Market had been down last week as no real bullish fundamentals were coming in in the week preceding the USDA WASDE report: Soybeans had been down -0.45%, Corn -1.67%, Chicago Wheat -4.45%, -4.46% in Kansas, -3.21% in Minneapolis, -1.36% on MATIF in US dollar (EURUSD was down -1.05%) and -0.88% for London Feed in US dollar (GBPUSD was down -0.60%). So a bit freaky considering December WASDE is not usually the most exciting one…

However, it provided a bit of entertainment as there was still some scepticism about US yields in particular. The entertainment was not provided by wheat for sure, not a single revision by plus or minus 1MT. Boring. The main movement is coming from old crop, use was up +0.86MT, old crop ending stocks down by -0.97MT. On new crop, ending stocks were only down -0.60MT to 267.53MT (35.58% of the production, 36.15% of the usage) as production was raised by +0.79MT (driven by EU +0.45MT, Russia +1MT to 83MT offset by Pakistan -0.50MT and Brazil -0.20MT, to be noted, Australia wasn’t move). Global use was raised by +0.42MT. The only thing that are to notice is the ever – and ever – and ever – growing Russian crop and the fact Australia was still pegged at 21.5MT. Also, US exports were raised by +0.68MT. After all… It’s Christmas! It doesn’t change the fact that with a world crop down -1.91MT year on year stocks are raising by +11.92MT… Whsat are we going to do with all this wheat?!?

Corn old crop was hit by an adjustment of Southeast Asian production, -0.51MT taking the old crop ending stocks down by -0.41MT. But the new crop was the one that was thrilling… Bahm! +7.56MT on the US crop! Yield was raised from 171.8 bushels per acre to 175.4 bushels per acre, beating last year! US Crop is now pegged to 370.29MT. Obviously, USDA tried everything to offset the US balance sheet and the world balance sheet. US feed is increased by +1.9MT, US exports were raised by +1.91MT to 48.9MT, Ukraine crop was cut by -2MT. But still, world crop is rising by +5.1MT to 1,043.9MT and ending stocks are raised by +2.9MT to 203.86MT, 19.53% of the production, 19.11% of the use. Year on year, ending stocks are down -22.72MT but with a crop down by -30.86MT, this is more than damages limitations!

On beans, ending stocks on old crop got adjusted by +1.42MT thanks to lower use and higher beginning stocks. So new crop was starting with a positive bias. Increased by the Brazilian crop (raised by +1MT) but offset by higher use, in particular Chinese crush (+1MT). World ending stocks are raised by +1.85MT to 97.9MT, 28.06% of the production, 28.38% of the use. Here also, with a world crop down wear on year by -2.36MT to 348.89MT, it did not prevent ending stocks to perform better as they are up +1.62MT year on year. Tough to see any justification of $10 apart wishful thinking or speculation of the next season. No major change on the US balance sheet, production was adjusted by -0.14MT to 120.44MT.

Market reaction was negative: Soybeans ended down -7.25 cents, Corn -3.75 cents, Wheat -5.50 cents in Chicago, -5.25 cents in Kansas and -2.50 cents in Minneapolis (ending at a premium of 195.25 cents to Chicago and 196 cents to Kansas). On the other side of the pond, MATIF was down -€0.75 and London Feed was down -£0.15. In Chicago, funds sold 5,000 lots of Wheat, 9,000 lots of Corn and 7,000 lots of Soybeans.


Reuters, with its estimates, was in good spirit with the CFTC COT by the way: funds had bought all along the week, decreasing their short on Wheat and Corn by respectively 3,993 lots and 36,244 lots, and increasing their long on Soybeans by 21,472 lots. But from last Wednesday to yesterday, I was the opposite: funds were seen selling across the board, 16,000 lots of Wheat, 13,500 lots of Corn and 30,000 lots of Soybeans. So next CFTC COT will be seller for sure, last chance today as it is the cut off.


US Export Inspections were quite funny knowing corn and wheat exports were raised after publication. Wheat inspection kept being lower and lower, 316.9kT. US Exports are supposed to be down -1.50MT year on year (after current WASDE revision) and it’s already down year to date by -1.033MT, did the USDA guy lost his calculator? 48% of the target is completing, behind from 49% last year (pace has now to be stronger than last year) but more worryingly far behind the long term average (54%). As per corn, with 658.4kT this week it is now 6.09MT behind last year, and exports are set to decrease by -9.34MT (after the current increase), so a big chunk is gone. Once again, why did USDA rushed increasing the data? 17% only is completed versus 25% last year, versus 24% on average. The next few months will have to be very busy on wheat and corn, it starts to become quite unrealistic. Soybeans numbers were lower than last week to 1,229.8kT, but situation is less preoccupying… If we look at the average! Indeed, 39% of the target is completed, 40% is the average. But we are far behind last year (47%) and the second part of the season will have to be strong also. So the picture is far from being bullish.


French Ministry sees plantings of soft wheat at 5.028M hectares, in line with last season while there was a switch from barley to rapeseed as surfaces are respectively down -4.6% to 1.36M hectares and up +9.5% to 1.5M hectares.


South Korea is seeking 138,000T of corn and 65,000T of feed wheat. Brazil said they’d be keen on buying Russian wheat if price is good… It is a clear danger for big other exporters. If price is good, they will lose market share to Russia. Strong lobbying is ongoing but at some point, one can wonder why Algeria did not shift a nice chunk of its supply from traditional France to Russia. GASC is back and will show again that the game should be a Russian game.


Night session is not showing anything captivate, a couple of ticks here and there. Soybeans are down -0.50 cent, Corn up +0.75 cent and Wheat up +1.50 cent in Chicago, +2.50 cent in Kansas and -0.25 cent in Minneapolis. London Feed is trading down -£0.20 and MATIF is flat.


UK CPI was higher than expected to 3.1%. German ZEW was worse than expected to 17.4. EURUSD is trading a bit up around 1.1780, GBPUSD is up above 1.3340 and GBPEUR cross rate is marginally down, trading around 1.1325.


A bit of tension on oil, rebounding +0.75% this morning and energy markets overall, as there was an explosion in Baumgarten gas hub (Austria) and a leak in the Forties oil pipeline (UK).

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