Another Soybeans day, the front month, N6, moved up +4.02% with very big spread action! N/Q was almost up +10 cents, and N/U +20 cents roughly. The curve is now in steep backwardation, which usually means there is short term shortage and high spot demand. It seems there is steady demand in old and new crop indeed. Just need to see It in export expectations now. Anyway, same stories, market is really fearing a shortage of available beans to export from South American due to the recent floods and current rains. CME Group is hiking the initial and maintenance margin requirement for Beans and Meal. Corn managed to stay unimpressed, finishing a few ticks down and Wheat followed Soybeans, probably much more influenced by short covering rather than anything else, some are throwing the towel, stop are triggering but nothing has changed. Wheat fundamentals are still very heavy indeed and day after day, US crop seems to profile itself as very good, and in the northern hemisphere, if there is quality concern in Europe and Black Sea, quantity is very likely to be there. The US drought talks are so far unjustified and there’s a lot of margin before getting really worried, the latest drought monitor is absolutely not comparable to the 2012 one. An actual drought would come slightly too late for wheat as harvest is slowly kicking off, it would obviously be a greater danger for Corn, especially with a 168 bushels per acre yield expectation. Funds bought 2,000 lots of Corm, 21,000 lots of Soybeans and 7,000 lots of Wheat. With Soybeans hiking this way, one can wonder if early spring wheat harvesters are not going to try to do a double crop at this rate!


NOPA crush came in at 158.3M bushels, above the 156.8M bushels expectations, but was still less than the March crush of 166.4M bushels. Higher demand week on ethanol, US ethanol production was up 14,000 barrels per day last week to 960,000 barrels and stocks were down -44,000 barrels to 20.77MT. Private analyst ANEC pegged the Brazilian corn production at 75MT, -4MT below their last estimates and -6MT below the USDA WASDE, exports are revised down -7MT to 23MT.


MATIF more or less followed Chicago Wheat in US dollar. There’s a bit of panic about the quality of the crop and the quantity, but quantity seems to be a given now. Farmers are still reluctant to sell the new crop but if there’s price pressure during the harvest, they might seriously kick off their new crop sale and it will be a huge relief compared to a few month back! Floods in France are looking impressive indeed but rains have drastically stopped. In other words, the floods are actually mainly rivers going overboard and Paris is the perfect example, river Sein is pretty high and closing the banks road. So yes that look impressive but there’s obviously no crop to be drown in Paris. However, even if 3 days there was the equivalent of 5 weeks of rain, the situation is similar to May 2013 according the French authority in charge of managing the dams upstream the river Seine. The 2013 wheat crop (all wheat) was 38.628MT. If this wasn’t the best number, it was big enough for the stocks to increase by 2.245MT. This was an average yield of 7.26T per hectare. Let’s transpose that to the current acreage. The total wheat surface is 3.16% greater than 2013, so this would be a crop of 39.848MT. Also, it comes early enough, if rains are stopping and fields drying to avoid drastic protein dilution and decreasing falling numbers like in 2012 but concerns are there. Back to the dams, as the rains have stopped, there is still 10% capacity for the dams protecting Paris and a few voice are raising in order to ask if the flow has been managed properly. Some are going farther insinuating the flow has been kept intentionally higher than it could have been in order to discourage demonstrations against the labor law in Paris: rains and flood have diminished the stream of people keen on spending time outside indeed. That’s a bit science fiction politics but it’s fun. Anyway, strikes are still going on and is very likely to disturb tourist coming for the UEFA European Football Championship on the transport side, while it seems that the fuel situation and the logistic in ports have improved. However, strikes and floods will surely cost e bit of GDP in France and reputational risk also if Euro is heavily perturbed. But French government is said to be ready to sacrifice the event to show its inflexibility, hoping on the other side a French victory will quiet everyone down and create a happy atmosphere for the summer in France.


Night session is again steady on Soybeans (and still backwardation is increasing) while widely unchanged on Corn and Wheat (Minneapolis a couple cents up though). At some point, considering the heavy long position, Soybeans will be hit by profit taking, the 12$ dollar level seems to be the psychological target. MATIF is expected to tick up at the opening.


US Crude Oil Inventories went down as expected, but in a much lower extend. Indeed, market was expecting -2.7M barrels and it was only down -1.4M barrels. On top of this, the widely non-event expected in Vienna did not provide a surprising outcome: no OPEC policy move. Iran has been inflexible. But market stood stiff, unimpressed. NYMEX Crude finished just above $49, while ICE Brent closed 4 ticks above $50. The next move is probably going to be very technical. On Freight, Baltic Freight Index BAD is keeping struggling and is approaching 600 points, it was down -6 to 606.


The mind of FED seems to be set-up on a rate hike. However, with Brexit camp having a bounce recently, will FED chose to raise the rate before knowing the result? Despite very good macro statistics in the US, we could see a technical postponement. However, there’s also the US presidential election approaching. Anyway, nothing will change on the 24th of June if Brexit goes through, there will be months and maybe years of negotiation with EU and international agencies to set up the move, so it won’t be binary like one day you’re in the next day you’re out. A few Services PMI’s to follow in Europe (Eurozone, Spain, Italy, France, UK) and job day in the US (NFP, unemployment rate) and non-manufacturing ISM. EURUSD has failed to maintain itself above 1.12 is back in the mid-1.11’s.


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