Another rebound of Soybeans, F7 closed up +9.75 cents to $10.30 on a mostly technical session. This was not enough just yet to give a strong motivation to Corn as it rebounded in a lower extent, but short could be in pressure pretty soon. Corn ended up +1.25. Wheat was unimpressed and closed down -3 cents, while there was still a bit of mess on the spreads as Kansas closed up +2 cents and Minneapolis was ticking up on the close. But December options expiries could bring some fun, especially on Corn around 350 cents strikes, and also with reducing volumes around thanksgiving holidays. In Chicago, funds were generally on the buy side as per Reuters estimates: they bought 4,000 Corn, 11,000 Soybeans and 1,000 Wheat. On the other side of the pond, +€1 for MATIF and +€0.50 for CME EU, its premium was (still) +€13. So far, MATIF Z/H is pushing higher, it will surely be more nervous with the expiry approaching.
Bing the CFTC COT cut off, it’s expected funds have purchased 7,500 Wheat over the week, 26,500 Corn and 26,000 Soybeans. In other words, trade will expect to see funds short 124,853 lots of Wheat, short 58,656 lots of Corn and long 124,177 lots of Soybeans. Overall short is melting… Risk off on the short Wheat and Corn could be damaging.
Night session is on the soft side with Soybeans down -2 cents, Corn down -3 cents and Wheat down -5 cents or so. MATIF and CME EU are expected flat but it’s still early, a bit of pressure should come from the US markets, EURUSD only slightly softer might not come to the rescue.
Monday night, the EU Crop Monitor MARS report was not really exciting but it’s the season… Soft wheat yield unchanged (5.62T/Ha), durum yield increased by +0.3T/Ha (to 3.35T/Ha), barley yield increased by +0.2T/Ha (to 4.77T/Ha) and corn yield increased by +0.1T/Ha (to 3.79T/Ha). Only marginal changes then. They pointed a bit of rain deficit around the Mediterranean sea, a bit too much rain in Romania, Ukraine and Poland and a little cold spell in Ukraine and Russia. Report says that “sowing and emergence conditions for small grains were somewhat difficult, but within the normal range”, so still no massive concern but the later the winter crops will be planted the more vulnerable to cold they will be.
South Korea Kocopia is seeing 50kT of corn, optional origin. Jordan wheat tender has been… Cancelled obviously! New deadline is set up for the 29th of November.
On the OPEC deal, the agreement would be to cut 1.2M barrels per day but the thing is, the three I’s are reluctant… Indeed, Indonesia, Iran and Iraq are hesitating to get on board while Libya and Nigeria will be excluded of the cut anyway. So nothing is more sure and if potentially we’d talk about a supply cut of -4%, there’s no agreement so far. Mind-set is very volatile, one day traders are expecting a cut, the other day they doubt about it. So the range $45/$50 is on and there’s a bit of nervousness! On freight, a bit of easing on the Baltic Dry Index BADI: -8 to 1,232. It feels a bit toppish and market panicked but the reversal is quite slow so far.
Big macro day today! Flash Manufacturing and Service in France, Germany and EU… And the results are actually decent. French Flash Manufacturing PMI was in line with expectations to 51.5 while on the Services it was better than expected to 52.6. In Germany, Manufacturing slightly missed the expectations with 54.4 but Services were also above the expectations to 54.1. For the UE, bot better than expected to 53.7 for Manufacturing and 54.1 for Services. EURUSD is slightly under pressure anyway, near enough of 1.06 to play with that level. A bit technical indeed. Later today, the Autumn Forecast Statement in the UK. Market will look at the growth forecast for next year. Previous forecast was +2.2%… But it’s dating from before the Brexit was even being imaginable! It’s expected Government will take a more conservative approach and will cut the forecast to +1.3%. Market will also look on the amount of Government borrowing and tax credits cuts. It can bring a bit of volatility to the British Pound and the currency started the day under pressure, GBPUSD trading below 1.24. Also later today US Core Durable Goods Orders month on month (expected at +0.2%, Durable Goods Orders expected at +1.2% on their side), Unemployment Claims (expected up to 241k), HPI (expected at +0.5% month on month), flash manufacturing PMI (expected at 53.6), New Home Sales (expected at 591k), revised UoM Consumer Sentiment (expected at 91.6), Crude Oil Inventories (expected at +0.3M barrels), Natural Gas Storage (expected at 7b cubic feet) and finally, the grand finale, the FOMC minutes! Market will look at how close was the miss and if there are apparent reserves about the December hike.