The bleeding did not stopped yesterday but it seems that market is finally struggling to dig further down. There’s actually still a bit of downside margin on the Soybeans and they were still down -1% of so, X6 losing -9.50 cents on the close. Corn and Wheat were also down but in a lower extent, Corn barely ticking a couple of cents down on Z6 while Wheat struggled to lose much more than a cent. But Wheat touched a new low since August 2006! More than 10 years! Flashback then! Just for fun and maybe getting an idea on the justification – or the lack of it – of those prices considering the current S&D. The September 2006 WASDE was showing a US Wheat crop of 49.03MT and ending stocks at 11.68MT (37.47% of the domestic use). Today this is 63.16MT of crop (+28.81%) and ending stocks are at 29.93MT (+156.25%, and this is 80.46% of the domestic use). Same exercise for the world crop: production of 596.10MT (versus 743.44MT today, +24.72%), ending stocks of 126.38MT (versus 252.82MT today, +100.05%) with a ratio to total use of 20.52% (today it is 34.51%). It’s a bit trivial but… Just saying! Corn touched new lows since December 2008 but failing to visit sub 300 levels. Funds sold 500 lots of Corn, 6,000 lots of Soybeans and 2,000 lots of Wheat.


The entertainment of the day was provided by the GASC. It’s getting very tricky to offer to the GASC tender as the stability of the tenders terms about ergot is bringing uncertainty and certainly a bit of annoyance. So they only received one offer! French wheat was expected not to be seen (and won’t be seen for a while, regardless of ergot concerns) and Romanian wheat, classified as ‘problematic’ by the Egyptian authorities, did not bother taking the risk of showing up. It was all about Russian wheat and Ukrainian wheat. But in a common movement, Russian wheat decided to stay away and the only vessel offered was Ukrainian at $179.32 FOB. They had no other choice but to cancel. Between the two last tender US markets went down a bit more than -5% (MATIF in US dollars was down roughly -3.5%) and the Ukrainian wheat was only -0.34% cheaper. In other words, premium has surged, risk premium attached to the tender is considerable. So no other choice than cancelling. But on a longer term, either they will have to pay much higher prices with no real choice of the supply, either they will have to backtrack again on the ergot. So the saga is far from over. Early August, Egypt said their stock would last until mid-February. There’s a bit of time but there could potentially be soft food security concern should the situation lasts.


We’re still waiting on Final number for the French crop but it seems that the quality is not really good, as widely expected. If France Agrimer said protein is above 11% on 97% of the harvest, the specific weight will be the real damage: only 28% of the crop is above 76. Hagberg is not too bad, 79% of the crop is above 240. Light but powerful wheat!


US ethanol production was down 5,000 barrels per day ( to 1.02M barrels per day) and this haven’t prevent the stocks to go higher: stocks were up 109,000 barrels to 20.93M barrels. Us Crude Oil Inventories were also bearish: market was expecting  a buildup of +1.1M barrels and stocks actually went up +2.3M barrels! Obviously, ethanol futures and oil futures reacted pretty badly. NYMEX Crude is back below $45, in the mid $44’s while ICE Brent carries a $46 handle. On freight, Baltic Dry Index BADI is taking a breather above 700 and retreated -4 to 711, driven by lower demand on midsize and bigger size vessels.


Night session is rebounding, finally: +3 to +5 cents across the board. MATIF is also up +€1.25. At some point market need to take a breather. The fact the world S&D are going to be heavy seems to be pretty well integrated and market will now focus on the next USDA WASDE.


EU unemployment rate reached 10.1% slightly above expectations. Today US unemployment claims and ISM Manufacturing can bring a bit of entertainment as so far EURUSD is pretty dull, still evolving in the mid 1.11’s. The star was the British Pound, now back to above 1.32 as the Manufacturing PMI was well above expectations. Meanwhile, government is still having internal discussion on how to handle Brexit. Brazilian real did not print significant move on Rousseff impeachment. That being said, US dollar gained +3.53% facing the Real since early August.

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