The day started well yesterday but macro doom and gloom kicked back and market closed off from its highs (wheat resisted though). Funds were even on Corn and bought 4,000 lots of Wheat and 5,000 lots of Soybeans. Market managed to close higher despite US Export inspection… Wheat was below expectations to 187,787T and it is not bullish by any means! The lag compared to last year is increasing to -11.2% and wheat needs now to be 427kT per week to meet USDA’s projections. Corn was in line with expectations to 599,440T, but keeps digging the lag compared to last year, now -21.5%, corn need to leave the US at a pace of 922kT per week. Soybeans were slightly better than its buddies, 1,197,482T exported last week, still -11.6% versus last year but only 446kT is needed per week to meet USDA’s target.
So it was not a very appealing macro day. NYMEX Oil was down 5.75% indeed… It’s been back below the $30 mark and it’s currently rebounding. Damages are beginning to surface, Halliburton posted a $28M loss on Q4, compared to $901M profit in Q4-2014, This hurts. It’s probably not only one to be hurt. Anyway, concerns are real on the global economy, especially from Asia, there was a bit of panic this morning: Shanghai -6.42% (-23.04% YTD), Hong Kong -2.48% (-13.81% YTD), Japan -2.35% (-12.21% YTD). Financial markets in Europe are trading sideways today. After a day of pause, Baltic Dry Index BADI is exploring new all-time lows to 345, this is -27.82% YTD.
In China, government is going to stop supporting local market prices of Corn and let the market to decide price.
Night session closed on the red side overall but the trading range was very thin, there’s not a lot of action so far today.
MATIF rebounded yesterday on short covering and this was also fueled by the confusion coming from Russia. There is a bit of reversal early today but not that much actually, other confusing news coming from Egypt failed to put some real pressure on the market. Also, the current strength of the MATIF could be entertained by the MARS report: The EU agency said the mild weather delayed the hardening of the winter crops and a cold snap at the time the snow layer with thin might have caused some damage in eastern Europe.
Confusing days indeed. Firstly in Egypt, a French Vessel is said to rejected after it did not meet ergot 0% requirement. But GASC had backtracked?!? Well it seems that the Agriculture Minister is much less keen on back tracking. A spokesman said indeed: “We don’t have ergot in Egypt, and if we allow it to enter the country, it would contaminate our crops”. But GASC then said there’s no final decision and cargo will be retested. Also confusion in Russia. Some say inflation and hiking prices on poultry and hogs would lead the country to restrict exports to contain grain prices. Indeed, with the weakness of the Ruble, the export tax is very high but is not even playing its role. But with the availability on the reducing oil revenues, not sure Russia would benefit from toughening grain exports. With traders now scared to offer to GASC, that would be very interesting to see the Russian wheat as well out of the equation! Ruble is flirting again with the level of 80. Russia’s GDP has been published at -3.7% in 2015, largest drop in 6 years.
India bought it’s non GMO Corn from Ukraine: 225,000T. Daewoo was the seller, at an average of $192.78/T. Bangladesh has been offered a best price by ADM at $211.45/T in its milling wheat tender. Iraq is seeking sunflower oil, GASC tender of soybean oil and sunflower oil is still pending (lowest offer or soybean oil is $750/T).
EURUSD is approaching back 1.08 with a lack of real trend these days. It’s not been very volatile these days compared to other currencies.