A risk off week before the USDA WASDE: Soybeans bounced up +2.91%, Corn +3.81% and Wheat +1.06%. MATIF Wheat was the other way around and continued to dig further down, losing -2.01% in euro. On Friday, funds bought 6,500 lots of Corn, 3,000 lots of Soybeans and sold 1,000 lots of Wheat. Market finished on a higher note on Corn and Soybeans and marginally down on Wheat, really all the eyes are on tonight, 8pm Dubai Time.
Over the CFTC week, COT showed funds were seller across the board, increasing short on Wheat and Corn by respectively 10,704 lots and 18,390 lots to 132,577 lots and 180,893 lots. Funds decreased their long position by 15,946 lots to 83,687 lots. But this is missing the end of the week risk off movement. Indeed, from Wednesday to Friday, funds bought 4,000 lots of Wheat, 22,500 lots of Corn and 6,000 lots of Soybeans. However, the cumulated short is estimated to still be just below 200,000 lots, with obviously pretty big spreads so it could be a shaky USDA WASDE!
Quiet night session, only Soybeans are showing a decent move, -5 cents, and Corn and Wheat are marginally down. Last day of the MATIF U6 and there’s some bargains to be done for sure! Spread is now 17 cents, U6 is murdered again while Z6 is just a tick down. It will be for sure interesting to see how many lots are going to the delivery and know the full story about the Romanian wheat. First day of the CME EU Wheat contract! If Bid Offer Spread is only one tick, the size on Bid and Offers is pretty thin and volume were 30 lots 3 hours and 15 minutes in the session. It will probably be used as an arbitrage to MATIF at the start. It’s just -€1 discount.
On the US balances sheets, market is looking maybe for a lowering ending stocks on Corn as the crop tours were conflicting with the latest report. But will USDA dare cutting the yield after bumping the crop by +15.59MT? Market surely sees a cut but expect the yield still to be above 173 bushels per acre. Therefore, average market expectations are -2.03MT on ending stocks. No major change expected on wheat (obviously) and soybeans, although, crop tour suggested that soybeans could be even better than expectations and some sees yield going above 49 bushels per acre… On the world balance sheets, nothing much expected on wheat. However, one of the USDA WASDE movement could come from EU and Russia. SoveCon decreased it crop estimates to 70.8Mt from 71.3MT while latest WASDE is at 72MT. Market will look for -1.5MT on the ending stocks. On Corn, the world balance sheet is more or less expected to take the US wheat and ending stocks are seen cut -1.46MT. Soybeans world ending stocks are seen down -0.87MT on average.
In Egypt, the ergot saga is still on, one of the rejected shipment was said to have less than 0.01% ergot! Difficult to be much closer to 0%! Egypt will surely face supply issues if it’s going on. On top of this there’s rumours of payment issue and currency devaluation. So, we’ll have another episode for sure.
Oil is back to $45… Keep ranging till the OPEC meeting and US storms have not really delayed shipments so it did help to bring back market on their support.
Slow start of the week on currencies as we’re entering in the build-up of the next FOMC… EURUSD is just above 1.12. GBPUSUD is just below 1.33 and market still expect a clear plan from the British MP, Brexit is nowhere to be seen just yet.