Market rebounded yesterday on Corn and Soybeans, mostly on technical and good export inspections. Once again, the movement was led by Soybeans, up +20 cents and followed by Corn up +9 cents. On the other side, sell off on Wheat. Down around -7 cents in Chicago, -9 cents in Kansas and Minneapolis still resisting on the fusarium issue from Canada (+2.25 cents on Z6 contract and calendar spreads are behaving like crazy). In Chicago, funds bought 15,000 Corn, 8,000 Soybeans and sold 5,000 Wheat. On the other side of the pond, downside movement was shyer, MATIF down less than a euro and CME EU just ticking down. On the CME EU premium to MATIF some say that feed is to compete with milling. It sounds pretty odd in a year were the availability of milling is pretty low, the premium to milling wheat should be obvious. So there’s still something unclear and the first delivery might bring answers: a paper driven squeeze would be very damaging, as well as a grey market between operators to swaps certificate to arbitrate locations differentials…


Hat trick! Export inspections were finally enough for corn, soybeans and wheat at the same time! Soybeans ended a 17 weeks losing streak. Indeed, for 17 weeks it has been desperately lower than 1MT and they are coming back in force as harvest is entering the silo at a good pace pace. Indeed, 1,104.2kT of soybeans were shipped in a week. An average pace above 1,050kT per week is required for the whole season. Corn shipment reached 1,470.2kT, a 8 weeks high, nicely above the required weekly pace and now, weekly required pace is just 1,030kT. Wheat shipment were also very good to 641.9kT but tough competition from corn and soybeans will arrive soon and still wheat shipments need to reach 450kT per week.


As mentioned, harvest are finally pacing up: 16% of the soybeans have been harvested in a week, reaching 26%, it’s now just 1% behind the 5 year average (10% behind last year). Corn harvested also picked up, 11% of the corn have been harvested in a week, reaching 24%, in line with last year and just 3% behind the 5 year average. It’s also good to remind the 5 year average is skewed on the upside as the 2012 harvest was done very quickly as there was not a lot to harvest! So the delay compared to the 5 year average is not worrying by any means. Winter wheat is 45% planted, in line with what it should be. As per the conditions, a little cut on corn, -1% to 73%, and +1% of P/VP to 8%. Last year it was respectively 68% and 7% so still far better. On the other side, soybeans increased a little bit: +1% of G/E to 74% while P/VP was unchanged to 7%. Last year it was respectively 64% and 11%.


FC Stone has published a new estimates of the soybean yield… 52.5 bushels per acre that is! 10% higher than previous record. It matches models based on satellite and econometric analysis. It’s the sixth year in a row yield is increasing. USDA is at 50.6, in other words, should they raise the yield to match FC Stone estimates, this would add +4.29MT to the production 118.62MT. On the corn side, they decreased their estimates but it is still the same pattern but in a lower extent: they see the yield at 175.2 bushels per acre, a little +0.46% above USDA, and this would bring an additional +1.75MT of production, to 385.14MT. Funnily enough that would completely cancel the cut of the September WASDE (in August the yield was 175.1 bushels per acre). Satellite and econometric analysis suggest on their side 172.8 bushels per acre.


So will it be a back to reality sessions? A reminder of, despite some quality concerns here and there, heavy productions… So far it is the traditional Tuesday reversal but nothing major: Soybeans are down -3 cents, Corn is just ticking down and Wheat is down -1 cents or so. Still to notice Minneapolis living in its own planet, trading at more than 120 cents premium to Chicago and more than 110 cents premium to Kansas. So far, CME EU and MATIF are expected flat but should feel a bit of pressure from the US and still a bit of disappointment to not being able to play to the GASC game.


Because GASC is back indeed. Same story, Russian wheat should still be the leader but these days, who knows! We’ll see if the confidence is going back but having a line-up of more than 1MT seems to be a very old story. With FOB prices in the lower side of the $170’s we’ll see how much risk premium is added to the price. GASC is also seeking 100,000T of raw sugar, soyoil and sunflower oil. Busy day! Japan is seeking 153,048T of food wheat, from US, Canada and Australia.


Crude Oil is still a bit nervous and failed an attempt to trade significantly above $49, NYME Crude is now in the mid $48’s, waiting to know more about the OPEC deal and most importantly to see if Iran will enforce it and if non-OPEC members would compensate the potential cut as Russia is pumping at record level. ICE Brent is in around $50.50. On Freight, Baltic Dry Index BADI is still suffering from lower demand on large and mid-size vessels and retreated -11 yesterday to 864.


GBPUSD is digging further down as the countdown to Article 50 seems to be triggered. It’s now trading around 1.2775, lower than the post Brexit referendum, a low point since Q2 1985. It’s dragging the euro down as market is still thinking it would be tough for EU economy to see the UK leaving. And finally, it’s giving a bit of animation to the EURUSD, back to below 1.12, trading around 1.1175.

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