What could have been a day on the downside became very quickly a rallying day. One word. Russia. It is obvious, and if market discounted it with the lack of official news the past few days, he’s very naïve… Russia won’t have any solution but to control imports, one way or another. USDA WASDE production is pegged at 68MT, with a domestic demand at 38MT, the 35MT export would make the country enter in a danger zone, decreasing the stock to use ratio to 12.68%. GASC bought 350,000T of wheat the other day and 290,000T was from Russia, so exporters are not giving any sign of reluctance to sell and price is still very competitive. Russian Agricultural Minister said they will discuss the grain market on their routine meeting on the 3rd of September as, at this pace, exports could reach 30MT, which will not be acceptable, especially considering the harvest might not be as good as they expect, USDA is at 68MT, but Russia is working still with a figure close to 70MT. Wait and see… But Wheat surged, ending +17.50 cents in Chicago, +20.50 cents in Kansas and +15.00 cents in Minneapolis. In Europe, no exception, MATIF Wheat moved up +€5.25 as EU would directly take profit of Russian export restriction, but could face some issue, it’s not like it’s going to be a bumper harvest! Production will be down -14.18MT year on year and for example, France export to Algeria are at level close to records. At some point, it won’t add up! London Feed followed, closing up +£4.95.
On the other side, Corn and Soybeans were relatively quiet and ended up respectively by +0.25 cent and +2.75 cent. Funds bought 5,000 lots of Soybeans, 11,000 lots of Wheat and sold 1,000 lots of Corn.
Night session is green across the board: Soybeans up +4.75 cents, Corn +2.25 cents, Wheat +8.75 cents in Chicago, +6.00 cents in Kansas and +6.25 cents in Minneapolis. EU markets have opened on a very strong note, +€3.25 for MATIF Wheat and +£3.80 for London Feed Wheat… On the same Russian story…
Ethiopia is seeking 200,000T of Wheat. GASC has bought 21,500T of Sunflower oil and 10,000T of soybean oil. Jordan strikes again and managed to make a purchase, wheat this time, 60,000T at $258.90 CNF.
No drastic effect on the yesterday’s better US quarterly GDP (4.2% versus 4% expected), EURUSD is still trading around 1.17, just below though, around 1.1680. GBPUSD is trading just below 1.30. After fighting with 1.10, GBPEUR cross-rate rebounded and is now trading around 1.1125 as the UK is now threatening the EU not to pay the £39b divorce bill if there’s no deal. If EU could arguably think the Brexit is not managed properly by the UK, surely they did not expect them to take a no deal slap and say ‘thank you here is the £39b cheque’?
US Crude Oil Inventories were down -2.6M barrels, Crude Oil is trading just below $70 on the NYMEX and ICE Brent at $7.75 premium.