Friday was red across the board. Funds sold 8,000 Corn, 7,000 Wheat and 8,000 Soybeans on Friday. The pressure on Wheat, Corn and Soybeans was certainly due to the expectation of a higher carry out mainly due to lower US exports in the next USDA WASDE report. MATIF was down, following US markets. More pressure was brought by a dollar still above 1.1150 and the stories on Algeria (low prices), Egypt (tender cancelled again) and Russia (expectations of a decrease in export tax but still no news about it).


CFTC’s COT showed as of Tuesday it was another big short covering week. Corn reduce short to 59,000 lots buying 28,000 lots over the week, Wheat reduced short to 49,000 lots buying 2,000 lots and Soybeans reduced short to 26,000 lots buying 5,000 lots. However, from Wednesday to Friday, they were back on the sale side (funds sold 1,000 lots of Wheat, 2,500 corn and 3,500 Soybeans).


After the ergot shambles it was expected GASC to come back… Tender take 2! Well, this was not much more successful as 4 offers only showed up. Best FOB was French at $186.64 making in theory the best CNF at $195.44. Russia was second ($190.41 FOB and $196 CNF) and Romania third ($193.55 FOB and $197.88 CNF). The last cargo offered was also French but was far behind, making it above $200 CNF. Egypt probably saw the Reuters headlines: Algeria is said to have bought 840kT at $178 CNF. So seeing a best FOC above this was probably upsetting and they finally just cancelled the tender once again! There will be fore sure a take 3 especially with market going down but it’s clear European traders are reluctant to offer as they see a lot of execution risk: ergot, cash,… Surely there will be another episode to the saga.


Thursday was the usual export sales report. Eventful this week. On the US side, wheat sales were tiny: 154kT, a new confirmation that US wheat has nowhere to go. It needs to average a weekly 293.9kT until the end of the session. Doable but it’s going to be pretty tight. Soybeans as well suffered an old crop cancellation (-43.6kT) and were only total of 22.1kT and with Chinese new year, the next week is likely to be very quiet also. However, they have a bit of buffer and the USDA’s target is not at risk just yet. Corn were a strong 1.1453MT and need now to average 611.5kT per week until the end of the season. Watch out the next US exports in the next USDA WASDE report next week… On the other side of the pond, EU cleared 786kT of soft wheat and 212kT of barley of export licenses. Meanwhile, they cleared 376kT of corn import licenses. So a bigger export week and a bigger import week also. And, for once, this is enough pace to make up for the delay of USDA’s target. Total wheat export are at 53% of the USDA’s target with only 17 weeks to go, the clock is ticking! Soft wheat is now required to average 710kT per week.


Also on Thursday StatsCan released the endo of years stocks. Total wheat stock was 20.7MT at the end of December, down 19.3% from previous December. Durum stocks were 4.2MT, up 3% from the year before. Canola stocks were 12.1MT, down 3.9%. Finally barley was 5.7MT, up 4.1%. More or less no surprise, market was expecting wheat stocks to be lower. With 3 years of lower wheat crop (13/14 was 37.53MT, 14/15 was 29.42MT and 25/16 is 27,6MT), no miracle can happen.


Pakistan bought 66kT of soybeans from Brazil, South Korea bought 55kT of Canadian canola, Israel bought 80kT of Black Sea corn, and 45kT of barley. Japan bought 141kT of wheat from Canada, Australia and USA.


EURUSD is kind of on fire in comparison with the last few week of range. Disappointing US employment data leads investor to dump a bit of US dollar. Until what level concerns in Europe will be greater than in the US? Indeed, lack of inflation, fears about Chinese economy, PIGS countries, Schengen talks,… All other things equal, it’s tough to be bullish euro.


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