A quiet Friday after a very strong Thursday. A bit of profit taking, mostly technical. Soybeans closed down -2.75 cents, Corn was just ticking down on the close, and Wheat corrected -4.00 cents in Chicago, -3.25 cents in Minneapolis but was up a couple of ticks in Kansas. On the other side of the pond, MATIF Wheat was down -€0.75 and London Feed was down -£1.50. In Chicago, funds sold 3,000 lots of Corn, 7,000 lots of Soybeans and 3,500 lots of wheat.
Bullish week last week overall, coupled with weakness of the US dollar. ICE Canola moved up +1.21% in US dollar (USDCAD moved down -0.17%) and MATIF Rapeseed +1.47% in US dollar (EURUSD moved up +1.40%). Soybeans moved up +3.92% over the week… It’s all about the weather in South America. There was a transfer of 2MT from Argentina (crop pegged to 54MT) to Brazil (crop pegged to 112MT) in the latest WASDE: but will this be as simple as this considering the weather challenges? SoyMeal moved up +8.58% over the week while SoyOil moved down -1.31%. Corn moved up +1.52% in Chicago and +0.74% in US dollar on MATIF. Wheat was up across the markets, with Chicago up +1.95%, Kansas up +2.79%, Minneapolis +0.29% (the premium is now down to 126.75 cents over Kansas and 147.50 cents over Chicago). Across the pond, MATIF was up +1.72% in US dollar and London Feed +1.37% in US dollar (GBPUSD was up +1.48% so London Feed was actually down and quite quiet).
One very good lesson of this CFTC is that the short can be massively wiped out without any stop triggering flash rally. Indeed, in a week ending Tuesday, funds bought a total of 151,700 lots of Wheat, Corn and Soybeans! This was drastically underestimated by Reuters, funds bought much more than expected. They reduced their short position on Wheat by 26,563 lots (it was expected to be 4,000 lots only) to 56,831 lots. They also reduced their short on Corn by 72,310 lots (it was expected to be 28,500 lots only) to 10,614 lots. Finally, it was expected funds to be now long Soybeans but in a much lower extent: funds bought 52,847 lots (it was expected to be 23,500 lots) moving to a long position of 42,869 lots. From Wednesday to Friday, same thing: funds are expected to have purchased 10,500 Soybeans and 7,500 lots. But they are seen seller of 3,500 Wheat.
US markets are closed, George Washington’s birthday public holiday. So other markets will be dull indeed: London Feed +£0.35, MATIF Wheat ticking up, MATIF Corn ticking down. The action is on the oilseeds as ICE Canola is up +2.20 CAD and MATIF Rapeseed is up +€1.50. For the next few weeks it will be all about the South American weather but soon, spring is coming in the northern hemisphere and speculation about the new crop will surely start!
Algeria is seeking milling wheat. As usual, French origin will be the most obvious, with Argentinian still doable. Jordan silo company is postponing its tender to buy 50,000T of wheat. Saudi’s SAGO booked 960,000T of barley between $230.00 and $244.69 CNF Red Sea and $239.99 and$251.84 CNF Persian Gulf. Egypt will set up local wheat prices next month.
China is still celebrating the year of the dog so currency markets are a bit quitter. On Friday, UK Retail Sales were lower than expected to +0.1% (expected at +0.5%)… In December it was the fault of Amazon, in January this is the traditional retail gloom as everyone is sorting their credit card debt! US Building Permits were better than expected to $1.40b (expected at $1.29b), the house market actually reached its highest level since more than a year. No exciting stats today, tomorrow, German ZEW (expected at 16.5) and German PPI (expected at +0.5%), but far from being thrilling!