Shorter week last week due to Friday off more or less everywhere on Easter holidays. Also now, all the markets are on summer time, meaning MATIF is opening at 12.45pm Dubai time, closing at 8.30pm Dubai Time. US has changed time a couple of weeks back, biscuit break of US is from 4.45pm to 5.30pm Dubai time and market is closing at 10.20pm to open at 4am for the overnight session. USDA WASDE reports are at 8pm Dubai time (next one is on the 12th of April), US export sales every Thursdays at 4.30pm Dubai time. Finally, crop progress report season is back in the US from Monday 4th of April, midnight Dubai time.  Quarterly stock report on the 31st of March at 8pm Dubai time.


So four days of trading last week only. Wheat was flattish in Chicago week on week, Kansas and Minneapolis went up (respectively +0.48% and +0.98%), the potential adverse weather is focused on these growing areas. MATIF surged 2.96% in euro, helped obviously by the euro weakness, bargain buying and technical rebound. Also, there was some over excitement on GASC booking French wheat. Soybeans were up +1.45, Meal +3.26% and Oil suffered a bit, -0.72%, correcting from previous rally and being spreaded. Corn was in-between, as usual with +0.82%.


CFTC’s COT (as of Tuesday) was all over the place. Short covering on Corn (funds bought 33,598 lots to reduce their short position to 154,569 lots), long increasing on Soybeans (funds bought 31,908 lots to reach a long of 53,682 lots) and funds increased their short position on Wheat, selling -14,331 lots to reach 81,837 lots short. So basically, there’s a big mess, a lot of spreading action, short covering bust still overall short bet with a touch of seasonal bullishness on Soybeans against the fundamentals. The quarterly stock report could put a cat among the pigeons and sort this mess, one way or another. Wednesday and Thursday, no massive movement, funds are expected to have sold 2,000 lots of Wheat, 1,000 lots of Corn and bought 1,500 lots of Soybeans. Cumulated short on Wheat, Corn and Soybeans is still a decent estimated 185,000 lots. Market is beginning to feel the oilseed complex has been overbought.


US Export sales on Thursday were strong enough, as expected for wheat and corn, respectively 487.7kT and 903.1kT. Beans were below expectations to 440.1kT (but anyway no big deal, most of the season is done), meal was well above expectations to a nice 468.7kT and Oil also slightly higher expectations to 24.4kT. But all these need to be shipped, market will focus on export inspections for sure.


Focus is still the weather, drought is expanding in New Mexico, Texas, Colorado and Oklahoma, Idaho, Oregon, Montana, North Dakota, and Wyoming (not talking about California and Nevada). But decent rains are forecasted on these area for the next 2 weeks and abnormalities are likely to be rain surplus excepted in Texas where it’s likely to be slightly below the average. So soil moisture is expected to come back. South American weather is favorable, it’s raining where it’s supposed to rain and the wet pattern is not disturbing ongoing harvest. In Europe, all good, French wheat has still 2 good weeks of advance: 65% of French wheat is at the 1cm ear stage, +18% versus last week, and +25% versus the average! Ratings are unchanged to 94% of G/E.  Tough to see any sustainability in the MATIF rebound if these conditions are maintained.


GASC bought 60,000T of wheat only. It was thought to be the last ender of old crop, but it might be a bit short considering the low volume booked. There was only 7 offers, so confidence is not back. French was the best FOB, offered at $179.44 by Soufflet, with a $10.20 freight it was also the best CNF to $189.64. Romanian was second behind, $185.14 FOB and $190.89 offered by Ameropa. There was $4 difference with the next offer so it was obvious these 2 only would compete. There was a lot of bargaining, Soufflet has to ditch a few pennies and did it (CNF to $189.20), while rumor has it Ameropa has been asked to match the offer and refused, and Soufflet was asked more quantity and allegedly refused. So, that’s it, GASC bought one vessel only at $189.20 CNF. Anyway, the offer from Soufflet was +$6 premium to MATIF (around +€4.4) while it’s trading spot in negative premiums. So obviously there’s still an Egypt risk premium. But despite its problems, Egypt has done its best month in terms of monthly CNF average price, for the current season and obviously the season before (every month so far were below the lowest mostly price paid last season – $200 in June 2015) so they made the best of a bad situation. With recent GASC success, French wheat has overtaken Ukrainian wheat. Ukrainian wheat has accounted for 14% of the total season’s supply to date (4.26MT total) while French wheat is now at 17% but it is still far from the 40% the previous season! Romania has been the second provider with 20% and obviously Russian wheat is the winner of the season with 44%. Market says that Bulgarian wheat will be admitted on the next tender.


Night session is going sideways, Soybeans and Wheat up, Corn down, MATIF is still closed on Easter Monday. US dollar is generally slightly weaker this morning.


NYMEX Crude finished the week below $40 and is rebounding in early trading just above $40. There’s a lot of uncertainty and speculation around the April meeting in Doha. On Freight, Baltic Dry Index keeps on recovering, +40% since the lows but still -15% YTD.


EURUSD very slowly corrected, quite painful to watch actually, -0.92% during the week. GBPUSD was also back on a bearish trend, more significantly though, -2.32%. Cross rate GBPUSD was logically down also. Brexit campaign is still very interesting, it seems that establishment, politics, media or companies, are more or less all in favor of staying in the EU but the British voter seems against it so far. Interesting distortion and result is going to be very interesting to see the outcome. So far, Brexit has a two points lead. If it’s happening, GBP will be under immense pressure and is likely to drag EUR on the downside. But there’s a lot of ifs! And FED is on the path, market is expecting more and more a hike in April, if not June.

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