Morning Comment – #Wheat #Corn #Soybeans – 29/06/2015

What a week… Chicago Wheat went up 15%, Kansas Wheat 11%, Minneapolis 10%, MATIF Wheat 9% in EUR, 7% in USD, Chicago Soybeans 3%, Soybean Meals 6%, Corn 9%… Weather market, to hot and wet in the US, to dry in Canada, Europe, India,… Market is scared about US wheat and corn quality (too wet), delay in wheat harvest, delay in soybeans planting (and maybe some loss of acreage). Then funds are covering short aggressively in a panic mode: only Thursday and Friday, funds are estimated to have bought 28,000 lots of Wheat, 35,000 lots of Corn and 15,000 lots of Soybeans. Soybeans are now interestingly long 30,000 lots. Tonight’s crop progress will be closely monitored for Soybeans and Wheat harvest. And tomorrow, big day, Quarterly Stock and Acreage report of USDA (plus on top of this for international markets the Eurozone bail out extension and the Iranian Nuclear Deal). Busy week ahead! 

El Niño is back on the headline, Rabobank estimated that the three main commodities to be impacted are Wheat, Robusta Coffee and Sugar and volatility is to expect (no kidding?!?). As far as wheat is concerned, the El Niño impact will be concerning until August and September until we’ll know East Australia yields. Canada remains dry as well, still concerning for wheat and canola.

 

MATIF wheat was on fire as well. Obviously market was dragged up by US markets but fears of dryness in Europe continued to support the prices. Temperatures are higher than the average more or less in the whole Europe. Lower EURUSD helped a bit as well. A very good volume on MATIF, the new crop traded almost 95,000 lots! This is 12% of the French crop! Same on the option, close to 50,000 lost have traded, volatility bounced up. French wheat quality is still very decent and so far, there is no need to be really concerned. And harvest is under way. Despite initial fears, barley harvest first reports across Europe are pretty good.

 

Wow, what a week end for Greece and Europe, for sure someone is going to buy the rights soon for a Hollywood movie. The last proposal of the creditors were basically similar: the still want a hike on TVA and the pensions to be lowered. Tsipras stunned everyone by announcing on Greek TV that he’ll submit the bailout plan to a referendum on the 6th of July. Eurogroup was slightly upset about this, especially when (allegedly) they learnt this from TV and newspapers the next morning. On Saturday, big meetings again, then Tsipras is kicked out from the meeting and the first Eurogroup meeting without Greece actually happened. The outcome was like: “huh, you want to play that game, game on then!”. Indeed, bail out is not extended after 30th of June. So basically, the referendum is obsolete as there will be no bail-out to vote on. The last chance scenario is a last minute deal with Greece withdrawing the referendum. But who is going to fold first? Greek citizen rushed on ATM’s to withdraw cash, just on Friday, 1 billion euros got withdrawn, big lanes in front of ATM, one third of ATM’s are said to be empty in the country. And here we go! Capital control is on (60 euro maxi withdrawable per day), transfer abroad are banned, banks will be shut until next week and stock market won’t open either. EURUSD don’t like this too much, and is back in the 1.10’s. Financial Markets are not a huge fan either of this uncertainty, French CAC40 and German DAX down more than -4%, while US futures down a bit more than -1%. Begin to feel like the doom’s day for Europe. Economic and Political impacts would be surely bad for Europe but let’s not exclude just yet a last minute deal, the thrill is maybe not over!

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