USDA WASDE is always a day the fundamentals may matter… Or may not… Well, the April report is not usually the most exciting as it is the last one without the ‘new new’ crop, new crop data (crop 18/19) will come in the next WASDE.

On wheat, old crop ending stocks are raised by +2MT thanks to an higher adjustment of the beginning stocks in Middle East (+1.30MT) and lower Middle East consumption (-0.60MT). It is more or less explaining the full movement on the new crop, far from exciting: world ending stocks are raised by +2.33MT to 271.22MT, 36.50% of the use, 35.70% of the supply. There is still plenty of wheat around and market could definitely absorb a hit next season. From one year to another, world production was up +9.07MT and ending stocks were up +16.62MT: there is definitely a lot of buffer! To be noted, US use is cut by -0.82MT (to 26.58MT), US exports were unchanged (25.17MT). EU use is raised by +2.15MT to 130.9MT and exports are cut by -1MT to 24MT.  Russian exports are raised by +1MT to 38.5MT. Nothing exciting, nothing bullish by any means. Market reaction? Wheat ended up +1.25 cent in Chicago, -1.00 cents in Kansas and flat in Minneapolis. On the other side of the Pond, MATIF was down a couple of ticks and London tick a single tick.

On corn, old crop ending stocks were decreased by -0.96MT as there was a beginning stock adjustment. It hasn’t helped the new crop for sure, but nothing dramatic overall: ending stocks are cut by -1.39MT to 197.78MT, 18.50% of the use, 19.09% of the production. The world production took a hit, it was expected: -5.67MT to 1,036.07MT, mainly driven by Argentina (-3MT to 33MT) and Brazil (-2.5MT to 92MT). This was offset significantly by lower use as US use was decreased by -1.4MT (mainly on feed) to 318.53MT, Argie use was cut by -1.2MT to 10.3MT. Overall, world use was cut by -5.24MT, explaining why the picture is far less worse than what it could have been. US exports remained unchanged (56.52MT). market reaction? Pretty shy! Corn closed down -1.50 cent.

Finally, Soybeans, virtually nothing on old crop and new crop world ending stocks were cut by -3.60MT to 90.8MT, 26.55% of the use, 27.12% of the production. World production is cut by -6.05MT to 334.81MT, led by Argentina: -7M to 40MT, a -17.5% cut from one month to another. Brazil, we knew that, was far from offsetting this significantly as the production was raised only by +2MT to 115MT which is quite extraordinary anyway. Argie crush is cut by -1.78MT, helping to offset the cut of world ending stocks. US exports remained unchanged by the way. So this is the most bullish part of the report but market had anticipated this already, one could argue that even after the report, Soybeans above the $10 mark is too expensive as supply remains quite amble. Soybeans closed up +3.00 cents.

To conclude, nothing massively excited. For Wheat, the new trend will depend on the new crop, clearly. Next WASDE will give the first assessment. On Corn, USDA chose to kick the can down the road one month on the US balance sheet at least as the exports are still a big challenge, so the picture was probably worse than it was. But the positive momentum is helped Soybeans for sure, a cut in US exports could ease a little bit in the next coming month, but Argentina is clearly worrying: is that over? Trade war between US and China could also bring volatility.

 

In Chicago, funds bought 4,000 Wheat and 5,500 Soybeans and sod 6,000 Corn. Being the CFTC COT cut off, market will obviously look for heavy funds buying action: funds have bought an expected 9,500 lots of Wheat, 53,000 lots of Corn and 16,000 lots of Soybeans.

 

Soybeans are continuing their rebound on the night session, +7.50 cents. Corn is pretty quiet, lagging far behind with +0.75 cent and Wheat is softer: -2.00 cents in Chicago, -0.50 cent in Kansas and -1.25 cent in Minneapolis. So far EU market are expected flat, but they could tick down, especially with lower US dollar.

 

Japan is seeking 128,543T of food wheat form US, Canada and Australia. Iraq is seeking 50,000T of wheat and is taking time to make her minds up as participants have been asked to extend the validity of the offer. Australian wheat is in the lead with $300.75 CNF. Egypt GASC is seeking soybean oil and sunflower oil.

 

US PPI and Core PPI were better than expected yesterday with both +0.3%. US CPI and Core CPI expected today at respectively flat and +0.2%. UK Manufacturing production is expected at +0.2%. EURUSD is trading higher at 1.2365 and GBPUSD at 1.4210. US Crude Oil Inventories are expected at -0.6M barrels, as NYMEX Crude is trading just above $65.30 and ICE Brent at $5.45 premium.

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