Wake up call? A bit of a relief yesterday and it sounds it’s going to be position adjusting until the Tuesdays’ WASDE, unless crop report on Monday is surprising. Soybeans ended down -2.25 cents, Corn -5.75 cents, Wheat -8.50 cents in Chicago, -7 cents in Kansas and +5.25 cent in Minneapolis (which ended at 212.50 cents premium to Chicago and 208 cents to Kansas). On the other side of the pond, MATIF was down -€1.50, CME EU was flat and London Feed was down -£0.85. In Chicago, funds were back on the sell side, selling 9,000 Corn, 3,000 Soybeans and 4,500 Wheat.
Night session is slightly stronger but like a quiet Friday so far. Soybeans up +2.25 cents, Corn up +1.25 and Wheat up +2 cents across the markets more or less. MATIF is expected to tick down on the open.
Good news in France, after a terrible year in term of quantity and quality, both are now back. Crop will be close to 37MT with 74% above 76kg/hL, versus 24% last year. Also, 92% will be above 11.5% protein (and 65% above 12%), great to compete on the international scene… However, this is a lot of wheat to sell, and apart from Morocco and Algeria, where is it going to go with Black Sea new bumper crop and aggressive prices? Those two could even have a huge card to play by threatening France to shift to Black Sea like everyone else. If there’s traditionally fears of higher broken grain and bug damage on Black Sea wheat, the temptation is becoming higher and higher in Maghreb.
Ethiopia received offers for its tender of 70,000T of wheat. Best CNF was $275.55 for 10,000T only. Execution is tricky as it’s delivered in inland silos, through Djibouti port. Bangladesh made a government deal with Russia to get provided with 200,000T of wheat at $252 CNF LO. China soybeans imported in August reached 8.45MT, down -1.63MT from July but this was a record August. This is 63.34MT so far this year, an increase of +8.67MT from last year.
US Crude Oil Inventories increased more than expected after 9 weeks of withdrawal: +4.6M barrels versus +4.1M expected. The hurricanes are to blame. Some refinery in Texas had to shut down during Harvey, refined products deliveries are disrupted in Florida waiting for Irma,… NYMEX Crude is still trading just below $49 and ICE Brent with almost $5.75 premium.
ECB’s Draghi failed to stop euro going up in its press conference despite being quite dovish. If inflation and growth outlook is broadly unchanged, the recent euro volatility is creating uncertainty, and could impact exports. If the length and size of asset repurchasing was discussed, he refused to commit on QE announcement dates and if ECB is not ready in October, this could well be postponed. EURUSD is trading now just around 1.2050 after spiking to close to 1.21. GBPUSD is trading below 1.3150 while GBPEUR cross rate is struggling around 1.09 as Brexit talks aren’t really improving and sticking on matters like the frontier between the two Irelands. It’s tough to see any plan going through within the two years, it should be a full time job to discuss conditions and EU will be very reluctant to speak about the after until everything, including the divorce bill, is agreed. And one week of negotiation per months is quite slow for that matter.