Another weak day in the US, driven by Soybeans but with no major move. News coming from the crop tours are pretty good for soybeans but yield projections are still a bit tricky at this stage. Market is not massively scared about the hurricanes formations in the US Gulf, the tropical storms and the heat. However, most of the Midwest is expected to receive average weather. Weaker demand and technical are also an obvious component. Soybeans were down -5 cents on the close on U6 while the curve steepened again, X6 being down -9.50 cents, so there’s still some structural issue in the market. Wheat was down also in Chicago (-3.50 cents on U6, -1.00 cents on Z6) but the major move was spring wheat in Minneapolis, U6 was down -14.75 cents on the close, Z6 was -7.75 cents. The tension on spring wheat can be seen as highly unjustified as there will be a big bunch of quality wheat in the US and in Canada. Corn was only a few ticks down. Funds sold 3,000 lots of Corn, 5,000 lots of Soybeans and 1,500 lots of Wheat. MATIF Wheat rebounded after losing -€7.50 euros in 3 sessions this is a healthy technical rebound.


Quiet night session, the last week of August is usually calm when there’s no obvious weather stress. Holidays, waiting for the next report, waiting for northern hemisphere harvest,… Soybeans are still slightly on the downside for -6 cent while Corn and Wheat are up a few ticks. MATIF is expected widely unchanged.


Pro Farmer day 3. So after day 2 we lost, according to their yield estimations -9.515MT of corn. And the day 3 was all about Iowa and Illinois, the two biggest states. Illinois corn yield is expected to be 200 bushels per acre by the USDA. Pro Farmer said it will be 3.25% shy of this and officially forecasted 193.5 bushels per acre. In other words, with current estimation of harvested area (11.5M acres) it would mean it’s -1.899MT that are vanishing. That being said, it would be a very good year anyway for Illinois as it’s +9.51% above the 3 year average. Similarly, soybeans pods counts are +9.67% above the 3 year average in Illinois. As per Iowa, the crop tour focused on the west and whole state yield will be known today as they’re moving on the eastern side. But we can still do some trivial calculation, that can give an idea of the trend. They visited 3 districts and the average yield observed is 187.55 bushels per acre (+6.59% above the three year average, as per soybeans pods count, they are +14.25% above the 3 year average). Should the final number be the same, this would be another cut as USDA is expecting 197 bushels per acre, and on 13.6M acre this is a -3.254MT vanishing. Let’s do the math, -9.515MT-1.899MT-3.254MT=-14.668MT. This will be obviously adjusted with final Iowa yield expectations but Pro Farmer forecast is directly implying the corn crop will be -14.668MT (so 370.25MT) compared to what was expected in the last USDA WASDE (384.92MT). In the latest WASDE, USDA raised the crop by +15.59MT, more or less it means that this increase is written off only 10 days after it’s been proceeded. One can be skeptical. Someone is wrong there. USDA might have been a bit aggressive (but usually they are careful, conservative and accurate as far as US crop are concerned, especially when there is no massive weather event making genuinely move the forecast quickly) but Prof Farmer Tour is widely known to be sometimes a competition between scouts: there might be an award for the scout who’s finding the ugliest looking corn cob! Truth will certainly be in the middle, else, one of the both will be publicly shamed! USDA WASE, since 1990 has increased on average the soybean yield by +0.8 bushels per acre in the September report. As per the corn, the average move on the September report is a cut of -0.0125 bushels per acre since 1990.


US Ethanol data were bearish as stocks were up 392,000 barrels to 20.82M barrels despite production being down -1,000 barrels per day to 1.03M barrels per day. NatGas inventories are also expected to be up 18 billion cubic feet, utilities are expecting a high consumption: high summer temperatures pushed the electricity demand up due to big aircon usage. Finally, the main energy data of the day was US Crude Oill Inventories. Market was expecting them to be down -0.5M barrels. It’s a total miss. They were up +2.5M barrels.  Obviously, Oil was sharply down yesterday, NEMEX Crude losing close to -3%: back in the high $46’s. ICE brent is playing with the $49 level. On Freight, same pattern on the Baltic Dry Index BADI: up +14, reaching 706, due to higher Capesize demand but the Panamax component was down.


No major move on EURUSD, still above 1.1275. German IFO missed the market expectations (106.2 while 108.5 was expected) and is down -2.1 from last month. To follow today, Durable Good Orders in the US and obviously unemployment claims. GBP is still above 1.32. The holidays really makes feel like they try to hope voters will forget they voted for a Brexit.

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