Main event of the day was on Wheat once again. If Chicago went up on +5 cents on drought concerns, which are by the way slightly over the top, the real interesting points was coming from Minneapolis: party’s over? The premium of Minneapolis K7 got slashed the past couple of weeks and closed yesterday to 83.75 cent to Chicago (upper graph) and 68.25 cents to Kansas (lower graph). The dryness concerns is focused on SRW and HRW areas so it could contribute to the spread action even if it’s farfetched at the moment, rain is needed for sure but situation is far from being desperate. Kansas wheat is still 43% G/E as USDA warned about risk of wildfires due to warm and dry weather. However, weather models are showing some rain should come. Otherwise, pretty uneventful day, with Soybeans down a tick, and Corn down -2.25 cents. In Chicago, funds bought 1,000 lots of Soybeans, 2,000 lots of Wheat and sold 7,000 Corn. On the other side of the pond, MATIF ended down -€0.50 and CME EU down -€0.50.
Night session started on a stronger note but sharply reverted and closed on a lower note: Soybeans closed at -4.75 cents Corn at -1.50 cent and Wheat -2.25 cents. MATIF is trading lower -€0.75.
Export inspections were pretty good on Soybeans, they were still below 1MT (at 921.8kT) but it’s much better than last week (706.3kT) and with now exactly half of the season elapsed, 79.42% of the targeted is completed, in other words, in 26 weeks, only 11.481MT has to be shipped, this is 441.58kT. For sure the pace of shipments are going to slow down (in what extent Is the question) but this seems to be more than achievable. However, the recent negative momentum has damaged the advance, the average completion at this stage of the season is 76%. Corn published a 6th week in a row above 1MT and with 1,445kT it just above the seasonal trend: 29.159MT are still to be shipped in 26 weeks. With 57% completion, it’s now behind last year (61%) but still above the average (54%). Wheat is still the main issue as now we’re behind last year and behind the average in terms of seasonality. Indeed, 70% of the target is completed and it was 72% last year and the average is 74%). Wheat shipment were 535.9kT last week but with 13 weeks to go, time is running out and 8.428MT are still to be shipped.
But now it’s going to be all about USDA WASDE. Virtually no movement are expected from the US balance sheet. It’s too early to cut wheat exports, and finally, soybean exports may just be on target. But let’s keep an eye on them, just in case. World ending stocks are seen increased by +0.95MT on Corn to 218.51MT, +1.14MT on soybeans to 81.52MT and -0.01MT on Wheat to 248.62MT. Movements will be mainly explained by South America. Average trade estimates sees Corn down -0.04MT in Argentina to 36.46MT and +1.28MT in Brazil to 87.78MT. On Soybeans, Argentina is seen cut by -0.3MT to 55.2MT and soybeans up by +1.95MT to 105.95MT.
Abares did publish a first estimate of the next Australian wheat crop. The crop is not even planted yet… So pure mean reversion after this year at 35.1MT and they are tossing the coin at 24MT. With this level, it means Australia would export 20.9MT (this season 22.8MT).
Yesterday, Sentix Investor Confidence in the Eurozone was better than expected to 20.7. Today, German Factory Orders were uglier than the expected ugliness. A -2.5% month on month was expected and it was actually -7.4%. Nothing much expected today, EURUSD is trading a tad lower but is still above 1.0550 feeling a bit of pressure from France as the soft conservative candidate is not going to challenge its buddy from the same party, a harder conservative about to be indicted. Meanwhile GBPUSD is trading more significantly lower, now just below 1.22.
Oil is still in the range despite IEA warning there might be a shortage of supply within 3 years. What about dealing with the current supply glut first? NYMEX Crude is trading just above $53.50 and ICE Brent with a $2.80 premium. On Freight, Baltic Dry Index BADI is back above 1,000, with +54 to 1,033 today, all vessel segments are bushing the index higher but Capesize index is showing the best strength.