Yesterday left a sour taste in the mouth. After opening down, SRW went in positive territory helped by EURUSD which was back down at some point just above 1.1150 and despite this MATIF rebounded sharply? It could have look like a technical tipping point but it’s a bit early to conclude this. EURUSD went back up indeed to erase its intraday losses and even trading above 1.13 this morning. So rebound of Chicago Wheat was very limited and Kansas and Minneapolis were actually unimpressed and stood on the red side. Fund bought 4,000 lots of Wheat which fail to trigger fears of short covering.


Corn and Soybeans did not follow the same pattern and closed down, funds being on the sell side: the sold 1,000 Corn and 500 Soybeans. The lower energy complex and the macro concerns weighted on the prices. Crude Oil has closed for the third day in a row below $30 and keeps going down this morning, it’s now in the mid $26 while Brent has a $30 handle. Financial markets failed to show some strength as well. China demand is a key component for Soybeans and for Corn, market is still digesting USDA’s decrease in US exports that was in fact pretty minimalist.


But really market is in a weird situation, ample supply, demand concerns but still market is already quite low and there’s a bit of traffic jam on the short side. Also, in France. With -5€ FOB premium, even if EURUSD has recently surged, it’s $168.50 FOB and this is quite cheap, it make sense if some trading house are putting back gradually some long risk in their book. On the other side, I’ve been reminded that the gasoil and fertilizer also collapsed, farmers are going to save, as far as France is concerned, roughly 15€ per ton on their cost on the next season. It gives a bit of a relief but I guess they were keener directly adding this on positive margin rather than compensating for lower margin.


So risks seems a bit both ways, especially when no big bearish news is expected until April, more or less, all the bearish fundamental news are behind us and end of winter and spring will be important. Unless there’s more macro concern coming from China. So nervousness is expectable in the next following weeks.


Night session is green across the board (corn flattish though, ticking lower), market is probably helped by the lower dollar. Interesting to see what will MATIF do today. This rebound in EURUSD has a technical component. Yesterday again, stats coming from Europe were not massively good, it the least we can say: French industrial production -1.6%, Italian industrial production -0.7%, UK manufacturing production -0.2%, UK industrial production -1.1% and in the US it was not too bad in comparison yesterday, Federal budget balance was $55.2b, higher than expected and crude oil inventories down by 0.8M barrels. However, new QE wave in Europe in March and uncertainty about the sustainability of US growth is driving the US dollar down.


Bunge seems still very upset about its French wheat cargo and they issued a statement saying that a phytosanitary certificate issued by French authorities and a certificate issued by an Egyptian delegation “prove compliance of the cargo with Egyptian requirements and regulations”. Pretty unlikely to see this actually going to arbitration, some kind of agreement will be found for sure, can Bunge afford to be blacklisted from GASC panel?


On the weather side, nothing to complain about, South America is warmer than It should be but it’s wet enough. In the US it will be warmer also next week with rain and snow coming in the plains and the Midwest. Just need to keep an eye on the snow cover but in February and March, everyday elapsing without winter kill is a good news. Not long now to forget about winter kill indeed until next season (night spring frost will take the relay for sure!).


Again and again, on Freight, Baltic Dry Index BADI has printed lower, obviously historical lows, to 291. Gold is now above 1200 USD, helped by a lower dollar but one can really ask if we’re not beginning a Kodratieff long term winter wave: energy and commodities down, freight down, gold up, deflation, financial market falling…

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