“Should I stay or should I go?”. This is incontestably the song of the day, the main event of the day that could be extremely fun: Brexit. Those who want to get the results will have to stay up during the night. However, markets are clearly expecting the now so called Bremain to win. GBPUSD is up once again trading close to 1.48, it spiked to the highest level since December 2015, so market clearly expect the status quo to win. GBPUSD could easily go up to 1.52 on the news. On the other side, this could be a cataclysm if the Brexit unexpectedly wins, but historically in the recent history, referenda are quite often choosing the status quo. And even if there’s Brexit, all scenario could be still open: a referendum is not legally binding by any means! Science fiction? In France in 2005, voters have been asked “Do you approve the bill authorizing the ratification of the treaty establishing a Constitution for Europe?”. Answer was a large ‘No’ with 55%. Similarly in Netherlands, ‘No’ won with 62%. The outcome was to adopt another Treaty (Lisbon) with public opinion claiming the change of the name and a details of the content was a treason of ‘No’ voters. So one can imagine that David Cameron, facing a Brexit, would negotiate another deal with EU. For the ‘Science’ (economic and political) it would be very interesting indeed if Brexit is happening but odds are rally low. For internal politics in the UK, on thing is 100% sure, the leadership of David Cameron will be challenged whatever the result. EURUSD is also higher this morning, back above 1.13. US unemployment claims to monitor today as job data is the black sheep of the FED in the process of rising rates.


Anyway, back to the grains, Corn continued to slide down -4 to -5 cents with decent rains prospects. Drought Monitor published later today should confirm the drought did not get worse in key parts of the corn belt especially with no extreme temperatures expected during July. Funds continued to sell Corn heavily, 10,500 lots. So optimism is coming back for the US crop (well the fear were slightly overrated maybe) and funds could begin to feel the pain, especially with so much wheat were a lot of milling will have to be sold as feed either because of quality (in Europe) either because there’s so much milling wheat that it will be over the milling demand (US). Soybeans on their side were on the rebound (+5 cents give or take), funds buying 7,000 lots. On Soybeans, the good news on the weather have been disregarded and market is still focusing on global demand versus lower supply with a bit of technical component. Wheat was sideways with no significant trend, no real movement and funds were even. It was also the case on the MATIF, no real interest, market just went down three ticks or so. The quarterly stock and acreage reports at the end of the month is also creating a bit of nervousness, export sales later today as usual.


France is sunnier and hotter also, a bit of rains and storms are going to cross the country during the week-end but sun and heat will be back on Monday to hopefully dry the wheat and barley fields in order not the quality to get worse than it already is. However, the total wheat crop (well, durum will have to be mostly integrated in soft wheat if the quality is as bad as feared)is still seen between 38MT and 41MT. So it is still a sizable crop.


Night session is lower across the board. Soybeans are reversing their yesterday’s gains, Corn is digging further down with now N6 and U6 below 400 cents per bushels. Wheat is just ticking down and sideways and MATIF should tick down also at the opening, with pressure from stronger euro.


Japan bought 119,988T of food wheat from US, Canada and Australia, as usual, but failed to buy feed wheat and barley, as usual also with the SBS auction. In South Korea, MFG bought 385,000T of Corn (optional origin), Kocopia bought 55,000T of corn at $209.50 CNF.


Ethanol production was down 51,000 barrels per day to 962,000 barrels but stocks were less off than the lower production (down -72,000 barrels to 21.11MT), so technical, demand is lower. Ethanol futures chose to rebound anyway. US Crude Oil inventories were down, -0.9M barrels but less than market expectations (-1.3M barrels). Saudis said that the oversupply situation in oil is no more. And price should not go below $50 anymore. Fore sure this level is sticky and a change in the S&D seems highly needed to diverge. NYMEX Crude is carrying a $49 handle and ICE Brent is just above $50. Gold is fueled by lower US dollar and is trading up, close to $1,270 per ounce. On freight, Baltic Dry Index BADI is rebounding +5 to 585. Still very little trend these days on freight.

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