The week was all over the place… Soybeans went up mostly playing around the technical of $10 per bushels to finish the week actually above, printing a gain of +2.13%. Wheat failed to find support, the situation is very comfortable and the little bullish news on US spring wheat was not enough to provide some decent bids to the market and Chicago went down -4.12%. Corn was stranded in the middle and overall did not make a big move (down -0.15%). MATIF violently corrected and was once again the star of the week with -4.60%. Switch one letter and crop becomes crap. But if the week before market reacted mechanically to the news that there will be less wheat in France, surging +9.09% in euros, this week, market maybe realized that on a more macro level, there’s no massive disequilibrium in the balance sheet: EU will be better thanks to Romania and Bulgaria and FSU is going to be over expectations, so it’s more like cards are reshuffled. MATIF finished the week down -4.60% in euro (EURUSD was up +1.80% over the week by the way). It might just be the salute for French wheat as it’s going to be very complicated to compete on the international scene this season. Meanwhile, Russia is thinking about taking action on the export tax, probably not for this season as we’re at the bottom of the tax bracket but if price in local currency is raising during this season this might become an issue as Russia will have to export a lot to compensate the heavy supply.

 

Another bloodbath was expected on the CFTC’s COT. And yes it was indeed. Over the week ending Tuesday, funds sold across the board: they increased their short position on Wheat and Corn to respectively 130,184 lots and 65,538 lots, selling respectively 13,578 lots and 52,176 lots. They reduced the Soybeans long to 121,689 lots, selling 16,003 lots. Reuters was once again off in their estimates as they expected funds to have bought 4,000 lots of Wheat over the week, sold 17,00 lots of Corn and 33,000 Soybeans. This would have been a pretty bad news for Wheat as over the period Wheat went down -0.72% so funds were not contrarian to the trend so Wheat is probably to find a bit of bids on the data, all other things equal. Anyway, now the Soybeans long is not big enough to cover the Wheat and Corn shorts cumulated and the balance is 74,033 lots short. Picture has drastically changed in a week! From Wednesday to Friday, it’s estimated funds sold 6,000 lots of Wheat, bought 1,000 lots of Corn and 10,000 lots of Soybeans.

 

All eyes are focused on the US weather and the French crop. US weather models show there will be heat but decent precipitations, so the drought is still a chimera. However, no improvement or the conditions are expected later today and we could see a downgrade as it’s fair to say there was some stress here and there but there is no widespread issue at the moment. In France, 41% of the wheat is harvested, delayed from last year (68%) and ratings fell again, -2% this week to 40% G/E. Most probably at the end of the week, the final number estimations are going to be much more accurate anything below 30MT would be really bad else, the expectations are now 30/32MT… With strong quality concerns!

 

Crop ratings later today indeed then, but market will keep an eye on export inspections, especially soybeans as the momentum need to persist in order to hope the unshipped amount will be actually shipped, or worse case rolled… But we saw in the last export sales some cancellation are begging to show up.

 

Stratégie Grains cuts its EU rapeseed estimates by 570kT to 20.7MT.

 

The ergot saga seems far from over in Egypt as there’s some differences in opinions between the GASC, the Government and the Quarantine Authority. Currently, the acceptable level of ergot is the international standard of 0.05% but story ain’t over just yet.

 

Night session sees a correction on Soybeans, still attracted by the pretty 1,000 cents level. Corn is a couple of cents down, following Soybeans and finding no bids as weather is not worrying by any means, while Wheat is rebound a couple of cents, but these days, all eyes are on the MATIF, expected flat so far. Slow start of the week on currencies, with no major move, EURUSD around 1.1175 and GBPUSD above 1.32. Oil is also having a quite start, down though, NYMEX Crude having a $41 handle and ICE Brent a $43 handle.

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