents higher, contango was steepening). MATIF started the day on a significant higher note before correcting, U6 finishing down -€3.75. Did market overpanicked? In the US, funds sold 14,000 lots of Soybeans, were even on Corn and bought 4,000 Wheat.


Night session is the traditional – so far – Tuesday reversal for Soybeans and Wheat, respectively up in excess of +5 cents and down more or less -2 cents. Corn is just ticking down. MATIF is expected to open on the upside but a cautious approach is needed there!


India raises the volume of its corn tender and is seeking now 150,000T. Syria’s Hoboob is seeking 150,000T of Russian wheat. China sold 4,019T of Corn auctioning the state reserves. South Korea rejected 72,450T of Argentinian wheat after finding living modified organism in cargoes.


Quite technical EURUSD these days as no big news are coming and the level of 1.10 is psychologically sticky. German IFO was better than expected yesterday to 108.3. No big data expected today but let’s keep an eye on US Consumer Confidence and New Home sales. BGPUSD is still a bit nervous between 1.30 and 1.33 as basically, we still have no clue about the plan of Theresa May for Brexit. But maybe that’s the plan! Oil is now fully below $45, NYMEX Crude just below $43 and ICE Brent in the mid $44’s. On Freight, Baltic Dry Index BADI is struggling above 700 and printed -9 to 709 on lower demand from larger vessels. Gold is playing around $1,320, on the upside this morning.

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