Market has been trading sideways yesterday. The first session of the week (Tuesday) was mostly short covering, then yesterday began like a traditional second session reversals. But market finished higher across the board for the second session in a row. CBOT Soybean Meal, ICE Canola and Paris and London Wheat and Paris Corn were on the down side though. In Chicago, funds bought 9,000 Corn, 5,000 Soybeans and 4,000 Wheat. There’s a part of technical here: short covering obviously but also option expiries. Getting higher strikes on the expiry make sense on a market that has been in a pretty bearish mood. There’s nothing bullish by any means just yet but funds seems keen on reducing exposure with the milder temperatures arriving. There’s no issue yet but a thinner snow layer will make the winter crops more vulnerable to a late winter cold snap or spring night freeze. So nothing to really talk about, let’s not reinvent the wheel.


MATIF has been also shaky traded down most of the day to finish only marginally down, helped by higher US markets and lower Euro. Night session in the US is weak, MATIF is expected to tick lower this morning.


There are still logistical issues in Brazilian ports, weather is still good for harvest by the way. Unexpected move in Argentina, Government has doubled the export tax for biodiesel (from 1.62% to 3.89%) according to the black box sliding-scale formula. South Africa is showing concerns about their corn supply. Indeed, Zambia used to be the buffer on tough years but Zambia won’t be able to cater for the 30% decline of the South African crop.


Egypt is trying hard to regain the confidence of the market. On a letter, Egypt’s Agricultural Minister confirmed the 0.05% level of ergot, which is industry standards. However, some traders are want a statement from the quarantine authority to make the process clearer, to avoid different interpretation on the measurement. SocGen said in the Wall Street Journal that the real issue is a dollar shortage, implying fungus is a scapegoat: “traders are now thinking Egypt is short on funds… A much bigger issue!” Michael McDougall said.


Crude Oil rebounded. UAE energy minister confirmed again they’re ready to collaborate and he said that current prices are not suitable and producers will have to reduce production. Story is the same, nobody want to make the first move and the move would have to compensate for the Iran aggressiveness in defending its market share. Indeed, Iran says they back the plan to freeze, but made it very unclear if it is applying to them. Freight index BADI, Baltic Dry Index, keeps on recovering, +6 to 307.


No major move on the EURUSD this morning, a bit of a rebound but it seems to lack a bit of oomph. After yesterday session, it’s now evolving in the 1.11 and 1.1150 range.

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