There are only two entertaining stories these days. GASC contradictions and confusion with Ministry of Agriculture is not over yet and Russia export tax will be the subject of a meeting on Friday. Else, the focus of the market chatters is much more peripheral: macro, financial markets,… Funds bought 2,000 Corn and 4,000 Wheat while they sold 4,000 lots off Soybeans. Soybeans fell yesterday on concerns about demand. Corn failed on the 370 level, every rebound, fueled (no pun) by oil rebound is finding some selling interests, farmers are consistently selling rebounds, and corn finally closed 1 cent down. Wheat was fueled by the above mentioned story on Egypt and Russia.


To be fair, there is also a bit of weather stories, but there’s nothing major, no real news. Brazilian and Argentinian soil moisture are improving and good precipitations are forecasted. Northern Argentina has been however badly hit by drought and high temperatures, corn crop has suffered a lot in the north east of Buenos Aires. The extent is unclear but some farmers are saying their yield is down 50%.. Long term model in the US is forecasting a mild winter, until late February temperatures are likely to be above the average. So either this will going to be a great season with early harvesting, either crops are going to be hurt by late March and April freezing. So far so good though. El Niño fading pattern expectation is slowing down and El Niño is likely to still show a bit of effect at the end of the year. On the other side of the pond, if we look at the map published by the EU Environment Agency’s MARS (Monitoring Agricultural ResourceS), one could be panicked. Indeed, there are not a lot of zones excluded from their areas of concern. British Iles, Bay of Biscay and western Turkey have received too much rain, Scandinavia, Baltic, north and West of Black Sea was too cold, Mediterranean coast of Spain, France , northern Italy, Romania and Poland were too dry. Pretty scary picture hey. Seems like they are over cautious, this is known already and the general state of the crops is pretty good and one of the most important things is weather in spring and it seems there was no actual widespread winter kill just yet.


MATIF traded sideways yesterday but finally rebounded following Chicago. Actually leading it as the impact of Egypt and Russian news would be more meaningful for Europe. However, there’s a bit of skepticism around the real impact of these stories… Export tax is high in Russia and is defeating its purpose, but if the objective is to restrict imports, despite the huge availability, it’s not by increasing the tax. There are talks to ditch the tax, but what is the solution to restrict exports? And is this actually a good idea? Is that the incorrect answer to a real problem? Restricting wheat exports probably won’t solve the inflation problem, the recession and the decreasing oil revenues.


Quiet night session, reversal of yesterday: Soybeans up, Corn up and wheat down. Nothing major. MATIF has opened a couple of ticks down.


Tunisia tried to be reassuring for French traders, they are keen on buying French wheat. Although, only one vessel was loaded so far this season… Algeria’s OAIC was in for feed barley. GASC cancelled the sunflower and soy oil tender.


EURUSD still ranging in the 1.08/1.09 range. Nothing new. Russian Ruble is back below 80.


Euronext will launch a Sugar contracts. They haven’t a really good track record of launching new contracts in the past few years. Rapeseed Oil futures, Open Interest 0; Rapeseed Meal futures, Open Interest 832; Premium Wheat, Open Interest 0; Skimmed Milk Powder, Open interest 1; Unsalted Lactic Butter futures, Open Interest 0; Sweet Whey, Open Interest 0; Wood Pellets, Open Interest 0; Malting Barley, suspended back in April. With 2 contracts already very liquid and efficient enough (New-York Sugar #11 and London White Sugar) it’s tough to see any room for a third contract (well, there’s the Sugar #16 – formerly Sugar #14 which is barely working). It’s not said if it’s going to be raw or refined, however, likelihood is white as the European Union is the third largest producer and with the need of quotas in September 2017, sugar beet producers are likely to increase their production. However, big industrials are already on the London Sugar markets, and not sure a Metric Ton contract in euro will be appealing enough to change their habit. So a bit of a déjà vu impression there…

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