This was some kind of week for the last trading week of the year. It started with a bang when market returned on Tuesday, Soybeans bounced +25.75 cents, Corn +9.25 cents and Wheat +16 cents. But it was with no real change on fundamentals (very technical with a touch of funds rebalancing and short covering), all the same discussions are going around and after a day off, market was itching to make a fashionable comeback. The only fundamental to put on the Soybean’s credit is that the rains might have avoided some soybeans area, potentially delaying the plantings. However, Tuesday proved this might have been exaggerated as Soybeans corrected -8 cents, Corn -6.75 cents and Wheat -8 cents, truth is a lot of traders are in holiday and market can be erratic in those circumstances. Uneventful Thursday, Soybeans down -3.50 cents, Corn up +1.5 cents and Wheat up +3.25 cents on a day where the GASC was there: no US wheat nor Argentinian wheat was offered. On the other side of the pond, similar behaviour for MATIF who recovered +1.36% between last Friday and yesterday’s close, not really bothered by a rebound in EURUSD.
Night session is softer on Soybeans, playing with the $10 level, F7 ended down -2.75 cents. Corn is ticking down, also playing with a psychological level: $350 on H7. Wheat markets are mixed, night session ended up +1.75 cent in Chicago but -1 cent down in Kansas and -2.25 cents in Minneapolis. There will be a lot of clean-up to operate early next year. MATIF is more or less flat, in poor volume as less than 2,500 lots have traded all expiries cumulated. Meanwhile CME EU is desperately dull… The end of the season will be very long, and salute an only come from a huge crop.
To be noted this week, again export inspections showed a weaker soybean shipments for the 6th week in a row… But it’s for those who want to see the glass half full as they reached a very good 1,710.2MT! Only 678.2kT are now needed on average per week, there’s now not much doubt USDA will increase export in the WASDE report: it’s 8% in front of the average seasonal pace, in other words we could talk about 5MT more at the end of the season, bringing the US exports above the 60MT mark. However, it seems it gave a bit of a relief to corn, shipments were above the 10 weeks average, reaching 970.5kT. It brought it on line with the USDA pace while last week it was 127kT behind. Not much buffer… But last year situation was worse, so still no need to panic and when soybeans shipments will leave more room for corn, we’re likely to see a pickup. Same scenario for wheat, from behind seasonal pace, it came back marginally in front. With 521kT of wheat shipped, this is above the 10 week average and bring back wheat to be in line, but wheat is definitely the one to monitor closely as the season will go very quick, especially with South America and Australia coming into the equation.
So GASC yesterday: 10 offers. Nothing from the US, nothing from Argentina, 1 from Ukraine ($187.60 FOB), 1 from Romania ($190.5 FOB) and the rest from Russia (best FOB $186.68). With freight differential, Ukraine was competitive and was set to make its return to Egypt after a long period of absence as GASC was expected to buy another big hand as supply is kind of tight: they purchased 235,000T at an average of $197.48 CNF. They took 3 cargoes of Russian (180,000T) at an average of $197.50 CNF and the 55,000T from Ukraine at $197.40. GASC has booked a total of 3.175MT this season through their tenders and Russian wheat is still the leader by far with 70%
Jordan state owned silos are canelling their tender to buy 30,000T of wheat. Morrocco is seeking 363,636T of soft wheat.
There are growing concerns in Asia about bird flu and human transmission as China confirmed a case of human contamination. But government is reinsuring, saying that it has been dealt with timely and effectively, only 170,000 birds have been slaughtered as a consequence: this is to compare with 18.4M is South Korea and 800,000 in Japan.
US Crude Oil inventories were expected to sow a withdrawal as US exports are surging. But instead of a -1.3M barrels expected withdrawal, stocks have risen by +0.6M barrels. Crude Oil hasn’t posted a major move anyway and is still in the $50/$55 range, waiting for next year to asses changes on S&D. NYMEX Crude is trading around $53.75 while ICE Brent has a $3 premium. On the Ethanol side, stocks were down -377,000 barrels to 18.68M barrels, if production was lower (-8,000 barrels per day to 1.03M barrels per day), demand also rose. On Freight, Baltic Dry Index BADI ended its year on the 23rd at 961, ending the year with a +10.46% rally.
EURUS seems to be willing to end the year on a good note as it has rebounded above 1.0525. Purely technical as the only major stats this week were in favour of US dollar bullishness: US Unemployment Claims were better than expected yesterday at 265k, Tuesday CB Consumer Confidence was also better than expected at 113.7. GBPUSD is back as well above 1.23. Anyway, brace yourself for some kind of year in 2017 as French elections, German election, Brexit and the start of Donald Trump presidency could bring some very interesting price action.