A strange week that was. Monday was the big move down following the previous Friday then barely nothing happened on Wheat and Corn (closing the week down respectively -1.98% and -1.91%) while soybeans rebounded on Thursday to erase the losses and close up +0.61% over the week. Bargain buying, short covering and good export sales were probably the catalyst of the Soybeans rebound. Funds were on the sell side on Friday selling 4,000 Corn, 2,000 Wheat and 1,000 Soybeans. After digging Monday and Tuesday, MATIF rebounded and finished the week only lower -0.80% in EUR and actually up in USD (+0.11%). A week more driven by macro than anything else, the USDA WASDE report on Tuesday was mostly a nonevent.


Will be interesting to see how market is waking up on Monday seeing the very short COT. A bit of short covering could happen in the US markets and MATIF could follow especially if EURUSD is keen on getting softer.


Export sales on Thursday were mixed: wheat was as expected (299.3kT), corn below expectation (to 346.1kT including a not needed cancellation of new crop sale) and Soybeans were stronger than expected to 601kT. On the other side of the pond, EU cleared 589kT of soft wheat exports licenses. Total wheat exports reached 55% of the USDA’s target, still far behind the required pace. And the gap is increasing as this week pace was once again behind the average needed and soft wheat exports need now to average 717kT per week. Tough to see it happening, especially when the GASC is trying to find any reason to avoid French wheat. EU also cleared 103,000T of barley export licenses and 182,000T of corn import licenses.


Seeing official CFTC COT data, it is fair to say that short covering mood disappeared. On Corn, Wheat (Chicago, Kansas, Minneapolis), Soybeans, Soybean Oil and Soybean Meal, funds were on the sell side over a week ending on Tuesday. And they have made no bones about it: Corn increased its short position by 43,306 lots, Wheat by 32,360 lots and Soybeans by 42,275 lots. They are now back to a cumulated short of 251,967 lots. Funds clearly followed the trend as over the week ending Tuesday, Soybeans were down -2.60%, Meal 4.19%, Oil -0.29%, Corn -3.09%, Chicago Wheat -3.73%, Kansas Wheat -4.35% and Minneapolis Wheat -1.66%. From Wednesday to Friday, funds basically sold Wheat and Corn versus Soybeans, so aggregated position has barely changed.


Nice GASC drama once again over the week-end!  It was expected for GASC to show up as two previous tenders were unsuccessful. They tried hard to make everyone sure that ergot drama is an old story in order to see prices not $10 above the markets. Friday’s tender… Only 5 trade houses dared to offer! Ergot story left some scares… French wheat was the best FOB ($185.25) but as usual, has a freight and second best FOB (from Romania at $186.55) was on the lead (freight from Romania is a tine $4.33). So only 300kT offered, GASC sniped the best one (from Romania then at $190.88 CNF)… And did the now usual double whammy, another tender on Saturday. Indeed, in terms of FOB proxied to MATIF H6 it was still a premium of $11.34 for the French and $12.64 for the Romanian, GASC can be jealous of Algeria indeed. On the new tender, only 4 offers… Saturday and ergot uncertainty have failed to motivate the trade houses. One offer of French wheat ($186.50 FOB) and 3 offers of Russian (from $188.60 FOB). And there, technically, French wheat was on the lead on CNF. But more drama unfolded! In an unusual move, GASC asked offers to extend the validity of offers until today, Sunday. There might be some though negotiation undergoing and result of the tender is yet to be announced. Indeed, there’s a “technical issue” with the $7.50 freight from France and it’s said that GASC is to impose the freight rate of National Navigation Company (NNC) at $8.95 making the French $195.45 CNF, behind the best Russian at $195.20 CNF so disqualifying French wheat in fact. Official statement is still awaited as well as the results… By the meantime, it was quite expectable a friendly solution would be found on the Bunge rejected cargo, this cannot go to arbitration. Bunge offered indeed to replace the cargo. Market says the cargo is to be resold to Spain. To be continued…


France Agriculture Ministry sees rapeseed planting at 1.49M hectares, increasing their estimates by +0.3M hectares. It is also 0.8% more than 2015. Barley also is better than last year, much better actually: +4.1%! Ministry sees surfaces to 1.36M hectares. It comes after the areas of wheat are estimated to 5.2M hectares, a 80 years record. So to sum up, it seems that farmers will plant more to compensate for lower prices. Not sure it’s supposed to help price action and if everything is going well in spring, France could head towards a new record crop. A bit early to asset it, but on the exchange side, tough to see the problem of storage under capacity solved… We’re going to see silos full pretty early into the harvest for sure.


This week’s focus was also on EURUSD. US dollar went down, FED’s governor confirmed she was still keen on putting the rates higher but showed some concerns about the US growth and the global economy. China, credit and oversupply in commodities are their current areas of concern. But the panic has eased at the end of the week and EURUSD was finally only up 0.91% on the week. There was a couple of good data in the US indeed: unemployment claims to 269k (better than expected), retails sales up +0.2% (core retail sales were up +0.1%). In EU, German preliminary GDP was 0.3% (as expected) but Italian GDP was +0.1% (lower than expected). Japan GDP awaited later today, expected at -0.3% and Chinese Trade Balance, expected at 389b.


Oil touched $26.21 on Thursday but rebounded sharply on Friday on one more voice raising to say that OPEC would be ready to cut the production: UAE’s Oil Minister indeed said they’re ready to cooperate. But on the other side, he said the non-OPEC member will cut their production helping the market to balance itself. Market closed the week at $29.44. It hasn’t happened since 24th December 2015… Baltic Dry Index BADI was up on Friday! +1 to 291. The freight index is still down -39.12% YTD. Gold close the week at $1,237.66 per ounce.

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