Morning Comment – #Wheat #Corn #Soybeans – 09/06/2015

Short covering continued… Corn and Wheat bought 6,000 contracts each, Soybeans 5,000. Risk off before the USDA WASDE report, implied volatility went up, uncertainty before this report is quite thrilling. Day was driven by higher wheat and lower US dollar. Rain is still concerning, fusarium is still concerning. But temperatures are going higher and it’s going to be drier all over the US, finally a real summer is kicking off! Fun fact, it will be actually hotter in Alaska than in Arizona. But weather is improving and is going to be very favourable. 

Planting report… Spring wheat and corn are old stories. Soybeans were shy, 79% only (+9% week on week) and is now delayed, some begin to be concerned. The crops are still very early in their development stages. Winter wheat harvest as kicked off 4%. As per conditions are concerned , winter wheat has decreased -1% on the G/E (43% versus 44% last week) but still way better than last year (+13%). Spring wheat -2% on G/E (69% versus 71%) and +1 of P/VP (5% versus 4%) and is now slightly worse than last year, This was expectable considering all the rains but is still very decent. Corn G/E is stable to 74% but P/VP up +1% to 4%. First soybeans condition -5% of G/E compared to last year to 69%. Not the nicest start, that is why the delay in planting begin to worries some in the markets. So that is bullish but that was largely expected by the market. This could have been much worse!

 

MATIF in euro is now much higher than both Chicago and Kansas. A lot of interest on calls and volatility, not a lo of outright put traded.

 

Between rumours, market chatters, spoofs, comments from persons “familiar with the matter”, it is actually very unclear what is the real deal with Greece. It’s beginning to be a rat race, very annoying. Bottom line is we know it’s going to end in a very bad manner. Just when? But European Union seems to be keen on making the joke last as long as possible. And probably not for macro reasons but more political reasons. Greece leaving Eurozone would create a precedent and that would be very bad signal to (among others) the UK, Scotland and France. Politics keep saying that it is not an option of European Treaties to be able to leave the Union but if it’s actually happening, well, that would mean it is actually possible, isn’t it? That would fuel Eurosceptic campaigns, proving them right in some extent, potentially spreading the mood of leaving the Euro. But Merkel is pragmatic and begin to lose patience and said “time is running out for Greece”. But most likely, we’re heading to a 9 month extension of the debt even if conditions are tough for Greece. Which is just postponing the issue anyway. Maintaining this artificial and heterogeneous Union is contributing to bring EURUSD higher, the double bottom technical pattern as well. As well, someone who knows someone who knows a guy (either it was off the record, either it did not happen… Or both…) reported that Obama complained about the strength of the US Dollar at the G7. The leak is coming French official and Obama had to say “Don’t believe unnamed quotes, I did not say that”. That certainly means he actually said it! That is raising question on some kind of currency intervention and FED politics. EURUSD touched 1.13 but now comes back down.

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