It finally got animated yesterday. Market fell across the board. Wheat was under pressure on the speculation that wheat export tax would be ditched (after the rumor was the opposite, tougher export rules, for the past few days), Soybeans were put under pressure by a Chinese cancellation of 395,000T. Basically market wondered if the good Chinese demand is not actually above what it should be, should this cancellation be the first of a series, this would be really damaging for the US exports. Funnily enough, the news was published breaking the USDA’s embargo by 17 minutes to announce it was actually a sale, not a cancellation. Someone will get in trouble! Corn did not found anything to justify its move, so it just followed logically Wheat and Soybeans. Funds were clearly back on the sell side and sold 7,000 Corn, 3,000 Wheat and 11,000 Soybeans.
MATIF was no exception and got hammered, on the Russian speculation. They are still going on by the way… Very quiet night session, Soybeans tried to recover a little bit while Wheat and Corn were eventful as well as MATIF, typical Friday after a big move.
No big weather news but keeping an eye on it is a good idea. Indeed weather is getting warmer a bit everywhere and snow layer is melting in FSU for example. Indeed, the winter on the north hemisphere is very mild. Should cold come back on the second half a February, some more snow will be probably needed. In South America, it’s becoming slightly drier than the season’s average.
Good week on export licenses in EU, 822kT of soft wheat licenses were cleared. This is finally above the weekly pace needed, but does this come early enough? Soon we’ll be in February and so far, soft wheat has only exported 49% of the USDA’s target, while 58% of the year has elapsed. Now, the average pace required for soft wheat is 714kT. Also still very pacey exports of barley (147kT) and 209kT imports of corn. Delayed US exports sales were also better than expected on wheat, but down from last week to 407.6kT. Corn and soybeans were also down from one week to another but still very good amounts of respectively 885.8kT and 772.7kT.
Oil was up. Russia, after traditionally refusing to coordinate its action with OPEC is feeling the pain and is ready to talks with OPEC and agrees a 5% cut in supply. Iraq said they would cut the production if everyone else was doing so. Saudi said they are just not ready yet for it, it’s only talks at this stage. Talking about talks, the talks in Russia about wheat export tax continue to be contradictory and confusing but the latest seems to be that the do not see any ready to take it down.
Morocco bought 105,000T of wheat. Jordan bought 100kT of wheat, they are successful these days! They paid $209 CNF. China said that corn being imported at $243 CNF, this should be the local price as well, which means a cut of 20% in the subsidy. Taiwan Flour Mills is seeking 41.3kT of US wheat.
EURUSD was back up above 1.09 on macro concerns in the US. Core durable goods orders month to month were -1.2% while -0.1%. And the quarterly advance GDP being expected today, investors were selling the USD dollar… And it’s been published below expectation to 0.7% indeed. However, on the other side of the pond, better than expected Consumer Price Index in EU have not helped to maintained the EURUSD above 1.09 and it’s seems that there was a lot of technical sells. In Asia, Bank of Japan has moved to a negative interest rates policy by bring is rate down to -0.1%. Happy days! Financial markets like it (rebounding more or less 3% in Asia), and USDJPY +2%, however, one could argue it’s a kamikaze move…