The day was mostly macro driven, US financial markets were down across the board, Asia is still choppy, coming don this morning between -1.75% and -3.5%. The Asian influenced Soybeans struggled to find some bids and market finished lower. Wheat did not find any support either on a lack of fresh news. Only corn rebounded, a modest rebound, a bit of short covering but no real info either. Also, crude oil touching $26.19 surely did not help to maintain some optimism. WTI rebounded to around $28 but seems now really keen on staying below $30. Anyway, funds bought 4,000 Corn and sold 1,000 lots of Wheat and 6,500 lots of Soybeans.
Very quiet night session, a few ticks here and there, sideways, but nothing to say really.
US is cold, very cold, but snow cover should be enough even if there are some concerns about the mild temperatures a couple of weeks ago that has decreased the layer, it’s not really snowing these days though, precipitations are also below the average indeed. Black Sea is also very cold but snow cover is much better, while western Europe, there’s nothing really to talk about. Weather in South America is mostly normal, there are still some areas where it’s too wet and other where it’s too hot but overall, there’s no major concern.
A day of all-time lows… The usual news on freight, Baltic Dry Index is down again for the 13th time in a row, reaching an historical low for the 12th consecutive session. It’s now 358 which is -25.11% this year. Also an all-time low for the Russian Ruble, touching today 84.70! is level, assuming a FOB price of $180, this would mean the local price for wheat is RUB 15,246 and the export tax RUB 1,123 which is 7.37%. With the availability everywhere and the bargain for farmers to sell, the tax seems to defeat its purpose and a move is likely. Action was supposed to be taken before the end of Jan, clock is ticking… It will be interesting to see how aggressive – or not – is the Russian wheat in the GASC tender.
Indeed, GASC is back. It’s been a little while and for sure, a lot will be interesting in selling. Also, GASC backtracked on the zero tolerance of Ergot but the quarantine authority disapproved the move and some talks were supposed to be held. No news about it. But will GASC avoid just in case French wheat traditionally more subject to ergot infection? Back in Russia, after being aggressive in Egypt they now want to increase their exports to Iran by 30%. Iran imports 6.6MT of wheat and is already supplied at 20% by Russia. It will create some more competition.
In France, there’s a bit of panic over the wheat. MATIF was also down yesterday indeed, selling panic really, fresh cash is needed and price is the price. A lot of farmers and coops are backtrading: “we should have sold at $180”. Yep you should have, you’ve been warned, haven’t you? But some farmers are talking about selling the next rapeseed crop (rapeseed still cost twice the price of wheat) as soon as it’s in to carry over the previous wheat crop. Some other are just panicking selling in the need of cash. So concerns is real and story have even reached Les Echos, an economic French newspaper who usually mainly talk about oil and precious metals as far as commodities are concerned. They point the risk that stocks will be at a 16 year high on increased competition from black sea and Argentina. No kidding?!? But they point also an interesting fact, oil rich nations seems to be more careful in their imports, watching pennies. Indeed, with plunging revenues on oil, lavish import parties are over. MATIF is expected mostly unchanged this morning but trading up to recover from yesterday would be no surprise, at least early in the session.
India said with 23.8MT of wheat stocks, it’s a comfortable level and food security is not at risk by any means. Jordan is tendering again to buy 100,000T of hard wheat. They’ll surely find some good offer at some point with this perseverance, but it doesn’t change the act the tenders terms are too restrictive. South Korea bought 50kT of US Corn at $189.65 CNF.
EURUSD is still moving around 1.09, it doesn’t seem to fancy a bullish wave and it has no reason so far to stop ranging. As per the Ruble, it’s beginning to be worrying for Russian authorities, they surely don’t want to have a scenario like the Belarussian Ruble…
As well as the question about the Kondratieff winter cycle, the MSCI World Index seems to show some 7.5 years seasonality and this seasonality would suggest it’s been peaking a few month ago. Last peak was at the end of 2007,… Are we facing a recession and a credit crunch? Well this would be compliant with Kondratieff, let’s watch gold for the next few months… It should meet some bids.