Typical Monday yesterday where the excitement began to start pretty late into the session. Last week the rebound of Soybeans was 3.71% and 10.32% for SoyOil, Monday has been the time for profit taking. Soybeans F6 finished down -1.16% and SoyOil -1.78%. SoyMeal have been dragged down as well. Same pattern for Corn. Wheat actually resisted pretty well. Indeed, it’s been sold enough last week, a bit more news are needed to se some fresh new significant short coming into wheat. Funds went back on the sell side obviously. They sold 7,000 corn, 2,000 wheat and 10,000 soybeans.
Night session is continuing to put pressure on the soy complex, quite nicely down for early trade. Corn is marginally up and wheat marginally down. MATIF is unlikely to open with a big movement, a couple of ticks down are likely.
Weather in South America is neutral really for Soybeans and Corn, nothing much to say. Meanwhile in the US, temperature are still above normal.
US export inspection were as expected for Corn and Wheat (although wheat was expected, it’s on the lower range of expectations and the amount stays ridiculously small), above expectations for Soybeans. Alongside the sales, it’s pointing the same thing every week though: exports are lagging… It’s beginning to be dangerous. Next USDA’s WASDE report will obviously focus on US exports, EU exports and Australian production. Still on exports, in France, after Soufflet reopening Socomac, one of the exchange silo, it’s now Senalia’s and Nord Céréales’ turn. After a few good week of exports, there’s some room in the silos, it’s about time, we’re 6 moths into the crop,…
MATIF Wheat was up yesterday, mainly driven by a lower EURUSD. The close was 1.50 euros from the highs on EURUSD coming back from the lows and also, it seems that any rebound is now meeting some decent selling action. Wheat MATIF closed yesterday, it was $15.83 above Chicago, it seems the market is finally willing to reduce the spread, bit by bit.
In Russia, cash basis are going down, there’s a bit of concern about Turkey. Although it’s been said there won’t be any ban of wheat exports to Turkey, Turkish seems to be reluctant to sign new contracts, finding the execution could be tricky, and there’s a lot of chats between Ukraine and Turkey. A loss of Turkey flow combined to huge availabilities could be more damaging to the Russian cash basis. Russian exports were down -21.5% from last week, but Ukraine also, -19.4%. Next GASC tender, we might see some very aggressive offers!
EURUSD was down sharply, market is very nervous and is likely to stay volatile until the FED’s meeting next week. Also, last week-end in France, there was local elections and Eurosceptic did a high score. Eurosceptic parties in EU are slowly moving towards being as strong as main right-wing and left-wing parties. On a longer term, this could create issues, but moves are slow as European, national and local elections are scattered over years by definition. And before that, main structural issues for Europe remain Greece and Britain. Greece has 4.503 billion euros of debt to redeem by the end of the year, 8.137 billion in Q1-16 and 6.363 billion in Q2-16, so trouble might be far from over. As per the Brexit, Cameron seems to be squeezed in an uncomfortable situation. Public opinion was clearly against engaging military action in the Middle-East, but without doing so, EU would have probably refuse to do any significant compromise around the Brexit negotiation: “You cannot have it all Dave” was probably the message. So he did an arbitrage, have better compromise from EU but a worse public opinion, time will show if the choice was the right one. But now, in Brussel, Strasburg and Berlin the idea of Britain leaving the EU is actually taken into account in scenarios, Britain leaving the EU is not seen as a remote possibility. Also, David Cameron is clearly not helped as his own camp is scattered over the ‘pro’ and the ‘against’. An interesting year to come.