Very weird market feeling, it’s like everyone is looking at each other wondering who’s going to pull the trigger first on the short covering but nobody does it and market keeps digging. So yesterday funds kept selling Wheat (5,000 lots) and Wheat finished close to -2% down. Soybeans were finding some bids (on technical but also NOPA is expected to show good numbers today) and corn, as often, was struggling in the middle. Funds were even on Corn and bought 4,000 Soybeans. MATIF did not find support on the ergot news from Egypt’s GASC and also dug further down. 

MATIF continued today to go down today but is coming back from its low thanks to Chicago showing some sign of recovery. FC Stone pointed that the correlation between USDA’s carry out in Europe and market price would suggest a K6 at €159. We’re not there just yet but farmers and coop are really beginning to sell despite the bearish market, they are at a point where they need fresh cash. US market traded sideways and after a soft start some support is found, reversal technical Friday. Soybeans are down, we’ll see if some bids are found when NOPA crush released.

 

Weather is getting better in Argentina and crops are looking actually pretty well, some very good rains occurred recently indeed (as well as in Brazil). FSU has seen some snow, the layer is now much better and concerns of immediate winterkill are fading. In western Europe, a bit of rain, a bit of snow, not much freezing, all good.

 

Buenos Aires exchanges raised is estimates of corn planting to 3.1M hectares, +0.25M hectares from previous estimates, there was some late planting after the elections! Tax arbitrage!

 

Good numbers on the EU export licenses yesterday, 754KT, anyway, wheat need to be strong now on in order to reach the USDA’s target (710kT per week is necessary), this will be quite challenging for sure. Total for soft wheat is so far 13.5MT, 11,76% behind last year. All wheat exports are now 46% of the USDA’s target, so there’s some obvious lag, it’s really tough to see the European balance sheet not becoming heavier in the next USDA WASDE report. Good numbers also for barley, 164kT. Corn keeps entering at a very good pace also, 243kT of import licenses plus 138,994T under the reduced tariff quotas (also 29,990T of wheat entered through the scheme).

 

Also today, once again, Baltic Dry Index reached new historical lows to 373, down -21.97% since the beginning of the year, and down -69.48% since the highs of August 2015, this is only 5 months ago… WTI is sinking as well, exceeding -5%, below $30, Brent being on the same level just above $29.50. It’s been a bloodbath as well on financial markets, down -3.5% in China, -1.5% in Hong Kong, in Europe it’s between -2% and -3% as well, and in the US and Canada it’s not much better. A lot of traders are going to leave for the week end in a doom and gloom mood! Indeed, China macro is not really appealing, new loans data fell well short of the expectations to 597.8 billion yuans.

 

EURUSD is stronger, seems like the 1.10 level is technically appealing. Ruble is on its historical lows, more than 77 rubles needed for a dollar, the export tax seems now unsustainable. It will also help the Russian wheat competitiveness.

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