Soybeans were once again the star of the day, +10 cents on the close to 1,056 cents on F6. Shipments are still very strong and if the momentum don’t fade right now, it’s very likely the exports will be more than expected at the end of the season. Combined with speculation of lower acreages and funds buying, Soybeans posted a 7th session in a row on the upside, the current movement is +7.13%… With no major change on the fundamentals! Wheat also has the same behaviour days after days. Chicago was down -6.25 cents, Kansas was ticking up (premium of Kansas to Chicago is now 22 cents on Z6) and Minneapolis was on fire in comparison with +7 cents on Z6, bringing the premium to Kansas to 129.75 cents and 151.75 cents to Chicago. A very messy spread situation! In Chicago, funds were even on Corn, bought 9,500 Soybeans and sold 3,000 Wheat. On the other side of the pond, a bit of MATIF selloff, -€3.00, on CME EU, a tick more than this and this have brought back the premium below the €10 mark, to €9.75. On MATIF time spread, the selling pressure seems to be back, will it have the same behaviour than previous expiries? And with CME EU in the equation this could be fun indeed… But open interest has decreased to 285 lots on the front month…
Night session is finally bringing an end to the Soybeans rally as F7 is just back below 1,050 with -6.50 cents. A bit of profit taking is now expectable. Corn is following with -2.25 cents while Wheat is still a mess: -3 cents in Chicago, -4.75 cents in Kansas, +0.25 cent in Minneapolis. MATIF has opened on the lower side: -€1.25. CME EU is flat, still to trade…
CFTC COT was out yesterday with one day delay due to Thanksgiving holidays last week. On the week ending Tuesday the 22nd, Reuters estimated funds were buyer of 7,500 Wheat, 26,500 Corn and 26,000 Soybeans. They were quite on line with Corn. Indeed, funds bought 24,762 lots, reducing their short position to 60,394 lots. But they were much less accurate as far as Wheat and Soybeans are concerned. Funds bought much more Wheat than expected, reducing their short position by 18,131 lots to 114,222 lots. But on the other side, funds bought less Soybeans than expected, increasing their position by 15,467 lots to 113,644 lots. Over the COT week, Wheat went up +2.58%, Corn +3.69% and Soybeans +4.49%, funds are naturally following the trend and on the other side, there are decent selling happening from producers and merchants.
US Export Inspections are in a similar pattern weeks after weeks… But this week they were all lower than last week, totalizing still a very good 3.1MT on wheat, corn and soybeans. Soybeans are still cannibalizing corn and wheat: they posted a 7th week in a row above 2MT, to 2,090.7kT. However, this is -581.5kT lower than last week and below the 10 weeks average since a while. Is that the positive momentum starting to fade? Anyway, soybeans are in front of the seasonal pattern and now need only an average of 794.7kT per week until the end of the season. Corn is keeping failing to show a positive momentum. Only 801kT were shipped last week, while the 10 week average is 959.8kT and now, corn need to reach 1,099.4kT on average for the next 40 weeks to meet the USDA target. We’re entering in dangerous territory there, corn has no more seasonal advance: at this time of the year, usually, it’s 22% of the total shipments that are already done, and currently it is 22%. So corn cannot really afford to miss the seasonal target for much longer. That being said, last year it was 14% and the momentum kicked off later. So no panic just yet. As per wheat… This was – again – the lowest since the week ending on the 21st of January 2016, and the third time in 10 weeks this is below 300kT. Indeed, wheat shipments reached only 222kT! Usually, at this stage, 50% of the wheat export target should be completed, it’s currently 49%, it was 49% also last year. So really, now, wheat exports need to wake up.
Soon the crop report will be over for the winter… Despite a relative lack of rain, the winter wheat is emerging properly: 92% has emerged, perfectly in line with last year and the 5 year average. Conditions are unchanged from last week to 58% of G/E and 10% of P/VP, overall better than last year (55% of G/E and 9% of P/VP). In Brazil, 87% of the corn is planted and 83% of the soybeans are planted.
Egypt is back, GASC is tendering indeed, for shipment first half of January. One could have expect them to show up earlier, usually a couple of sessions on the downside are enough to trigger a tender, it was 4 sessions on the downside in Chicago… (3 sessions down and a flat one on MATIF). Pretty aggressive! As shipment period is going into the new year, it will become possible to see some Argentinian wheat offered, but it might be still a bit early for this one. Last year, they bought their first cargo of Argentinian wheat for shipment on the second half of January. Also, SRW could technically calculate. Anyway, shipment period falls in the middle of holidays season so it could prevent the prices to be very aggressive.
D-1 for the OPEC or nOPEC… Market still is sceptical about what’s going to come out, the mood is very volatile, and after rallying yesterday on OPEC optimism it’s retracing today on market scepticism. NYMEX Crude is currently trading around $46.50 while ICE Brent is above $47.75. On Freight, tiny little rebound after 5 consecutive lower number: Baltic Dry Index BADI went up +3 to 1,184. Gold is now well established below $1,200 per ounce as stronger dollar is putting logically some pressure on the precious metal.
EURUSD is trading below 1.06. There is huge debates as if the Trump election will create inflation or not, preventing EURUSD to go much lower. And obviously market will wait for the December FOMC! A failure to kike rate will bring a lot of disappointment. French Consumer Spending was above expectations to +0.9%, Spanish Flash CPI was also above expectations year on year to up +0.7%. But main data of the day will be preliminary US quarterly GDP, expected to +3% while the Preliminary quarterly GDP Price Index is expected at +1.5%. Also the US Conference Board Consumer Confidence is expected to raise to 101.3. In the UK, mortgages approvals were above expectations to 68K and the M4 money supply month on month also above expectations to +1.1%. Brexit referendum doom and gloom mood is still to kick off! That being said, the actual Brexit process is far from having started and triggering the Article 50 in Q1-2017 seems more and more unrealistic. GBPUSD is trading around 1.2450 and GBPEUR is around 1.1750.