Morning Comment – #Wheat #Corn #Soybeans – 17/06/2015

Novak Djokovic wants to win the Tennis French Open, he tries hard, he fails, but he eventually will. Soybeans, Corn and Wheat are the same, they really want to go down in a dramatic fashion but they are keeping hanging on… Market keeps finding reasons indeed to avoid to go lower: small decline in rating, wet weather, delay in planting and harvest… This won’t take away the fact that the crops will be very good and supply very ample. Wheat Corn spread is narrowing and it is a good indication the pressure is actually slowly going away. Seasonality is usually bullish in June and July, but with such short position and a lack of serious drought it might have less momentum than usual. Weather is still wetter than usual though with a tropical storm (he’s called Bill) hitting Texas and Oklahoma. As well there are some concerns beginning to appear on corn, too much wetness could reduce the yield. 

Funds bought 8,000 corn and 14,000 soybeans while they were even on wheat.

 

MATIF closed slightly higher, dull day, low volume, front month traded less than 7,000 lots. As usual, Z5 is more liquid than U5. Quiet day as well on the option market, the only noticeable directional bets where on Z5 190C and 202C. Else spreads and delta neutral strategies.

 

Some strength across the board on the night session in the US, MATIF opened on a positive note as well and is still $14 above Chicago.

 

Egypt bought actually close to 50% of the wheat on the local market, this should decrease the imports by almost 2MT. Looking forward, the aim of the government is to buy up to 70% of the wheat locally. Argentina Agriculture Minister expects wheat acreage to remain stable to 5.26 million hectares. USDA said 100,000T of US corn were sold to unknown destination. In France, France Agrimer decreased the soft wheat ending stock to 3MT (-600,000T), it is still more than a quarter higher than the previous campaign. It’s mainly due to the increase to 11.1MT (+500,000T) of the exports. Well with these high stocks, some room need to be made in silos as the harvest is kicking off in the south.

 

EURUSD continues to range on the same picture: rate hike from FED in early Q4, and Greece. If Greece is defaulting, market expect to do it the worst way possible (which is the best for Greece), defaulting mainly on the loans of the EFSF. The likelihood of a default is still considered as low, Euro would have hit parity already because he risk of a major meltdown seems to be under-priced. But impossible is nothing. Meanwhile, the talks turning bitter with the IMF and Greece taxpayers have withdrawn 600 million euros from their bank accounts on Monday fearing there will be some kind of capital control.

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