Evening Comment – #Wheat #Corn #Soybeans – 05/06/2015

This first week of June has been pretty hectic. Very technical days… Night session began on a softer not and gradually came into the green territory, outcry opened and market rallied to 2 digits up. Theses level did not sustained for long and just before the close market came back to the session lows and beyond. This was the similar pattern of Wheat, Corn and Soybeans. This exhausting game has been played almost all week long. Market is still worried about global weather but every day with no proven bad news is a good news as the wheat harvest are slowly kicking off in the north hemisphere. 

Warm and wet, this is bad indeed for wheat. At an early stage there are the risk of fusarium and at a later stage it can delay the harvest with the risk of seeing wheat kernels germinating on the plant (main consequence is loss of protein and drastic fall of hagberg falling number). There are risk of both occurrences in Texas, Oklahoma and Kansas. Last year in France this has been the case, rain just before the harvest delayed it and destroyed the quality of the crop, especially in centre east of France. Where did MATIF go? Between 150 and 160 euro per tonne. As long as the quantity is there, financial market is often very careless about the actual spec of the commodity. But for sure cash premium for milling will increase, feed premium will decrease, gluten will go up,… But bottom line, we’ll have an idea only after a few days weeks of harvest, it is still very early to assess the overall quality of US Wheat.

 

Wheat Corn spread seems to finally be a bit toppish, this would be a good sign.

 

Wet weather is perfectly targeted for corn though. Watch out the corn yield in the USDA WASDE next week! USDA said July is very important: it was a clear signal corn yield won’t move. But with great conditions, who knows? Answer on the 10th of June, 8pm Dubai time.

 

Condition report on Monday will see first data for Soybeans.

 

Funds have bought 6,000 corn, 4,500 wheat while Soybeans sold 2,000 contracts, This is a very damaging markets, easy to trip over the carpet.

 

Japan is seeking 120,000T of wheat next week. Iraq 50,000T tomorrow.

 

US Dollar finally stronger on good Job Data and some Grexit talks. There is no default but a deferral. Don’t you dare calling it a credit event! Next week, a few billions of governments bonds are to be rolled, the week after as well, at the end of June, IMF is owed more than a billion, civil servants and pension will need to be paid, ECB is owed a few billions mid-July… Fun time ahead.

 

Have a good wheat-end!

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