Big day on funds! They bought 11,000 Soybeans and sold 10,000 Corn and 9,000 Wheat. Corn and Wheat were probably helped by the reminder that exports will need to be very high at the end of the season (Corn got a respite this week though) and anticipating a very good condition and progress report. Corn and Wheat finished down, -5 cents for Corn and -12 cents for Wheat. MATIF was no exception and followed on the downside. Soybeans were up, also very technical, a lot of spreading action with Corn, beans were also beneficiating from higher Meal (funds are short covering SoyMeal). Well, a lot of position adjustment and nervousness before the USDA WASDE which is by the way very likely to be a nonevent unless a surprise is coming from US exports.


Interesting start of the day for a report day! Night session is green across the board. Soybeans and SoyMeal are still on the rise (respectively +0.75% and +1.2%) while Corn and Wheat are slightly reverting the yesterday’s selloff. MATIF just ticked down, feeling the pressure of higher EURUSD.


Finally the notional crop progress on corn was published. And one can have a laugh… After all the talks about corn planting delays, finally corn planting (at 4%) are in front of last year (1%)! And perfectly in line with the 5 year average (4%). As well, winter wheat conditions are 56% G/E (42% last  year) and 9% P/VP (19%) last year. It’s been degrading from last week (-3% G/E and +2% P/VP) but bottom line, condition is much better than last year, but farmers will obviously point the fact that it’s degrading and also the fact only 4% of the wheat has headed (5% last year and 7% on the 5 year average). Spring wheat plantings are at 13% (14% last year and 10% on the 5 year average).


Export inspection were good… As far as Corn and Soybeans are concerned. Wheat was pathetic but market hasn’t been surprised, with wheat sales cancellations there will be more damage. Corn needed 1,061.9kT per week to fill the gap with USDA’s WASDE and actually did better: finally! Corn export inspections were a nice 1,122kT indeed, bringing the average needs (21 weeks to go) to 1,006.7kT. This will still be a very tough challenge, probably unrealistic. Soybeans export inspections were a good 387kT and the average weekly need is now below 200kT to 188.7kT. No immediate concern here. But wheat export inspections were a tiny 339kt. Basically two month to go where wheat cannot afford to be below half a million tons per week… This is very unlikely.


So what does this mean for tonight USDA WASDE? USDA will probably get away with not changing the corn exports. As per wheat, not changing exports will be very sneaky but it’s not unconceivable they want to wait for next crop data to be published (next month) in order to be discrete. However, US wheat exports will be most probably short of the forecast by -1.25MT to -1.75MT at the end of the season. But market seems delusional and is not expecting a move.


What else to expect on this report? Nothing massively exciting to be honest. Mainly, the changes should come from South America, production is expected to be increased overall, the main change being Argentinian soybeans. Market will probably be more focused on the next one, which is going to include new crop data.


Buying 60kT each time is a bit short for Egypt and they’re back indeed still for old crop. They will probably have much better prices thanks to lower market but the moisture is just another issue to the confidence crisis so some premium to the market is still to be expected. Also on international tenders, Japan seeks 126,620T of food wheat. US Wheat is the cheapest on the Iraq tender at $238 CNF FO. Qatar booked 40kT of wheat, Jordan still there for 100kT of hard wheat as well as Ethiopia (70kT of wheat after purchasing almost half a million tons).


Oil is back above $40. Significant move will wait for the Doha’s meeting next week. On Freight, Baltic Dry Index BADI keeps on moving up, +16 to 555, it’s now up +16% YTD and a recovery of +91% since the historical lows. Gold is also on the rise, above $1,260, thanks to US dollar weakness.


EURUSD is up, this is probably a combination of technical and general weakness of US dollar. As far as euro is concerned, if Brexit is going on, this will create a lot of uncertainty: who’s next to leave the EU? There’s an obvious momentum of the ‘leave’ camp and timing is not helping the UK government: migrant crisis and Panama Papers will clearly have an influence on voters. There’s still probably a ‘all or nothing’ card in the PM wallet, like ‘The Vow’ of the Scottish Referendum. Campaign will be fore sure captivating until the 23rd of June.

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