Another selloff on Friday for Soybeans, -153.25 on the close on Friday, back to 975.75 cents. At this price, will farmer be that keen on switching acres? Corn was down a couple of ticks while Wheat markets were all over the place: Chicago +3.75, Kansas flat, Minneapolis down -5 cents. In Chicago, funds sold 2,000 Corn, 10,000 Soybeans and bought 2,500 Wheat. On the other side of the pond, MATIF ticked down while CME EU went down -€3.25 to reach only a +€0.50 premium to MATIF, which starts to be much more acceptable. Reflection of the physical quality discount is a key to the contract survival, and on the new crop, which is much easier to assess as MATIF quality specification will be clearer, it closed at a -€2 discount, which is more or less what it should be, so this is encouraging.
Last week was a tough one for the longs… ICE Canola -4.42% in US dollar, MATIF Rapeseed -0.97% in US dollar, CBOT Soybeans -2.43%, SoyMeal -3.25%, SoyOil -0.22%, Corn -0.22%,… MATIF Corn was the only one on the upside with +0.42% in US dollar but this is due to the fact EURUSD was up +0.57%. As per Wheat, CBOT was down -2.64%, Kansas -5.62%, Minneapolis -2.41% (resisting well, the premium was back to high levels, to 107.75 cents over Kansas and 111 cents over Chicago), MATIF down -2.36% in US dollar, CME EU down -6.29% in US dollar and London Feed wheat -0.16% in US dollar (GBPUSD was up +0.61% over the week, one of the best weekly performing currency).
Once again, CFTC’s COT showed funds sold across the board in a much greater extent than anticipated. Indeed funds sold 20,376 Wheat, 58,089 Corn and 32,685 Soybeans while estimates were accounting for respectively 4,500 lots, 500 lots and 500 lots. It means that the aggregated Wheat, Corn and Soybeans position is now short 137,027 lots as funds increased their short and Wheat and Corn to respectively 121,005 lots and 81,691 lots while they cut their Long position to 65,669 lots. Finally, it’s estimated that they kept on selling from Wednesday to Friday: 2,500 Wheat, 14,000 Corn and 16,500 Soybeans. Question is now how much of those, if any, will be covered before the 31st prospective plantings and quarterly stock report. It’s usually a market mover…
US Drought Monitor will continue to be under scrutiny as on face value, it worsened between the 14th of March and the 21st of March, but rains of last week should get us a better one this week. Indeed, unaffected area decreased by more or less -5% to 63.78% of the US territory, and there is a significant part of the dry situation affecting the winter wheat crops. Also, slowly but surely spring planting are kicking off in the US, especially in the southern states.
Everyone is back on the daylight saving time, so Chicago day session is 5.30pm to 10.20pm, night Session is 4am to 4.45pm, MATIF is 12.45pm to 8.30pm, all Dubai time. Mixed night session to start the week, but nothing too much: Soybeans down -2 cents, Corn up +1.25 cent, and still messy Wheat as Chicago is down -1.75 cent, Kansas down -3.50 cents but Minneapolis is ticking up. MATIF and CME EU both down, respectively -€1.25 and -€2.25.
Jordan is seeking 100,000T of feed barley again, after cancelling last week tender. The issue is still the same, tough tender terms. But fairly enough, they have been more successful overall on the past few tenders, it could actually suggest seller are less risk averse and eager to sell, to whoever that is. But it is a bit farfetched to take Jordan success as an indicator of price bearishness. On Friday, Taiwan Flour Mills booked 98,200T of US wheat.
Oil is still down, NYMEX Crude trading around $47.50 and ICE Brent with +$2.90 premium. More and more OPEC members are pleading for an extension of the deal. This is u misunderstand. They need a new deal as current supply level is not solving the glut. Freight is still on a bullish trend, +3.39% to start the week with as Baltic Dry Index is up +42 to 1,282, pushed by Capesize Index (+5.56%) and Panamax Index (+2.87%).
This is the week kicking off a world change: Brexit! Theresa May will trigger the Article 50 on Wednesday, market reaction should not be much as it is now well known and anticipated, but who knows! But the coming 2 years will be very interesting, especially if there’s noticeable leadership changes in France and Germany as elections are fast approaching. But the week is starting in a generic US dollar weakness as market feels concerned that whatever Donald Trump wants to do, he will face (should they be legitimate or not) hurdles and begins to question its ability to deliver the tax cuts. EURUSD is treading above 1.0850, GBPUSD above 1.2575. Otherwise, nothing much to expect on the macro side at the start of the week.