Funds bought 29,000 Corn, 26,000 Soybeans and 13,000 Wheat. This was some kind of short covering, short covering is calling stop triggering, stop triggering is calling more short covering,… Market finished collectively up in a dramatic fashion, Soybeans up in excess of +20 cents, Corn above +10 cents and Wheat very close to +20 cents. The rationality is tough to identify but market is always right and funds are like Tuco The Ugly (Eli Wallach) in ‘The Good, The Bad and The Ugly’: “when you have to shoot… Shoot! Don’t talk”. Indeed, it seems they are buying in a rush with the flow and will ask question and try to understand later. It was too close and too pretty… The 1,000 cents level on Soybeans is being tested indeed. And so far pretty successfully as night session is showing some incredible strength, bringing soybeans back up to close to 1,025 cents. Else nights session is quiet, Corn is just ticking down and Wheat is ticking up in Chicago but down in Kansas and Minneapolis. Tough to see MATIF not having a little breather but hey, these days you never know!
It’s all about Argentinian weather. It’s wet indeed, crops, especially Soybeans, are suffering. But it is set to improve drastically over the next ten days, firming the top layer of the soil and improving field works conditions. So market is doing some preventive buying as it is very difficult at the moment to assess the real damage of the crops.
MATIF Wheat followed up and finished up +4.25 euros on U6 with K6/U6 spread keeping digging to -12 euros! Which is interesting, it shows that the end of the campaign might be tough for old crop and spot demand and it raise an interesting question: can the new crop sustain a rebound in these conditions? Not sure. However, it’s a huge relief and some French coops and farmers are going to sell feeling slightly less the pain.
Philippines booked 150,000T of feed wheat between $186.25 an $190.50. Japan received once again to offer on the feed wheat and barley tender but is still in for the food wheat tender (126,398T of Australian, US and Canadian wheat). Also, Jordan, but that’s not unusual, failed to buy hard wheat again.
Strong demand on the energy complex. US Ethanol production was up 1,000 barrels per day to 939,000 and stocks were down 271,000 barrels to 22.05M barrels. Also market was surprised by the US Crude Oil Inventories, increased by +2.1M barrels (last week was +6.6M barrels), slightly lower than expected. Also US imported more Crude Oil (8.2M barrels per day, up +247,000 barrels per day from last week) and there was also more refinery input (16.1M barrels per day, +163,000 barrels per day). Crude Oil rebounded and is now trading above $44 while Brent is just at $46. US Shale Gas operators are going to be above their breakeven, it will be interesting to see how the come back to the market. However, US NatGas inventories are expected to be up by 4 billion cubic feet. On Freight, after 21 days of going up, first day down for the Baltic Dry Index BADI… A little -2 to 669. Gold is up, approaching $1,260 per ounce.
EURUSD is back below the 1.13 level. It seems the game is on and the battle around 1.13 is animated. To follow today, UK retail sales, Philly FED Manufacturing Index and US unemployment claims. No exciting news on the Brexit side, the leave camp is losing a bit of momentum but this campaign is very cyclical, it will kick off again soon, especially with the deadline approaching.