That was some kind of Monday. Funds bought 15,000 lots of Corn, 10,000 lots of Soybeans and 6,000 lots of Wheat in a market rebounding sharply. Same old news, weather related, last short are beginning to feel the pain and short cover, etc,… Not a lot of news indeed. Wheat is just a follower and the real decider for Soybeans and Corn will be approaching the end of June, some fears of drought and excessive heat are coming back in the market talks. With the South American lighter balance sheets, market is really sensitive to what would or could happen in the norther hemisphere. But so far so good in the US. In Europe, if floods in France are easing, there is still a bit of rain forecasted. But what is now missed is sun and heat in order to dry Wheat, have good photosynthesis which would prevent wheat from being low quality: specific wheat, protein, Hagberg are currently at risk, with also some fears about mycotoxins. Same in south of Russia. MATIF opened in gap and traded also higher all day long.


Night session is still strong on Soybeans but the early gains are fading, and Wheat and Corn seem to be keen on a Tuesday reversal. MATIF also opened lower.


Crop progress was interesting and confirmed that there is no major acre switches between corn and Soybeans. Indeed, Corn is 98% planted (+4% from last week and this is to compart with 99% last year and 97% for the 5 year average, so a timely plated corn) and Soybeans are 83% planted (+10% from last week and this is to compart with 77% last year and also 77% for the 5 year average, so, thanks to dry weather conditions, soybeans are on their way to be early planted). This was also the first ratings for soybeans and they are in a very good state! 72% are G/E and they were 69% last year, also only 4% are P/CP versus 5% last year. So this is not only an early start, it seems to be a good start. Corn improved and is now in a better state than last year, 75% (+3% from last week) are now G/E (74% last year) while P/VP stood unchanged at 4% (also 4% last year). However, winter wheat slightly deteriorated, moving 1% from G/E to P/VP, now 62% is G/E and 9% is P/VP. There is still no comparison with last year (respectively 43% and 20%). As per the spring wheat, conditions are unchanged to 79% of G/E and 2% of P/VP, also better than last year (respectively 69% and 5%). It’s now officially confirmed the harvest has kicked off, with 2% of the winter wheat in the silos, this is slightly delayed as last year it was 3% and the 5 year average is 10%. First harvest reports are however very encouraging in terms of yield and quality.


Export inspections were particularly exciting! Wheat shipment reached 390.2kT, including only 178.2kT as far as May was concerned. So, in theory, it would mean that total shipment for the marketing year that has just end up reached a total of 20.248MT, in other words this is short 979.9kT of the USDA’s target. Logically, USDA should cut the US Wheat exports in the Friday’s WASDE and one can still wonder why they bumped them up in the previous WASDE report. As far as the new marketing year is concerned, wheat need to average 453.9kT per week. Corn shipments are back above 1MT to 1,067.5kT but this is still a bit shy of the required pace and now 1,102.7kT is reqired for the next 13 weeks. As far as Soybeans are concerned, ugly number, quite surprising: 98.4kT. Soybeans need now 295.2kT per week to reach the target, but the 10 weeks average is 209.4kT, so there might be a bit of situation there. However, this is still a very achievable target especially considering it seems there some demand shifting from South America to the US. But keeping an eye on it is definitely a must.


Algeria is tendering to buy 50,000T of feed barley. China has sold in auction 13,261T of wheat from their states reserves. It follows 1.79MT of corn, 104,851T of rice, 111,467T of rapeseed,… Ageing stock has to go!


Oil is still evolving around $50, it seems to be a level where fundamentals are needed to diverge. On Freight, Baltic Dry Index BADI is struggling above 600 and was down -3 to 607. Gold is retreating this morning but stays above $1,240 per ounce.


So did Janet Yellen just realized there was a Brexit vote in June? Or did it take one bad (‘less good’ than expected) job data to change her mind? Indeed, in a speech she said that UK leaving the EU would create some uncertainty and that the latest job data raised question about the economic outlook. All the governors aren’t in agreement with each other so next FOMC meeting will certainly be heated, she actually said they’ll be “wrestling”. But time is running out, there are only 7 month to fit 2 rate hikes, should it be still their objective. Only 4% of the market participants are now expecting a rate hike in June, the implied probability increased to 27% for July, 49% for September, 51% for November, and 70% for December (this is not conditional probability though, because if June were to be hike, July probability would obviously fall). French trade balance for May was more negative than expected to -€5.2 while French budget was in deficit of -€56.5b. French Government is trying to prepare the EU that the deficit objective won’t be reached and Jena-Claude Junker had to insist that budget rules apply to all, including France. But hey, who cares? Certainly not France, an most probably this is only a posture from Junker, they will let it happen with no sanction. Meanwhile, Greece is supposed to redeem €306M to the IMF today, this is from the first bailout program. Should not be any problem but this will be followed by €7.2b of treasury bills until the next IMF redemption of 5459M in July and soon after, they owe €2.3b to the ECB (and €1b the week before of treasury bills), so this is a busy start of the summer for Greece! EURUSD is struggling above 1.1350. Meanwhile, GBPUSD is nervous and is rebounding above 1.45. Polls can suggest Brexit could happen but bookmaker odds are suggesting is won’t happen, so the mood is really split and market is nervous.

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