Soybeans are a bit nervous approaching the report with a third session in a row on the downside with -8.75 cents. A fair bit driven by the expectations of the USDA WASDE of tomorrow: the US yield is not expected to move, we should now be very close to final, but lower exports and/or lower use could bring 0.79MT in the US balance sheet, added to potentially a net +1.8MT of production in Brazil plus Argentina (well AgRural just pegged the Brazilian crop at 114MT, +6MT above USDA, so there is some potential for more than a net +1.8MT for sure), world ending stocks should edge higher again (+0.8MT is the average of the expectations). But also there will be the US Quarterly Stock report, it’s surely going to show the struggle of exports as stocks are expected to be +7.70MT higher than the same time last year, so more than the increase of production year on year (+3.52MT).
Corn was only ticking down. Nothing expected on yield on Friday. However, traders are rather optimist as they only see +0.38MT on the US balance sheet, this would mean only a little action on the exports. With this in mind, market sees the world balance sheet getting tighter expecting ending stocks to be revised down by -1.1MT… Potential surprise possible then. Quarterly stocks are expected higher than last year (+1.14MT).
Wheat ended the session up across the board, +2.50 cents in Chicago, +1.50 cent in Kansas and +3.50 cents in Minneapolis. Just a tick down on MATIF and +£0.70 in London. This is weather driven, but once again, there is snow in the US to protect the wheat so crop actually at high risk is insignificant at the moment (but needs to be monitored, there’s a difference with damage and outright winterkill for sure). In Black Sea, there’s a general complain about the lack of snow, this is more serious for sure. However, this is not completely untypical, snow is very often arriving at the end of Jan. So concerning, but if snow comes soon, there should not be widespread issues. Historically, the winter is not the most damaging season for wheat. As per the WASDE, no major change expected in the balance sheets. US Stocks Should reflect lower production and are expected down -6.21MT but with a crop down –15.46MT year on year, tough to actually eel it’s bullish… Half of the marketing year is gone, should be at least down -7.73MT, right? Also winter wheat plantings are expected to be down year on year by -4.25%.
In Chicago, funds sold 9,000 Soybeans, 2,000 Corn and bought 2,500 Wheat.
Night session is rather dull, Soybeans are ticking a couple of ticks down, Corn a couple of ticks up, Wheat is down -2.00 cents more or less across the markets. MATIF is barely ticking down and London Feed -£0.30. Nothing super exciting at the moment.
FranceAgriMer cut the French soft wheat export target outside the EU for the third time in a row, to 9.3MT, -0.2MT from previous. Indeed, the competition is tough with Black Sea, some traditional destinations (like Algeria) are only still working thanks to strong French lobbying, but the traditional markets are shifting to Black Sea and new destinations are difficult to find. But this was offset by expectations exports within the EU will work, sign there is some work undergoing to try to compensate the lost flows: it’s now pegged to 8.6MT, +0.5MT from last month. Ending stocks are therefore revised down to 2.9MT from 3.2MT previously. Barley ending stocks are cut by -175,000 to 925,000 and corn also trimmed down by -0.1MT to 2.5MT.
Japan bought 91,087T of food wheat from US and Canada. They also manage to secure 1,510T of feed wheat on the not very popular SBS tender. Meanwhile, China offered a bit less than half a million tonnes of 5 years old wheat to auction. And nobody wanted it.
US Crude Oil Inventories showed a bigger withdrawal than expected with -4.9M barrels (-3.9M expected), this is the 8th week in a row stocks are going down. It’s pretty cold in the US, driving the energy demand up obviously. Adding current geopolitical concerns, NYMEX Crude is trading higher, just below $63.75 with ICE Brent trading at $5.75 premium.
UK Manufacturing Production was better than expected by a tick to +0.4% month on month (and previous was adjusted up 2 ticks to +0.3%). As a matter of fact, it is the highest output since 10 years. US PPI and Core PPI later today both expected at +0.2%, Unemployment Claims expected at 246k. EURUSD is still around 1.1950, GBPUSD is trading below 1.35 and GBPEUR below 1.13.