So it happened. Waking up with -3% on EURUSD, -9% on GBPUSD and -6% on cross rate GBOUSD, it did not leave a lot of surprise when switching on the BBC: Brits have voted to leave the UK at 52%, one could say the polls conspiracy as failed. Indeed, at the start of the week, it was a given the remain camp would win and sometimes there are big surprises. So the UK will leave the EU! Well not so fast… Yesterday BBC anchors kept saying “we won’t talk about the referendum in order to avoid accusation of trying to influence”. Drastic change of tone today, they remind that 48% wanted to remain, they remind that a referendum is not legally binding and a new round of negotiation could create a better deal inside the EU, they remind that France and Germany election are approaching and they will want to delay the process as much as possible in order to refrain the euroskepticism in their own country,… So the story is only starting and all he scenarios are still possible. Meanwhile, in Netherlands, they now want also a referendum: this is very likely to be the first county of a lot and there’s definitely troubles ahead for EU. In the UK, the Scots have their secretly wished result. They secretly wanted UK to vote leave and Scotland being remained. And it happened! So the independence of Scotland will surely come back in the headlines. David Cameron is likely to stay PM on a short term, but it’s difficult to see its leadership not being challenged and Boris Johnson has made risky but now genius political move. So Brexit will stay in the headlines for a while, but this is for sure an historical day.
Another down day yesterday on the grains. Down across the board. Same stories, weather more favorable, US Drought Monitor has not shown any signs of worsening, soil moisture in Indiana actually improved quite well. Pressure is adding pressure, long Corn and Soybeans are bleeding and Wheat short are finding a relief. As Soybeans fell -11 cents, Corn -5 cents, Wheat -5 cents, funds sold 12,000 Soybeans, 12,000 Corn and 4,000 Wheat. It’s obviously adding a pressure, a bit of panic mode there from highest long. MATIF was no exception and followed lower. And the panic mode could continue as the night session is once again down across the board. Soybeans are down -13 cents, Corn -8 cents and Wheat -7 cents at 7.30am GMT. It will be very interesting to see if MATIF finds some support from the freefall of the EURUSD or if the doom and gloom mode is prevailing.
South Korea Kocopia is issuing again a tender to buy 55kT of Corn, optional origin. Tawain’s MFIG bought 65kT of corn at 125.60 cents premium above Chicago Z6.
US exports sales were as expected on wheat to 465.3kT, corn above expectations, still very strong to 1.421MT and soybeans as expected to 1.3221MT. This momentum needs to be reflected in the export inspections, but the situation could become tricky: a discrepancy between commitments and shipment is profiling and with price falling, mind the defaults! On the other side of the pond, EU cleared 555kT of soft wheat export licenses, total of the season is 30.7MT and with a few days to go in the season, soft wheat need only 300kT, so USDA’s objective is more or less reached. It’s been a crazy season!
Oil is also sharply down at 7.30 GMT, NYMEX Crude is back to with a $47 handle and ICE Brent with a $48 handle. Logically, Gold il surging, trading above $1,315 per ounce. On Freight, Baltic Dry Index BADI rose to 596, really trendless around 600 since a few weeks.