Morning Comment – #Wheat #Corn #Soybeans – 10/06/2015

Pressure is growing… USDA WASDE day… Fasten your seatbelt, life jacket under the seat… Unless it’s going to be a non-event once again because no huge change is actually expected! Whatever market has been really nervous about it, the amount of short covering and new long has been quite important, implied volatility was all over the place (drastically decreased yesterday to jump back up this morning). A lot of traders are clueless about what’s going on! EURUSD above 1.13, Chicago Wheat Corn spread above 170, MATIF Z5 at $10 premium to Chicago, still heavy short on wheat, corn and soybeans in the build up to the harvest… 

Yesterday, corn follow wheat but the wet weather is improving and corn is not a real victim of the heavier US rains and finally closed slightly down. Soybeans were higher on worries about the delay of the last 20% of acres to plant. Wheat, still the same issues we’re hearing till a few weeks now. Funds bought 4,000 soybeans, 5,000 wheat and were even in corn. So before the report, funds are short 150,000 lots of corn, 75,000 lots of soybeans and 65,000 of wheat. Decent bet. A very surprisingly bullish report would generate a bloodbath…

 

Corn might be eventless, USDA insisted July was the most important month for Corn so a yield move would be a surprise. Indeed, we might need to wait one more month. Soybeans will surely show the availabilities are still very heavy with no change despite the current US planting delay. Really, Wheat is to watch on this report: let’s monitor closely milling wheat versus feed wheat in the US, Russian productions and Indian imports. US new crop production of wheat should be logically slightly lowered.

 

MATIF was flat. There is some concerns about dryness from Europe to Black Sea, but situation should improve.

 

German parliament seems to be opposed to a new aid package to Greece while Tsipras offered some new austerity measures but EU and IFM believe they are still not enough. This won’t last until 30th of June: current bailout plan will be over and IMF is owed more than EUR 1.5 billion. This will be make or break. An agreement is likely to be found, postponing the matter to March 2016. But on can wonder if there is really an alternative to a Grexit and/or bankruptcy scenario.

 

It is more the concerns of the US President that drives the US dollar lower, indeed, he allegedly complained about the current strength of the currency this would mean (pure speculation by the market at this stage) that some plan will be wrapped up to keep the US dollar lower.

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