Soybeans on the rise again! And double digits again. The upside movement was fuelled by good export inspections and good NOPA crush data. Soybeans finished up in excess of +16 cents. Corn and Wheat followed but in a much lower extent, giving the impression the rebound is beginning to lack a bit of steam, Corn just ticking up and Wheat ending up around +2 cents in Chicago. Funds were even on Corn while they bought 9,000 lots of Soybeans and 2,000 lots of Wheat. On the other side of the pond, nothing much either, MATIF and CME EU Wheat finished both up +€0.75 cents. No Tuesday reversal just yet as Soybeans are up again +2.75 cents and Corn +1 cent but Wheat is struggling, -1.75 cent, so hope for the traditional Tuesday reversal is still permitted! European markets are expected to tick down on the opening.

 

Sweet, neutral and sour Export Inspections. Wheat shipments were in line with expectations to 450.6kT, corn were well below expectations to 875.8kT and soybeans were above expectations to 2,509kT. But wheat expectations were pretty low and it was actually on the bottom of the range of expectations, so there’s no real achievement there by any means. The 10 weeks average is 614.4kT and it’s the second week in a row it’s well above the 10 weeks moving average, pretty bad sign as US wheat struggle to compete on the international scene and corn and soybeans harvest is going on at a very decent pace and ports will be flooded pretty soon. But there’s no real issue just yet as it is not massively off the weekly required pace, now wheat shipments need to reach 469.9kT for the next 33 weeks, but soon half of the year will be gone and to reach the objective (26.536MT as per the new USDA WASDE) it is better to see a positive momentum at the start of the season rather than hoping for a surge at the end of the season to be bailed out. On the bright side of the matter, cumulative exports are +28.8% above last year, while in comparison the exports are set to raise by +25.84%, so still a slight positive momentum. Corn shipments missed their target indeed. Most pessimistic expectation was 1MT, so this is quite a miss. With newly increased USDA WASDE exports (56.517MT) it means we need to see 1,058.8kT on average per week. But it’s just the start of the season and so far, we’re +79.5% above last year (exports are set to raise by +17.26%) so momentum is clearly on the upside.  Soybeans were good at least. At this pace, it is just a matter of time before the weekly average pace will be below 1MT, it is currently 1,030.4kT. In 2 weeks, soybeans exports lost their upside momentum, on the week ending on the 29th September, cumulative exports were +36.2% above last year, last week it was only +18.4% above last year and it’s now only +13.9% above last year. Early to get worried about it but for sure it will be something to follow as exports are set to raise +4.59% this year.

 

However, if exports were to be lower, it could just be compensated by higher soybean meal and oil exports as NOPA posted a quite good September crush. It was actually the busiest September since the 2007 record of 139.8M bushels. NOPA crush was indeed 129.405M bushels this September, down from 131.8M bushels in August but up from 126.7M bushels last year. This was obviously on the high end of the range of expectations.

 

On the crop progress and conditions, nothing much to say, hurricane Matthew did not have any impact on the soybeans and corn areas. Corn ratings actually improved, +1% of GE to 74% (68% last year) and still 7% of P/VP (10% last year). No change on soybeans, still 74% of G/E, to be absolutely fair, there’s a tiny improvement also as there’s -1% of G and +1% of E soybeans, but this is very marginal. Soybeans rated P/VP are unchanged to 7%. Last year there was 64% of G/E and 11% of P/VP. On the harvest side, 11% of the corn has been harvested this week, reaching 46%. It was 54% last week and 49% for the 5 year average. To put things in perspective, that’s a 5 days delay compared to last year, it’s not the end of the world. Farmers have apparently focused on their soybean harvest: 18% of the area have been harvested in a week, reaching 62%. In terms of area, they have harvested 56.47% more area on soybeans than on corn indeed. They cannot be everywhere at the same time! As per the plantings, they were also on it, farmers have planted 13% of the winter wheat in a week, reaching 72% (73% last year and 73% also for the 5 year average). And despite being technically a tad delayed, it’s an early development in the fields! 47% of the winter wheat has emerged, versus 44% last year and 45% on the 5 year average. Sowing are done in god conditions.

 

Indonesia is planning to be self-sufficient on corn by 2018. The Agriculture minister said 2016 exports will be around only 1MT compared to 3.6MT in 2015. In Malaysia, September production data for palm oil are expected to be lowered on adverse weather, it drove the Crude Palm Oil prices up +9.93% in 6 trading sessions. Japan is seeking a total 132,015T of food wheat coming from the US, Canada and Australia. GASC has received 3 offers on the rice tender, results expected today. They bought earlier 134,300T of white sugar, and early this month 60,000T of soyoil and 33,500T of sunflower oil – and obviously wheat – as they seems to been keen on doing a lot of shopping before central bank is devaluating the currency.

 

Oil went back below $50 yesterday. There’s a bit of scepticism Russia will cut the production alongside OPEC and also, inside OPEC, it’s still expected Iran to play the lone rangers card and not enforcing any cut.  It’s rebounding today, the level of $50 will be sticky, NYMEX Crude is currently trading just below $50.50 and ICE Brent just below $52. On freight, Baltic Dry Index BADI was up a tiny +2 to 894 as lower demand on larger vessel was completely offset by higher demand on mid-size vessels.

 

EURUSD went back above 1.10 as there were a couple of bad macro data in the US. Industrial Production rose only +0.1% month on month (+0.3% was expected) while the Capacity Utilisation Rate was shy -0. 2% of the expectations to 75.4%. Finally, Empire State Manufacturing Index was down -6.8 while it was expected up +1.1. No drama just yet, market won’t reconsider its certainty about a rate hike in December based on those.  US CPI today will be much more significant. GBP is still around the 1.22 level, trading higher this morning. Uncertainty is growing as the mess is getting messier in the UK. One can doubt about the fact Article 50 will be triggered, a lot of Members of Parliament are going to do everything to challenge the process, especially Northern Ireland and Scotland who voted to remain in fact.

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