Tipping point? At least a well-deserved breather. Market moved down, led by Soybeans, they closed down -9.25 cents. Corn ended down -1.25 cent, Wheat down -2.75 cents, Kansas -1.50 and Minneapolis -1.50 cents. On the other side of the pond, CME EU and MATIF ended flat. In Chicago, funds sold 4,500 lots of Corn, 7,500 lots of Soybeans and 2,000 lots of Wheat. Being the CFTC COT’s cut-off, market will expect funds to have been on the buy side for 8,000 lots of Corn, 4,000 lots of Soybeans and 21,000 lots of Wheat.
Night session is still softer, modestly: Soybeans are down -2.75 cents, Corn -1.50 cent and Wheat -2.50 cents (Kansas is 1 cent worse and Minneapolis is flattish). MATIF and CME EU are mostly flat.
It is still much milder than usual in the US and wheat is at risk of leaving dormancy where the snow has melted. But it’s not bad by any means if there’s no cold snap but no snow layer would mean more vulnerable to freezing. It’s a “What If” world, the worse can always happen but so far, so good! In South America it is getting drier in Brazil while Argentina will experience some patches of rains for the next two weeks but nothing seems to dramatic.
NOPA Crush later today is expected at 159.1M bushels.
Bird flu is back in the headlines: chicken price is falling in China as the human death toll is said to have reached officially 79. The situation seems pretty serious and has been underestimated. Consumers are now concerned, scared about eating chicken and China is the second biggest market in the world… Would it hurt feed demand? Tough to say at the moment but consumer will switch their demand towards other meat but the elasticity on the feed demand could suffer from some lag.
Taiwan Flour Mills are seeking 102,850T of US wheat. Japan received no offer in the not so popular SBS feed wheat and feed barley tender. Algeria is seeking durum and feed barley. Jordan silos failed to purchase 25,000T of wheat.
On Oil, OPEC overall compliance with the cut is not helped by a strong dollar and US Shale Gas operators drilling as much as they can as their profitability is good and NYMEX Crude is failing to enter a new trend, still ranging. It currently trades just below $53 and ICE Brent has a $2.8 premium. US Crude Oil Inventories are expected to show a build-up of 3.7M barrels later today. On Freight, the slide continues: Baltic Dry Index BADI was down -3 to 685. But the downside momentum seems to lose a bit of pace. Pause or the end of the dip?
In policy news, Dodd Frank is seen being at risk and on top of this, President Trump signed a bill to roll back regulation of commodities trading firms.
EURUSD is back in the mid 1.05’s as Janet Yellen strongly hinted than a March rate hike could be reality as she emphasised that “waiting too long” could be “unwise”. But with the track record of failing to deliver promises, let’s wait and see: market is still very sceptical indeed and sees that happening at 17.7% probability only. On top of this, US PPI was better than expected yesterday to +0.6% (versus +0.3% expected) and Eurozone flash quarterly GDP was lower than expected (+0.4% versus +0.5% expected) and German Zew also fell short of expectations to 10.4 (15.1 expected). Later today a bucnch of US stats also: CPI, Core CPI, Manufacturing Sales, Retail Sales… On the other side of the pond, UK CPI was +1.8% versus +1.9% expected yesterday: GBPUSD is trading softer, just above 1.24.