Market digested the USDA WASDE on Friday and closed lower across the board. Soybeans have been attracted by the level of $10 but K7 failed to go for a sneaky test yet and low on day was 1,003 cents and finally closed at 1,006.50 cents, -4.50 cents on the day. Corn closed down -2.75 cents. Wheat was down in Chicago by -3.50 cents, -7 cents in Kansas, while Minneapolis premium rebounded after the harsh correction as Minneapolis closed only down a tick. In Chicago, funds sold 10,000 Corn, 1,500 Soybeans and 2,500 Wheat. On the other side of the pond, MATIF and CME EU Wheat both moved down -€0.75.
Last week was lower across the board, highly technical and finding pressure form the USDA WASDE that reminded that he world is very well supplied and South America corn and soybeans, despite localized issues, will be flooding the market. Wheat felt some pressure on some adjustment but the focus start to shift to the next crop, despite a current US concern, if EU and FSU are doing well, this might lead to another tough week for farmers. And so far, as far as France is concerned (the main contributor to the EU’s bad year), everything is going well as France AgriMer said 92% of the soft wheat is in G/E conditions. But to be fair, it was the same last year (93% actually) so anything can still happen. The whole soy complex went down, Soybeans -2.99%, SoyMeal -1.29% and SoyOil -4.94%. ICE Canola and MATIF Rapeseed followed, publishing weekly loss in US dollar of respectively -2.51% and -1.10%. Corn was down -4.33% and MATIF Corn -2.09% in US dollar. Wheat was down -2.87% in Chicago, -3.44% in Kansas and -1.69% in Minneapolis. As per MATIF Wheat, CME EU and LIFFE Feed, they lost in US dollar respectively -0.96%, -0.90% and -0.25%. Still on the weekly moves, EURUSD moved up +0.46%, GBPUSD down -0.98% and USDCAD up +0.70%.
Interesting COT on Friday that doesn’t include the USDA selloff as the cut-off is Tuesday. Funds sold across the board across all commodities. Tough to find a commodity that has been bought: Heating Oil, Natural Gas, Cotton, Frozen Concentrated Orange Juice and Lumber are more or less the only one. Funds sold 7,714 lots of Wheat (in a market moving down by -0.11% during a week ending on Tuesday), increasing their short position to 63,180 lots. Reuters was expecting funds to be on the buy side for 6,500 lots, this is quite a miss that could bring some additional pressure. Funds reduced their long position on Corn and Soybeans by respectively 2,054 lots and 3,938 lots to respectively 80,081 lots and 127,638 lots, while market went down -1.57% and -2.52%. Reuters slightly overestimated the selling appetite as they were targeting respectively 3,500 lots and 7,000 lots. From Wednesday to Friday, ‘square hat trick’ as the three days on the three commodities are expected to have seen selling: Wheat for a total of 11,000 lots, Corn for a total of 32,500 lots and Soybeans for a total of 14,500 lots. This would bring the aggregated position down to long 86,539 lots. Anyway, with the funds starting to feeling the pain on Corn and Soybeans, if there’s no bullish fundamentals coming into the equation (like new logistic issue in South America) they could be tempted to take their last chips away from the table…
Night session is not massively exciting so far. Soybeans are up a single cent, Corn down -1.50 cent and Wheat down -2.50 cents in Chicago, -5 cents in Kansas and -3 cents in Minneapolis. MATIF has opened a couple of ticks down.
On a side note, a couple of weeks of usual hours discrepancies between US and Europe as US moved yesterday to daylight saving time while Europe will be on the 26th.
Saudi Arabia’s SAGO have booked 735,000T of hard wheat: 480,000T to Jeddah at an average of $218.91 CNF and 255,000T to Dammam at $223.48 CNF, making a total of 735,000T at $220.49 average CNF. Tunisia bought 75,000T of milling wheat. Iraq still to purchase their wheat, meanwhile they are talking about buying US rice. GASC is seeking 25,000T of soybean oil and 15,000T of sunflower oil. Still in Egypt, wheat stocks are at 3MT, enough to last 4 months, overlapping nicely with the local crop coming in April. In other words, GASC appearance on wheat might become more sporadic for the next couple of months.
Oil is starting the week slowly, no major move, trading $48.50, ICE Brent is trading with a $2.80 premium, managing so far to stay above $50. US growing Crude Oil Inventories are pointing the fact that the OPEC deal might just have been an ineffective gesture. On Freight, Baltic Dry Index BADI ended the week at 1,086, full recovery mode after the dip of February, BADI is now up +13.01% since the beginning of the year.
This is the week of the FOMC: Wednesday. Before that we’ll have German final CPI and ZEW tomorrow, US PPI and Chinese Industrial Production tomorrow as well, and a big Wednesday: French final CPI, UK’s Average Earnings, US CPI and Core CPI, US Retail Sales and Core Retail Sales just before the big event. The week is starting on a soft US dollar note, EURUSD a tad up, trading around 1.0675 and GBPUSD is back above 1.22. In the UK, there’s a risk that the package obtained by the UK Government from the EU to be validated by the parliament, this could technically lead to a ‘no-deal’, to a ‘no-Brexit’. One can see it as an incentive from EU to give the worst package as possible to either keep the UK or getting rid of them in a better position. Story is not over yet and Article 50 is far from being triggered…