One can be genuinely clueless about where the markets are going on a short term point of view, but one sure thing is: fasten your seatbelt and get ready for a choppy ride!
Wheat rallied up after a quiet start on the night session. As it could be expected overnight freezing was out of the window, this still seems to be a concerns in North Dakota especially. In Texas and Oklahoma, rains are delaying the first cuts, farmers are hoping to get going by Friday but rain on matured wheat is especially bad: milling can quickly downgrade to feed . In Canada, same freezing problems for wheat and Canola in Manitoba and Alberta. Reseeding canola on large parts will actually be necessary. Considering the amount of short, short covering, stop triggering can easily create a panic. On the other side, Australia is dry due to El Niño development. Monsoon pattern is to be monitored in India as Earth Science Minister said it might be 12% shorter than usual, raising fears of serious drought. That being said, in April, 99% of the rains need were met.
Corn followed wheat, lagging behind. Wheat Corn spread logically widen again as worldwide fears are concentrated around wheat. Soybeans where down on Argentinian deal and weak demand while soybean oil continued its rally on EPA biodiesels targets.
MATIF went up, following US markets. There are weather concerns in France as the temperature will be unusually high for the season. However, this is only for 3 to 4 days so, probably no big deal. There was a bit of panic at the start of the session, a lot of buying interest in put options. Rapeseed went up on good India import prospects.
Corn condition is unchanged, 74% G/E, 3% P/VP. Slightly less than last year (76% and 2%). Market was expecting (or just hoping) a little increase. Winter wheat is down -1% on G/E (to 44%) and P/VP is up 1% to 20%. Considering all the talks, this could have been much worse and it is still far better than last year (30% and 44%). And.. Spring wheat is improving… Again! 71% are G/E (+7% from last week). No change on the P/VP: 4%. Considering all the scaremongering about weather from farmers, this is not too bad.
Wheat is over on planting. While Corn is virtually done: +3% to 95%. The end is taking a bit of time to be done, but it is usual. 84% (+10% week on week) has emerged, this is an early developed crop without any doubt (79% is the 5 year average). Soybeans are +10% planted to 71%, just above the average of 70% at this period. 49% is emerged (+17% from last week, 4% above the 5 year average). Winter wheat is headed at 84% (+7% from last week and 7% as well above the average) while spring wheat is 91% emerged (+11% from last week and +22% compared to the average).
Spring wheat is 87% planted in Russia.
After good hopes, Tunisia has actually been hit by drought and the 2015 grain harvest will be down 39% to 1.4MT. They will need to import between 2MT and 2.5MT.
USDA WASDE on the 10th of June, Stocks and Acreage report on the 30th of June.
The good news of the day is that KFC is denning the rumour spread on social media: they don’t use genetically modified eight legged chickens in China… They are suing indeed three Chinese company for spreading a such rumour. Joke apart, with 5,000 branches in China, scaring chicken consumers could have a nasty effect on demand. But these days, on the US side, if bird flu seems to be out of the headline, it is actually pretty much still on. The week of the 24th to 30th of May, Nebraska, Iowa and Minnesota have recorded a total of 16 farms infected.
EURUSD is keen on going back to 1.10 after being weaker yesterday. FED rate hike in Q4 and Grexit/Brexit are likely to maintain a long term pressure on the European currency.
Steady start of the night session in the US. Market seems to be keen on pursuing a bit of short covering.