Yesterday was a typical two sided session. Soybeans closed up +6.75 cents, Corn +4.75 cents and Wheat +8.25 cents. A bit of uncertainty, nervousness, before the USDA WASDE report, driven by Soybeans. The focus will be US Crush and Exports, and obviously South American production. The weather outlook is still a bit wet, providing the volume on the bid side. The main question is that if Corn and Wheat are going to acknowledge their own S&D on Thursday of if everyone will follow Soybeans. So everyone will take the opportunity to clean the books a little bit before tomorrow. Wheat rally was also fuelled by fresh talks of winter kill in Black Sea. So far, it’s widely estimated that the snow cover has been well efficient. Funds bought 9,000 Corn, 6,500 Soybeans and 6,500 Wheat as per Reuters estimates. It means market will look for a buying week on the next CFTC COT with expectations at 14,500 lots of Corn, 11,000 for Soybeans and 10,000 for Wheat. Kansas premium was easing down, back to 8.75 cents on the close, same for Minneapolis, closing at still very high premium of 124.75 cents versus Chicago and 116 cents versus Kansas. When party will be over, it will hurt. Spring action on spreads are to expect. On the other side of the pond, MATIF closed also up +€0.75 while it was a pure flat line on CME EU H7, flat not trading. Danger zone for the contract, new crop will need to arrive fast and big. And physical brokers to get incentivise to push their clients to trade basis CME EU…

 

Night session is still up for Soybeans, trading above 1,050 cents with +8.25 cents. Same old reasons… Corn is down -0.50 cent and Wheat -1.50 cent, likely to be quiet until the report, but Soybeans can still trigger some panic. Kansas and Minneapolis are up respectively +0.75 cent and +2.25 cents taking a breather after their premium got reduced yesterday. MATIF is just ticking up in early trading.

 

Japan booked 6,200T of feed wheat on the SBS tender and no Barley. There’s a lack of interest of traders for the scheme. Jordan silos are postponing the 25,000T milling wheat tender to reissue it for the 14th of February. Government is still seeking 100,000T of hard wheat. Ethiopia offers are in, March best offer is at $223.68 CNF, April $224 CNF and May $219.68 CNF according to Reuters and Bloomberg.

 

As of December, France has only exported 2.4MT of wheat outside EU, down -47% from last year. Tough season as the lack of availability has not been compensated by higher prices. France Agrimer sees seasonal exports to 10.9MT (including 4.9MT outside EU) and ending stocks to 2.75MT.

 

Oil is down. If the output of OPEC has reduced from December (Saudi Arabia taking the main hit), Iraq, the UAE , Venezuela, Libya and Nigeria are still above their target. OPEC is overall 368,000 barrels per day above its target. On top of this, US Shale Gas operators cannot care less about OPEC and are pumping as long as it is profitable to do so. NYMEX Crude is trading lower, just above $51.50 while ICE Brent has a $3 premium. US Crude Oil inventories are expected up +2.7M barrels later today. This would be the fifth week in a row the inventories are building up. On Freight, Baltic Capesize Index BACI kept digging, -108 yesterday, this is -11.86% in a day, taking the selloff to -42.02% since the beginning of the year. Small rebound of +9 (+0.97%) of Baltic Panamax Index BPNI did not help a lot and Baltic Dry Index BADI fell -21 to 714 and is on a -25.70% fall so far this year.
Greece is back in the headlines, as IMF seems worried about the level of debt, approaching 180% of the GDP. If they see the debt slowly decreasing to 160% of the GDP, they think the situation is unsustainable and forecast an explosion to 275% by 2060. There’s a nice potential of volatility if we add Brexit, French and German elections for the next couple of months! EURUSD is lower, trading below 1.0650, GBPUSD is trading below 1.25.

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