Another day up but pretty unconvincing. Soybeans ended up +0.75 cent, Corn just a tick up and Wheat +2.75 cents in Chicago, +1.50 cent in Kansas and +2.75 cents in Minneapolis. On the other side of the pond, MATIF moved up +€1.75, CME EU +€1.00 and London Feed -£0.05.
In Chicago funds bought 1,000 lots of Soybeans, 3,500 lots of Wheat and were even on Corn.
Night session is still on the upside: +1.50 cent on Soybean, +2.25 cents on Wheat and +1.1.50 cent on Corn. So far European markets ae expected flat.
US export sales were pretty big for soybeans with 2.338MT: South America availability for Nov and Dec is weaker so Chinese demand went back in the US. Corn was slightly weak to 526.6kT and commitments are down -39% year on year. However, it’s only the start of the season but still, exports are supposed to be down only -19.40% year on year so it is clearly running behind. Finally wheat was very weak 307.3kT and it’s so far a -2.9% decrease year on year: if exports are supposed to come down -7.59% year on year, the start of the season is supposed to be pacey so this is definitely an area of concern. But Russia will be the word for the 2018/2017 wheat season!
There’s a lot of chatters about Australia… But it is hot and dry indeed, and overnight there is still some risk of freezing. Current USDA WASDE stands at 22.5MT but it seems like being just above 20MT is the new expectations, with 21MT for the optimists, and 17MT for the super-bullish.
However, there’s a growing uneasy feeling these days. There are issues in quite a lot of the world’s major production areas. We might just get away with it as far as quantity is concerned but the overall quality of crops will be a challenge.
In the north of the UK, there is still quite a significant amount of unharvested wheat, barley and oats. They are now mature so the situation could get tricky. It is a very unusual landscape to see some winter wheat well emerged next to a fully matured oats field! On top of that, farmers are reluctant to sell so short physical are struggling to secure the supply.
In France, France AgriMer said the corn crop is 80% G/E while harvest is starting gently (2% completed).
US Ethanol Production as down -14,000 barrels per day last week and stocks were up +6,000 barrels to 21.138M barrels. It’s coming after US Crude Oil Inventories showed a bigger build-up than expected on Wednesday (+4.6M barrels, versus +2.8M barrels expected). NYMEX Crude Oil is however trading above $50.50 with ICE Brent at $6.00 premium. Exchanges of nice words between North Korea and the US is probably creating a bit of tension…
US Unemployment Claims were better than expected (259k versus 302k expected) as well as the Philly FED Manufacturing Index (23.8 versus 17.3 expected). It comes after a hawkish (well cautious but overall positive) press conference from Janet Yellen: FED left rates unchanged but pointed unexpected economic risk following the hurricanes. However, job market is doing well and household spending are increasing. But on the other side, inflation is below the 2% target (to 1.4%). The FED dot plot is suggesting still one more hike this year, 3 in 2018 and rates are seen at 2.9% at the end of 2020. They will also gradually unwind their $4.5 trillion balance sheet gradually. But there was not a huge move on EURUSD: it is still trading close to 1.20. GBPUSD is trading above 1.3575 and GBPUSD above 1.1325 as Theresa May will give a speech today after the turmoil created by Boris Johnson. Next round of Brexit negotiation is starting on Monday so market will focus on any given clue about rights of EU Citizen, the transition period and the amount divorce bill.