A quiet day that was. Soybeans failed to close below $10 on X6, entering in the last few days of trading. They closed on the higher side with not much conviction, +1 cent, failing to show any major excitement following the excellent export inspections. Corn was not much more inspired and finished a tick down on Z6. The real movement of the day was on Wheat, ending the trading day with a rally of +7.75 cents on Z6. There was a bit of short covering as some are getting impatient and bored as their short wheat is not paying a lot these days. Funds bought 4,000 lots of Wheat and were even on Corn and Soybeans. On the other side of the pond, this is just captivating: CME EU ended the day up +€2.25, gaining one more euro on its premium to MATIF as it closed up only +€1.25. If it’s only to prevent the fact to potentially get imported wheat on the physical delivery of MATIF, this is beginning to be farfetched. And we’re not really far to calculate on the CME silos closest to Rouen or Dunkirk! The initial joke, to take delivery of MATIF and deliver it to the CME is pretty close to calculate in theory. So finding Romanian or Bulgarian wheat in inland silos is not yet quite realistic but it is not science fiction by any means. But then, CME would have a better grade in the silo (MATIF is in theory better) and market might struggle in price discovery: should you price the contract specifications or the deliverable wheat in store? Still not realistic but if the premium keeps going up,… Watch out MATIF Z6 versus CME EU H7…


Night session is generally on the downside but with not much conviction. Soybeans are down a couple of cents, Corn down a cent or so and Wheat is also down a couple of cents. It will be quiet on MATIF as it’s a public holidays in France, All Saints. But it’s quite often there’s big movements on these days as there’s lower liquidity, and taking into account the CME premium to MATIF, this could provide some entertainment despite reduce volumes. MATIF is up +€0.50 on the opening while CME EU is flat, it hasen’t actually traded yet.


Export inspections were expected to show again that soybeans shipments are cannibalising corn and wheat shipments… And they did it again in a dramatic fashion! It’s the second largest ever weekly Soybeans inspection,  the record being 3.11MT in November 2014. Inspections were above 2MT for a third week in a row to 2,867.2kT (China was accounting for the bulk of it with 2,296kT). Soybeans are now in need of 949.3kT per week, for the next 44 weeks… The 10 week average is 1,529.2kT so, so far, soybeans are doing really well, but the positive momentum is statistically over, lower seasonality is usually kicking off from November, so reaching 55.112MT is not going to be a piece of cake by any means. If the cumulated inspection this season so far is 13.641MT, +1.643MT above the last year 11.998MT, soybeans still need to do better than last year as the exports are expected to raise +2.42MT from last year. Obviously, there’s not logistical room for everything and corn and wheat inspections are still struggling. Corn shipments were below 1MT for the third week in a row to 791.9kT, dangerously below the 10 week average of 1,175.3kT. Corn need to reach an average of 1,076MT per week for the whole season. Ok, so far it has done better than last season, with 9.152MT exported since the start of the season, it’s +3.90MT above last season, but at the end of the year, this will need to be +8.32MT.  Momentum should pace up because with south America expected to do well on the new crop, there will be a lot of competition. As per wheat, inspections were  below 500k for the fourth week in a row to 325.5kT. This seriously need to pace up, 480.7kT on average per week is needed. The exports are expected to raise +5.45MT from one year to another, so far, cumulated exports are +2.58MT in front of last year. Time to panic? There’s still some time and some buffer: a trivial way to see it is that 40% of the year as elapsed, and 47% of the expected increased exports is done. But for sure, mind the seasonality, especially with harvest flooding silos with corn and soybeans. Finally, the total of inspections is still way above the average since the start of the season and was this week approaching 4MT (3,984.6kT). So when soybeans stampede will be over, it will surely free some logistic for corn and wheat and soybeans will stop cannibalising wheat and corn exports.


The second event of the day was the crop report but it’s the last few weeks of excitement before the winter. Corn harvest reached 75% (+14% from last week), although it’s behind last year (-7%), it’s on line with the 5 year average which include the year 2012, an outlier (there was so little corn to harvest that it was wrapped up quickly). So historically not too bad, and ultimately, bigger crops take longer time to harvest so maybe a statistical correction of the data (to take into account the size of the crop) would give a better indication on how fast or slow the harvest is. Same picture on soybeans, 11% of the gravest completed last week, reaching 87%, only -4% behind last year an +2% above the 5 year average. No worries then. Winter wheat is 86% planted (79% last week, 87% last year, 88% for the 5 year average), planting is done in very good conditions, 70% has emerged (60% last week, 69% last year, 69% for the 5 year average) and although there was a downgrade, conditions are pretty good: 58% is G/E (59% last week, 49% last year) and 9% is P/VP (7% last week, 12% last year).


Japan is seeking 153,156T of food wheat from US, Canada and Australia. Algeria is seeking 50,000T of durum.


Oil took a slap and is now back to just below $47 for NYMEX Crude (around $48.75 for ICE Brent). Goldman Sachs said about the OPEC deal that they price a “lower probability of a cut” and should it happen the expect an “even lower odds of success”. They expect to be back to $40 if the deals fails. On Freight, Baltic Dry Index BADI rebounded +23 to 857 on higher demand for larger size vessels (+8.26% on Capesize component) but this was partially offset by lower demand on mid-size vessels (Panamax component -0.88%).


The sarcastically so called “rock star” Governor of Bank of England Mark Carney said, after a few days of suspense, he will exercise his option to stay in the job for 1 year out of the 3 optional years. He had a 5 years contract indeed with option to do 3 more and he’s exercising 1 year, meaning he will leave just at the end of the Brexit negotiations (should Article 50 actually be triggered in Q1-2017, nothing is more sure) in June 2019. He’s been heavily criticised the past few months has he’s seen to have politicised the office and being more pessimistic than he should have been on Brexit in order to influence the vote or even to reverse the result. And indeed, macro data failed to confirm the announced, the predicted, immediate collapse. Latest data was today: Manufacturing PMI was expected up +0.7… And actual is up+1.5 to 54.7. Tough to say if market cares, GBPUSD still trading around 1.2250 so tough to say if it’s happiness, disdain or indifference. EURUSD, on its side, is trading around 1.10, just touched it a retreated. EURUSD tends to be stronger since a few days. The US election is casting uncertainty and doubts indeed. Will the FED rate hike actually happen? On top of this, Chicago PMI was down, much below expectations to 50.6 (expected 54.1, previous 54.2). If the report points the fact that inflation is on the rise, it also pinpoint that economic growth is uncertain, and in a stagflation situation, doubts over the raise of the rates are permitted: “A key takeaway from the latest survey was the pick-up in Prices Paid to a nearly two-year high. Inflationary pressures are on the rise, which is one of the metrics the Federal Reserve has been waiting for to increase rates. However, economic growth ahead, as read by the October Chicago Business Barometer, looks very disappointing. Hopefully, it doesn’t mark the start of a downward trend”. ISM manufacturing PMI today.

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