Mixed day yesterday as Soybeans finished up +7.75 cents and Corn and Wheat moved down respectively -3.75 cents and -11 cents). It’s mostly reflecting export inspection, bad on wheat and corn and outstanding in soybeans. Funds sold 8,000 Corn and 7,000 Wheat while they obviously were on the buys side of Soybeans for 13,000 lots. And usual story on the other side of the pond, premium to CME EU closed at +€10.25 as MATIF moved down -€1.25 and CME EU up +€0.50. This is quite interesting and if delivery is going well, it might give a strong signal to Euronext, the CME delivery procedure is much more attractive… As there’s still no logic other reason why this should be at premium. But there’s still a lot of time to expiry and a lot can happen.
Night session is reverting on Soybeans, $10 seems a tough obstacle. Corn curve is sideways with no significant move, either ticking up or down while wheat is down -0.75 cent in Chicago. Meanwhile in Europe, very quiet opening, a couple of ticks down both in MATIF and CME EU. MATIF volume is dramatically low compared to last year, reflecting the lower harvest: if there’s less basis contracts done because less availability, there will be obviously much less hedge and AA’s.
Export Inspections on corn and wheat needed to be good. It didn’t happen, and for wheat it was actually pathetically low. Wheat shipments reached a mere 244.3kT… The lowest since the week ending on the 21st of January 2016. Wheat now needs to reach on average 476.5kT per week over the next 32 weeks. Corn was again significantly lower than the 10 week average: shipments only reached 541.5kT. A weekly pace of 1,070.2kT is required, there’s still some time ahead (45 weeks) so no need to worry just yet but for sure, it’s a data to keep an eye on. On the other side, it was a question of time before soybeans shipments needed less than 1MT on average per week and it happened. With an excellent 2,739.7kT of soybeans shipped last week (2,165kT to China), the weekly required pace is down to 992.4kT. This is also why the worry on wheat and corn is relative, a very trivial calculation adding the average of wheat, corn and soybeans weekly inspections since the beginning of their respective marketing year makes 3,251.6kT per week, total this week is actually above, to 3,525.5kT… There’s not room for everyone indeed and a huge inspection on soybeans has to be in detriment of corn and wheat for pure logistic reasons.
Crop progress was better than expected: corn harvested reached 61% (46% last week, 70% last year, 62% for the 5 year average) and soybean harvested reached 76% (62% last week, 84% last year, 76% for the 5 year average). First ratings of winter wheat clearly shows that sowing has been done in excellent conditions: 59% are G/E (47% last year) and only 7% are P/VP (14% last year). Planting are slightly behind though, 79% completed (81% last year and 82% for the 5 year average) but the development is in advance (60% are emerged versus 58% last year and on average for the last 5 years).
MARS report is out. EU Environment Agency confirmed that Corn has been hit by dry conditions and decreased the yield by -0.3T/Ha to 6.82T/Ha, significantly below the 5 year average (6.93T/Ha). Soft wheat yield is revised sown -0.2T/Ha to 5.62T/Ha, compared to 5.83T/Ha for the 5 year average. They pointed that sowing of winter crops is starting with not optimal soil moisture but it’s “not yet a serious concern”.
IKAR has cut its export grains forecast by -0.6MT to 40MT, this is mainly explained by a cut of their forecast to 29.5MT (from 30MT, which is still the amount expected by the USDA). Since the beginning of the year Russian Ruble is around +17.50% stronger, this surely won’t help exports. In Ukraine, cereals exports have dropped by -12.4% in September to 3.9MT. This is mainly due to a delay in corn harvesting and logistical issue.
GASC is seeking wheat again. Fact is they are delayed: the average cumulated purchased at the end of October for the last 3 seasons is above 2MT, we’re currently at 1.620MT. Price is expected to be roughly similar to the previous tender. They have demonstrated that confidence is long to build and quick to destroy. South Korea’s MFG bought 60,000T of Corn and Mauritius as received offers in the tender to buy 51,800T of flour.
NYMEX Crude Oil is still stuck with a $50 handle, $51 handle for ICE Brent. On Freight, Baltic Dry Index BADI was down -11 to 831 on lower demand on the larger vessels segment.
US Flash Manufacturing PMI was better than expected to 53.2: this probably helped EURUSD to stay below 1.09 and this morning, although German IFO was higher than expected to 110.5, EURUSD is still in the 1.0885 area. GBPUSD is ranging these dats, stuck in the mid-1.22’s.