Similar scenario, feels like we’re in Groundhog Day! The day started on the upside but the rebound struggled and market finished lower overall. Soybeans were the only one keeping their head out of the water with a very shy +1.25 cent. Otherwise, Corn moved down -3 cents, Wheat -7.25 cents in Chicago, -8.75 cents in Kansas and -14 cents in Minneapolis. On the other side of the pond, no exception with MATIF down -€0.75, CME EU -€2.00 and London Feed -£0.75.


There’s a feeling that the Farm Journal Crop Tour is better than last year on corn and soybeans, on top of that there is still the Russian bumper crop issue. The bullish signs are quite rare these days indeed.


In Chicago, funds sold 7,000 lots of Corn and 5,000 lots of Wheat while they bought 1,500 lots of Soybeans. Being the CFTC COT cut-off, market will expect to see funds seller of 19,500 lots of wheat over the week, seller of 22,500 lots of Corn ad buyer of 12,500 lots of Soybeans. In other words, very close to be short on the three of them.


Back to the event of the week, the Farm Journal Midwest Crop Tour, on corn, Day #2 results as follws:


  • Corn Indiana: 171.23 vs 173.42 last year (-1.26%), 167.13 for the 3 year average, WASDE 173.
  • Corn Nebraska: 165.42 vs 158.6 last year (+4.30%), 162.51 for the 3 year average, WASDE 183.


In other words they are -1.02% below current USDA estimates on Indiana and -7.07% below for Nebraska. So far, differences with USDA are quite significant (+3.53% on Ohio and -8.09% in South Dakota) but it is not unusual. Last year they ended up being -12.9% on Ohio, +7% on South Dakota and -13.3% on Nebraska. They were spot on Nebraska (to mentioned only the states they have surveyed so far). Their US estimates ended up being -2.5% below actual USDA 2016 yield. Just to have an idea about the bias and the relevance of surveying a such big crop…


Purely on data analysis, my final model range so far 162.59/167.60, my ‘central’ value 167.14, a -5.01MT on the US Corn. But it’s just data analysis on a biased and small sample…


On soybeans, Day #2 results as follows:

  • Soybeans Indiana: 3×3 pods count 1,168.78 vs 1,178.41 last year (-0.82%), 1,164.09 for the 3 year average.
  • Soybeans Nebraska: 1,131.02 vs 1,223.07 last year (-7.53%), 1,182.12 for the 3 year average.


This is still a lot of edamame to count but less than last year so far, apart in Ohio. My model says 49.9 for the yield this is purely for the sake of being a spreadsheet geek, it’s even more difficult to extrapolate on soybeans than on corn.


But the takeout seems to be quite good, it’s much less a contest this year of the one scout who will find the worst looking corn cob or the fewest and tinniest pods on a meter square of soybeans.


This is to put in perspective with Mondays’ crop reprt: soybean conditions improved to 60% G/E (+1% from last week) while P/VP remained unchanged to 12%. Last year it was respectively 72% and 7%. Corn also improved to 62% G/E (+1% from last week) and remained to 12% P/VP. This is to compare respectively with 75% and 7% last year. Spring wheat condition was still awful (34% G/E, +1% from last week but it was 66% last year) and 42% P/VP (9% last year) while 58% is harvested.


Also on Monday, export inspections were strong: 665.2kT of soybeans, 583.1kT of wheat and 691.4kT of corn. 26% of the wheat target is completed, 21% last year and 23% on average, so we’re in a nice little seasonal advance. With falling prices, the positive momentum is not surprising though as it triggers the demand, it probably won’t last forever. For soybeans it will be a tight call, 4% remains to export, usual seasonality suggest 97% but last year it was 94%, so completely doable and it could even be exceeded. We’re heading towards a better corn export as 2% remains to export while it was 9% last year and 6% on average. Also to be noted sorghum shipments already exceeded their target by 2% so exports will be raised indeed.


In Brazil, Celeres sees an increase of soybean area but a cut in yield, pegging the new crop to 109.1MT (cutting by -4.7MT their estimate), USDA WASDE is at 107MT. Corn crop is pegged at 95.8MT, cutting their estimates by -4.9MT, the move was expected and USDA was already at 95MT.


In the UK, there’s a bit of a shamble as harvest is progressing (it’s not late but it started early, so this is a very long harvest). It was easy for Scotland to get use to 2 surplus years but the structural normal is deficit, so market feels a bit lost. English wheat seems to struggle for biofuels compliance and Scottish wheat seems fine, but if it is in theory dragging the basis higher, the English wheat that won’t find its traditional way to the ethanol industry will be very aggressive to come up north, it needs to go somewhere eventually, so it’s more a swinger’s party rather than anything else (I’ll stick on Groundhog Day for my Twitter’s topical picture of the day…).


Tawain’s MFIG bought 130,000T of corn, thought to be from Brazil. It’s said Taiwan bought 98,850T of US wheat last week also. In South Korea, NOFI is seeking 12,000T of rapeseed meal, 12,000T of canola meal, 12,000 of palm kernel meal and 6,000T or copra meal. MFG on its side is looking for 70,000T of corn. Finally, Algeria is seeking 50,000T of wheat, sure bet for French wheat, but how long will it last (no Russian wheat allowed… Yet!).


Night session is firm on Soybeans with +6.50 cents, barely ticking up on Corn and +1 cent-ish on Chicago and Kansas Wheat while Minneapolis is +4 cents up. MATIF and London Feed are ticking down while CME EU is on spread action: +€1.5 on U7 and -€0.75 on Z7. We’ll see how long it last!


Good Flash Manufacturing PMI in Japan at 52.8, stronger Yen, USDJPY is trading around 109.35. Eurozone is mixed: Flash Manufacturing PMI is good at 57.4 (Germany at 59.4 and France at 55.8) but bad on Services at 54.9 (53.4 in Germany ad 55.5 in France). EURUSD is trading higher this morning, back above 1.1775. Flash PMI’s later in the US also, expected at 53.4 for Manufacturing and 55.0 for Services. US Crude Oil Inventories later expected at -3.3M barrels but oil is really stuck below $50, NYMEX Crude trading around $47.75 (ICE Brent with $3.9 premium). Question could soon become how long will OPEC bear this…

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