Mid Session Comment – #Wheat #Corn #Soybeans – 30/06/2015

Planting for soybeans… 94%! +4% One more week could be enough to complete the planting if weather is getting better, only Missouri is still a concern now. Market reacts positively, going down on the night session, indeed, this mean most of the soybeans will be actually planted and there won’t be any massive loss of acreage. Phew! Soybeans back below 1,000 cents per bushel. Soybeans development are slightly lagging compared to last year though and the average, but this is not really concerning. On its side, corn is silking, in line with last year (4%), below the average of the last 5 years (8%) but this is not a concern either just yet. And finally wheat harvest… Finally a decent week, +19% to 38%, now only 4% lagging from last year and 8% lagging from the 5 year average. So it is clearly pacing up. 

It was expected conditions would be downgraded. P/VP winter wheat is +1% to 23%, P/VP spring wheat is +1% to 5% but G/G are up +1% to 72%. Is that that bad? Clearly not. But more or less, the winter wheat downgrade of SRW is compensated by improvement of HRW. In other words, so far, the rain has taken quality and yield from one area to put it in another. Rain still make grain. Financial markets are still struggling to dichotomise quality and quantity in the price action. The underling question is: is this rally justified or not? Corn G/E are down -3% to 68%, +2% of P/VP to 8%. Soybeans G/E are down -2% to 63%, +1% of P/VP to 9%. Corn and Soybeans aren’t as good as last year but are still at very good levels.

 

Wheat rallied gain as funds bought 12,000 lots, corn were even and finished slightly softly and soybeans sold -4,000 lots finishing sideways. Basically funds are all over the place! Corn is up on the night session, soybeans downd but wheat is struggling to find a direction just yet. The calm before the storm?

 

On the US weather, still getting drier but is still wet on key parts of SRW, but getting better on key parts of HRW. But overall, weather seem to improve slowly. Still some concerns of dryness in Canada.

 

Export inspection were higher for wheat and soybeans, respectively 317kT (+7kT) and 297kT (+119kT). Corn was down to 1,041kT (-75kT) but is still at a very good pace.

 

8pm Dubai Time, USDA stock and acreage reports. Let’s be careful, most of the concerns have raised after the cut of the USDA! Data will be at the 1st of June. StatCan 2015 acres are estimated at 24.1M acres (+1.3% vs 2014), Canola to 19.8M acres (-2.4%), Barley 6.5M acres (+10.7%), Corn 3.3M acres (+5.7%) and Soybeans 5.4M acres (-2.5%).

 

In France, Barley harvest is now well underway and it seems to be pretty good, yield and quality. First reports of wheat harvest are still quite satisfactory in term of quality. Yields will make more sense once a larger quantity is harvested. But more or less wheat and barley crop are done in France, dry weather won’t damage too much crops at this stage, coops and farmers seem to be pretty confident dryness is not a real issue so far. Corn in France might be another story but if it’s too late to panic for wheat and barley, it is still too early to panic for corn.

 

Interesting day again on the MATIF wheat, testing 200 euro in very decent volumes. 81,282 lots traded on the new crop. Once again 10% of the crop exchanged, this is absolutely huge. And on options, a lot of volatility strategies and calls were leader on the outrights but also a very good number of put. In other words, there is a high feeling of uncertainty on the market. We’re heading to a fourth green session in a row as MATIF is currently trading higher.

 

European Commission cut this year wheat crop forecast to 140MT (-1.5MT), lifted the Corn crop to 68.4MT (+0.3MT and cut barley crop to 58.1MT (-1.4MT).

 

Iraq is extending – again – the deadline of the tender. Algeria is tendering. India is stuck with 27 million of poor wheat. Indonesia is keeping the Palm Oil export tax to 0.

 

Let’s bet the last day for the last chance for the last deal won’t be the actual last one… However, Greece has announced they won’t repay IMF today (It is called a default, but another word will certainly be found, payment will just be in arrears). While German say it’s too late to reach a deal… This doesn’t mean a last minute agreement won’t be found, everyone is calling bluff. Jean-Claude Junker allegedly offered a bail extension if Tsipras was supporting the ‘Yes’ at his referendum, Tsipras disagreed. So it sounds like Europe is ready to fold first! Anyway, the Greek drama is not over but it can still end in a tragedy… EURUSD has been pretty volatile 1.0953/1.1235 was the range yesterday! His morning it’s trading lower, just below 1.12. A campaign of crowdfunding has been launched to raise 1.6 billion euros to pay the today’s IMF debt. And if it was the solution?!? However, it has only reached 98,639 euros…

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