Market was down in thin volume (soybeans volume were decent though), waking up from a long week end. Winter holiday mood is kicking off, and finally there is some nice snow cover appearing in the US (especially in Texas, Oklahoma and Kansas) which will nicely protect the wheat from freezing. Elsewhere in the US precipitations are also beneficial. Also good news on the worrying part of Brazil (Mato Grosso), it seems decent rains have hit the crops. Market seems slightly shy though and want to receive the confirmation the weather pattern is becoming durably more favorable.
Still on the weather side, in Black Sea, temperatures are beginning to be very winter compliant so the snow cover will be highly needed and there’s still a bit lack of it. Meanwhile in Western Europe, feels like spring and barbecue time… We’re heading towards one of the hottest December. Floods in the UK are damaging a few winter crops fields but nothing major as far as crops are concerned.
After Soybeans moved down -1.97% last week, Soybean Meal -4.27%, Corn -2.67% and Wheat -3.95%, it was expected to see a Commitment Of Traders red across the board. CFTC COT was published yesterday indeed and from 15th to 22nd of December, funds were clearly on the sell side. Wheat more than doubled its short position and is now short -82,543 lots (selling -43,437 lots during the week). Corn sold -18,990 lots during the week to reach a short of -67,167 lots. Soybeans movement was only small, only -2,162 lots were sold and the short is now -31,681 lots. Kansas Wheat, Minneapolis Wheat, Soybean Oil, Soybean Meal, funds were also on the sell side. Picture as of Friday (well Thursday actually), will be pretty similar as funds have sold -2,000 Corn, -2,000 Wheat and -10,000 Soybeans.
No surprise on US Exports inspections, the two data to focus on for the rest of the campaign is clearly wheat and corn, so far respectively 11.757MT and 9.121MT have been shipped out so this is only 54% and 21% of USDA’s target, time is running out!
Argentina wheat harvest is reaching 69% with concerns of quality, proteins is said to be low and some of the milling wheat seems to be border line feed. Still in Argentina and the export keenness, there’s some talks about poultries in the US buying some Argentinian meal, this would be another bad news for US market. Indeed 90,000T of meal seems to be on their way to Virginia.
Very low volume on the MATIF yesterday, less than 10,000 lots traded, clearly holiday move, very few traders at their desk and traditionally there’s very little new contracts to hedge on the industrial side the last week of the year. Market was on the downside, helped by a lower Chicago and there was no EURUSD move to disturb. So not much to say really.
Seems like it’s heading towards a traditional Tuesday reversal. Night session is decently up on Soybeans and Wheat, probably some reaction to the COT, a bit of short covering and profit taking. Only Corn is ticking lower. MATIF has opened higher, basically more or less retracing the yesterday’s gains.
Jordan is seeking wheat, 100kT, it comes after the cancelled the previous tender. Would be surprising to see them managing to book a cargo the last week of the year considering their historical success… Morocco is seeking 360kT of milling wheat and 315kT of durum, both US origin.
No major move on the EURUSD, on the upside this morning though, approaching 1.10, but main currency focus will certainly be Ruble, hitting new lows (more than 72 rubles needed for 1 USD). Mechanically it is increasing the Russian export tax and it’s beginning to reach a level which is contradictory with the appetite of Russia to export. Yesterday, deputy prime minister confirmed there was no intention to decrease imports to Turkey. On macro side, Chinese PMI is expected later today and thought to have contracted for the fifth month in a row. China is heading for its lowest yearly growth for the last 25 years…