Traditional reversal Tuesday, market rebounded: Soybeans finished up by +7.75 cents, Wheat was up +8.00 cents and Corn a shyer +3.00 cents. Market moved up on the same stories, bad weather in Australia (rains and night frost) and slow harvest in the US. Funds were on the buy side obviously, buying 5,000 Corn, 7,000 Soybeans and 3,700 Wheat. Tuesday being the cut-off for the CFTC’s COT, market will expect funds have sold across the board the past week: 100 lots of Wheat, 14,400 lots of Corn and 16,000 lots of Soybeans. This would bring the cumulated short above the 200,000 lots mark. So seeing a rebound driven by short covering before the Friday’s stock report would make technically sense. To be noted, Minneapolis is almost 1$ higher than Chicago on quality concerns on the Canadian side. No surprise on MATIF, followed US markets on the upside. The CME EU contracts added +€0.25 to its illogic premium.
Indeed, there will be the quarterly stock report of the USDA as of the 1st of September published on Friday. Market is expecting to see a number around 65.37MT in Wheat, +144.85% from June (quite logic, harvest came in-between) and +14.54% from last year, which is slightly more than the increase of the crop (+13.11%). Corn is expected around 44.55MT, -62.85% from June (-75.39MT). Is this a lot? Not sure, linear 3 months of export and use is 86.88MT. This is higher +1.33% than September last year. Finally on Soybeans, it’s expected at 5.47MT, +5.24% from last year and -76.90% (-18.21MT) in 3 months which is even more obvious than corn as linear 3 month use and exports of soybeans are 26.87MT, but seeing export inspections since a few weeks, it doesn’t really come as a surprise.
Night session is softer on Soybeans (-4.50 cents), the 950 level is triggering offers as market struggles getting away from the fact that the crop will be outstanding. Latest bullish crop in date is Cordonnier, he increased its yield estimates to 51 bushels per acre, USDA is at 50.6 bushels per acre, so this would add close to 1MT on the crop. Corn and Wheat are following without much conviction, respectively down -1.50 cents or just ticking down. MATIF and CME EU are just ticking up.
Busy busy on the international tenders. Tunisia is seeking 42,000T of durum, 25kT of barley and 67,000T of soft wheat. South Korea’s Kocpia is seeking for 55,000T of corn. Morocco is seeking 303,637T of soft US wheat, Bahrein is seeking for 25,000T of wheat. Syria is still there for the 1MT super-deal with Russia but the credit risk is considered pretty high and it’s said that there was a few credit issues with previous deals with Syria that has hit a trade house in Europe, so there’s some obvious caution there. Mauritius is tendering to buy 51,800T of wheat flour. Still awaiting Jordan results on feed barley and hard wheat, will it be the usual cancellation on tough tender terms keeping offers away or high? Philippines bought 45,000T of feed wheat at $205 CNF. Japan bought 125,775T of food wheat from US and Canada. China is keeping struggling with its ageing corn stock and managed to sell through its auction only 65,883T. meanwhile, they said they will impose anti-subsidy duties (between 10% and 10.7%) on DDGS imports from US, hitting directly in fact ADM, Louis Dreyfus, Poet, Valero Energy and Andersons. It comes after last week decision to slap anti-dumping duties on US DDGS. The Egyptian ergot saga is still on. They have appointed SGS to survey cargoes at the port of loading instead of an Egyptian delegation, and obviously, traders at destination are not happy as they see the risk moving from origin to destination. We’ll see how keen on are traders to offer on the next GASC tender.
Deal or no deal as OPEC is meeting at 2PM GMT? Oil is still just below $45 and it’s pretty nervous, reacting on the upside to comment from those who say they are keen on a deal, and reacting on the downside to comment from those who say they don’t need a deal. So wait and see but as usual, Iran will still be keen on reconstructing in market share, regardless of Saudi’s interest. One can wonder if the OPEC is not now obsolete considering US and Russia are biggest producers and considering the fact that OPEC members have nowadays different interests regarding the price of oil. NYMEX Crude is a few cents below $45 while ICE Brent has a $46 handle. Today, as usual, US Crude Oil inventories could bring a bit of volatility, as well as ethanol data.
Quiet – if not boring – currency markets these days. The Conference Board US Consumer Confidence Index surged to 104.1 while it was actually expected declining to 98.6. But this failed providing some strength to the US dollar. Today US durable goods orders is the stat to follow. EURUSD still just above 1.12.