Reversal Tuesday but nothing really exciting, pretty boring market actually… US weather is still ok, despite a few flooding that could disrupt logistic and potentially hurt some fields but no major concern just yet. Funds bought 3,500 lots of corn, 3,000 lots of wheat and 1,000 lots of soybeans. Quiet night session, soy complex is down, corn up and wheat sideways.
MATIF ticked lower yesterday and did not really find support from the lower euro. It continues ticking lower this morning despite a lower EURUSD.
EU Cleared 337,000T of soft wheat export licenses last week, bringing the total of the season to 12.4MT. Reaching the USDA’s target is becoming tougher and tougher… Indeed, total wheat has only reached 42% of the USDA’s target but while 50% of the marketing year has elapsed already. Corn imports are reaching 6.6MT this year (405,000T last week) it is 89% more than same time last year and this might continue to increase steadily as India is seeking 320,000T of non GMO Corn. Barley was a tiny 20,000T last week, need now 102,000T per week to reach USDA’s target. Weather in Europe still mild and wet, if there’s no winter kill in February, this is a very good start of the crop! Black Sea is becoming really cold, snow cover is small but is there, so, so far, so good, but to be monitored closely. UK AgroConsult raised its Ukrainian export target for wheat to 14MT (+2MT) and barley to 4MT (+0.4MT), corn exports are left unchanged to 16.5MT. Market chatters: a French brokers were panicking yesterday fearing the Ukrainian wheat crop will collapse by more than 20MT and MATIF would go up by 30%… So far, no one bite the hook!
Weather is becoming favorable in South America, rains is showering parts that should receive water and it’s dry where it’s supposed to be dry. Still in the region, Argentina Government is so far disappointed with Soybeans export data: they were expecting a stampede after the cut of the export tax.
South Korea bought 65,000T of corn from Brazil (June shipment) at $180.99 CNF while there was no purchase on the feed wheat tender from NOFI who bought 13,000T of barley. After the super tender from Ethiopia, market is talking about Zimbabwe, they are said to be planning to import 700,000T of corn due to the South African crop badly hurt by El Niño effect. After rumors, GASC confirmed the 3 vessels on hold in Dunkirk were due to administrative issue only, no dollar liquidity and obviously no due to ergot potential infection. Talking about ergot, the change of the percentage is under discussion.
Overall, crop sentiment is still bearish, careful to a catalyst of short covering as funds were shorter than expected but on top of that, macro is coming back in play with a bearish pressure… EURUSD is still down, below 1.0750 now. It’s more the dollar up actually, investors are flying to safety. The focus on China seems to be back, worries of a slowdown is still present. Also conflicts in Middle East could put some pressure on oil but on the other side Russia is producing at a record pace to try to maintain decent cash flow with these low prices.