Last week saw a sizable correction in prices.
After a strong bullish period, maybe are markets entering into a downward spiral?
Really, there has not been anything massively fundamental that changed.
At the exception of a better climatic situation in South America, we have not seen particulary change in the fundamentals.
The market, maybe, should had to see demand rationing driven by higher prices to end the bullish price move definitively.
However, by the end of the week, we could see a further reduction in the long positions given the price action.
In fact, after Friday’s moves the question bothering the market is where we’ll go from here and not many are interested in catching a falling knife.
In add, there has been more talk of physical demand on the edges and so, the speculation that is at the basis, could to firm significantly after the crash.
Some analyst, however, thinks that this last week’s drops in price, on the contrary, could makes the situation worse, as no demand destruction would have occurred and likely uncover some more demand.
Meat markets, infact, are of course very happy with the sell off, with hogs, fats, and feeders all pushing new highs for the year.
Fats and feeders both get expanded limits for today after the large moves.
Wheat prices were lower this week, mainly due to pressure from declining corn values.
And corn prices, at this time, even if had a sharp pullback, it’s not seems to be caused by a fundamental change in the supply and demand balance sheet but mainly due to the funds’ extreme one-sided positions, which went for a quick exit once the market prices started declining.
Also the fundamental situation in soybeans continues to be supportive.
However, prices had a sharp pullback after five consecutive weeks of rally.
Consequentially, in this moment, markets are waiting to see what will come of the new stimulus package floated by the new US President, and when it’ll happen.
Really, few are expecting any significant changes to policy when the Open Market Committee of the US Federal Reserve (FOMC) board meets this week and will provide its updated economic outlook.
So, in the meantime, all are looking at the facts, with the sanitary situation that looks out of control in many countries, creating concerns about the global demand.
Even as vaccines are rolling out around the world, new concerns continue to grow around the new variants.
Lockdowns in Europe are looking more likely to drag still into spring, with the German government suggesting that theirs will be in play until at least March.
Today it was annunced the decision of the USA to stop international flys.
EIA ethanol production was up 4,000 bpd to 945,000, although stocks were down slightly to 23.6 million barrels.
The euro strengthens slightly against the dollar to 1.2180 while the rouble loses ground after the anti-system demonstrations across the country this weekend and trades at 75.35 against the USD.
The US dollar index strengthened to 90.2.
As for oil, it is trading at $52.20 per barrel in New York.
Aussie local markets may stay to watch today, looking at what may well be a choppy day of trading, and with most operetors that will go on holiday tomorrow due the Australia Day.
On the international market, the momentum of the Chinese buying momentum is also in question with a resurgence of Covid-19 infections in the country along and with several swine fever cases in pig herds.
Disappointment also came from Turkey’s tender, which only bought 95,000 tonnes of wheat out of the 400,000 tonnes announced previously helped push prices lower.
So, tenders from importing countries like Saudi Arabia, Algeria, Turkey, Egypt, Morocco could to check demand conditions.
Tonight we will see how the sessions close.
