A softer day yesterday with a lot of mess on Wheat spread. Soybeans Z6 failed to touch $10. This level is seeing a lot of producer and merchants selling as it’s seen as a miracle considering the size of the US crop. Z6 ended down -3.75 cents. Corn followed with -3 cents. Wheat in Chicago went down -2 cents, while Kansas was down -4.50 cent. The premium to Kansas closed to +6.50 cent ($2.39/T). Minneapolis closed up +3.75 cents, so logically premium to Chicago and Kansas kept rising, closing to respectively $121.50 and $115. Vomitoxin and Alphatoxin are making Canadian wheat (quite often basis Minneapolis) more expensive. On the other side of the pond, no much excitement, MATIF ended up +€1 and CME EU +€0.75. Premium of CME is still a very high €17.50. In Chicago, funds sold 6,000 Corn, 4,000 Soybeans and 3,000 Wheat.
Night session is showing a little strength across the board: Soybeans are more or less completely reverting the yesterday movement (+3.25 cents), Corn is just up a cent or so while wheat is on +2.50 cent. Export sales later today, Corn and Soybeans should be significantly above 1MT.
On the weather side, US is going to be wet but the rain even will mostly avoid the winter wheat areas were soil moisture would be welcome. Snow has arrived in Canada. South America will see very favourable conditions until the end of the month. MATIF is ticking up, CME EU is flat.
Algeria is said to have purchased 580,000T of wheat, the bulk of the price is said to be between $201.50 and $202.00 CNF. Considering the quantity, tough to imagine there’s not at least one cargo of Argentinian wheat priced below $200. It clearly calculates but there’s a significant risk on bug damage and January shipment is a bit early. But big trading houses can definitely take the risk and have the ability to switch origins. Anyway, French won’t be in, most likely the bulk of the order will be German and Baltic origins. Japan purchased 136,726T of US and Canadian food wheat.
Saudi Arabia seems keen on publishing the amount of oil reserve they have, adding that they want the ARAMCO IPO to be the most transparent IPO of an oil company. Meanwhile, US Crude Oil inventories diverted once again significantly from the estimates: +0.4M barrels expected… Actual was +5.27M barrels! This is +22.1M barrels in 3 weeks and stocks are now at 490.3M barrels. The data was bearish across the board: Gasoline stocks increased by +0.75M barrels, Distillates stocks increased by +0.98M barrels, imports increased by +0.98M barrels and production decreased by -10,000 barrels. This has clearly taking wind off from the current rebound. NYMEX Crude is still trading with a $45 handle, around $45.75 and ICE Brent is trading at +$1 premium. There are rumours that some OPEC ministers will hold an informal meeting on Friday in Doha, to discuss about the battle plan of the (alleged) supply cut on the 30th of November. On the other side, a bullish week on the ethanol. Stocks were off 620,000 barrels to 18.61M barrels despite a higher production (+15,000 barrels per day to 1.02M barrels per day). It helps ethanol futures to contain their daily loss. On Freight, Baltic Dry Index BADI is on a bull run: +139.54% year to date! And it’s +294.83% since the historical lows of February 2016. It’s at its highest level since August 2015… It’s mostly fuelled by the drastic rebound on larger size vessels, Baltic Capsize Index BACI is posting +419.36% year to date. Mid-side vessels demand was average, Baltic Panamax Index BPNI is posting +173.38% year to date.
Another Brexit doom and gloom defying statistics: UK retail sales are up +1.9% in October, versus +0.5% expected. GBPUSD is rebounding towards 1.25. This afternoon, US CPI, Philly FED and Unemployment Claims could bring some volatility on EURUSD which is taking a breather after the current dramatic post-election selloff. After trading below 1.07 yesterday, reaching a yearly low of 1.0663, it has rebounded and trading around 1.0725. Gold is trading above $1,225 per ounce.