US were closed so not a lot to say, opened market have been really quiet, the only excitement came from MATIF Rapeseed who posed a rebound of around +0.7%. Else, Ice Canola was finally down (around -0.35%), MATIF Corn and Wheat were sideways with no big move to report, very low volumes. Gold was lower, tested the $1,200 level on the bullish trend of the US dollar and the expectation of a FED rate hike and technically rebounded (last time Gold was below $1,200 it was in February). Oil started the week on a positive note, both NYMEX Crude and ICE Brent reapproached the $50 level and are struggling this morning to go for a taste of the big number. Market is widely waiting for the OPEC meeting later this week but is also widely expecting nothing. A policy move seems to be necessary to go significantly above $50. Export inspections and Crop report are postponed to today due to the public holidays.
On the Grains, trading is resuming with a sideways night session. Soybeans and SoyMeal are up once again, Corn and Wheat are down, MATIF should follow at the opening despite a softer euro.
So Oklahoma (accounting for 6.5% of the US wheat) is beginning the harvest of wheat. Statistically, the first wheat entering the silos are the best and one should not get excited too quickly, it is not necessary giving an idea of the whole crop. After this disclaimer, let’s get excited anyway. Indeed, it seems it’s going to be, as far as Oklahoma is concerned, the best crop in years! Officials are expecting 3.55MT (+32% from last year and +174% from 2014), the 5 year average being 2.6MT. In Brazil, Mato Grosso corn crop is now seen at 21.24MT (-1.85MT versus previous estimates) according to the Farm Institute. Tunisia harvest is seem 7.69% up to 1.4MT, this won’t be enough to help Morocco.
It’s raining quite a bit from Western Europe to Black Sea and market is fearing a crop like the 2014 French crop! That being said, in France, some floods are reported in the Center East but it’s far from widespread. In the UK, an increase of the soil moisture was welcomed. In Russia, June is expected to be wetter than the average. Protein dilution and fusarium are the current risk but there’s no panic across Europe at the moment. Indeed, so far, the rains are favorable, it’s if it last that it could become an issue. Also there are storm in the US on the plains but is will gradually shift to a better placed MidWest. Back in France, hailstorms have damaged vineyards but fragile crops like rapeseed have been spared.
China was supposes to start to sell reserve of soybeans stocks on auctions, 300,400T per week until they sell 4.4MT. They were not planning to compensate this sell by import of fresh beans. However, the auction has been postponed. More to follow for sure. The auction of 38,002T of wheat has however successfully taken place. Algeria’s OAIC is tendering for the new crop of milling wheat, August shipment.
On Freight, Baltic Dry Index BADI moved up +5 to 606.
Nothing much on macro data, French consumer spending was down -0.1% (expectations were +0.1%) month on month but previous month have been revised, to +1.1% from +0.2%. French preliminary CPI was expected at +0.3% this morning and actual is better than expected to +0.4%. No real improvement on the strike, public transports and infrastructure are hit (trains, planes, still a bit of petrol issue but it has improved though) while the UEFA football is starting in lesst than 2 weeks… Finally, German retail sales month on moth were expected at +1% and actual was -0.9%, with a revision of previous from -1.1% to 1.4%. Spanish flash CPI was as bad as expected to -1% year on year. Deflation risk is still a concern in Europe. Italian unemployment is raising to 11.7%, it was actually expected to decrease to 11.3%… Slowly but surely, the so called PIGS (Portugal, Italy, Greece, Spain) are slowly making a comeback in the headlines, Eurozone problems are far from over and it might become even tougher the day after the 23rd of June if Brexit is going through. It is said that EU is going to be particularly nasty in the way they would handle the exit on the UK of the EU in order to send a message to other countries in a bid to put down the rebellion: “you want to leave, face the harsh consequences”. Because France, Netherlands, Austria, Greece,… There’s some growing interest in leaving the EU. But the trend is clearly on the ‘Remain’ camp to win, the only hope for the Brexit is a huge turnout on the side of the Brexit and a low turnout on the side of the ‘Remain’ camp. But there’s still 3 weeks to go and a lot can happen. And indeed, the latest sad stories of migrants in the Mediterranean is giving a boost to the ‘Leave’ campaign: latest poll is 46% for the ‘Leave’ camp, 51% for the ‘Remain’ camp, the balance being undecided. On the other side of the pond, market now it as a point where if the FED is not hiking the rate on its next meeting it would be a massive disappointment. EURUSD fail the battle the first time yesterday on 1.11 and rebounded. It started the day on a softer note so most probably we’ll have another test of the 1.11 figure.