Friday finished on the red, fund sold 5,000 Corn, 4,000 Soybeans and 4,000 Wheat, the bearish momentum was still on and the week have been a bloodbath. Over the week indeed, ICE Canola went down -2.39% on China making the import spec tougher,  CME Soybeans followed (-2.65%), forgetting and correcting the logistical issues in South America, MATIF Rapeseed was no exception and went down -1.06% in Euro and -2.85% in Dollars. CME Corn was down -3.01%, CME Wheat -4.01%, Kansas Wheat -3.17% and Minneapolis resisted pretty well with -0.81%. MATIF Wheat was hammered, -4.28% in Euro and -6.00% in Dollar, in full panic mode, MATIF Corn resisted pretty well in comparison and was +0.17% in Euro (-1.64% in Dollars). So a pretty ugly week…


And it seems like over the week-end people were more worried about Leonardo DiCaprio winning his first Oscar (he did a couple of hours ago…) rather than being worried about the potential bullish catalysts. There are issues indeed but immediate threat is just not there. There are mainly two areas of concerns, the heavily short bets and the weather, but, once again no immediate threat, it’s all “what if” around worst case scenario. Rosenthal was saying level of short is irresponsible, maybe, but so far they’re right…


Indeed, CFTC’s COT showed once again a very heavy level of short. Funds are, as of Tuesday, close to being short 135,000 lots of Corn, 100,000 lots of Wheat and 22,000 lots of Soybeans. During the week, Wheat increase short position by 14,300 lots, Corn marginally (considering the current level of short, this is marginal indeed) decreased short position by 3,600 lots while Soybeans cut by half their short position by buying 21,000 lots. Basically Wheat has no bullish support and it’s tough to find any immediate reason to buy while Soybeans found some obvious bids from Brazilian logistical issues, Corn being torn between the both. From Wednesday to Friday, the selling bonanza continued: funds sold 7,000 lots of Wheat. 25,500 lots of Corn and 13,000 lots of Soybeans, so it’s estimated the cumulated short is now over 300,000 lots. Mind the short covering but if there’s no catalyst, this is likely to happen very violently and suddenly.


Weather is still very mild in northern hemisphere, winter wheat is leaving dormancy, snow cover is melting, hardening has not been completed… This is not an issue by itself, if there’s no big freeze, it’s actually putting winter wheat on a very good track. No cold sap is forecasted so any fear about it is pure speculation at this stage.


A bit of fundamental news.


International Grain Council increased its wheat output by +1MT to 732MT and its corn output by 10MT to 969MT. IGC sees grains stocks at the highest level since almost 30 years.


USDA said wheat areas will be 51.3M acres, -6% down from last year. On the other side, corn surfaces are seen to 90M acres (+2.3% from last year) and Soybeans are seen to 82.5M acres (-0.2% from last year). In terms of cumulated surfaces, it’s down 1.8M acres. But is this bullish? Not sure… Indeed, in terms of quantity, keeping the same yield, corn acreage would compensate more than the diminution in wheat and soybeans. Wheat would lose -4.3MT and soybeans -0.3MT but corn would be up +8.6MT… In terms of global grain supply, this could lead to heavier balance, so it sounds like it’s just a farming arbitrage. Also USDA said it sees aver prices for the next marketing year to 420c/b for wheat, 345c/b for corn and 850c/b for soybeans… We’re almost there already!


US export sales were good on wheat Thursday, higher than expected to 486.2kT, while corn and soybeans were as expected to respectively 1,066.3kT and 328.6kT. Anyway, really it needs to be shipped so wait and see, but no cancellation this week. On the other side of the pond, EU cleared a good amount of soft wheat (761kT) which is for this week enough to fill the gap with USDA’s estimates, but it needs to last and it’s going to be tough. Barley was exporting at a good level to 302kT while corn keep being imported at a very good pace to 315kT.


French crop condition is in advance, is the South East of France, 34% of wheat has an ear of more than 1cm! Nationwide, 10% of wheat has lifted 1cm (+5% week on week, 0% last year). Wheat is 95% G/E… Was MARS over cautious last week? Barley is 94% G/E.


GASC had no choice but buying, supply was getting tight. Offers are coming back but it’s shy… 480kT were offered indeed, and French wheat, best FOB, was still $5 premium to MATIF, it’s decreasing but confidence have been hit. GASC bought 300,000T: one vessel from France, two from Romania, one from Argentine and one from Ukraine, Average price paid was $185.45CNF. It should take their supply to last until the end of July, it’s buying some time but problem is not solved. Still no news about the 3MT deal…


Saudi Arabia’s SAGO just booked 870,000 of hard wheat, Tunisia bought 75kT of durum at $269. Ethiopia has received offers, lowest price is $206.13 CNF FO. Iraq is still in for 50kT of wheat.


Night session is sideways but overall pretty strong, wheat and corn on the upside, soybeans marginally down. MATIF Wheat should edge higher but some spread action and panic can bring surprising move.


Outside grains, main story is still Brexit. The least we can say is that newspapers and G20 are not on the Brexit side and the scaremongering machine is working hard, tough to see any mainstream news or agency pointing virtuous effects of a Brexit indeed. But it seems like it’s convincing non-British only, latest poll is giving the Brexit on the win!  52% versus 48%. Ant the campaign is turning bitter now in the UK. Some sources are claiming UK officials “instigated G20 Brexit warning”, Boris Johnsons is more or less being insulted permanently,… Not sure it’s the best strategy, but it’s tough to convince the UK’s average and lower class, the common currency advantages cannot be used, citizen feel there’s no more control of UK laws and it’s coming right in the middle of the migrant crisis… 115 days to go! GBP is rebounding on early trade, well deserved as it plummeted -3.72% last week. EURUSD is following higher (and had followed last week losing -1.81%).


Finally, gold is above $1,230 now, meanwhile, oil is up also, NUMEX with a $32 handle. Baltic Dry Index BADI recovered +12.76% from its low but is still -31.59% YTD.

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