A strong start of the week with still some very messy spread action. Soybeans led the way again, ending up +16 cents, dragging up the meal (+7 dollars) but the oil was marginally down (-0.02 cent per label). There is still very good demand from China and should it sustain, the US export target will be reached pretty quickly. Corn followed nicely with +12 cents, both were fuelled by potential concerns on South American weather. Meanwhile, Wheat was messy… Chicago ended up +1.75 cent on Z6, leaving to Kansas just a single cent premium as Kansas just ticked up on the close. If HRW becomes cheaper than SRW, surely a lot of work need to be done on Minneapolis. HRSW was under pressure indeed, closing down -5.50 cent, Minneapolis premium to Chicago was down to 148.25 cent and 147.25 cents to Kansas. On the other side of the pond, also some crazy spread action on Z6 with MATIF Wheat down -€3.50 but CME EU up +€4.00, bringing the premium to €24.00… But… There is a big but… Z6 did not trade on the CME EU, which is very worrying. Also today, so far, it is still to trade. There is only 150 lots of open interest. It’s a shame, CME EU contracts arrived probably the wrong year, but one could not forecast we’d lose -30% of the crop in a blink of an eye. The contract is bringing a much better delivery procedure and much more flexibility so hopefully it will be kept listed to at least see how it behave on the next (hopefully) better crop. MATIF Z6/H7 spread ended at -5.75, the past recent expiries, it dug further down, interesting to see if the crop will affect this now usual behaviour. In Chicago, Funds bought 18,000 lots of Corn, 8,000 lots of Soybeans and 1,500 lots of Wheat.
After 7 weeks in a row above 2MT, soybeans shipment finally decreased below 2MT, the third week with a negative momentum. Is the early seasonal busyness over? Tough to say but what is interesting to see is corn shipments went back above 1MT by the meantime, soybeans was clearly cannibalising corn. Corn shipments posted their strongest week since 8 weeks. This is reinsuring. So numbers are 1,910.2kT for soybeans (only 762.5kT needed per week on average until the end of the season) and 1,150.2kT for corn (above – finally – the average weekly need, bringing it down to 1,097.4kT). Wheat is still worrying and failed again to reach the average weekly split: with 453.6kT of wheat shipped this week, it brings the average weekly requirement to 498.7kT: 50% of the year is gone already and 51.13% of the export target is done. Should it be linear there would not be any issue but there’s a bit of seasonality usually on the first half of the season and it should be more than this. So mind the wheat!
Winter has kicked off, no more weekly crop report. We can enter in hibernation.
Another strong night session, no Tuesday reversal… Like roughly 50% of the time! Soybeans ended up +12.50 cents, strong demand and technical. The whole soy complex is following, all of them were up +1.20% on the close of the night session. Corn is a few ticks up while Wheat is overall up a cent or so, MATIF is ticking up and CME EU is flat, Z6 hasn’t traded and is bid €175 and offered €180…
In Australia, ABARES confirmed they prospect of a record Australian crop with 32.64MT on good weather prior to the harvest. USDA is still well below 30MT (28.3MT), so next WASDE should see an improvement for sure, probably a bit more conservative though knowing USDA. Still in Australia, rapeseed production is seen at 3.58MT and barley at 10.6MT. On the other side of the south, Informa sees Argentinian production to 56MT, -1MT shy of the USDA but is matching the 36MT for corn. Finally, Abiove sees Brazilian soybean crop to 101.4MT (USDA is at 102MT). Back to the northern hemisphere, in Russia, Ikar downgraded by -0.5MT its wheat export estimates to 28.5MT, USDA is at 30MT. It’s told that Venezuela might become a destination for Russia. StatsCan later today.
A bit of profit taking on oil, NYMEX Oil is currently trading around $50.50, passed the excitement, market will now expect to see some real action on the supply rather than wishful thinking. ICE Brent is trading around $53.75.On Freight, Baltic Dry Index BADI suffered from lower demand from larger size vessel. This was partially offset by good demand on Panamax segment. BADI is down -10 today to 1,186.
EURUSD rebound on pure technicals, a bit of bear trap after the Italian referendum and it’s back above 1.0725. There will be a bit of nervousness until the FED for sure. GBPUSD is around 1.2750, there is no major consensus on how the Supreme Court hearing went so far, result will be known in a few weeks’ time. Hearing it’s still on today…