Fake or not, the biofuels news is clearly played on the bullish side and market retraced the retracement. Indeed, the closed way below the highs on Tuesday on the White House denying the news but yesterday market came back around the highs of the news. On top of this, the USDA January Crush was reported at 170.6M bushels, this is +6.2% compared to last January and the cumulative USDA Crush since October is +3.4% compared to last season, this is to compare to an expected increase of +2.1% over the whole season, so right on time. However, the first quarter is usually the stronger one, so how much crush will slow down will be monitored. Soybeans ended up +16 cents and Corn +8.25 cents. Wheat followed in a very nice fashion, with +13.25 in Chicago, +13.75 cents in Kansas and +11.25 cents in Minneapolis. Some traders are starting to bet there will also be a hit on spring wheat planting surfaces. However, it’s tough to see farmers planting less overall considering their tricky financial situation, so either this is the wrong bet, or it’s acreage that will be cultivated with another crop. In Chicago, funds bought 12,000 Corn, 7,500 Soybeans and 6,500 Wheat. On the other side of the pond, MATIF was also in good shape, ending the day up +€2.75 on K7 in nice volume! Actually the best volume for a specific expiry since the Z6 on the 25th of July were 44,202 lots were traded. Indeed, 36,995 lots of K7 were traded yesterday, thanks to the volatility, the excitement to see French wheat at the GASC,… CME EU did not really care as 60 lots were traded on K7, closing up +€2.50.
Night session is taking a breather. K7 contracts are trading quietly, Soybeans down -2.25 cents, Corn down -0.50 cent and Wheat still up with +1.50 cent. MATIF is expected to tick op on the opening with no much conviction though.
Ethanol Production in the US was unchanged last week to 1.03M barrels per week. However, demand was lower and stocks continued to grow, reaching 23.09M barrels, up +422,000 from last week. As per the US Crude Oi Inventories, expectations were spot on, pretty rare! The inventories increased by +1.5M barrels in a week… This is now +34M barrels in the stocks since the beginning of the year. But Crude is holding pretty well, still stuck in the range $50/$55 as more and more market seems to think that OPEC will be pushed to act as among other things, the US Shale Gas operators are preventing the prices to reach their target of $60. On Freight, Baltic Dry Index BADI went up +12 to 871 despite Capesize index falling by -2.64%. Panamax index being up +4.62%, this has more than offset.
Japan bought 113,167T of food wheat, from US and Australia. They also manage to book 8,830T of feed wheat in their SBS tender.
ISM Manufacturing PMI was better than expected to 57.7 yesterday. Very little news on the currency front, EURUSD is still above 1.0525 with no convincing trend. British Pound is more convincingly in a downtrend as MP Theresa May faced the first challenges of its Brexit bill. The House of Lords wants to enforce an amendment to guarantee rights of EU citizens in the UK after Brexit. Back to the House of Commons, the Government will try to overturn this. GBPUSD is trading down, just above 1.2275.