Soybeans back above 900 cents, Minneapolis Wheat closing again above 600 cents… These markets are dynamite… TNT, watch me explode! Next USDA WASDE (10th of August) and next Stratégie Grains (9th of August) will be interesting to read with big question: will the heatwave downgrade the agronomic yields of European, Scandinavian and Black Sea crops, will the suitable barley for malting be down as much as -30%? Will US lack of rain start to take its toll? Will Southern Hemisphere start to suffer…
A lot of questions and not so much good answers are coming. German Farming Association slashed their forecast of winter wheat production by -6.1MT to 18MT!
Soybeans closed up +28.75 cents, dragging Corn and Wheat up. Corn closed up +5.00 cents and Chicago Wheat +7.25 cents (+8.75 cents in Kansas and +5.25 cents in Minneapolis). A bit of a respite on the other side of the Pond with MATIF down a tick but still established above €200. London Feed was down -£0.65 to £186.35.
Funds were on the buy side, buying 16,000 Corn, 10,000 Soybeans. Therefore, market will look for the CFTC COT to show heavy buying: 17,500 lots of Wheat, 54,500 lots of Corn and 18,500 lots of Soybeans.
Profit taking on the night session with Soybeans down -12.25 cents, Corn down -1.25 cent. Wheat is resilient: +0.75 cent in Chicago, flattish in Kansas, -1.25 cent in Minneapolis. European markets have opened quite strongly on the back of the German news, London Feed is still to trade but is offered at equivalent +£1.65. MATIF Wheat is quoting +€2.00.
Jordan failed to attract any offer on their barley tender. Groundhog day… Relax spec, fall-back scheme and payment terms and you’ll get a better deal! South Korea’s NOFI also aborted a tender rejecting all the offers in their attempt to buy 63,000T of wheat. Japan is seeking 104,968T of food quality wheat from US, Canada and Australia. Iraq is seeking 30,000T of rice.
BoJ chose the expected status quo, rates are still -0.10%. FOMC today will very likely chose the same position and will keep its rate stuck with the 1.75%/2% range. Will we see a third hike in 2018? Market still widely expects it in September. A smaller proportion of the market expects a fourth hike in December. As usual, it’s not done until it’s done! And tomorrow (busy schedule of Central Banks!) BoE is expected to raise its rate by +0.25% to 0.75%. Some argue with inflation getting controlled and the risk around Brexit, this would be premature. UK Manufacturing PMI was a couple of ticks below expectations to 54.0. ADP NFP are expected later today at 186k, Crude Oil Inventories at -2.6M barrels, ISM Manufacturing PMI expected at 59.4… Busy day indeed. EURUSD is trading around 1.1685, GBPUSD around 1.3115, Crude Oil $68.35 on the NYMEX with the ICE Brent a $5.45 premium.