Friday was still in digestion mode after the USDA WASDE, there’s a lot of risk off as short bets, even if right, would pay off in a few weeks time if not months are good news will now come from plantings and winter weather. By the meantime, a lot can happen on the upside: Australian crop, Russian export ban, weather,… Soybeans closed up +9.25 cents, Corn +4.50 cents, Wheat +9.25 cents in Chicago, +10.50 cents in Kansas, +6.50 cents in Minneapolis, +€1.25 on MATIF and +£0.45 on London Feed. Funds bought in Chicago 5,500 Wheat, 16,500 Corn and 6,000 Soybeans.
At the week scale, it was a quite quiet week with no major move and no major trend. Soybeans moved down -0.17%, SoyMeal -1.01%, SoyOil -0.14%, Corn +1.49% in Chicago, +0.34% on MATIF (in US dollar, EURUSD was up +0.34%, on other words, MATIF Corn was flat in euro), Wheat markets were sideways, as Chicago was down -0.72%, Kansas flat, Minneapolis up +0.80%. On the other side of the Pond, MATIF Wheat was up +0.95% in us dollar and London Feed down -0.65% in US dollar (GBPEUR was down -0.09%). Finally ICE Canola was down -1.97% in US dollar (USDCAD was up +0.66%) and MATIF Rapeseed was down -1.06% in US dollar.
CFTC’s COT showed funds sold Wheat (4,786 lots) on a week ending on Tuesday, increasing their short position to 16,885 lots. On the other side, they bought Corn and Soybeans (respectively 23,732 lots and 3,002 lots) and decreased their short position to respectively 34,032 lots and 41,401 lots. From Wednesday to Friday, it’s thought the same pattern went on as funds are expected to have been seller of 2,500 lots of Wheat and buyer of 31,500 lots of Corn and 6,000 lots of Soybeans.
Night session is weak, more or less Wheat, Corn and Soybeans are down by -2.00 cents across the boards. Still early but European market should follow the movement and tick down on the open.
Jordan is seeking at the same time 120,000T of wheat and 120,000T of barley. Good luck!
Finally fracking… After almost 10 years of legal battle, fracking is starting in the UK. Should it go smoothly, the industry could grow rapidly and helps gas supply on the long term and diminish the reliance on exports. But these days, UK gas prices are Brexit and Oil driven. It woun’t last, price attract flow and US LNG cargo are calculating.
Meanwhile, the story of the Saudi Journalist is starting to turn in a geopolitics problem. What is striking is the difference of treatment between the Russian incidents in the UK (widespread condemnation) and this Saudi incident in Turkey (world leader are much more cautious). Is the reliance on Saudi’s oil stronger than Russian oil for major countries as Saudi threaten than any sanction will see “stronger measure” in response with a reminder that the “kingdom has an influential and vital role in the world economy”. Russia is the first oil producer in the world (10.6M barrels per day), followed by Saudi (10.5M barrels per day) and the US (8.9M barrels per day). This is an interesting podium… But on top, Saudi is clearly leading the OPEC (but a lot of countries seems keen not following the cartel’s orders, but could they significantly diverge in case of a oil trade war?) with a total production capacity of 35M barrels per day, 44% of the world’s production. Saudi is betting most of the OPEC member would follow them.
Crude Oil is trading close to $71.50 on NYMEX, still $9.35 premium for Ice Brent.
British Pound is not starting the day well as GBPUSD is down trading around 1.3125 and GBPEUR cross-rate is trading down around 1.1350. The UK Government is trying to perform a quadrature of the circle: you can’t have no border between Northern Ireland and the Republic of Ireland but have one with the rest of the UK and EU. No deal Brexit is luring, and funnily enough, this will bring a border in Ireland. Dream mode on: the easiest solution could well be to give Northern Ireland to the Republic of Ireland and unify the country for real! Joke aside, it sounds like it’s going to be the main issue of a deal, the UK Government have promised it: this is possible, but not taking into account the other promises on frictionless trade. A deal will be up to what promise the UK Government can give up, if they can, as internal politics is getting more on more difficult!
EURUSD is flattish, starting the week trading around 1.1560. The only major stat today is US Retail Sales and Core Retail Sales, expected at +0.4% and +0.7% respectively.