MATIF was opened yesterday. Sometimes, when US are closed MATIF can entertain. Not this time… H6 closed a tick up and K6 was flat in very thin volume. So let’s not waffle and ramble. The only piece of excitement was H6 touching fresh lows of Friday to €164.50 but front month bottom seems to be more something like €155. To reach these level we’ll need a bit of help (not cumulative conditions): farmers need to keep selling, EURUSD to go higher, US markets to keep going lower, a big weather market to happen or macro to keep entertaining the doom and gloom atmosphere.
Last week indeed, MATIF was under pressure, farmers and coop needed fresh cash. But on MATIF Corn, where situation is slightly tighter, this was aggravated by talks of Abengoa closing a plant in Spain and the bird flu in south west of France could offset by 100,000T to 150,000T the feed use. It’s been announced yesterday that goose and duck production are halted.
The question was much more how in what state the US market would wake up after this long week end and the CFTC COT data. Shorter than expected Corn is probably fueling the small rebound of the night session while Soybeans are also up, mostly technical but also on Argentina encouraging import of soybeans in a bid to crush even more to export more oil and meal. Wheat is pretty quiet and started the week on a little softer note. We can expect some animation later during the day though.
It’s becoming colder in the US, snow cover is there to protect fortunately but with wind, felt like temperatures are like -21C degrees in Chicago, -26C degrees in Minneapolis, -18C degrees in Des Moines, and it’s pretty warm in Kansas City as a comparison: only -11C degrees. However, there’s o concern for wheat thanks to the snow, and Gartman is quoting Melvin Ford of Lynchburg Milling Company, famous for the 40 years old very colloquial but good advice: we “must always remember that wheat is a weed; you can **** on it and it will still grow.”
Ukraine exported 10.63MT of wheat in 2015, down -2.17MT from 2014. Morocco has imported much less wheat than expected in 2015 as the local harvest was a record 8MT. Egypt GASC bought 35,500T of sunflower oil ($802/T CNF) via tender but no soy oil. Japan is seeking 132,432T of Wheat from Canada or USA.
Every day it is the same story. On freight: Baltic Dry Index keeps digging into its historical low and is now at 369, this is -20.80%. On top of that, bunker is cheap with crude oil consistently below $30 these days. It’s beginning to be damaging for some. Danish ship owner Norden has sold his last Capesize vessel in a bid to exit this market segment, taking a loss of $14.8M on the vessel. With Capesize index at 197, it’s the lowest of the basket. Panamax and Supramax are the highest (respectively to 375 and 388) and a lot of ship owners seems to be keen on focusing on this segment indeed. More and more ships are said to be willing to layup so either it’s going to reduce the offer and spark a rebound, or t’s more structural and we’re facing tough times and a few bankruptcy are unavoidable. But with China positing its lowest GDP since 25 years, it’s a clear sign global trade is slowing down.
Indeed, China posted a 6.9% GDP. Well, a lot of countries would be happy with this, but it’s clear slowdown of the growth in China. But financial markets rebounded: +3% in Shanghai, +2% in Shenzhen, Hong Kong and Tokyo lagging behind nut still on the upside.
Ruble is recovering after flirting with the abyss yesterday, on its lowest point, 79.4120 RUB were needed for 1 USD, it’s now back below 78.50. EURUSD still going around the 1.09 level with a lack of clear trend.