To find some green over the week after this USDA WASDE selloff, one needs to look at ICE Canola and MATIF Rapeseed, respectively up +1.07% and +1.19% (in US dollar). The rest was red across the board.
The Soy complex was down, -1.47% in Soybeans, -1.90% in Soybean Meal and -0.18% in Soybean Oil. Corn was down -1.57% and -0.77% in MATIF (in US dollar). Finally, Wheat was down -3.41% in Chicago, -3.97% in Kansas and -5.90% in Minneapolis. On the other side of the pond, Wheat market followed as MATIF was down -1.25%, CME EU -1.57% and LIFFE Feed -1.40% (all in US dollar).
Wheat is probably the less controversial sell off as it was driven by crops pretty close to harvest (or under harvesting). FSU could even become slightly heavier but US Spring wheat could become tighter. There was some controversy and doubts indeed on the corn and soybean data, USDA yields raised question and eyebrows. It is seen as not reflecting what farmers are seeing in the fields, and the lack of correlation between soybean and corn is seen as suspicious.
However, right or wrong, market this morning continues to feel the pressure. Soybeans are down -6.25 cents, Corn -4 cents, and Wheat -6.25 cents in Chicago, -7.75 cents in Kansas and -16.75 cents in Minneapolis.
It also happened Stratégie Grains released its monthly report on the same day. European (EU) soft wheat crop is raised by +0.3MT to 141MT thanks to better yield in Bulgaria, Lithuania, Latvia, Estonia, Poland and France (offset by lower yields in Germany, the UK, Czech Republic, Slovakia and Spain). Barley production is raised by +0.7MT to 58.2MT, corn production is raised by +0.1MT to 58.9MT, durum production is raised by +0.2MT to 8.8MT. Therefore, with a all wheat production of 149.8MT, they are a tad above USDA (149.56MT). The report is pointing the difficult situation of France, after losing market share last year, there is a very decent crop both in France and in the countries that stole the market share (notably FSU), so it will be a key year.
In the UK, soft wheat production is pegged at 14.153MT, imports at 1.525MT, exports at 1.094MT and consumption at 14.516MT. So this will be a tight year and stocks will come down from 2.074MT to 1.770MT. As for barley, winter barley production is pegged at 4.079MT, spring barley production to 2.890MT. Situation is a bit tight overall in EU on spring barley and still comfortable for winter barley. The issue will be quality rather than quantity for brewers and distillers.
On currencies, EURUSD went up +0.44% over the week, GBPUSD lower -0.18%, GBPEUR cross rate -0.62%, barely resisting to the appeal of going below 1.10. USDBRL was up +2.00% and USDARS up +0.35%. South American currencies could feel more pressure on the turmoil in Venezuela. The start of the week is generally on the stronger side for US dollar but nothing major.
Over the CFTC COT week, funds sold heavily again and the main news is that they are back to short on Wheat! Indeed they sold 26,291 lots, taking them to short 14,101 lots. They sold 17,571 lots of Corn, cuing their long to 67,073 lots, and sold 26,882 lots of Soybeans reducing their long to 12,913 lots. Soybeans long could be the next to vanish as from Wednesday to Friday funds sold an estimated 13,000 lots and with the night session move, tough to see them buying (but never say never). Funds sold an estimated 14,500 lots and 16,500 lots of Wheat and Corn from Wednesday to Friday.
COFCO is struggling and is drastically scaling down in Rotterdam and Geneva. As it something to do with the soybean shipments resold recently?
Saudi’s SAGO bought 660,000T of barley in their tender.