Funds bought 8,000 Corn, 3,000 Wheat and 1,000 Soybeans yesterday, a short covering day after the USDA’s WASDE report mostly seen as neutral. It seems some are just bored, bored to be short. Even if the fundamental mood is bearish, we’re at a stage we need to wait a good couple of month to have reliable bearish news for the new crop and meanwhile, the risk of bullish news is clearly there. Especially on weather. Current weather in the US or in Europe is not damaging by any means, it’s actually pretty good, nicely wet, not too cold. But snow is needed before freezing. So a bit of risk off, especially with the year-end approaching. Soybeans, Corn and wheat finished up indeed last night, surely soybeans and corn benefited from good export sales but wheat was just acting as a follower. Very technical day actually. 

US Exports sales were once again pathetic for wheat, well below expectations to 225.1kT, -213kT from last week. The bad news was offset by a very strong week in corn and beans, respectively 1,097.1kT and 1,454.5kT. There was good Chinese demand, most of the soybeans will go to China indeed. In Europe, it would have been difficult to do better than last week for EU Export Licenses, after the pacey 1MT of soft week last week, it’s only 563kT this week, bringing the total for the season to 10.3MT. This momentum need to keep up. On its side Barley was better than last week to 241kT (+161kT). EU continues to import a good amount of corn, 383kT last week, +72kT from last week.

 

Finally Z5 is out of the board, no more spread, no more manipulation… Final contango was 12.5 euros, not enough to pay the quarry which over 3 months should be at least 16 euros. MATIF H6 will be now living its own life. And yesterday, the spread with Chicago continued to reduce, the pace actually accelerated, when MATIF closed it was back to $11.83. This is obviously to a lower dollar and a rally in Chicago so it might rebound, any sustainable decrease should be done, considering the situation through a lower MATIF in euro. There are some concerns about the bird flu in France, especially in south west, but it seems unlikely the issue will reach the scale of the recent US crisis.

 

Night session is giving away some gains on corn and wheat (typical Friday’s profit taking?) but is stronger on soybeans. Chinese demand is good and soybeans are actually cheap, so probably a bit of bargain buying. MATIF opened lower and trades a couple of tick down in thin volume.

 

Reuters on its side have heard that 500,000T of wheat have been sold to Algeria’s OAIC, between $195 and $197 CNF. One interesting rumor suggested that some Argentinian wheat made it (seller would be Bunge). Argentinian exports seem to pace up drastically thanks to the new government Policy. Else, the usual Glencore, Granit and InVivo are said to be part of the deal.

 

EURUSD went down yesterday and is mostly unchanged today. Still very nervous about the next week: hike or no hike? Market is widely expecting for the hike this time, a disappoint would certainly bring back EURUSD to 1.14/1.15, 97% of the economists are convinced it will happen… But mind the black swan event! Other currency, South-African Rand is plunging to its lowest level ever (around 15.75 ZAR for 1 USD), South African economy is hit by lower metal prices and has been recently downgraded by Fitch. The Finance Minister has been removed from its job. Argentinian Peso also hit a record low to 9.75 ARS for 1 USD, this will surely push farmer to sell, adding to the benefits of export taxes. Brazilian Real is the exception, not following the trend but stays at low levels (3.80 BRL for 1 USD). Also Russian Ruble is on a bearish trend, approaching the low levels of August 2015, currently close to 70 RUB for 1 USD. Finally, oil finds no bottom, keeping digging,… It’s been Brent’s turn to show up below $40 and WTI is trading below $37. International Energy Agency seems to see no significant price recovery until the end of 2016 as OPEC will keep the tap opened.

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