Down across the board for the real first day back to normal business in 2018: Soybeans moved down -3.25 cents, Corn -4.00 cents, Wheat -3.00 cents in Chicago, -4.25 cents in Kansas and -1.25 cent only in Minneapolis, closing the premium to 197.75 cents to Chicago and 192.25 cents to Kansas, $2 is too attractive technically not to pay a little visit in the next few sessions. This week will be all about getting in position for the USDA WASDE but to be honest, it’s not usually the most exciting of the year. We will keep an eye on US exports, but Northern Hemisphere should be quite dull. A bit of movement could come from Argentina and Brazil (lower soybean output in Argentina, something like -0.7MT is expected, due to La Niña but I could be completely offset by Brazil thanks to ideal conditions, +2MT expected) and Australia (wheat is still seen as pegged aggressively). So not much more to look forward too. Else it is the same story, winterkill is tough to assess until is proven, meaning until the winter is over. And with an adequate snow layer, wheat can bear incredibly low temperatures for a durable amount of time. As a matter of fact, areas with high risk are incredibly limited so far. MATIF Wheat was flat yesterday, CME is still dead and won’t resuscitate anytime soon, London Feed was up +£0.45.
In Chicago, funds sold 12,500 Corn, 4,000 Soybeans and 2,500 Wheat.
Night session is still down on Soybeans, -3.75 cents (moving now to H8 contracts), and Wheat (-1.50 cent across the markets) while Corn keeps its head out of the water with +0.75 cent. MATIF is ticking sideways, London Feed very quiet with -£0.20.
US Export Inspections showed wheat keeping struggling with 234.4kT. With the unreported shipments, if wheat is doing well at the end of the season it could still be just a little lower than expected, so most probably USDA will wait and see on the WASDE. But with exports expected down -5.22% year on year, we are currently -6.56% behind last year, so time to catch-up is running out! Even though this week was slightly better than expected (849.2kT), corn shipments are down a staggering -36.26% compared to last year, while they are expected down only -16.04% year on year. There’s now a significant seasonal delay as only 23% of the target is completed while it is 30% on average (31% last year). The guy who decided to raise US exports in the November and December WASDE (twice by ‘just’ +1.91MT… Why? Why?!? Why?!?!?) will certainly have to admit its tail between the legs that it has now to come back down. Soybeans were decent (1,183.1kT) but is this sufficient to maintain the target? Exports are set at +3.52% for the full year, it’s currently -14.20%… Will USDA admit they were wrong on corn and soybeans on the same report, take the hit one shot, or trying to do one thing after the other? The only reason that could lead the USDA to keep the soybean target unchanged is the fact that in terms of seasonality, this is still acceptable: 49% of the target is completed, while it is 52% on average (58% last year). So it is a bit better than corn. Answers on Friday but odds are higher on corn exports for sure.
GASC is back. With EURUSD at this level, French wheat can forget about it, unless they go hara-kiri. EU Traders are still a bit scared about the poppy-ergot saga, so once again, it will be a Russian story (the radioactive story never impacted the keenness on Russian wheat). Last tender on the 27th December they got 180,000T of Russian wheat. Since July 2017, hey have purchased 3.065MT of Russian wheat, 85% of the total volume! The second origin, Romania, is far behind with 300kT (8%), and then Ukraine (180kT, 5%). A single vessel of French (60kT) accounting for 2% of the volume (total volume so far 3.605MT) but probably accounted for quite a lot of the issues as we know!
Iran bought 120,000T of soybean meal. Japan is seeking 91,087T of food quality wheat from US and Canada.
Despite strong German Industrial Production (+3.4% month on month) this morning, EURUSD is getting weaker, seems like the battle with 1.20 could be lost as EURUSD is trading down to around 1.1930. GBPUSD is down in the same extent, to around 1.3525, leaving the GBPEUR cross rate unchanged to around 1.3335. No major stats expected today, tomorrow US Crude Oil Inventories and UK’s Manufacturing Production.