Market corrected across the board on this FOMC day. Soybeans finished down -13.75 cents on the N6 and the curve vas on the verge of coming back into contango, as N6/X6 was +1.50 only. Corn and Wheat were down between -6 to -8 cents. Funds sold 11,500 lots of Corn, 8,000 lots of Soybeans and 5,000 lots of Wheat. The move has been weather driven, forecasts are pretty good, some rain will fall on needed parts on the Midwest. In France and Germany there’s a bit of rain, still fueling quality concerns and crop: will we have an abundant crop with poor quality? Quantity is not at risk by any means indeed. MATIF followed Chicago down and harvest is fast approaching in France, which could lead to additional pressure.
And night session is a repeat so far, for the same reasons. Soybeans are the leader again, down more than -1% with curve flattening, Corn is down -3.50 cents and Wheat -1.50 cents. MATIF has also opened lower, stronger EURUSD adding a bit of pressure.
US Ethanol weekly production was up +7,000 barrels per day to 1.01M barrels per days but demand did not follow as stocks were up 957,000 barrels to 21.18M barrels. US crude oil inventories were expected more or less flat, they actually decreased by -0.9M barrels. NYMEX Crude and ICE Brent were not impressed anyway, they are currently trading respectively with a $47 and $48 handle. On Freight, Baltic Dry Index BADI keeps struggling in a slow motion fashion: -4 to 604.
NOPA soybean crush was more than expected to 152.820M bushels, it was the busiest May ever and +5.206M bushels from April. This was 3.15M bushels above analyst expectations but it failed to impress anyway. In parallel, SoyMeal exports fell to 682,500T (-86,535T from April) but it was still better than the prevuous May (551,146T in May 2015). SoyOil Stocks were unchanged at 1.884b lbs.
Rosario Exchange sees old Soybeans crop to 55.3MT, this is -1.2MT below current USDA’s forecast and -2.3MT below government’s estimates. Corn is seen as 27MT, same as USDA.
Jordan is back on seeking hard wheat and feed barley. French wheat has been sold to Vietnam, first time since the nineties. Japan bought 112,870 of food wheat, India is seeking 50,000T of Corm, South Korea’s MFG bought 130,000T of optional corn and their friends KFA is seeking 130,000T of corn.
EURUSD has been a bit nervous on the non-event FOMC (unanimous decision to leave the rates unchanged mainly driven by job data and Brexit fears) and it was actually a bit dovish. The growth outlook is not as good as expected and indeed, the job data has probably weighted on their decision as they acknowledged the “pace of improvement in the labor market has slowed”. The longer rate forecast is cut to 3% from 3.25% and number of rates hikes forecasted are reduced to 3 for 2017 and 4 for 2018. Market is definitely more expecting a hike in September, and most likely there won’t be enough time to proceed to 2 hikes this year. July odds are only 5.9% now, and interesting to be noted, 1.9% are expecting a cut: by being over maybe over optimist the past few month, the fact they are failing hiking the rate could bring pessimism in the market. More or less this was expected so the rebound has been quite moderate. EURUSD is currently trading above 1.1250. As expected, it’s getting nasty in the UK, insults are flying over, it’s going to be tough last week until the referendum. British Pound is still nervous as market begins to feel Brexit could actually happen. Cross rate GBPEUR is getting hammered since late May, from 1.3217 on the 25th of May to 1.2507 earlier today, this is -5.37%. Fore sure if it’s happening it will create volatility and EU will face some interesting challenge because some country might think: “why not us?”.