Traditional Tuesday reversal, but hey, it’s about time market is taking a breather. Very limited though with a lack of conviction, a typical double sided session. Soybeans finished down -5.25 cents, Corn a shy -0.50 cent and Wheat -4.50 cents. Nothing much to say, a bit of profit taking after current rally: funds sold 5,000 lots of Corn, 6,000 Soybeans and 2,200 Wheat. Being the CFTC’s COT cut off, as per Reuters estimates, market will expect funds to have cut their short position on Wheat by 11,800 lots to 123,606 lots, cut their short position on Corn by 8,000 lots to 122,973 lots and increase their long position on Soybeans by 12,500 lots to 85,569 lots. This sounds slightly underestimated though. On the other side of the pond, nothing convincing, MATIF Wheat ticked lower on Z6 while CME EU ticked higher. Not much to say, mostly a technical session with not much fundamental news. Front moth on CME EU posted its second best day in terms of volume, 774 lots. Open interest reduced by -78 only to 830.
But about the tradition Tuesday reversal, this is mostly a urban legend. Analysing continuous front month contracts, on Wheat, over the last 236 Tuesdays that were preceded by a Monday (so excluding weeks were Monday is a public holidays), only 109 of them were the opposite movement of Monday, this is only 46.19%! For Corn this is 44.07%, while on Soybeans this is 50.85%. Sample is used is quite low (236 Tuesday) so with a 95% confidence interval, it’s fair to say that it is fifty-fifty, in other words, there’s no special seasonal pattern on Tuesday!
Egypt has enough wheat stock for 5 months and also enough vegoil for 5 months. Meanwhile, Central Bank has allocated $1.8b for the strategic purchase of food stuffs. By the way a committee has been set up to discuss the price of local wheat for the next season. Finally, ergot saga is back in the headlines: at the end of September, Egypt said they had appointed SGS to inspect shipments… Today SGS denied a such discussion has happened.
Nothing major on the night session, Soybeans up a couple of ticks, Corn just ticking down and Wheat is -2.00 cent in Chicago. MATIF is ticking a couple of ticks down while CME EU is flat. Zzzz…
Oil is higher this morning, still having a $50 on the NYMEX Crude. ICE Brent carries $52 handle. No major diversion to expect until we know more about the OPEC plan at the end of November. Small down again on freight, Baltic Dry Index BADI posted a loss of -4 to 890, once again due to lower demand on larger vessels and this was partially offset by stronger demand on Panamax, Supramax and Handysize.
US CPI met expectations with +0.3% (month on month) but fuelled slightly more than expected by food and energy prices as Core CPI was up +0.1% while +0.2% was expected. This is the fastest pace since 5 months, quite soon FED won’t have the inflation excuse anymore to stay away from the rate hike. EURUSD is trading just below 1.10. In the UK, CPI (year on year) was the highest since November 2014! Core CPI (excluding food, energy, alcohol and tobacco) was up +1.5% year one year. It gave a bit of boost to the currency and GBPUSD went back above 1.23. Macro stats since the Brexit vote are far from being as morose as expected. British Pound also rebound facing the euro, GBPEUR trading around 1.12. Chinses quarterly GDP met expectations with +6.7% annualized, but industrial production was lower than expected to +6.1% year on year (+6.4% expected).