No big news yesterday in grains. Funds sold 1,000 Corn and 4,000 Wheat yesterday, while they bought 3,000 Soybeans. Soybeans and Oil finished up while meal was down. Corn was under small pressure while wheat was more frankly down. A bit of profit taking here and there but market was actually awaiting for the FOMC so it was a bit boring. Sharp reversal this morning though, US market is up across the board, largely helped by a lower US dollar. Reciprocally, MATIF is trading down due to higher euro and accepting the fact that GASC purchase was not that bullish…


Not a lot of news on the weather side, all good for the next 4 weeks in South America, wet enough but the soybeans harvest probably won’t be disrupted and will still be on time. Rainfall is expected in the US and is more or less what should be expected for the season, soil moisture is likely to be reestablished in areas where it’s needed for winter crops and spring plantings.


Market was chatting since a couple of days about greater spring surfaces in the US. First to blink was Allendale, they expect an increase of corn plantings by +2.76%. As per soybeans, they are seen stable (marginally down actually: -0.09%). With less winter plantings, it was expectable that it was “wait and see on spring” with a bit of price arbitrages. Not sure cumulated surfaces of all wheat, corn and soybeans will be down that much from last season…


Is confidence back in the market with GASC? Fair to say that it’s not completely the case. Only 6 offers, including 2 really out of the market. So basically, GASC booked all the decent offers, 4 of them. Best FOB was French, $178.74, reversed to MATIF at the time of the offer, it was +€3 premium to MATIF Wheat K6 (+$3.37). It’s better than at the climax of the ergot crisis though, but still a huge premium, considering  -4€ to -5€ premium are negotiated currently on the market for April and May which is still actually expensive as -€10 can be seen on spot. However, it gives a good relief to those who’re ready to take execution risk! Anyway, best CNF was the Romanian wheat, with was the best, although it was $4.25 above best FOB, there was a $4.43 advantage on the freight, so best CNF GASC was offered was $188.77. So GASC purchased a total of 240,000T at an average of $188.86 CNF, including 120,000T of French wheat, 60,000T of Ukrainian wheat and obviously 60,000T of Romanian wheat. Interestingly, when we compare tender line-up and tender result, it seems that Soufflet and Casillo reduced their French FOB price by respectively -$0.44 and -$4.12 (on top of this Casillo reduced its freight by -$0.03), also Louis Dreyfus seems to have ditch -$0.80 from its FOB offer. Unless it’s a reporting mistake, it shows that there’s a lot of execution risk premium on offers and it also shows that traders are eager to sell. Russian wheat was out of the league this time, stronger ruble makes it less competitive these days. Finally, to be noted, Argentinian wheat was not offered. Interestingly enough, MATIF was really pleased and sometimes, you want to talk to the screen and say: “come on, it’s only 120kT, there’s still a huge underlying export issue in France and EU”. Well, this time it seems that arguments have been heard, MATIF gains vanished and market finished more or less flat. Lower US markets of course did help as well. Despite all of this, it’s a very good year for the GASC, last year, from July to Mars, lowest monthly average price paid was around $248, it’s currently $187.40, for the current month. They now have supply until early July.


OPEC will actually meet next month in Doha, OPEC and non-OPEC members will sit around a table to decide the fate of the production. Iran would probably be pleased to see a cut have they have no intention to participate and need to restore their market share. So if OPEC is moving with some OPEC members, it will have to compensate the excess supply Iran will provide to the market. It’s funny as to see as it’s oil there’s no issue about anti-competitive practices. Bac in 2012, when the wheat flour cartel in France and Germany was caught sharing the retail market, they took a slap on the wrist of €242.4M. Comparison is a bit far-fetched as it’s final consumer who was the direct victim but anyway, the point is oil market is not efficient by any means, especially when panic mode is on the producers side… Oil is up in a hope of a supply cut, NYMEX Crude is approaching $40. NatGas is also rebounding sharply and above $40, US shale gas might flow again very heavily. Higher oil prices give a relief to Russian Rubble, USDRUB back with a 68 handle.


Ethanol output was up 21,000 barrels per day to 999,000 barrels per day. And demand followed, logically with higher oil prices: stocks decreased by 454,000 barrels to 22.85M barrels.


EURUSD is sharply up to close to 1.13. Huh? What happened to the FOMC then? No rate hike (this was widely expected), only one governor was up for it. However, FED has lowered its optimism for the US economy. Back to reality? So a new rate hike probably won’t happen before June, if at all. Janet Yellen said there probably won’t be 4 rates hikes in 2016 as expected back in December but maybe only 2. FED says they forecast a GDP of +2.2% in 2016 (-0.2% compared to previous estimates), +2.1% in 2017 (-0.1% compared to previous estimates) and +2% in 2018 (unchanged). Inflation will still be low in 2016 (1.2%) but is expected to reach 2% by 2018. So this might clearly delay any appetite to increase the rate and it’s reflected in the FOMC’s FED funds forecast: they are decreased to 0.9% in 2016 (-0.5% compared to previous estimates), 1.9% in 2017 (-0.5% compared to previous estimates) and 3% for 2018 (-0.3% compared to previous estimates).


So US dollar is down versus EUR, GBP, CAD, AUD, JPY,…  This will help commodities in US dollar and mainly gold which showed an nice rebound, back to close to $1,270. GBPEUR cross rate is down, still under pressure of a possible Brexit, it comes as George Osborn, on its budget, downgraded growth forecast for 2017 to 2.2% (-0.3% versus the forecast in November).


First day down since a while for Baltic Dry Index BADI! The fright index was down -3 to 393. Let’s keep an eye on it.


In France, parliament will certainly increase today the tax on palm oil imports for the food industry in a bid to save the environment… Tax is thought to be hiked by +101.92% to €210/T. With London cocoa prices up +12% since the bottom of February, French Nutella consumer are likely to enter a strike…

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