After a shaky week (last week Soybeans went down -3.14%, SoyMeal -4.43%, Corn -3.06%, while Wheat went up +2.02% in Chicago and +1.38% in US dollar in MATIF) and a very short CFTC’s COT (Soybean are now only long 106,338 lots while Wheat is short 129,058 lots and Corn over the 100,000 lots mark of short to 104,432 lots, in other words, cumulated short between the three of them is now a nice 127,152 lots) trouble could have been expected on Monday. And finally nothing much actually happened, Soybeans were the best performers, still fighting with the $10 level and U6 closed above, and the curve is still in backwadation so there’s still some structural problems to solve here. Corn and Wheat finished just about up while MATIF was down -€1 or so. In Chicago, funds bought 4,000 Soybeans and were even in Corn and Wheat.
Corn were expected to have suffered a bit and they did: -2% of G/E to 74% (versus 70% last year) and +1% of P/VP to 7% (versus 9% last year). The toughest part is over as 97% is silking and 53% is doughing. So it’s becoming clearer and clearer the quality and quantity is going to be pretty good in the US. No change on the soybeans (72% G/E and 7% P/VP) and spring wheat (68% G/E and 8% P/VP). Similarly to corn, soybean sensitive development stages are going very well, 91% are blooming and 69% are setting pods. As per harvest, 94% of the winter wheat has been harvested while spring wheat harvest reached 30%.
French Analyst Agritel confirmed its expectation of a bad number for the French crop: 28.7MT only. Quite logically, exports outside the EU are expected to take a serious hit, to 5.1MT. It’s going to be a tough environment for French farmers as a lot of them were wishing for a black swan event to happen, it more or less did, but they were expecting it would be reflected in prices and so far, this is not the case, MATIF prices are still pretty low considering the side of the crop. It doesn’t pay in this case to have neighbors with very big crops. In Russia, IKAR raised its grain output estimates to 116MT including 70MT of wheat and this could actually just be a bottom. For sure EU and FSU will be to watch in the next USDA WASDE!
US export inspections were disappointing in wheat to a little 376kT, however, overall the start of the season is pretty good. Corn was above expectations to 1,452kT but it is still shy of the required pace and time is running out! More than 1.6MT was needed… On the other side, soybeans reached 972kT and is now in a very good position to reach USDA’s target.
Japan is seeking 124,572T of food wheat. Jordan is expected on the result of the hard wheat tender today. China is still trying to get rid of ageing corn stocks bit this is proving to be challenging. Meanwhile, July soybeans imports reached 7.76MT, +0.2MT from last month.
OPEC is back on panic mode saying they’ll meet informally, There’s still an oversupply situation. NYMEX Crude is back fighting with the $43 level while ICE Brent carries a $45 handle. On Freight, Baltic Dry Index BADI is at 636. Gold is trading just below $1,335.
GBPUSD is back below 1.30 on a couple of bad data. Indeed, the Brexit uncertainty is beginning to be felt in macro data: monthly manufacturing production was down -0.3%, the deficit of the trade balance was also much more than expected. EURUSD is nicely ranging and is back below 1.11.
Quiet night session so far, US wheat is ticking sideways , MATIF ticking down and Corn us just ticking down, while only Soybeans are showing a couple of cents or so down. Summer holidays and Olympics mood for sure…