A crazy session in Chicago yesterday. Market was clearly on its way to continue the bearish momentum of the day before helped by a stronger US dollar. But we saw the perfect demonstration that at this time of the year, considering the significant amount of short, market can react very quickly to any bullish news and go from -7.25 cents down to +5.25 cents up (example for Corn H6 but the movement was similar on Soybeans, wheat followed but did not finish at the top, just marginally up). In the afternoon, it was reported indeed that it was too hot and dry in Brazil (Mato Grosso seems to be the main concern) and market panicked, decided to take profit from the day before and cover short. It sounded like a scapegoat really, short are nervous, although the mood is clearly bearish, S&D heavy, it’s a tricky period: market is very short, the lack of snow and the higher temperatures in the norther hemisphere are creating some nervousness and some shorts are looking for the first bullish signal to get out of the position and lock gains, just a little spark is needed. Fund bought 8,500 Corn, 12,000 soybeans and were even on Wheat. 

US export sales weren’t particularly bullish: Wheat was stronger than last week to 320,000T but it’s still a weak level, market was not really expecting better though. Weak but to be fair higher the USDA’s required pace, but the pace is unlikely to maintain and traditionally decreases in spring, so wheat should do better now because doing better in April May is more unlikely. Corn was below expectations to a decent 677,600T, but it’s always tough after a very good week (last week was 1,097,100T) to look good. And despite the lower recent USDA’s export target, Corn need to go at roughly 730kT per week… So bearish story is possibly not over just yet. Soybeans were on line with expectations to 1,023,800T. On the other side of the pond, EU cleared once again a very good amount of soft wheat licenses, beating the season’s top of 2 weeks ago: 1.1MT, bringing the total to 11.4MT this season. Barley was marginally lower than last week to 235,000T (season’s total of 5.1MT) while corn is getting in at a strong pace, 462,000T this week, +79,000T from last week and the season’s total is now 5.6MT. It will be interesting to see at the end of the season if wheat is impacted negatively by the decent corn imports.

 

It is still warmer than usual in the US and also in Europe. Black Sea seems to have the most winter compliant weather pattern. El Niño is said to be peaking and effects will gradually disappear.

 

Informa lowered its forecast of 2016 US corn plantings to 88.926M acres, -1.3% from their previous estimates but this would be still better than 2015 (+0.137M acres). Soybeans planting are seen at 84.537M acres, -0.9% from their previous estimates but also better than 2015 (+1.9M acres).

 

Stratégie Grains came with a bullish news but at some point, expecting a record every year is naïve… Firstly they increased the EU wheat exports by 800,000T to 27.6MT. One can be skeptical about it, might have some surprises at the end of the season. But it would still be -4.9MT lower than last season. Ending stocks are lowered by -1.4MT to 18.4MT. Next year lower crop! After the 150MT this year, it will be ‘only’143.6MT according to them. Yay -6.4MT can be seen as bullish I guess but everything is relative, this would still be an incredibly good amount! And if everything is more normal next year, they see a Corn crop back to normal to 64.9MT (+7.6MT compared to this year). The bullishness really depends on the angle we’re looking the data at. EU wheat has done 3 better crops in a row…

 

Main currency news is obviously coming from Argentina with the confirmation of the lift of currency control, newly elected president Macri want to create incentives for exports and attract investors. The currency, peso, obviously collapsed more than 25 and from 9.80 ARS to 1 USD, it’s now 13.30 ARS to 1 USD. Time will show if it’s creating an uncontrolled inflation. Grains exporters agree to sell $400M worth of grains per day for the next two weeks. Grains exporters agree to sell $400M worth of grains per day for the next two weeks: repeated voluntarily… This is huge indeed! This is, on current Chicago prices, 1.239MT of soybeans of 2.720MT of corn! They are going to flood the market… It’s said that the stockpile of soybeans waiting for the devaluation to be sold is something like 13 to 15MT.

 

Night session is quiet, Soybeans small up, Corn small down, wheat a bit more significantly down, but it’s a bit all over the place, Chicago is leading, Kansas just behind but Minneapolis slightly up. MATIF wheat has opened quietly, just a tick trading a tick higher. EURUSD is finding some support on 1.08 and seems to be keen on taking a breather.

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