A bit of a pause as far as Soybeans and Corn are concerned, ending the session with -1.25 cent and +1.25 cent respectively, nothing much on the news side. But fast-forward for Wheat as it continued to rebound as the talks about dryness and winter kill (we’ll have to switch to spring night freeze in a few days…) are coming back in the headlines. Good tender activity also gave a good mood to operators. Technically it can also be seen as a pull back and the 440 cents level will be a tough one. Kansas was up +4.75 cents and Minneapolis was up 8 cents, premium to Chicago was back to 104.50 cents on the close. On the other side of the pond, MATIF was up +€1.75 as there was probably some hedging coming from Algeria and Egypt sale. CME EU was down -€1.50. In Chicago, funds bought 3,500 Corn and 2,750 Wheat and sold 3,000 Soybeans.
Night session was bullish: Soybeans up +7.25 cents Corn and wheat both up +2.25 cents… Lower dollar is probably helping a bit after the FOMC. MATIF is trading sideways with no real trend.
There was a lot of candidates for selling to Egypt and GASC wiped half of the offers, totalizing 420,000T at an average of $209.54 CNF. This consist in one vessel of Ukrainian wheat at $207.74 CNF, 5 vessels from Russia at $209.64 average CNF and one French at $210.89 CNF. Russia is still obviously the main importer with 70%, followed by Romania (17%) and Ukraine (7%). GASC has booked (so this is including all vessels potentially rejected) a total of 5.555MT this season, it’s now clear that the Egyptian Pound devaluation has hurt the private sector and the demand is switching from privates to GASC and we are slowly but surely heading to a huge GASC number if we consider the July to June marketing year.
Algeria is also supposed to have bought, from $205 to $206, around 480,000T but it’s always tough to know really how much. Also, after the wheat tender, Saudi’s SAGO is back and is seeking 1.5MT of barley. With this tender activity, the EU balance sheet is getting wiped! Stratégie Grains decreased its EU barley ending stocks by -0.6MT to 7MT and EU soft wheat ending stocks by -0.6MT to 10.4MT, on higher animal feed and… Higher exports!
US Crude Oil Inventories were down! Yep! The first time since 10 weeks with a surprising -0.2M barrels. It’s giving a relief to the slide of NYMEX Crude, back above $49, ICE Brent is trading with a +$3 premium. On the Ethanol side, production was up +23,000 barrels per day to 1.05M barrels per day, there was also good demand as the stocks decreased by 90,000 barrels to 22.77M barrels.
FOMC was not surprising by any means, FED rose its interest rates target by 25 basis points to 0.75%/1% and from the statement, market sees 2 more FED rates hike this year, and 3 in 2018. So everything is on the a good track and those who are warning against a bubble are just scaremongers or have missed the bullish train… We shall see! FED governors believe the inflation is close to the goal and should stabilize around 2% noting this is coupled with economy expanding at a moderate pace and solid job data. EURUSD was up anyway (lower US dollar then), it might sound like a paradox. But it could be selling the rumour buying the fact, and a bit of relative disappointment in those who were expecting more than 3 hikes this year… Come on, seriously? 3 hikes in 11 years and you want 4 of them in 2017? Pure greed… Bank of England left its rate unchanged, as expected, to 0.25%. Sounds like a rate hike won’t happen for a while, Brexit will need to go through first. But GBPUSD rebounded, for the same reasons… Back up to around 1.2375. Finally on this Central Bank day, Bank of Japan left its rate unchanged as expected, the hole dug is already big with interest rates at -0.10%. Australian Unemployment rate was higher than expected to 5.9%… And Australian dollar surged, reaching a three weeks high despite poor job data and the US interest rates hike… Sounds like a technical retracement. AUDUSD is trading around 0.7690.