After Soybeans and Corn started the trading day on a softer note, everything closed collectively up give or take +2%, finally respecting the Tuesday traditional reversal, happening on Wednesday because Monday was closed. A bit farfetched but there’s not a lot more to say, markets has heavily reacted to export inspections and crop report but the move was pretty big and market needed a breather for sure. But market is a bit lunatic, weather was good in the US recently, improving the quality of the winter wheat, but mood will quickly switch to dry and hot issues, get ready for the usual weather market! Funds got excited, they bought 14,000 lots of Corn, 23,000 lots of Soybeans and 3,750 lots of Wheat. Funds positions movements are on the higher range of the usual volume since a few weeks, typical weather market seasonal pattern. MATIF was rightly penalized by a stronger euro but more than it should have been in regard of the US move. It closed a tick down. We can expect a bit of decorrelation with the French harvest approaching and with the current weather concerns: will the rain bring bad protein and fast hagberg falling numbers?
Night session is quiet for Corn and Wheat so far, Corn is barely ticking down, Wheat a few ticks up. Really Soybeans is again the star of the early trade with +6 cents up. MATIF is so far expected flat but nobody is awoken just yet to put orders in the order book. Should not move massively at the opening though.
USDA crush figures were down from 4.99MT in March to 4.75MT in April but it was slightly above average of market expectations. Meal stocks were steady to 365.653T (+62,981T) while SoyOil stocks reached 2.049b pounds. The USDA oil production is 6.4% above the NOPA’s figure.
France floods are beginning to bring concerns over the quality. Tough to say at the moment if it’s scaremongering or real concerns, but it seems it is not too late, it has to stop now though. But everything is happening at the same time in France: weather event and strike both impacting logistic and public transports (train, rail and road),… Government is holding pretty well as the labor law is supposed to be debated in the Senate in a few days, after the EUFA Euro Football Championship is supposed to start. So a few days to wait to see if the Government stubbornness will pay or not.
Japan is seeking 20,026T of feed wheat and 9,370T of feed barley for their livestock on the SBS (Simultaneous Buy and Sell) scheme, basically acting as a central purchasing agency for privates. China is keeping up with the auction of state reserve, although there’s no news about the soybeans, they auctioned 2,831T of rice (they have potentially 403,200T up for sale). And results for corn are awaited, there’s 2MT of corn virtually to get rid of. Egypt ‘s FIHC bought 30,000T of SoyOil in a tender, ADM is the seller, at $779/T and cash is payable immediately.
The $50 level on oil really seems to be a big resistance. The term structure seems to become bearish as the NYMEX Crude and ICE Brent contango seems keen on widening. Market widely expect nothing to happen as Iran rejected oil output cap once again as OPEC is meeting in Vienna today. A few fun stuffs are going around this morning though: CMC Markets is saying that the only thing that is going to be boosted in Vienna is the hospitality sector, while OilPrice.Com is taking the contrarian approach expecting an unexpected result. US Crude Oil Inventories are expected to be -2.7M barrels, this could add a little spice in a very eventful day for oil. Oil started the day slowly, NYMEX Crude flirting with $49 and ICE Brent approaching $50. N Freight, Baltic Dry Index BADI was unchanged to 612. Gold is helped by technical and lower US dollar, rebounding since testing the $1,200 support.
Japanese Yen is on a third day of surging, coming back to test the 109 level. The upside move from the kamikaze move of April’s BoJ decision to move the rates negative took a month to erase, EURJPY came back to 111.43 on the 30th of May and then revert. So if we have to expect another full retracement the other way around, 105.50/106 is the target. Prime Minister Shinzo Abe delayed the sales tax implementation to October 2019 and said he’d rather put in place a new stimulus package. USDJPY is down then, and so is the Nikkei 225. After posting yesterday a -1.62% loss, it opened with a gap on the downside and is currently trading down -2.5%. Global manufacturing activity remains weak in Japan. In China, the Central Bank fixed the Renminbi at its lowest level since 5 years to 6.58. In the US, ISM Manufacturing PMI was expected down -1 to 58. Market has been pleasantly surprised by the number being 63.5, reaching a five 5 year high! Should be good for the US dollar, right? Well, EURUSD is unimpressed and went to test the 1.12 level. However, it seems to convince the last skeptical on the markets: it’s now widely expected for the FED to hike the rates this month, if it’s not happening it will be a huge disappointment. Also, total annualized vehicles sales in the US were steady to 17.4M. Although this was a weaker May than usual, the last quarter of 2015 was very strong: it seems like lower oil (and then cheaper gasoline) have pushed consumers to buy new cars maybe earlier than expected.