Shy wake up after the volatile week last week. Night session in Chicago is so far very quiet (clock went back one hour). Will market take a breather this week? There was very little news this week end. Market is at the mercy anyway of weather and technical so these are very difficult to predict. Wheat and Soybeans are the stars while corn is a follower, not really knowing which of his buddy to follow, therefore, it’s very boring on corn, stuck around 380, implied volatility is going down to very low levels.
CFTC’s COT official values as of Tuesday were published and virtually no change on corn and soybeans both long, 33.6k lots for corn and 2.376k lots for soybeans. Obviously, it’s not coming as a surprise, the short covering in wheat has been pretty drastic, +19,002 lots: finds are now short ‘only’ -33.264 lots, this is much more decent. The end of the week have seen an estimated 9k lots of wheat contracts purchased so they’re estimated to be only short -24k lots as of Friday night. Enough short covering or not?
Market is not expecting any big surprise with the NASS crop progress report tonight, corn harvest is seen at 85% and soybeans at 91%. Weather has been good over the wheat plains, reestablishing soil moisture, good for emergence just before the dormancy. Well, some find a way to say it has already damaged the crops, sounds like more a bullish game from structural long speculators, I mean farmers… Weather in south America is seen as beneficial as well for the crops.
Market will digest the GASC purchase as well. It’s a reminder that US wheat is not competitive by any means on international markets but now Russian wheat is too expensive. Probably some interesting cash basis movements to expects in the next few weeks. French wheat finally made it for one vessel but it this enough? And will the market hold its excitement? French wheat need to find competitiveness elsewhere and tries hard, apparently 96kT of French wheat made it to Mexico so far this marketing year while it was only 24kT last year and 31kT the year before. But with a record crop, much more will surely be needed.
EURUSD is back up above 1.10 with no real news over the week end. 1.10 is a psychological level and a news will be needed to go back in the 1.08/1.05 range or surge back to 1.14. FED, ECB and Greece might bring some volatility in the next couple of weeks.