Friday finished by a correction on Soybeans, printing -22.75 cents while Corn and Wheat were less than a couple of cents lower with no big swing. Funds sold 1,700 lots of Corn, 9,000 lots of Soybeans and 300 lots of Wheat. Nothing major on the other side of the pond with just a few ticks on the downside. Let’s have a look at the week instead. This was a kind of trendless week on Chicago Wheat (up +0.37% over the week), Kansas (+1.02% on the week) showed a bit more strength on spreading action with Chicago but Minneapolis was clearly the most significant move (+2.23% over the week), fundamentally driven, as there are some worries about the quality in Canada and actually, the spread with Chicago is at a 3 year high, very close to $1 per bushel. Much more fun on the other side of the pond, MATIF finished the week up +2.04% in US dollars. Market really struggles to find the correct equilibrium as the French issue is happening in a very different environment as Romania, Bulgaria, and UK will be able to provide French millers and starch industry (especially, as far as the UK is concerned, if the Pound Sterling keeps weakening as GBPUSD is back below 1.30 and EURGBP cross-rate still much higher than the post Brexit vote, above 0.8650) while Black Sea will be flooding international markets. After its 7 first ever sessions being up, CME EU finally corrected and ended up the week up +2.03% in US dollars. This was probably the main exciting thing of the week, seeing the CME EU Wheat finishing +€1.50 above MATIF. There’s an obvious disequilibrium indeed between the bids and offer, the hype of trading the new contract is biased on the buy side and there is probably much less appetite to go to the delivery as a seller but at some point, the arbitrage will be there and will be done. So the abnormal situation will probably help the liquidity of the contract and the physical deliveries. Not much excitement either on Corn, -0.15% on the week, the harvest is going on and first yields are very encouraging but this is only the start and obviously, outstanding fields are often harvested first. So market is a bit in a wait and see mode. Meanwhile, MATIF Corn was up as after wheat and barley crop where hit by wet weather, corn in France is hit by dryness and winds. Soybeans have been very technical this week (-1.14% on the week), although the weekly move seems small, it’s be pretty volatile! Basically the level of 990 was a good enough resistance, X6 failing to close above on 2 occasions, and the strength to spike to $10 has not been found just yet. Also, same as Corn, harvest is starting and it seems it could be even better than expected so S&D cannot be ignored, especially considering the uncertainty on the demand side (final old crop crush has to be decreased). Also to be noted SoyMeal was down -3.32%, SoyOil up +4.16%, ICE Canola +2.78% in US Dollars (China and Canada resolved their trade issue related to the quality), MATIF Rapeseed up +1.50% in US dollars.


On the CFTC’s COT, funds increase their positions. Indeed, they increase Corn and Wheat short by respectively 14,652 lots and 1,827 lots to a respective 161,592 lots and 127,265 lots. They increased their long position by 11,444lots to 90,433 lots. The opposite strategy they have between Corn and Wheat is quite interesting and at least one of the both will most probably backfire as harvest is going on. On notable thing on this CFTC’s COT is that Reuters was completely off their estimates: the estimated that funds bought across the board for a total of 2,450 lots of Wheat, 10,950 lots of Corn and 23,000 lots of Soybeans. Also, despite funds selling What and Corn, it failed to put real pressure on the market as, in a week ending Tuesday, Wheat and Corn were actually up respectively +0.74% and +2.64%. From Wednesday to Friday, Funds are expected to have bought 200 lots of Wheat, sold 8,400 lots of Corn and sold 17,000 lots of Soybeans, bringing the cumulated short to 224,000 lots with now only 73,000 lots long of Soybeans.


Rebound on Soybeans this morning, a bit against fundamentals as drier weather for the next 10 will enable harvest to improve certainly quite nicely and make up for the delay. But after the correction from 990 cents, market needs to take a technical breather. And we’re talking about no more than 5 cents, so nothing actually drastic this morning. Wheat is also on the higher side but just for a little cents why Corn is just ticking down. Nothing much to expect from MATIF and CME EU opening just yet, traders are still asleep… Today after the close the usual crop ratings and progress, market won’t expect big numbers on the harvest has it’s been pretty wet. Earlier, there will be the US export inspections: soybeans will be under scrutiny as more than 1MT is needed and the level has been only reached twice the past 10 weeks. Corn also need slightly more than 1MT and wheat would do just fine with 0.5MT.


Jordan is tendering to buy 100kT of hard wheat, they managed to buy 50kT on the 30th of August, at around $208 CNF. They are also in for 100kT of feed barley, latest try (2nd of September) have been unsuccessful and latest purchase was on the 31st of August, 50kT at $180.50 CNF. Tough tender terms are still an obvious issue in Jordan tenders.


India is decreasing its wheat import duty from 25% to 10% to stimulate imports following a disappointing local crop. In Saudi, SAGO will now also be in charge of barley tendering process, taking it over from the ministry of finance.


StatsCan updated it forecast and there was not much surprise. Canola is seen at 18.31MT, marginally higher from last year (18.28MT), the decline in areas was totally compensated by a higher yield. Spring wheat is seen at 20.6MT, up +3.9% from the previous crop, mainly due to higher yields. Drum is expected at a record of 7.3MT, up +35.7% from last year. However, StatsCan pointed the fact there’s a fusarium issue on wheat. Soybeans are pegged at 6MT, unchanged from last year. Finally, corn is seen down -2.9% from last year to 2.9MT. On the fun side, Canadian Prime Minister Justin Trudeau was so happy of the resolution of the canola issue with China that he posted on Twitter a mustard field!


Oil is starting the week in positive territory after the Friday debacle (NYMEX Crude lost -3.97% on Friday). A bit of technical rebound there to go back to test the psychological level of $45 and this is also fuelled by Algerian energy minister who said “We will not come out of the meeting empty-handed”. But so far, markets is convinced there will be no significant outcome coming from the OPEC meeting. Meanwhile, Saudi’s Aramco listing is still in the pipeline and CEO said it will happen in 2018 and they are investigating to list the company in New-York, Hong-Kong or London. NYMEX Crude currently trades a few cents below $45 and ICE Brent has a $46 handle.


Slow start of the week for the currencies. EURUSD is marginally higher, around 1.1225 and GBP USD lower, in the mid 1.2950’s. Not much to follow today, German IFO will be the highlights, expected at 106.3 (+0.1).

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