Soybeans finally closed below $10! With -6.75 cents, it closed at 999.25 cents and it was predictable, it has triggered some bids and during the night sessions market has rebounded sharply with +6.50 cents. It won’t be a piece of cake to go further down but the ample supply coming from South America is clearly bringing the fundamental pressure. Corn and Wheat where unimpressed though, Corn failed to follow Soybeans by correlation, and the return of rains in the US left also Wheat unimpressed. Corn ended up +1.25 cent while wheat was flat. They have also rebounded during the night session with respectively +2 cents and +5.75 cents. Kansas ticked down yesterday and Minneapolis was up +1.25 cents, they were also both on the upside this morning, more or less in the same extent as Chicago. In Chicago, yesterday, funds bought 6,000 Corn and 1,000 Wheat while they sold 3,500 Soybeans. Being the CFTC’s COT cut-off, market will look for a grand slam on Soybeans, funds were expected to be on the sell side every single day, for a total of 18,500 lots. On Corn and Wheat, it’s expected funds were net seller of respectively 36,000 lots an 16,000 lots. On the other side of the pond, MATIF was down -€1 yesterday, CME EU up +€1.25… Ant they are both retracing their own way today as MATIF is up +€1.50 and CME EU down -€1.

 

GASC is back! Considering the amount purchased already, considering the level of state reserve, considering the local harvest is approaching, this can only hint the fact that private sector has been badly hit by the Egyptian Pound devaluation and GASC is compensating the lack of buying from private sector. And it was popular! 17 offers! This includes US SWW (two shipments, best FOB is $189.60), one shipment from Ukraine ($195 FOB), obviously Russian wheat (8 shipments, best FOB is $195.90), 3 French shipments, there is still some indeed (best FOB is $196.99), one shipment from Romania (FOB $205.74) and 2 US HRW vessels (best FOB $194.45). It is a total of 1.005MT offered, it was a long time the 1MT threshold was not reached. Otherwise, Jordan is seeking 100,000T of feed Barley, Japan booked a little 1,177T of feed wheat and barley in the not so popular SBS tender. Taiwan’s MFIG bought 65,000T of US corn at 119.1 cents over Corn N6, CNF.

 

Oil is rebounding a bit, taking a well deserve technical breather but later, US Crude Oil Inventories, are expected again to show a build-up of 3.3M barrels. Saudi authorities begin to be annoyed and said that there’s no reason why they should be the only one to bear the cut for the others OPEC members. In other words, they are discovering that they have a dominant position, that during years Saudi and other OPEC members had the same vision and strategy, but it’s now changing… Should the deal be in fine a failure (in terms of long term price recovery), it’s going to be a big reputational damage for OPEC and most probably create some arguments between members. Saudi don’t need other members to ‘influence’ the world oil price, but they need other countries to contribute to the cost and fewer countries are ready to do so. NYMEX Crude is trading below $48.75 and ICE Brent with a $3 premium.

 

Anyway, nothing else matter today… FOMC indeed! 10pm Dubai time. It’s not really about the rate hike, at this point, a failure from FED to hike the rate would be a massive disappointment. It’s about reading between the lines, especially about inflation and employment. Indeed, there will be speculation about how many rates hike there will be in 2017, two or three? US CPI was a tad better than expected to +0.1%, Core CPI was as expected to +0.2%. US Retail sales were a tad lower than expected to +0.1% while core retails sales were, on the opposite, a tick better with +0.2%. EURUSD is trading so far quietly right above 1.06. GBPUSD is back to close to 1.22 despite average earnings growing less than expected with +2.2%. Countdown to Article 50 triggering is right on, fun period ahead. But today, Dutch elections, soon French and German elections, could also bring an interesting next few weeks.

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