Another weak day for Wheat, closing down -4.00 cents in Chicago, -4.25 cents in Kansas and -1.25 cent in Minneapolis. Weather issues seem to be forgotten, and finally, winter crop in the northern hemisphere are not doing too bad over the winter. A lot of traders tried to see a significant bullishness in USDA WASDE, noting (but it is not new) that it’s the first time in 5 years the overall stocks are down (aggregated wheat, corn and soybeans ending stocks will be down -4.08MT year on year). But there are still plenty of cereals around and wheat is by far the heaviest balance sheet. Soybeans rebounded +7.50 cents on better than expected NOPA Crush (166.382M bushels while 165.4 was expected on average), Corn was stuck in the middle once again with +2.00 cents. MATIF Wheat also suffered (closing down -€1.50) from the lack of GASC booking French wheat. Well, if traders don’t offer it, thy can’t book it, right? However, the lack of competitiveness of the French origin compared to Russia will become a serious issue at some point, especially if Russia uses more arable land (there is still a lot available) and output western-like yields. If France is struggling with Russia at 85MT, what will it be at 100MT? Algeria is still a cash cow but at some point, the economic sense will prevail versus the very active lobbying from French authorities and this market share will be eventually lost. New destinations are needed! London feed was down a single tick, very quiet market, priced out of imports, priced out of exports, with farm retention still. In Chicago, funds sold 5,500 Wheat and bought 6,500 Corn and 5,000 Soybeans

 

GASC Booked 295,000T of Russian wheat out of the 475,000T offered (60,000T of Romanian wheat were also offered at $204.85 FOB, not competitive). It was expectable, despite international market being lower, they had to pay more, and best FOB was +$5 higher (to $197) than previously due to a much stronger Ruble. They paid on average $211.92 CNF ($207.86 on the previous tender)… Since July 2017, they booked 4.015MT, including 87% of Russian wheat, second contender is far behind with 7% (Romanian wheat), then Ukraine (4%) then France (1%).

 

China sold 163,524T of imported wheat from its ageing stock, 12.73% of the amount offered. Tunisia is seeking soft wheat (92,000T), durum (75,000T) and barley (50,000T).

 

US Exports Inspections kept being weak on wheat, with 368.7kT it’s not going to be any good for the hopes to reach the USDA export target (26.54MT, unchanged in latest WASDE): 57% of the target is completed, so it is a tad in front of last year, so writing off hopes would be premature, however, it is behind long term average (61%) and pace need to increase rapidly. Corn shipments were also weak with 584.4kT, 52% of the 48.9MT USDA WASDE target (unchanged), while last year it was 55% and also the long term average is 55%. It needs a very pacey second part of the season, almost a record pace is now needed. If nothing happens in South America, we will for sure have a downgrade in the USDA WASDE. Well soybeans shipments were stronger in comparison, with 1,231.0kT, but still, even with the new export target (58.79MT, it was revised down -1.77MT) it’s only 25% completed so far, compared to 32% last year and 31% on average. The cut was most probably far from being enough…

 

No major move on currencies, EURUSD still ranging between 1.2200 and 1.2250, GBPUSD trading around 1.3575 and GBPEUR cross rate is also stuck in a range, trading around 1.1250. Chinese GDP expected tomorrow, +6.7% a tick lower than the previous). US Crude Oil Inventories expected down -1.4M barrels also tomorrow as NYMEX Crude is trading above $63.75 and ICE Brent at a $5.33 premium. So potentially funnier fundamental macro day tomorrow, quietness expected today.

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