Over the week, Soybeans only fell -0.31%. The pressure brought by the USDA WASDE collided with technical. Corn did not have this problem and ended the week down -2.44%. MATIF Corn was down in the same extent in US dollar, -2.86%, but this is mostly currency driven as market is resisting pretty well as all major French crops (wheat, barley, corn) are badly hit. As per Wheat, what a mess. Chicago was down -2.72% on the week but spreads are still behaving like crazy, there is still a lot of clean-up needed. Kansas was only down -0.30%. Minneapolis was still driven by the vomitoxin issue: although concerns eased a bit and premium of Minneapolis went back below 100 cents versus Kansas and Chicago, it revered and Minneapolis ended the week up +1.91%, trading 109.75 cents above Kansas and 117 cents above Chicago on the Friday’s close. On the other side of the pond, same old story, MATIF was down -0.15% in euro (-2.71% in US dollar) and CME EU up +2.30% in euro (0.32% in US dollar)! Premium of CME EU ended the week at €16.75! The MATIF Z6 versus CME EU H7 spread ended the week at -€13.50, it’s a bit of a pipe dream but if at some point the quarry is paid between the both, this could be amazing to see the arbitrage physically executed. Not really far to calculated… A fat finger away!
CFTC COT is to be released today, Reuters estimated funds to be buyer of 4,500 Wheat, 13,000 Corn and 10,000 Soybeans over the CFTC week ending Tuesday… Missing the USDA WASDE fun! From Wednesday to Friday, funds are estimated to be on the sell side, for 11,500 lots of Wheat, 22,000 lots of Corn and 16,500 lots of Soybeans. US Export Inspections will be expected to see the same pattern: soybean shipment will cannibalise corn and wheat. Traders are expecting to see between 2.422MT and 2.585MT for soybeans. But corn is still expected strong (1.143MT to 1.320MT) and wheat is seen between 462kT and 571kT. There probably won’t be room for everyone, especially if soybeans shipment are surprisingly high… Nothing much is expected on the crop report, harvest are wrapping up, winter wheat sowing also, and conditions could be better but no major move on conditions is expected by any means. Also NOPA Crush report is expected on Tuesday, just as USDA reduced the Crush by -0.54MT to 52.53MT (+1.19MT from the last season).
On the weather side, Brazil is to be on and off wet in centre west and centre south and conditions are seen as almost perfect. There were concerns in Argentina about freeze damage but nothing reported so far but temperatures could all further down. At least, it will be mostly dry. US will be mostly dry, a bit of soil moisture would be welcome before winter wheat is entering into dormancy.
Night session is softer across the board with no major move just yet. Soybeans are starting the week -2 cents down (on soon expiring X6, F7 is currently -6 cents down), Corn is -1.50 cent down as well as Wheat in Chicago and the move is similar in Kansas. Minneapolis is mostly flat but tends to be stronger for a cent or so. MATIF is expected to tick higher while CME EU is so far expected flat.
Tunisia bought 100,000 of soft wheat and 75,000 of Barley. Meanwhile, Algeria’s OAIC is in for January shipment. South Korea KFA bought 63,000T of corn, optional origin.
In Egypt, there’s a reshape of the quarantine authority. The newly created General Organization for Export and Import Control (GOEIC) will have sole responsibility for inspecting wheat and other agricultural goods and any imports will require the GOEIC approval.
EURUSD posted a nice move last week with -2.56%! After spiking to almost 1.13 on the US elections night, it ended the week at 1.0850. Market, after a few hours of panic mode, realised that a candidate rhetoric and the president elect actions will most likely be drastically different. The main point that is worrying the markets is trade deals, especially with China. Market sees as very unlikely he will put in place a drastic import duty on China products. That would mostly be bad for US economy and worldwide economy so the reason might prevail. Also, retaliation measures could be tough: China could stop buying US soybeans for example… So, the mood seems to gradually become like the song say: “meet the new boss, same as the old boss”, and speculation on what he will do and what he won’t do probably won’t dissuade FED from a December (the 14th) rate Hike (Donald Trump won’t even be in office just yet). EURUSD has started the week continuing its lower trend and is now trading below 1.0750. GBPUSD was up +0.66% last week, closing just shy a pip of 1.26. Nigel Farage managed to catch up with Donald Trump and it’s unclear if he’ll try to play a role of intermediary between the two governments but he’s been the first UK politician to meet the new president elect, rising a bit of anger in the Tories bench as it can be taken as an humiliation. GBPUSD is following EURUSD lower this morning and is trading around 1.2475. The cross rate GBPEUR, drastically rebounded, after reaching a low in October of 1.0940, it’s back above 1.16. It seems like the result of US elections could be the best as far as Brexit is concerned. No major macro stat today. Japan preliminary quarterly GDP was better than expected to +0.5% (+0.2% expected) but the GDP deflator is -0.1%, worse than the +0.3% expected. Japanese Yen is taking a hit this morning, USDJPY being up in excess of +1%. Chinese industrial production year on year was slightly lower than expected to +6.1% but only marginally missed the expectations (+6.2%). The retail sales were +10% year on year (+10.7% expected). Tomorrow will be funnier: German preliminary GDP, French CPI, UK CPI, EU flash quarterly GDP, German ZEW, UK inflation Report, US retail sales,…
Oil is starting the week a tad lower, NYMEX Crude trading around $43.25 and ICE Brent above $44.50. There is still a lot of questions around the OPEC deal. Finally, Gold is tagging a hit on stronger US dollar, currently trading around $1,220 per ounce.