Markets finished the week on a higher not after a shaky week where dispersion, volatility and drought, were the keywords. ICE Canola went down -3.31% in US dollar, MATIF Rapeseed -3.21% in US dollar, Soybeans -1.59%, SoyMeal -1.59%, SoyOil -2.53%, Chicago Wheat -2.78%, Kansas Wheat -1.65%, MATIF Wheat -3.05% in US dollar, London Feed Wheat -1.11% in US dollar. Meanwhile, Minneapolis resisted well (+0.23%), drought talks are ‘contaminating’ spring wheat chatters as areas are overlapping. Corn was obviously on the bullish side +3.49% on the drought talks, Soybean did not follow as it seems that traders are long enough and the current rebound is probably enough to absorb drought talks. MATIF Corn was down -2.34% in US dollar on its side, there’s no concern of any kind.


Drought or no drought then in the US? It’s pretty sure that the corn belt need some rain. However, this drought is coming much later than the last reference we have, in 2012, soil moisture is much better than the last pop corn crop. Also no comparison with 1988. So if it continues, it’s not likely anyway to reach the same extent of damage than in 2012. In 2012, between the 1st of June and the 10th of August, Corn moved up +45.19%… Since the April lows, Corn rallied +26.49%. Of course South America is also falling into the equation but it’s already a lot, especially considering the very good ratings – so far – of crops. A story to follow, ratings later today. A bit of rain is planned, especially tomorrow, that should help to contain the increase of soil moisture abnormalities.


CFTC’s COT was a surprise. Firstly, as far as funds positions are concerned, Reuters had estimated Wheat to increase short position by 18,000 lots. It’s been reduced by 5,085 lots to 48,232 lots. Anyway Wheat short is resisting well, most of the funds are sticking to their guns and believe in the abundance of the US crop and world crop. Reuters expected Soybeans to increase their long by 15,500 lots. Big miss as well, they decreased long by 2,963 lots to 207,088 lots. Finally, the big question was to check if Corn got Longer than Soybeans and they did! Funds increased their long position by 44,328 lots (also a big miss by Reuters, estimating only 23,000 lots) to 252,295 lots. Cumulated Corn and Soybeans long is almost 460,000 lots, this is pretty sizeable. From Wednesday to Friday, it’s estimated fund sold a total of 3,500 lots of Wheat, 3,500 lots of Corn and 6,500 lots of Soybeans.


Night session is red across the board. Rains forecasted, Corn and Beans are leading the way (-8 cents and -12 cents respectively) and Wheat is following with -4 cents. MATIF also opened lower.


Oil is rebounding as Brexit fears are vanishing and lower US dollar, NYMEX Crude is close to $49 and ICE Brent just above $50. Gold is taking a hit for the same reasons, back to the $1,280 support. On Freight, Baltic Dry Index BAD finally got below 600 to 587, driven by lower Capesize demand.


Saudi seems to have booked German wheat at $204 CNF


But this is it, this is the week FX and macro traders have been waiting for: Brexit referendum. Actually glad this is coming to an end… Campaign has been really disappointing and probably missing the point, the whole point being really the compatibility with a political union without a federal state, and the possibility of trade agreements and economic cooperation without political cooperation. Most likely to be an ideological vote and as often, voters will reject the uncertainty fearing the changes. The sad murder of a pro-European MP has had a strong effect on the opinion also. UK will remain in the EU. Good or bad, whatever, the world will just be the same, with the same troubles in Europe and the whole story over EU sustainability is not over by any mean. GBPUSD is on fire as Brexit fears are vanishing, almost +2%, EURUSD also is on fire, trading above 1.1325. Euphoria on financial markets also, all rebounding +2% or +3%. Interesting how can the mood change quickly!

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