When it is too cold, it is bad (winterkill risk in the us), when it is too mild it is also bad (Black Sea temperatures could take wheat out of dormancy, reduce the snow layer and expose it to winter kill). The never ending story… But in all fairness, the crop condition report was a bit ugly indeed in the US: Colorado G/E fell to 48% in December (from 66% in November) and it will miss the las episode of cold snap… Kansas G/E moved down to 37% from 51%, Oklahoma to 15% from 30%… In comparison, Illinois (from 62% to 56%), Nebraska (from 59% to 64%), South Dakota (from 18% to 20%) and North Dakota (from 28% to 27%) almost look like good news! However, in the northern hemisphere, wheat is highly resistant to freezing from mid-December to mid-February, so it is very early to draw definitive conclusion. If wheat was to choose a stress, it rather being cold in winter rather than thirsty in summer. And the snow is accumulating, a bit slowly but it is there. Wheat markets remained strong, Chicago ending up +2.50 cents, Kansas +6.25 cents and Minneapolis up +1.75 cents. No exception on the other side of the Pond with MATIF up +€1.50 and London Feed +£1.00. Mind the short covering as funds are very short but also, if market were to realise this is unjustified panic, the back to reality move for Wheat could just be violent. Soybeans moved up +4.75 cents, and Corn ticked down. In Chicago, funds were buyer of 2,500 lots of Wheat, 3,000 lots of Soybeans and seller of 3,500 lots of Corn.


USDA Crush was slightly below estimates to 173.3M bushels (trade guess was 174.1M bushels) but still quite a head of the seasonal current USDA estimates.


China sold 12,847T of their ageing wheat stocks, bit by bit they manage to get rid of it, however this was only 3.02% of the amount offered to auction.


Else pretty quiet market, sounds like traders will be back on the 8th of January. Night session is slightly softer, Soybeans down -1.75 cent, Corn flattish and Wheat -2.00 cents-ish across the markets. European markets are expected flat so far but it is still early.


FED acknowledged tax cuts could bring more growth. Indeed, the FOMC Minutes stated that “most participants indicated that prospective changes in federal tax policy were a factor that led them to boost their projections of real GDP growth over the next couple of years”. However, “inflation might stay below the objective for longer than they currently expected”. This could indicate that FED won’t be as hawkish as expected in 2018, a few members noted that being too fast “might [be] inconsistent with a sustained return of inflation to two per cent”. It had led FED to increase the rates from 1.25% to 1.50% in the December meeting, the January meeting is expected to be a status quo, March will be pivotal. If it’s not happening, the chance of having 3 rates hike in 2018 will be very low… On top of this, Janet Yellen mandate ends on before the March meeting. The new post holder will be in a tough situation, crashing the economy with higher interest rates is not something the US President is fundamentally keen on, so the new Governor could be just cautious… EURUSD corrected yesterday, but seems more technical than anything else as the level of 1.2000 is technically sticky (ISM Manufacturing was also better than expected to 59.7). Small rebound this morning, trading above 1.2025. GBPUSD is also trading slightly higher around 1.3530 while GBPEUR is more or less unchanged at 1.2550. UK Services PMI today (expected at 54.1), ADP NFP (expected at 191k), US Unemployment Claims (expected at 241k) and US Crude Oil Inventories (expected at -5.2M barrels). Could be a fun day!

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