Last week was a short but eventful week, with markets all over the place prior the USDA WASDE today. Last week, Soybeans moved up +1.32%, Soybean Meal +2.34% and Soybean Oil -2.09%. Corn was also up +0.42%. Meanwhile, Wheat markets were spreading like crazy with Chicago down -0.23%, Kansas up +0.63% and Minneapolis up +2.37%. Minneapolis premium ended at 205.25 cents to Kansas and 209.00 cents to Chicago. On the other side of the Pond, market was a bit destabilized by currencies as EURUSD moved up +1.48% and GBPUSD +1.92%. MATIF Rapeseed moved down -1.76% in euro (-0.30% in US dollar), MATIF Corn -0.94% in euro (+0.53% in US dollar), MATIF Wheat -0.62% in euro (+0.85% in US dollar) and London Feed +0.18% in British Pounds (+2.10% in US dollar). CME EU printed +3.52% in euro over the week (+5.06% in US dollar) but this is more expiry driven than currency driven. For sure there is some kind of storage optimisation on the expiry happening there…

 

The new week restarted on a softer note. Yesterday, only Corn managed to keep the head out of the water with +0.75 cent on the close. Otherwise, it was down across the board: Soybeans down -2.00 cents, Wheat -3.00 cents in Chicago, -6.75 cents in Kansas, -4.50 cents in Minneapolis. On the other side of the pond, MATIF ended a couple of ticks down. London Feed -£0.55… And CME EU -€6.00! Lack of liquidity and some hands have clear advantages holding the silos at fixed parities to Rouen as U7 is expiring… In Chicago, funds bought 2,000 Corn and sold 2,500 Soybeans and 3,000 Wheat.

 

Talking about funds, quite a surprising CFTC COT on Friday. Funds were expected buyer over the week, for 13,000 Wheat, 7,000 Corn and 24,000 Soybeans. Not only they bought much less Soybeans than expected (16,423 lots, reducing their short position to 11,944 lots) but they actually continued to sell Wheat and Corn (respectively 9,041 lots and 44,778 lots), increasing their short position to respectively 86,570 lots and 109,723 lots. From Wednesday to Friday, funds are expected to have sold 500 Wheat, 4,500 Soybeans and bought 2,000 Corn.

 

Night session is very quiet: the calm before the storm? Soybeans and Corn down a couple of cents, Wheat -1.50 cent in Chicag, -1.00 cent in Kansas and +1.25 cent in Minneapolis, MATIF just ticking up, CME EU flat line, and London Feed -£1.20.

 

UK market is depressing. Market is down but basis are up. Most of the Scottish wheat is still in the field and farmers (those who had the weather window to harvest) are reluctant to sell hoping for better days. So a lot are caught in their basis risk, unable to deliver Scottish wheat in Scotland and having to import wheat from North England or EU.

 

US Exports inspections were higher than expected on soybeans and wheat to respectively 1.106MT and 0.447MT. Strong start of the season for soybeans while wheat was slightly below the weekly required pace. Corn shipments were at the low range of the expectations to 0.662MT.

 

Crop conditions are unchanged on corn, 62% G/E and 13% P/VP. It will be interesting to see the yield as it’s well below last year at the same time (74% G/E and 7% P/VP). Soybeans conditions were a tad down, -1% of G/E to 60% (73% last year) and +1% P/VP to 12% (7% last year). Spring wheat is 95% harvested and another season is rolling as winter wheat is 5% planted.

 

Big event today! Not the Apple Key Note (6pm London time) but the USDA WASDE (5pm London time). Main focus will be yield. Market expects a yield cut on Soybeans, to 48.7 bushels per acre (August WASDE was 49.4 bushels per acre, Farm Journal was 48.50 bushels per acre). On Corn, market expects also a cut to 167.8 bushels per acre (August WASDE was 169.5 bushels per acre, Farm Journal was 167.1 bushels per acre). This would imply a cut of -1.58MT of the US soybean crop and -4.09MT on the US corn crop. Seems like this report could be a market mover! On the world ending stocks (new crop), market sees -1.4MT on corn. If the yield is cut in that extent, this might be quite optimistic or South America would have to come the rescue. On soybeans, -0.3MT is expected. Same comment but less obvious. Wheat is seen barely changing (-0.1MT), but with Black Sea, it could bring another reminder that there’s a lot of wheat…

 

Another shambles in Egypt. Previous season was ergot shambles, it seems to be now poppy seeds shambles. After a Romanian vessels were said to contain poppy seeds, it’s now a poor French vessel. French wheat is struggling in Egypt considering the Russian competition, if on top of this there’s execution issues and rejections, this will be very difficult… The cargo is likely to be re-exported after being reviewed by local prosecutors. Meanwhile, they announced their reserves would be sufficient to last until the beginning of March.

 

In France, the Farm Ministry bumped up again the crop estimates: +0.3MT on rapeseed to 5.5MT (up +15.6% year on year) and soft wheat +1MT to 37.8MT, up +37.1% year on year.

 

Algeria is seeking 35,000T of feed barley. China sold 11,614T of its ageing local wheat reserve, 0.58% only of the total amount put into auction. They failed to sell any of the imported wheat. Japan is seeking 139,382T of food wheat from US, Canada and Australia. Turkey purchased 60,000T of feed barley, lowest price offered was $198.28 CNF. Jordan is seeking again 100,000T of wheat.  Last week, Algeria bought 250,000T of durum between $285 and $290 allegedly, always tough to know the real deal.

 

The Brexit repealing bill has been passed. There was a lot of nonsense discussions about it while it is just a transposition of EU law to UK law after Brexit and parliament will work on those law after Brexit. But market welcomed the new as GBPEUR cross rate rebounded sharply above 1.10, trading above 1.1075. On top of that, UK CPI was above expectations at +2.9% year on year. It seems like so far the inflation is not going up uncontrollably. EURUSD is trading a tad higher to start the week, just around 1.20. GBPUSD is trading around 1.3250.

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