Thursday, the theme was clearly the Soybean / Corn spread. Market is talking more and more about some switches from Corn to Soybeans in the US planting, Monday’s crop report will give some clues about the reality, or not. So logically, Soybeans went down, Corn went up. And wheat just followed Corn. Seriously, this Wheat feels sometimes being like Soybeans or some other times being like Corn. We’ll see if funds will disregard fundamentals by moving Wheat short to long in order to be consistent with Corn and Soybeans. On Thursday, funds bought 15,000 Corn and 4,000 Wheat while they sold 4,000 Soybeans. Today, softer day again for Soybeans while Corn is rebounding for the same reasons. But Wheat has the lead, Wheat Corn spread action? At this pace indeed, the funds Short won’t last for long, quite a bet just before the harvest that is expected to be pretty decent in the northern hemisphere. MATIF is also on the upside, pursuing the Thursday move.


US exports sales were good on wheat and corn, respectively 682.8kT and 1.2557MT. Soybeans were lower than expectations to a little 219.3kT. Export inspection should be pretty decent for corn. Wheat and beans might be a bit softer and might struggle to reach the USDA’s required pace. On the other side of the pond, this was a good week for soft wheat, enough to fill the gap with USDA’s season forecast: EU cleared 628kT and now need 570kT per week with a month and a half to go. This will be a close call! Morocco and Asia seems to have been the French wheat salute for the season, without these unusual demand, the picture would have been pretty ugly. But another very good harvest is expected… Barley export licenses were 177kT and 218kT of corn was imported.


Farmers put the second gear on in France to plant corn: 34% of the corn was planted last week, they are now only 11% behind last year, no big deal. Winter Wheat is now slightly behind last year (weather has not been particularly good but no major concern, 9% has headed versus 20% last year. It will be fun to have a late but abundant crop actually, Algerian execution for July would need some attention. As per the condition, 87% of the wheat is G/E, stable from last week, -4% from last year. This is still historically very good conditions.


Russia is expecting to do a very good crop of grains again, biggest since 2008 actually. SovEcon is expected 105.4MT of grains, including 61.1MT of wheat (+1.1MT of wheat from last year that would be). However, a higher Ruble, helped by higher oil prices, hasn’t helped the competitiveness of the Russian wheat for the last couple of months.


Egypt’s GASC needs 80kT of rice and the proceeded with direct contracts. Market is still waiting for a direct contract for wheat, it’s been a lot debated but nothing so far. Japan has bought 127,226T of food wheat, from the US, Canada and Australia. Iraq is supposed to come back on Monday with a decision on the hard wheat tender. US private importers bought 44,900T of non-GMO corn from Romania.


On Freight, Baltic Dry Index finished the week on a positive note, going back to 600. Oil still above $46 on the NYMEX, Canada and Nigeria supply disruption is helping to maintain the prices. ICE Brent is around $47.75. Gold still up and down from one day to another, rebounding today to close to $1,270 on US dollar weakness.


On the currencies side, no major move just yet on the Brazilian real following the president’s impeachment. EURUSD is back below 1.13: noting much really, good retail sales in the US (+1.3% month on month). Mostly technicals these days, just ranging. June might be slightly more exciting: FED and Brexit in the menu. GBP is down, lowest point of May, BoE and IMF – what would you expect – warned of tough times ahead if UK is leaving.

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