The winter kill story lasted a few hours only and failed to bring the rebound that was expected or feared. A very interesting experience was actually made by a US farmer who recorded an outside temperature of -10.7 degrees Celsius (12.8 Fahrenheit). His wheat is covered by  10.16 centimetres of snow (4 inches). The temperature below the snow cover was +1.1 degrees Celsius (34 Fahrenheit). In other words, wheat is pretty safe. Wheat moved down -4.25 cents in Chicago. Kansas was a bit sceptical though and only moved down -0.75 cent, ending with a 9 cents premium to Chicago. Minneapolis was gently in-between (-2.50 cents) and is still very well priced compared to Chicago and Kansas, at respective premiums of 136.75 cents and 127.75 cents on the close. We’re heading towards the time of the year where it’s tough to have a view as traders will wrap up their year cutting position, funds are going to rebalance, traders will take holiday and that will reduce the volume. Soybean went down -15.25 cents, the move was very technical as to be fair there’s not much actual bearishness around. However, the idea that even with strong demand they can be overvalued is growing, especially with South America expected to yield pretty well. Corn followed Wheat with an eventless and unconvincing -3 cents. Funds sold 5,500 lots of Corn, 8,500 lots of Soybeans and 2,500 lots of Wheat. MATIF was flat, CME EU a couple of ticks down.


Night session is again down across the board, no Tuesday reversal so far (it’s fifty fifty anyway). Soybeans are still correcting (down -9.25 cents), as we reproaching the level of $10, it will surely be a strong support where a lot of battle can happen. Corn and Wheat are just quiet with -1 to -2 cents across the boards, nothing major as it’s the week before Christmas, some traders will be already gone. MATIF and CME EU are expected flat so far.


Jordan is back tendering Wheat as they received less than 3 offers (might mean just one) on their previous attempt. They also seek wheat bran. GASC is back and it’s going to be very interesting: if Russian wheat is as usual in a very good position (especially considering FOB prices went done more or less -3% in a week or so, best FOB price should be no more than $180), Argentinian wheat is becoming less risky in terms of quality considering the execution period (second half of January) and US wheat could technically start being competitive as the worry over wheat exports are growing. That being said, Taiwan Flour Mills are seeking 93,125T of US wheat.


Indeed, the expected struggle of US wheat continues. Only 478.2kT were shipped while the required average pace was 497.4kT (but to be fair, this week is above the 10 week average and the best inspection since 6 weeks). It’s not a big miss as such, but keeps increasing the weekly average needs: 498.2kT now for the next 24 weeks. Wheat is just in line with the seasonal average pace, 55% of the final exports are usually completed by this time of the year, and it is spot on. There’s absolutely no buffer. And with an unexpected massive competition from Australia, mind the Asian destinations! Corn shipment were below expectations to 769kT while the average weekly pace was 1,093.8kT and is now, with 37 weeks remaining, 1,130.7kT. This is the smallest inspections number since 5 weeks. But once again, it’s more soybeans that were cannibalizing a bit the corn shipments. But, in terms of seasonality, some fears are slowly building up: on average, 28% of the final export number has been already shipped at this time of the year, this is currently 27%. As long as it’s well in front of last year (18%) market will not panic but this is definitely something to keep an eye on, especially considering that the South American weather is getting much better for Corn and decent crop will hit the books. As per Soybeans, they are in an Andy Williams mood: it is indeed “the most wonderful time of the year”! Again a big number on the high range of the expectations to 1,731.6kT. If it is the 5th week in a row that the number is smaller than the week before, it is still outstanding and brings down the weekly average need to 706.9kT. The seasonal advance is such that the export USDA WASDE numbers will be at some point raised, it is becoming very likely: 53% of the export are already completed, this is to compare to 47% last year and 46% on average. So a hugely negative seasonal pattern is needed for soybeans to only reach their current target of 55.79MT.


Oil is starting the week ranging around $52 without a clear trend. NYMEX Crude is more or less at $52 indeed with ICE Brent at $3 premium. On Freight, Baltic Dry Index BADI fell for the 11th straight session, with -19, it’s now at 927. If the larger size vessel component is down at a much lower pace since a couple of days, it’s the mid-size component of the index who took the relay as Baltic Panamax Index BPNI was down -7.90% yesterday.


Also not a very good start of the year for the European currency as it’s now trading consistently below 1.04, despite a good German IFO (raising +0.6 to 111, +0.3 above expectations). German PPI month on month was also better than expected to +0.3% (+0.1% expected). So quite technical move and the more it’s digging down, the more traders will bet on the one for one objective. GBPEUR cross rate went back above 1.19 as GBPUSD is ranging around 1.2375 and 1.24. If this has been much more a dollar strength rather than other currency weakness, EU and UK will have their own story in the first quarter of 2017 as the Brexit deadline is approaching. Article 50 is supposed to be triggered in March, with no prior negotiation as per the EU said but with most likely, a huge battel in the UK parliament.

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