Funds sold 7,500 lots of Corn and 3,500 lots of Wheat but still bought 2,500 lots of Soybeans. Is this the sign of realization that Corn and Wheat should not follow Soybeans in that extent?
The same story is going around: rains in Argentina, higher river levels creating port congestion, etc,… But market finally closed overall on the soft side, with no major move actually, single digit down, less than -1%. MATIF was no exception and it was also a quiet day, with a bit of pressure from a stronger Euro. Everyone was waiting for the FOMC (which was a waste of time). Night sessions is sideways, Soybeans are still down (-3 cents), Corn just ticking a couple of ticks down and Wheat up +2 cents. Quiet day as well on the MATIF up a couple of ticks along the curve.
Also on the weather side, Australia is expected to receive more rain than usual for the next quarter. It will be a relief for soil moisture after a very strong El Niño. Still a bit fresh in France, a few hailstorms actually, but it has avoided rapeseed. Phew! Anyway, cold snap is not damaging at the moment but winter crops might lose a couple of day of their advance.
US Ethanol output went down 12,000 barrels per day last week (to 927,000 barrels per day) but demand was still high and stocks were off by 417,000 barrels to 21.63M barrels. NatGas inventories are expected up 70 billion cubic feet. US crude oil inventories rose by 2M barrels while a raise of only 1.4M was expected. The last 10 weeks, US crude oil inventories raised by 36.6M barrels while the sum of the expectations was 23.6M barrels. Crude Oil is trading as its highest level of 2016. Slightly softer today, NYMEX Crude is trading with a $45 handle and Brent with a $47 handle. Finally, on freight, Baltic Dry Index BADI is rising inexorably to 715, that’s a +49.58% rise since the beginning of the year.
US export sales are expected later: 1.2MT/1.7MT for corn, 375kT/625kT for wheat and 700kT/1.1MT for soybeans.
Algeria’s ONAB is seeking 30,000T of corn. Saudi Arabia is tendering for 550,000T of hard Wheat. Jordan is likely to come with long expected tender terms modifications next week, quality and payment seems to be the main issues. Morocco is keeping its import duty of 30% despite the expected cut of production (from 11MT to a currently peg at 4.7MT) in order to protect local crop, harvest being on the verge of kicking off. USDA is expecting Morocco to import 4.6MT of wheat and barley next season. In Russia, grain exports are estimated to be 2.5MT in April, a record. The last year record (30.8MT) is on its way to be beaten by +0.6MT.
The main central bank events of the day were actual main non-events. As expected, US Federal Reserve haven’t made a move but Janet Yellen reiterated that June rate hike is the target. According to her, the US economy is “strengthening” and “solid” enough. There’s also much less risk coming from China and the risk of impact on the US economy is seen as lower. FED will however “closely monitor inflation indicators and global economic and financial developments”. There was a bit of EURUSD swing but market seems on the skepticism side and US dollar continued to weaken, trading currently above 1.1350. GDP data will fore sure be under scrutiny: expected at +0.7% quarter on quarter (lower growth than the previous +1.4%) and unemployment claims (expected at 258k) might also add a bit of excitement. On the Asian side, a continuation of the Pikachu stimulus move was widely expected… And it did not happen. BoJ kept its monetary policy steady. As a consequence, Nikkei fell -3.61%, USDJPY is falling also roughly -3%. Gold is higher, following US dollar weakness and now currently trading above $1,250.