Friday was quiet in comparison to the rest of the week. Soybeans closed exactly on the $10 level, printing -1.50 cent. The battle is likely to be very tough as the level is seen as highly psychological. Corn closed up +1.50 cents, Wheat just ticked up in Chicago but was up +3.50 cents in Kansas and +1 cent in Minneapolis, volumes were quite low. On the other side of the pond, very little activity on the MATIF, closing down a couple of ticks while CME EU just ticked down. In Chicago, funds bought 3,000 Corn, were even on Wheat and sold 3,000 Soybeans.


The week is starting on a positive note across the board: weaker US dollar, short covering after CFTC COT, weather talks,… Soybeans are up +6.25 cents, Corn +2.25 cents and Wheat +4.50 cents. MATIF is just ticking up in early trading.


Friday was not a representation of the week, which has been pretty nervous (basically a sell off at the start of the week followed by a recovery). Soybeans lost -0.65%, SoyOil -1.16% but SoyMeal was up two ticks (+0.06%). ICE Canola and MATIF Rapeseed moved down -2.80% and -0.53% respectively, both in US dollar. Corn rebounded in a quite technical week, printing +0.89% over the week while MATIF Corn followed in a lower extent with +0.48% in US dollar. Wheat was a mess: Chicago was down -0.96%, Kansas down -0.44% but Minneapolis rebounded +1.96%. The premium of Minneapolis took a such slap recently that there was some profit taking and it is now back above $1 to Chicago (112.75 cents) and closed at +95.50 cents over Kansas. MATIF was down, not helped by EURUSD rebound, and closed with a weekly loss of -0.39% in US dollar. CME EU followed with -0.89% while London LIFFE Wheat was up +1.59% in US dollar (although GBPUSD rebounded last week, the general currency weakness is helping this market for sure, and UK wheat exports). EURUSD was up +0.63% on the week, slightly disappointed at the FED statement, the greediest were expecting a raise at every meeting! GBPUSD was up +1.83%.


The main point of talk is becoming the drought in the US and HRW is said to feel the pain and on top of this there are some reports of wildfire. However, it’s good to put things into perspective as every year there is the winterkill scaremongering, followed by the drought scaremongering. Fairly, one can admit that the situation is not better than last year, it could not be better, last year soil moisture was excellent at the start of the spring as far as wheat, corn and soybeans area were concerned. But looking back in the years, it is pretty contrasted and the spring is always starting with some hydric stress in some part of the HRW areas. The US weather normal pattern is dry at the end of the winter and rains should come back with raising temperatures. So looking at the current Drought Monitor and the 6 last year, it doesn’t look particularly awful. For sure the rain will need to come but “spring rains make grains” as the adage says. Furthermore, North Dakota, the second producing state has no significant issue. Well winter wheat area is tiny to be fair (2%/5%) but spring planting will be done in better conditions than last year, so at least this is a positive point. There’s no issue either in Montana (usually fairly split between spring and winter wheat).

And weather forecast is encouraging, Oklahoma, Kansas, Colorado, Missouri and Arkansas (the two last being minor wheat producers) will find some relief for the next 12 days. Kansas being the first wheat producer of wheat this should give some relief in the panicking mood and the Drought Monitor should improve in the next couple of weeks. Oklahoma is also a big contributor to the US winter wheat crop so here it is, in a couple of weeks, there could be no more dryness issue in Kansas, North Dakota and Oklahoma. Alabama, Georgia and Tennessee aren’t likely to improve drastically but the contribution to wheat production is low. So picture overall is far from being as severe as it seems.

In France, FranceAgrimer said the soft winter wheat conditions are unchanged, to a still very good 92% G/E. But it was similar last year and we know what happened next so nothing to get excited about. And on northern hemisphere winter crops, this is the period were a significant amount of talks (whether they are bullish or bearish) are useless. As long as there was no winterkill, everything can happen, the good, the bad, and the ugly! Sometimes we should save time and just let time do its thing…


In Argentina, in Rosario ports, there will be a 24 hours strike on the 30th of March, asking for better wages. It should not create a huge mess over the logistic should it last only 24 hours.


Pretty interesting CFTC’s COT. Reuters was estimating that funds were on the sell side (they got this right at least), but the extent has been quite surprising. Indeed, it was estimated funds sold 16,000 Wheat, 36,000 Corn and 18,500 Soybeans. They actually sold respectively 7,449 lots, 103,683 lots and 29,284 lots. Funds increased their short position on Wheat to 100,629 lots, decreased their long position on Soybeans to 98,354 lots and cut their long and move to short 23,602 lots on Corn. It was a bit of a panic mode, following the trend as on the CFTC’s week, Wheat moved down -3.69%, Corn -2.69% and Soybeans -2.20%. There was a bit of reversal from Wednesday to Friday, funds buying 3,250 Wheat, 12,500 Corn and selling 3,500 Soybeans but the aggregated long has virtually vanished, lower than 15,000 lots.


Saudi’s SAGO purchases 1.51MT of feed barley, between $179.88 and $192.51 CNF Red Sea ports (1.03MT) and between $188.10 and $193.18 CNG gulf ports (480kT). More than 150 offers were received, so there is still a lot of feed grains around! Taiwan flour mills are seeking for 98,200T of US wheat.


Oil is starting the week on a softer note, wishing to play with the $48 even figure. Supply glut is still there, OPEC deal is not enough and therefore extending it would be useless as stocks are still building up, another deal (and cut) is necessary, it seems to be as simple as this. But how long will Saudi be keen on bearing the burden for other OPEC members? NYMEX Crude is trading just above $48 and ICE Brent with a $3 premium. On Freight, Baltic  Dry Index BADI ended the week with a 13th session in a row on the upside (will it be the luck number?) closing at 1,196. This is due to the Capesize Index which is surging. As a matter of fact, Panamax Index was down for a straight 6th session, ending at 1,108.


US Unemployment Claims were slightly better than expected on Thursday with 241k. On Friday, UoM Consumer Confidence was also slightly better than expected. The main events of the week-end are the G20 meetings. They agree to very conceptual stuff like the volatility of FX market should remain low for market stability sake… Stable and strong growth is the best case scenario for a stable economy and calm currency markets… A lot of wishful thinking rather than any new policy of course. However, there is disagreements on the fact global trade should be free and open… Well basically it was the USA against the ‘G19’ and beyond those 19, for sure some might think a little does of protectionism could not be that bad but were on the other side as the new US administration seems (for good or bad reason, whatever) treated like the black sheep. Anyway, market gives only a little credit to the G20, basically a spring camp for worlds leaders… US Dollar weakness could be expected this morning but it is not drastic, EURUSD being up around 20 pips, trading above 1.0750. GBPUSD is following in the same extent, trading now just above 1.24. Meanwhile in the UK, Her Majesty the Queen Elisabeth II gave Royal Assent to the European Union (Notification of Withdrawal) Bill last week, clearing the way for MP Theresa May to start talks to leave the European Union… Countdown is on as it is supposed to happen by the end of the month… G20, get ready for stable FX markets…

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