Market took a breather yesterday. What if? Indeed, wheat if it is not that bad after all. The truth is it is very difficult to assess, and the first reports of the Wheat Quality Council tour are encouraging but the best fields are likely to come first considering their itinerary. So a bit of ‘wait and see’ mode yesterday. Now moving to N7 contracts as K7 will expire soon, Soybeans ended down -1.50 cents, Corn -5.25 cents, Chicago Wheat -2 cents, Kansas +2 cents and Minneapolis -5.25 cents. In Chicago funds were back on the sell side, selling 11,000 Corn, 3,000 Soybeans and 5,000 Wheat. Anyway, they won’t be able to sneak out, if they really cut their short, it’s going to be messy. Over the COT week (ending COB yesterday), funds will be expected to have bought 16,000 lots of Wheat, basically reducing by 10% their short, market went up +8.28% by the meantime… So tough to be discrete there and a larger scale short covering could end up in tears… Fuds will be expected to have bought 7,000 Soybeans on the week and sold 5,000 lots of Corn. So not a lot of net purchase for the global price action! But let’s wait, in violent movements, Reuters is usually missing by a mile their estimates, funds have probably bought much more.
On the other side of the pond, switching to U7, MATIF Wheat ended up +€2.00, rebounding after the battle as 1st of May was Labour Day. CME EU ended up +€1.50.
Night session was a bit hesitant, no real trend: Soybeans up +0.75 cent, Corn just barely up a tick and Wheat is the only significant retracement of the recent rally: -6 cents in Chicago, -8.50 cents in Kansas and -4.25 cents in Minneapolis. MATIF is down -€1.25 and CME EU -€2.75.
So first day of the WQC tour, projected yield is 43 bushels per acre in northern Kansas, this is so far not too bad as the 5 year average is 42.7 bushels per acre but far less than last year (47.1 bushels per acre). Also, it wasn’t expected that the first part of the tour would be the worse, so let’s not get excited just yet.
Taiwan flour mills is seeking for 5,750T of US wheat. Tunisia is seeking 75,000T of durum. China is trying to get rid of the ageing stocks and were offering to sell 92,260T of wheat. Nobody was interested…
US Crude Oil Inventories today are expected down -3.3M barrels after being down -3.6M barrels last week. There’s a little pickup in demand thanks to weather conditions but market won’t easily forget that there’s a supply glut. NYMEX Crude actually went down yesterday, Conoco Phillips on its Q1 results raised doubts about the efficacy of the OPEC deal. On top of this, Saudi bragged that non-oil revenues are surging and emphasised that there might be no need for a new deal or even no need to extend the current deal after Q2-17. Sure… And Saudi Aramco worth $2 trillion… And those who criticised the IPO plan were said to be “socialist, communist”. NYMEX Crude is trading below $48, ICE Brent with +$2.9 premium. Meanwhile, some may feel emotional as Brent Delta platform has arrived in Teesside to be decommissioned and scrapped. Shell want to leave the pillars in place, sparking obviously some controversy.
EURUSD is still above 1.09, debate tonight in France for the presidential elections between the 2 candidates. It’s said that Emmanuel Macro ins actually very scared as he’s not really good in debating and he’s expected to be ‘eaten alive’… However, it’s not seen to impact significantly the voting intention and he’s still expected to win by at least 55% against 45%. Meanwhile there’s a bit of a shamble on Brexit, Barnier, Juncker and Tusk are said to be willing to give a tough lesson to the UK. GBPUSD is doing relatively well these days, trading above 1.29 and cross rate GBPEUR is above 1.18. FOMC today, nothing is expected but statement will be under scrutiny. Also ISM Non-Manufacturing PMI today, expected at 56.1.