Market was still digesting the information given on Tuesday. Bullish? Bearish? Nothing change? Short covering or not? Funds bought 5,000 Corn and 5,000 Soybeans, they sold 3,000 Wheat. Market finished higher on soybeans and corn kind of respecting the WASDE outright logic and the rebound faded on wheat. Spring seeding are likely to have more effect, it’s really early to assess the Crop 2016 and the US balance sheet! Corn did not really care about ethanol stats: production was up 7,000 barrels per day last week but stocks went up 246,000 barrels. MATIF also fell yesterday, following Chicago and higher euro added more pressure.
And MATIF continued to sink today on higher euro, France Agrimer data and lower US markets. French farmers and coops are beginning to panic as well, they needed some cash. One can be upset! They’ve been warned! With a such wheat crop, €185 was really decent! FC Stone pointed the correlation between USDA EU carry out and EU Wheat price is telling us the fair value of MATIF K6 is €159… On the other side of the pond, night session was quiet and soft. Soybeans and Corn small down while Wheat rebound kept fading.
US export sales were in line with market poll for wheat and soybeans, respectively 290,600T and 1,127,400T. Corn exceed expectations with 669,300T.
2015 in South Africa was the driest since records have started in 1904. No wonder why corn crop took a hit (it’s seen at 8MT only by USDA, it’s been downgraded -4MT in the January WASDE). Rosario grain exchange said Argentina will harvest 23.8MT of corn, raising its previous forecast by +3.6MT. This is to compare to the 25.6MT expected by the USDA. Wheat and soybeans aren’t moved, respectively pegged to 9.6MT and 55MT (to compare to respectively 10.5MT and 57MT in the WASDE). Will Rosario bump up its forecast or will USDA downgrade its? APK Inform sees wheat crop in Ukraine to 58.5MT
There are rumors cash basis for corn is on fire and there some Argentina corn sold in Brazil.
New bird flu outbreak in France, still in the South West but outside the restriction zone. Authorities are fearing this is going to spread. Still in France, France AgriMer sees French intra EU wheat exports to 7.045MT (down -0.44MT compared to their previous estimates) and to third country at 11.3MT (down -0.07MT compared to their previous estimates). As a consequence, French ending stocks are raised +0.6MT to 5.8MT.
Jordan cancel its tender, it’s said they’ve received zero or one offer. Tunisia on its side did buy 92,000T of soft wheat at $186.97 CNF on average (March to April shipment), 109,000T of Durum at $280.68 CNF on average (February to June shipment) and 50,000T of barley at $179.13 CNF on average (February and March shipment). Finally, Egypt backtracked. The Supply Ministry said the level of ergot is still 0.05%. Good news for French wheat. India is tendering again to buy corn, 200,000T this time. No result yet from previous tender of 290,000T, price offered were between $192.99 and $245 CNF, best offer is said to be from Ukraine.
The ship continues sinking. Baltic Dry Exchange keeps digging indeed into its historical lows and was published yesterday at 394. And new-new-new historical low today at 383, this is -19.87% since the beginning of the year. In the top of 2008 it was 11,793! Well the low of the same year was 663. It’s very used to volatility. Cheaper oil (and cheaper bunker) and lower demand of global commodities are keeping putting pressure on freight prices. As well as a few oil companies, there could be some damage if low prices are subsisting… Market can be really crazy and illogic. Gartman is citing today Lord Keynes quite fairly: “The markets can remain illogical far longer than we can remain solvent.”
Following the weakness of the Ruble, some discussion will be held in the government and action is likely to be taken before the end of the month. The export tax is not sustainable with the Ruble close to its historical low. Euro finished higher yesterday and continued to go up today and is currently fighting with the 1.09 level. Oil rebounded after looking what was happening below $30 and is now just above $31 (WTI). There is still some macro concerns and volatility in equities markets. Nikkei was down -2.68% while Shanghai recovered +1.97% to be back above 3,000. But the star today is French CAC40, -2.32%, with Renault down -9% on suspicion of a VolksWagen like scandal. Peugeot is following, -3%.