Not much action on Corn and Wheat, market is in a wait and see mood, book cleaning mode. There is no surprise expected from the USDA WASDE report on those. So it will be interesting to see that if it is bullish on Soybeans, if Corn and Wheat will follow or if they will focus on their very own fundamentals that will be a remainder of the heavy supply situation. Indeed, the main question is Soybeans, US balance sheet (export and crush), Argentina and Brazilian production will give the direction. Market seems to think that Argentina won’t be significantly offset by Brazil and closed up +16 cents. Corn ended the day +2.25 cents up and Wheat +1.75 cent up. Funds bought 5,000 Corn, 12,500 Soybeans and sold 500 Wheat. No major spread move on wheat, Kansas closed up +2.50 cent and Minneapolis +2 cents. On the other side of the pond, MATIF was also up, +€1.25. Volumes are still much lower than last year: since the beginning of the season, March contract averaged a daily volume of 9,327 lots while it was 22,207 lots for the previous March contract at the same stage of the season, -16.77% of volume. Execution only brokers will feel the pain and feel their business model need to evolve, especially considering the fact the MATIF is over covered. CME EU was down -€1.50, trading only 15 times…
Night session is reverting across the board: Soybeans are down -4.25 cents, Corn -1.50 cent and Wheat -2.75 cents. Really, today will only be about USDA WASDE, 9pm Dubai time, 6pm Paris time, 5pm London time, 11am Chicago time! MATIF is expected to open flat so far.
Not a lot to talk about. South America has been ‘less wet’ than expected but market could not care less. In Texas, Corn planting has officially started! Bring on the next season!
Tunisia has bought 100,000T of Durum at $269.59 CNF. Japan bought 111,522T of feed wheat from US, Canada and Australia. South Korea’s MFG is seeking 140,000T of corn.
The (big) ships are still sinking. Capesize Index was down yesterday -9.71% taking the Baltic Dry Index BADI down -12 to 702: 15th session in a row down for the main index, collapsing -26.95% since the beginning of the year. Baltic Capesize Index is down -47.65% since the beginning of the year while Baltic Panama Index BPNI is up +9.62%. It seems that it’s more profitable these days to split shipments into several Panamax cargoes rather than one Capesize. And the Capesize fleet being smaller than the Panamax fleet, it makes the index for larger vessels more volatile and sensitive to demand. Meanwhile, US Crude Oil Inventories were expected to rise for the 5th week in a row. Well… They did! But way more than expected. A build-up of 2.7M barrels was expected and it actually reached a whopping 13.8M barrels. Interesting to note that since the beginning of the year, the total build up is 22.4M barrels, interesting to put in perspective with the OPEC production cut… Talking about OPEC, sign they might realise that their cut might have had a $10 to $15 dollar impact, some members seems to think this price action was highly psychological and more is needed for the price to reach $60 and hinted that some more cut may be needed… Well, first reach the target (still 368,000 barrels per day above the target) before talking about the next cut. And US Shale Gas operators will stay the troublemakers of the equation. Finally US Ethanol Stocks reached a 9 month high: stocks were up +215,000 barrels to 22.09M barrels. It’s not due to a bigger production as the production was actually down -6,000 barrels per day to 1.06M barrels per day. Interestingly enough, markets did not react negatively: Ethanol futures were up +2.04% yesterday and Oil was also slightly up yesterday and keeps rebounding today: NYMEX Crude is trading around $52.75 and ICE Brent with a $2.80 premium. General US dollar weakness these days is helping a bit.
Not a lot of significant macro data the past 24 hours. US Unemployment Claims today are expected to 249k. EURUSD is trading above 1.0675. GBPUSD above 1.2550. MP Theresa May wishes hoping to start formal Brexit talks by the end of March, all the parliament debate has been in fact a pure waste of time.