Friday did not trigger new short covering, the rebound fed selling interest, those we were squeezed in the bear market where happy to sell wheat above 510. Now the short of corn, including options is probably more worrying than the short in wheat. Corn as resisted very well but how long until it narrows its gap with wheat? Wheat is now 5 digits short while corn is still nicely over 100k.
There is a lot of noise before the traditional summer weather market (and maybe it kicked off already). Over wetness in some part of the southern plains might decrease quality with risk of fusarium, some damages during the night due to freezing (summer weather market talking about freezing?!? Soon we’ll hear about the polar vortex or global warming), while corn might have suffer from worms in Illinois but on the other side some saw corn nicely emerged only one week days after planted. There is a lot of speculation and if there is some proven problems, the scale is, so far, very limited. Clearly, in the condition report of tonight, if the wheat E/VG and P/VP ratings are not respectively decreasing and increasing, that would be a good news. That being said, we know the supply is going to be pretty imposing next year, but can it get even better? USDA did not modify the corn yield implying the month of July is the most important month. This is true. US Corn yield and wheat availability (in Russia, Ukraine, China, Pakistan and India) will certainly be the key of the two next USDA reports.
Strategie Grains decreased the European wheat exports for next crop -2.6MT (from 31.2MT). The wheat tax lift in Russia will certainly increase competition.
NOPA showed a record level of crush for a month of April! 150.363 million bushels.
Eggs production is said to be impacted for 18 months in the US due to the bird flu. Death toll is 32 million over 16 states. It is still a very low percentage of birds but how long until it impacts the consumer confidence which could had a much worse effect on demand?
EURUSD is lower this morning, coming back to test 1.14. While Greece is back in the headlines, Germany being impatient to see reforms in Greece while they are threatening the IMF to default. A deal will be obviously made shortly but once again, big redemptions in July.
Green markets overnight in thin volume. MATIF will certainly find some strength in lower Euro and higher US markets.