Another month has started, a bit sideways and eyes will gradually focus on the next USDA WASDE on the 8th of November. And the most interesting will probably be about soybeans as still, world ending stocks up +1.19MT from one season to another and US ending stocks and production up respectively +3.52MT and +3.66MT from one season to another but Soybeans still trading pretty close to 1,000 cents with funds carrying a long of almost 50,000 lots, there is still a lot of possible damage on the downside. Indeed, with 83% of the soybeans harvested, the market scepticism about the yield should start to fade and we should be now very close to the final number. Soybeans moved up +7.25 cents yesterday and funds bought 6,000 lots. Otherwise a trendless day with a lack of steam, Corn ended up +2.50 cents (funds bought 5,000 lots) and Wheat was down a couple of ticks in Chicago, -0.75 cent in Kansas and +1.25 cent in Minneapolis. On the other side of the pond, MATIF Wheat keeps bleeding it started the month on the same note to ending the previous one: indeed, scary Halloween for MATIF, Z7 end down -€1.50 and All Saints day hasn’t brought the salvation by any means as it closed down -€2.50. EURUSD cannot be blamed as it is stuck in a 1.1600/1.1650 range since a few days. As the new wheat is getting planted in France, there might be some kind or reality check and some lack of ‘Plan B’. Russia is the big white elephant in the room… London Feed was down -£0.55, some will suffer there. If farm retention have increased cash basis, the flat price never moved up as it was hoped and when time will come to sell to buy Christmas presents and pay Her Majesty’s Revenue and Custom in January, the lack of liquidity will be an old memory and there will be a lot of farmers to sell at the same time: have they shot themselves in the foot? The second part of the season is expected to see cash basis softening indeed…
Night session is green across the board with Soybeans up +4.25 cents, Corn up a couple of ticks and Wheat up between +2.00 cents and +3.00 cents between Chicago and Kansas and rebounding more sharply in Minneapolis with +6.00 cents. MATIF Wheat is trading a couple of ticks up in early trading, London Feed is expected flat.
Jordan managed to bought 100,000T of feed barley at $232 CNF. Iraq is seeking 50,000T of wheat, officially from US, Australia or Canada but some surprise are still possible! South Korea’s NOFI bought 134,000T of corn while MFG bought 129,000T of corn and KOCOPIA also bought corn (60,000T, busy day in South Korea!). Japan managed also to meet a little unusual success on the SBS tender and will import 14,300T of feed wheat and 205T of feed barley. Finally, Taiwan bought 60,000T of US wheat. Ethiopia has increased its size to 400,000T from 200,000T on its wheat tender. Saudis’ SAGO bought 484,000T of wheat, above $220 CNF.
That’s it, my tracker mortgage took a hit… Bank of England moved from 2 to 6 hawks and increased its rate by +0.25% to 0.50%. Fully integrated by the market, GBPUSD is more or less flat just below 1.3250. GBPEUR cross rate is trading slightly down but is staying above 1.1375. Purely inflation driven decision. But economy is fragile and there’s no comparison with the growth in the US, time will tell if it was a mistake. Meanwhile, yesterday, the FED preferred a status quo but the conference press was hawkish enough to make the case of a December rate hike very strong.
US Crude Oil Inventories moved down more than expected with a -2.9M barrels withdrawal. NYMEX Crude Oil is trading around $54.25 and ICE Brent with a $6.15 premium. There some speculation around OPEC meeting at the end of the month. The production cuts and freeze surely helped the market and helped to get rid of a bit of the US stocks, however, below $60/$70, Saudi is still bleeding cash on its budget. Russia said they will be on the OPEC side but it is far from being binding and inside OPEC, there is a lot of disagreement as objectives have become different: some countries cannot cope with a cut and are exempted (Nigeria and Libya) and some other are cheating the numbers and Saudi is always stepping in to take the hit. This divergence of interest is a long term issue and this is not helping Saudi.