Market was overall collectively up, Soybeans being the leader. Indeed, Corn was in a good shape at some point yesterday but pressure on the energy complex probably helped to close well from the highs, just up a few ticks. As per wheat, too much unreliable information these days, it just don’t know where to go… Funds bought 9,000 Corn, 1,000 Wheat and 7,000 Soybeans yesterday. It’s been specifically reported funds seems to continue to cut their grains and oilseeds short futures positions and switching them to long put and put spreads positions, traders are probably bored they feel they need to do something, modifying their risk reward exposure, but still with a short bias. MATIF was down, probably hurt by Egypt stories and also very attracted by the psychological level of 160.
Quiet night session in the US, Corn mostly flat, small up for wheat and little reversal on soybeans. MATIF could edge a tick higher or so at the open, following Chicago and a marginally lower euro.
Winter wheat ratings seems pretty good overall and seems to improve in the key states of Kansas: 55% is G/E, this is +9% compared to last year. Oklahoma is 74% G/E, its down -3% from last month but still it’s the best January ratings since 2010 and well above last year (+33%). Illinois is 65% G/E, +7% from last month. The latest weekly crop report (1st of Dec) was showing a nationwide 55% of G/E. Cannot wait for the return of the weekly ratings, might give a bit of animation… Bring on the 4th of April!
So Egypt confirmed no one has offered to the tender. In a bid to ease the fears of supply concerns (on top of it, Egypt seems to be short of cash) and maybe to introduce the fear to reduce their potential demand, they also said they were talking to a government to secure a 3MT frame contract for wheat supply. They did not disclose which government was involved but it’s pretty unlikely we’re talking about France! A total of three cargoes have been rejected due to ergot, only one was confirmed to be French but it’s likely he two others to be French also. It’s very likely to by Russia they’re talking with. This would hurt other traders as GASC said a few month ago they would need only 4MT of wheat, this would mean only 1MT through tender. Meanwhile, Algeria seems to have bought at least half a million tons, average price seems to be around $180.
Oil was smashed again yesterday and ended the day back below $30, to $29.88. Small rebound the morning, the $30 handle is back. It’s been very damaging and indeed, the oil slump begins to show its effects: Exxon Mobil will post its weakest annual result (annual earnings were cut by more or less 50% to $16.2b) in more than 10 years and British Petroleum suffered a $5.2b loss… Chevron will cut spending by $9b, will sack 4,000 workers, Shell earnings are falling 50%,… Tough times! US financial markets were under pressure yesterday an posted losses of around -2%. Today, apart from Shenzhen (who have suffered the biggest loss year to date), Asia is back on the red side, the virtuous effect (well, at least the excitement) of the Bank of Japan negative rate policy have vanished: Nikkei was down -3.15%.
In Russia, there’s a new meeting on Today about export tax. It’s fair to say that anything can happen. USDA’s attaché in Russia said the final production is likely to reach a total 103MT of grains, up 1MT versus their previous estimates. However, this bump is mostly from other grains and pulses.
Taiwan’s MFIG bought 65kT of US corn.
And on top of this, usual same story on freight, copy and paste… Baltic dry index dug new historical lows to 310, -35.14% year to date. It’s very likely to hurt ship owners now.
EURUSD is in the same pattern of doing nothing, on top of the range though, so let’s watch out. However, it seems anyway that the US dollar strengthening is a safer bed on a longer term, there are still some structural issues in Europe: Grexit, Brexit, Schengen discussions,… Not really appealing for the common currency so without a major news, tough to see EURUSD not coming back at the bottom of the canal.