Same weather story. However, the so called Beast from the East is quite disappointing, it brings snow layer without extreme temperature, but the snow layer would be sufficient to protect the wheat for days at extremely low temperatures. But market can’t take its eye off it. On the US front, the drought will be under scrutiny wheat by week and here again, market can’t take its eye off it. And to add to the self-justification of the current bullishness there’s the Black Sea cold snap, the South American weather,… Once market is looking for weather catalyst, it’s easy to find them! Is this justified? Very early to say, but it has been proven more than once than there is more damage to crop in spring and summer rather than in winter. So still… Making yield assumption on crops not planted yet or crops that are below a snow layer is highly premature. But US need rain, this is a fact. Anyway, market is always and Soybeans moved up +3.75 cents, Corn +2.00 cents and Wheat +11.25 cents in Chicago, +0.50 cent in Kansas, +€0.25 in MATIF and +£0.20 on London Feed.
And here we go again, at least it’s not a dull night session: Soybeans up +8.75 cents, Corn +1.25 cent, Wheat +7.75 cents in Chicago, +9.00 cents in Kansas and +3.25 cents in Minneapolis. Order book is still quite empty in Europe, but thought to see MATIF or London Feed not opening higher, especially with a stronger US dollar.
Yesterday, in Chicago, funds bought 4,000 lots of Wheat, 15,500 lots of Corn and 10,000 lots of Soybeans. Being the CFTC COT cut off, market will expect to see funds buyer of 9,000 lots of Wheat over the week, 33,000 lots of Corn and 22,500 lots of Soybeans. Aggregated long should be above 100,000 lots!
Syria cancelled the 300,000T wheat tender as “unsuitable prices” were received. True that there must be a significant premium in prices to reflect the difficulty of the execution at many different levels unfortunately… Jordan made no purchase on a 100,000T wheat tender, this is not a surprise. Japan is seeking 136,616T of food wheat from US, Canada and Australia.
US Core Durable Goods orders were down -0.3% yesterday, big miss, it was expected at +0.4%. On the other hand, CB Consumer Confidence was better than expected at 130.8 (126.2 expected). But the main event of the day was Powell testifying. He basically said the growth momentum is positive globally but hiccups are possible so more stimulation on fiscal policy is necessary. He’s confident wages should start to pick up and believe the shortfall in inflation was not a trend, therefore, FED will continue to increase the rates. US dollar liked it overall and EURUSD is now trading just above 1.22, GBPUSD just below 1.39. Michel Barnier, EU negotiator, sent a bomb in the UK’s House of Common. At the start of the Brexit shamble, one could joke that Ireland (the Republic) should do an ‘Irexit’, take the opportunity to unify with Northern Ireland and join the UK to avoid any hard border. Well, in essence, Michel Barnier is offering the opposite! Northern Ireland needs to stay in the Custom Union with regulatory alignment. GBPEUR is trading just above 1.1375.