Market was collectively down coming back from a long week-end. Export expectations and anticipations of favorable crop report led the fundamental bearishness while the technical bearishness was driven by profit taking. Funds started the week on the selling side, selling 11,000 lots of Corn, 8,000 lots of Soybeans and 10,000 lots of Wheat. Wheat led the way down, falling more than 3% in Chicago. It’s interesting to see that despite a few quality concerns there and there, it’s becoming increasingly probable another bumper crop will happen: derivative market is focusing on the quantity, not on the quality. MATIF was no exception and with the strike and rains, some pressure could happen on the U/Z spread as rolling for logistic reasons and rolling to get sure to have the new crop quality could definitely make sense.


Night session doesn’t feel like it’s going to be the Tuesday reversal of Wednesday (market is lost when public holidays are on Monday!). Soybeans are the main driver, -6 to -7 cents down, Corn il lagging behind with -2 cents while Wheat is ticking up. MATIF is expected to tick down, as an adjustment with US markets and on higher EURUSD.


Crop Rating and Progress report was expected anxiously as it is the first one showing ratings for recently planted corn… First, on the plantings, 94% of the corn is planted, same as last year, +2% above the last year average. In other words, it’s virtually done and it seems there was no massive switches from corn to soybeans. The chatters about these were purely theoretical and came too late, Farmers had already bought the seeds and their flexibility was marginal. Soybeans are 73% planted, 17% of the soybeans were planted last week, this is working well. It’s in advance compared to last year were 68% of the beans had been planted, and also in front of the 5 year average (66%). So it’s fair to say that everything is going pretty well on the planting side. As per the ratings, Winter Wheat improved to 63% of G/E (+1% from last week) while P/VP are still at 8%. This is far better from last year (respectively 44% and 20%) and the first harvest reports, especially in Oklahoma, are very encouraging. But let’s not get excited indeed, Oklahoma winter wheat is rated above the national average (65% of G/E and 6% of P/VP) and the first acreages of harvest are usually the best. Spring wheat also improved from last week, +3% on the G/E to 79% while P/VP stood at 2%. Last year it was respectively 71% and 4%. Finally… Corn! Market was expecting between 68% and 73% of G/E and actual was on the higher range of the expectations to 72%, P/VP being at 4%. This is slightly shy of last year (respectively 74% and 3%) but this is historically good enough.


Export inspections were released yesterday. Wheat shipment were shy half a million tons to 494.8kT. In other words, with 1 week remaining, next week need to be 1.156MT to reach the USDA’s target. Unless a miracle is happening, especially in a week shortened by a public holiday, this won’t happen and luckily enough, the next last export inspections report of the season for wheat will be a couple of days before the June USDA WASDE. So USDA would struggle not to act. Interesting fact, between the March WASDE and the April WASDE, wheat shipments did not averaged 400kT per week, between the April and May WASDE, they reached an average shy of 425kT. Both were not enough pacey enough to reach the 21.09MT old US export expectations, and on the May report USDA are bumping them up 140kT anyway (to 21.23MT)? One can genuinely wonder about what happened there… The likelihood that it will be below 21MT is pretty high so this bum up of export in the latest USDA was and is still an enigma…  After 8 weeks in a row with more than 1MT on the counter, corn has struggled last week, only 786.4kT have been shipped. Corn need 1.1MT for the next 14 weeks and cannot afford too many of weak weeks like these. Soybeans also haven’t done enough, only 182.3kT were shipped and they need 282.7kT for the next 14 weeks. There is no big issue just yet but the situation cannot last, the average of the 10 last week is only 254.1kT, it has to pace up, else this won’t be enough.


Floods and rain in France are not just yet a concern, we’re still on the side of “rains make grains” but the situation need to be monitored as the 2014 crop lack of quality is still haunting farmers and coops. So far farmers are happy, they miss a bit of sun for photosynthesis but nothing to get worried about just yet. But the rain is disturbing loadings for sure… As of yesterday, 3 vessels were loading in Rouen for Morocco, has it been completed? If not, in theory, the shipment will be hit by the 30% import duty, unless a special agreement is found, which is not impossible either.


Jordan is cancelling (no bidders) and tendering again to buy 100kT of wheat. Groundhog day, it will only end when the decide to significantly ament tender specs and payment terms. Algeria wheat tender deadline is today, August shipment, new crop. China auctioned 111,467T of rapeseed oil: 2011 ‘millésime’ was sold at the equivalent of $804.55/T, and the 2012 ‘millésime’ at $824.73/T. No news about the postponed or cancelled soybeans auction. Ukraine, at the end of May, has exported 15.5MT of wheat and 16.4MT of corn.


Baltic Dry Index continue to range above 600 and rebounded yesterday to 612 points. Oil is weaker this morning, NYMEX Crude tried to go above $50 and did not manage to sustain and revert, currently having a $48 handle. Same scenario for ICE Brent, hello $50 and then back to the lowers $49.


EURUSD is still directionless between 1.11 and 1.1150. Switzerland quarterly GDP was up +0.1%, missing the market consensus of +0.3%, as their retail sales moved down -1.9% year on year.  Spanish manufacturing PMI also missed expectations to 51.8, as well as Italian manufacturing PMI (to 52.4), as well as German manufacturing PMI (52.1) while French manufacturing PMI met expectations to a weak 48.4. The real data of the day will be the US ISM Manufacturing PMI. meanwhile in the UK, Brexit camp is gaining some pace, probably heavily influenced by the Mediterranean Sea and Channel migration situation. Some online polls are showing 52% for the Brexit while more traditional and reliable polls are showing 45% for the Brexit, 42% for the ‘Remain’ camp with the balance being undecided. This will be a thrilling June!

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