A few days after the CME recorder the record volume on Corn, it’s now Euronext. MATIF Milling Wheat futures traded a record 112,292 lots. Funds sold 25,000 lots of Corn, 8,000 lots of Wheat and bought 18,000 lots of Soybeans. Huge days these days, it’s going to be interesting to compare these estimations with the actual movement of the CFTC’s COT later today. Market could be surprised of the extent of the positions moves. Yesterday was once again a very interesting day indeed with divergence all over the place. Soybean continued to rebound on the same story, a combo of weather market, short covering and stop triggering. But Soybeans closed well off their highs. Have the fund assess this Argentinian rains have been overpriced? On the other side, Wheat and Corn corrected by more or less -10 cents. Kansas Wheat and Minneapolis were resisting better, falling by respectively -6 and -8 cents. But MATIF Wheat rebounded on its side with very interesting spread action. If U6 was up +€1.5, K6 was down -€1.5, bringing the spread to -€14.5. We’ll see if the spread will pay the actual carry (more or less €26) but tough to see the new crop rebounding considering the amount of carry out, especially if Chicago US markets by the meantime are correcting.
And the markets during the night session probably integrated the news and answered to the fund’s question: “have we been too high?”. Argentinian weather is improving and authorities confirmed there was no big deal. Buenos Aires Exchanged said no more than 4MT are at risk after the floods while the government said -3.3MT. Meanwhile, the harvest has been 30% slower than last year, but field work condition are drastically improving from hours to hours. The worse seems clearly avoided and amble worldwide balance sheet will absorb this, especially if China is increasing yields and surfaces on soybeans.
So big correction across the board today: Soybeans are back below 1,000 cents per bushel on K6, the curve being down -20 cents. Corn is down -5 cents, while Wheat is down around -12 cents. Wheat is a bit an enigma actually, fundamental reason to follow as much as this the South American weather market was puzzling. A bit of attention seeking! However, seems like a lot of financial funds are coming back to commodities these days. MATIF U6 is also down sharply, -2%.
Yesterday, EU cleared 712kT of soft wheat export licenses, is the big momentum over? It is still enough to fill the gap as soft wheat needed 573kT but the next couple of weeks will be critical. Barley import licenses were on their side 137kT while Corn import licenses were 219kT. US export sales were good, 620.6kT on wheat (only 295kT of old crop though), 1,325.9kT for corn and 747.4kT for soybeans. It seems that there was a bit of panic on this side as well, increasing prices and physical basis have triggered some purchases in a panic mode. Some farmers and coop will certainly sleep a little better from now!
Canada seeding intention on total wheat is down -1.1% to 10.23M hectares, Canola -3.7% to 7.8M hectares and barley up to 2.75M hectares (+3.8%). Japan bought 126,398T of feed wheat from US, Canada and Australia. Bangladesh rejected again some shipment. Russian wheat this time, official version is lack of quality especially the spec of foreign matters contents.
Only one day down of freight and the Baltic Dry Index BADI is back up. A marginal +1 though. No big move on Oil today, NYMEX has a $43 handle and Brent a $44 handle. Meanwhile, Gold is still just below $1,250 per ounce.
It’s been a volatile day yesterday for the EURUSD: seesaw action! There was a rally on the basis of the expectations that the stimulus measures were over but the Draghi’s speech could lead to think the opposite as he was really beating around the bush, clearly avoiding to talk about future policy. And then there was a big correction. Minimum bid rate stood at 0%. EURUSD is now back in the mid 1.1250’s. US unemployment claims were better than expected to 247k but Philly Fed Manufacturing index contracted by -1.6 point. CPI and Retails sales to expect this afternoon in the US, could be a market mover. Yen on its side tumbled as the Bank of Japan is thought to dig further down into the kamikaze mod, increasing the negativity of rates.