Friday’s COT (COB Tuesday) showed funds have been buying a lot over a week: they reduced their short bet on Corn, Wheat (CME, Kansas and Minneapolis), Soybeans, Soybean Meal, and increase their long bet on Soybean oil. Corn is back to short -64,746 lots (+13,394), wheat to -70,980 lots (+6,344 lots) and soybeans to -11,115 (+23,653 lots). These are still significant shorts bets considering the period, more likely to show a bullish seasonality. Friday was essentially a usual softer Friday with funds selling back 3,000 wheat, 7,000 corn and 7,000 soybeans.
Over the week, the main move was clearly the Soy complex, -2.25% down for SoyOil and almost -4% down for Soybeans and Meals. ICE Canola in US dollar more or less followed but mainly currency drive (USDCAD +3% over the week). MATIF Rapeseed did not follow, probably more technically as European rapeseed crops are actually in a good shape going into the winter. Wheat indeed has been pretty dull over the week, slightly down in Chicago (-0.45%) and MATIF in USD followed in the shade (-0.47% in USD but -1.40% in EUR), slightly up in Kansas (+0.42%) and more down in Minneapolis (-1.50%). So, all over the place! London Feed Wheat was up, a lot of rain might be seen as too much, some floods have hit the UK indeed. Corn on its side was down -1.64%.
With Z5 contracts out of the picture, market will slightly be less technical but some end of month/quarter/year readjustment can surely happen. Night session is as quiet as a Monday should be… A bit stronger across the board. MATIF opened a tick higher.
US weather is still very hot for the season, a few stats have recorded record temperatures for the season. Once again no big deal if snow comes before freeze but dormancy of wheat seems to be dangerously delayed on some parts. Although situation was not damaging by any means in Brazil and Argentina, forecast are improving and it seems it’s going to gradually become drier.
It’s the time of General Assemblies for French coops. Although their message is subliminal, it’s pretty clear: they’re beginning to worry about the fact farmers are not selling. Indeed, farmers think they can wait more because it’s too cheap, but there’s cheaper than cheap in Black Sea and France need to export urgently, later will be too late especially considering record plantings and better conditions than last year (98% of the winter wheat is rated G/E in France). If winter is going well, farmers with a significant remaining stockpile could feel the pain. It’s tough to make them understand that even if it appears to them wheat is cheap, it might still be artificially inflated by a lower euro.
Russia need to export as well, so not sure the competition will decrease, there might be an export stampede on international market in spring! Watch out cash basis! Indeed, Russia exported from 1st of July to 9th of Dec 17.8MT of grains (13.4MT of wheat 2.8MT of barley and 1.4MT of corn), down -6% from last year.
MATIF spread with Chicago (on H6 expiries) decreased sharply to $11.83 on Thursday and rebounded Friday to $12.50. This has still some margin to decrease.
Taiwan Flour Mills bought 87,150T of US wheat in tender.
This is the week… FED is likely to hike its target rate, 97% of the economists expect it. So that would be a huge surprise if it’s not actually happening and EURUSD would rocket up. If it’s happening, a lot says that the information is already integrated in the market already. We’ll see but market really lost the habit of having a rate hike, last one was almost 10 years ago in July 2006 (where rate was brought from 5% to 5.25%). So, some care is needed while saying everything is integrated in prices already. The volatility of EURUSD is showing how nervous the market is… Not long to wait! EURUSD currently in the mid 1.09’s, being an awkward level, it will probably be bac on support or resistances by the end of the week: place your bets and fasten your seatbelt! Oil has opened the week lower as well, WTI is below 35.50.