Busy week… EURUSD +2.78% on ECB news, ICE Canola +2.47% despite the correction on Friday’s StatCan, Soybeans +3.71% on technical, short covering and bargain purchases, Soybean Oil +10.32% on the ethanol mandate news, Corn +3.88% on short covering and technical, CME Wheat only +1.15% but bumpy (Kansas +3.00%, Minneapolis +1.78%). In the other side of the Atlantic, basically it was a currency market. MATIF Wheat followed Chicago in USD +1.08% and was therefore down in EUR but there’s still some downside potential as the H6 MATIF/CME spread closed at $16.79/T.
COT official data as of Tuesday showed there was some obvious short covering from funds, they decreased their short position on corn and soybeans, quite significantly. Corn was short -78,140 lots (covering +21,668 lots during the week) and Soybeans short -34,768 lots (covering +18,157 lots during the week). Only Wheat increased its short bet by -29,971 lots to -77,324 lots short. Despite this short covering, the aggregated short position of Wheat, Corn and Soybeans is over the -190,000 lots short, which is pretty big considering the season. Adding Minneapolis Wheat (short -2,946 lots) and Kansas wheat (short -23,798 lots) to the equation is bringing the total around the -215,000 lots short. However, from Wednesday to Friday, estimates show the short covering continued, wheat buying 9,000 lots, corn 8,000 lots and soybeans 17,000 lots. The only long bet was Soybean oil, long 40,538 lots. The surge of more than 10% of Soybean Oil on the ethanol mandate news surely helped funds to double the long bet from one week to another. On the other markets, sugar is still at a record long to 176,968 lots.
Else, no major news over the week end, weather has been wet enough in South America, a bit of rain also in Black Sea, dry and pretty warm for the season in the US and in Europe. There’s no big deal at the moment: if wheat in the US, Europe and Black Sea Wheat have a delayed dormancy, this is not a problem if snow is coming before the freeze. Because indeed, in some places, it look like it’s spring already!
Quiet night session so far. Soybeans and meal down while oil still up. Corn down while wheat up.
MATIF is under pressure by a higher EURUSD and hit a two month low. Euro fundamental exposure could kick back in if farmers and coop, non-exposed to USD, could were to panic and realize that prices above 180 euros were a bargain for them considering the record crop in France and Europe, the record planting in France, and the very good conditions. Also, some end of years bills will certainly create some cash flow needs. Indeed France Agrimer said wheat planting are almost over and reaching a record level, also barley planting are done and corn harvest is over.
In Brazil, after Safras & Mercados estimates of the Soybean crop of 100.4MT, Celeres produced its estimates: 101.9MT. Meanwhile, FC Stone is at 98.8MT.
After multiple aborted tenders, Jordan has signed an agreement with the United Arab Emirates government to secure food supply and in particular wheat and barley. By the way, deadline of the Jordan wheat tender is tomorrow. Morocco is said to have purchased 150,000T of local wheat for the production of the subsidized flour. Russia’s Deputy Agriculture Minister confirmed the wheat exports to Turkey won’t be impacted. However, Turkey is said to check alternative anyway towards Ukraine. Ukraine said on their side they are ready to “double or triple” exports of grains and oilseeds to Turkey. Some nervousness around cash basis to expect!
EURUSD started the week on a softer not, market may realize that although the ECB move was disappointing, it’s not bullish euro by any means. Market will now focus on next week FED’s meeting. In Greece, parliament has voted spending cuts, tax hike and pension reductions. Will the story repeat itself?