Funds were back on the sell side yesterday, selling 6,000 lots of Corn, 3,000 lots of Soybeans and 5,000 lots of Wheat. Wheat was leading the dance, although it was a two sided session. Market failed to find support from early bullish energy and financial markets, the rebound was obviously lacking steam and the support it could have brought to agricultural markets never really came. It’s still very a very technical market anyway, with options expiry and spread action in a landscape of bearish fundamentals.
Night session was quiet, Wheat closed mostly unchanged, Corn up and Soybeans down. A typical Friday on a short (time and side!) week. Next CFTC’s COT will be quite interesting by the way.
Nothing much to say about the weather. South America is mostly good, and snow cover is melting in the norther hemisphere. No real news but surely a lot to follow in the next couple of weeks until spring has officially begun. Soybeans harvest is keeping up in Brazil thanks to good weather and is now almost online with the average to 16%. There’s still some traffic jam in ports, delaying loadings and cash basis is up. Still in south America, Buenos Aires Exchanges sees the corn crop to 25MT, still lagging -2MT behind USDA.
Ethanol data was bad. Production was up +6,000 barrels per day but demand did not follow and stocks were up 262,000 barrels to reach a record level to 23.22M barrels. Crude oil stocks were also pretty bad, very high level: 404M barrels. It kills the recent oil rebound and oil is back to a $29 handle (for a few cents only) in New-York. On the other side, it seems that investor continues to bid gold and the metals is failing to go back below $1,200 despite Goldman Sachs issuing a selling recommendation. Oil down and gold up is never a good sign for the economy.
EU cleared 733kT of soft wheat export license. This is better from last week (+144kT) and for once above the required pace to fill the gap and meet the USDA’s expectations. Nothing fancy though, soft wheat still need to average 716kT per week and it’s going to be challenging indeed. EU also cleared 255kT of barley export licenses and 259kT of corn import licenses.
MATIF was unimpressed yesterday by a lower EURUSD and followed Chicago lower, although it closed off from the highs. There was a bit of spread action spread from H6 to K6 are clearly on. French ending stock data clearly contributed to add fresh pressure on the MATIF. France AgriMer increase indeed its estimates of wheat ending stocks in France to 6.0MT (+0.2MT compared to their previous estimates), it seems like there no end in making the balance sheet heavier… This is driven by lower exports (11.0MT, -0.3MT) to third countries. However, meanwhile, Stratégie Grains increased EU soft exports to 28,3 (+0.2MT) MT and increase their new crop exports estimates to 30.6MT (+0.7MT). The analyst said it’s due to “brisk shipments from the Baltic countries, which were partly offset by a reduced outlook for France and Germany, the EU’s two largest wheat exporters”. The added, quite fairly this time, that it is “insufficient to avoid high stocks at the end of the season”. MATIF is still down today. No real reason to change.
GASC is trying its luck again. Take 3! Well, sellers aren’t massively excited it seems. Only 4 offers. Best FOB is France at $183.50, it’s still a premium of $8.5 to the MATIF… Russia is following at $187.90, French should be just about in front with freight but will GASC find a reason to reject the offer once again? Unless there’s a plan B, Egypt will be close to have supply issue if they keep refusing paying this kind of premium, some traders say there’s underlying cash issues behind the fungus drama.
Russian Deputy Prime Minister says they are still talking about export tax but no decision has been taken so far. Anyway, they have a little relief with Rubble back to 77ish but Russia is very busy these days with grains and oil export strategies.
Pakistan bought 60kT of soybeans from Brazil and Europe. US sold some Corn in Costa Rica (106kT).
EURUSD is down again and it seems the recent rebound is fading slowly, it’s now back below 1.11. German PPI was below expectations at -0.7%. US unemployment claims were better yesterday to 262k.