Yesterday ended up being an uncoordinated move, Soybeans and Corn finished up respectively +7 cents and +2.75 cents in a USDA WASDE reversal. However, Soybeans closed well off their highs, the retracement clearly lacked of conviction. Wheat was on the downside in Chicago for a couple of cents while Kansas and Minneapolis premium to Chicago increased as they closed respectively down -1.50 cent and up +0.50 cent. On the other side of the pond, the premium of CME EU was back on a bull run, closing at €13.50, MATIF being up only a couple of ticks while CME EU was up +€2.75. Funds had bought 8,000 Corn, 8,000 Soybeans and sold 3,000 Wheat.
Today was another kind of session for sure! After the yesterday’s breather, Soybeans were back on the downside, trading at -13.25 cents on the close. Wheat and Corn followed in a lower extent, ending respectively down -2.25 cents and down -3.25 cents. And yet again, Kansas resisted well (actually ending up +0.75 cent) and Minneapolis rebounded sharply (+5 cents). Minneapolis premium to Chicago and Kansas has been obviously back above $1 and is ending the week respectively at 117 cents and 110.25 cents. In Europe, CME EU premium to MATIF closed at +€17! Indeed, CME EU closed up +€3.50 while MATIF was down a tick. On the northern France silos, it’s pretty close to calculate to deliver CME EU with MATIF! A bit more is needed as quarry would need to be paid as it cannot be done on the same maturity but with CME EU H6 versus MATIF Z6 at +€13.75, in theory, not long until the arbitrage is possible. The expiry of CME EU will be the key to success, a squeeze would be very damaging. After 8 sessions with volume lower than 100 lots on front month, finally it went back above today.
GASC followed his consistent strategy to buy the dip and came today with a new tender. Was it the public holiday in Europe (end of World War I) or the EGP situation, not sure, but only 3 traders showed up with Russian wheat, best FOB was $192.50 (ex-aequo, two offers from Grainbow and Aston at this price). They booked only one (funnily enough they booked Aston), 60kT, making the CNF $202.14.
In France, winter wheat is 90% planted (93% last year) and barley is 97% planted (98% last year). There’s no more significant delay, apart from durum planting, reaching 54% while it was 79% last year. Corn is 89% harvested.
The Donald Trump disastrous effect has been very quick to vanish, way quicker than Brexit. After the initial panic spike, it violently retreated in the mid 1.08’s. On its side, GBPUSD is showing a good form, trading around 1.26. Market is trying to put two and two together and maybe the combination of Brexit and Donald Trump could lead to trade deals that would be good for the UK. This is purely hypothetical at this stage, Article 50 is far from being triggered.
Oil keeps struggling, if there’s a bit of irrationality as well, bottom line is there are serious doubt about the OPEC deal and even more about what will do the non-OPEC countries. NYMEX Crude is in the mid-$43 while ICE Brent is trading around $44.75. The traditional safe heaven, Gold, is correcting and Gold is now below $1,2230. So confidence is not hurt just yet and the stronger dollar is obviously helping to push it down. On Freight, Baltic Dry Index BADI is back above 1,000 (+71 today to 1,045) as Baltic Capesize Index surged by +14.58%.