No real move on Soybeans at the close, still some nervousness on spreads, backwardation has steepened a bit yesterday, N/Q +3.25 cents, N/U +7.25 cents, N/X +10.25 cents… But no comparison with early June where NX was above 60 cents. There is still some tension on short term supply indeed, but the fear seems to fade. Meanwhile, Corn finished up +6.5 cents and Wheat down more or less -4 cents. No issue on wheat while corn balance sheet is feared to get thinner in South America and in the US. Funds bought 16,000 Corn and Sold 2,000 Soybeans and 7,000 Wheat. MATIF wasn’t helped by a lower euro and followed Chicago on the downside.


Night session is quiet, Wheat is rebounding a bit, +3 cents, Corn is sideways, mostly flat and Soybeans just a bit more than +1 cents up. MATIF also opened on a stronger note. Market could be pretty quiet, just waiting for the FOMC, main fundamental event of the week.


On the weather side the month of May was the hottest may ever according to the NASA. It’s raining pretty well in the US, especially on corn and soybeans, it will be good for soil moistures. Indeed, crop condition are good, drought monitor is not alarming by any means, but the soil is drying and these rains are mostly welcome. In Europe, east of France and Germany seem to be at risk of mycotoxin, especially fusarium. But there’s no threat anymore on the size of the crops.


Have we seen the bottom on the Brazilian cut? IF USDA is forecasting the old crop 77.5MT some analyst (like Cordonnier) are thinking -2MT could actually be more realistic. Meanwhile, in Argentina, will we see more wheat sowing due to export tax arbitrage? It could raise up to 20% to 5M hectares. ABARES sees Aussie crops higher than the previous year thanks to good conditions during the plantings:  wheat is pegged at 25.4MT (+0.9MT from last year and +0.4MT above current USDA’s forecast), barley to 9MT and Canola to 3.2MT.


Egypt local wheat purchase reached around 5MT which is +25% above their target. GASC might soon need fresh foreign wheat soon to blend, but how much will they import, their target could decrease. But the season is going to be a nice drama as the ergot stories are not over yet as there are still cargoes under zero policy rejection, so traders’ confidence to sell to Egypt won’t be very high. On the other side, with plenty of wheat this season once again, if you don’t want to sell to Egypt, fair enough, but you will have to find demand elsewhere… It’s going to be very interesting for sure!


Japan is seeking 112,870T of food wheat. China auctioned 9,859T of imported wheat from the state reserve.


On Freight, Baltic Dry Index BADI keeps eroding and struggling: -1 to 608. Oil is also struggling, currently back down with a $47 handle on NYMEX Crude and $49 handle on ICE Brent. The level of $50 is really sticky and there’s no big fundamental news to help to diverge. Iran exports are keeping increasing but this data has been integrated by the market since a while. Gold still playing around $1,280 per ounce.


Busy night tonight, 10pm Dubai time FOMC and 11pm kick off of France Albania in the Euro 2016! On a serious note, nothing is expected so if something is happening, it will be a massive bearish signal for the Euro. Market is now more betting on a July or September hike. Yesterday, good retail sales (+0.5% month on month, versus +0.4% expected) won’t erase the fact that the previous job data raised concerns. US PPI might bring a bit of excitement but really, there’s very little chance of a surprise, but hey, never say never! As per the British Pound, it’s very shaky and nervous. Market begins to feel Brexit could actually happen. Funnily enough, the timeline is exactly the same as the Scottish Independence referendum. The week before, the ‘Leave’ camp was leading, then the establishment is going to throw the last weapons, heavy scaremongering and promises and it will be just fine. Anyway, whatever happens, they will cope just fine, in or out. Leaving the EU most likely wouldn’t mean to abrogate any of the international treaties, trade will stay the same UK is the 5th economy in the world and trade partners will continue to do business, collapsing pound would hurt imports for sure but it will be good for investment and exports. We’ve seen recently during the season that UK can become an aggressive exporter of wheat when the British Pound is going down. Markets and economy would adjust in case of Brexit, so either way, there’s probably no big deal, but it’s more the uncertainty that scares market than anything else. EURUSD  is trading around 1.1225 and GBPUSD is taking a breather, rebounding +0.5%. Yesterday was the first day ever the German Bund yield reached negative values.

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