What a week! And almost a black Friday! Weather market and Brexit brought some volatility, panic,… Doom and gloom mood on the markets! Just looking at weekly moves in local currency, ICE Canola went down -9.07%, MATIF Rapeseed -3.89%, Soybeans -4.87%, Soybean Meal -7.81%, Soybean Oil -2.94%, Corn -12.16%, MATIF Corn -3.31%, Chicago Wheat -5.51%, Kansas Wheat -8.25%, Minneapolis Wheat -4.08%, MATIF Wheat -1.69% and LIFFE London Feed Wheat -0.33%. Obviously, MATIF and LIFFE held much better as EURUSD was down -1.41% during the week and GBPUSD -4.72%. When you think about it, this is not a massive move on currency as the beginning of the week, bullish on ‘Remain’ hopes to win, offset the Friday collapse and currencies closed well off from heir lows after the panic mode move back to a more sensible analysis approach. If there’s uncertainty indeed, so far it’s business as usual as long as Brexit is not officially starting and all scenarios are still possible, and an even more special status of the UK inside the EU is still a possibility.


Anyway, on Friday, US markets went down across the board. Good rains in the corn and soybeans areas are seen as beneficial and stronger US dollar did not help to contain the selling from funds. They sold 8,500 Corn, 14,000 Soybeans and 3,000 Wheat. MATIF and LIFFE were up on their side, on a pure currency parity effect.


Market will focus on Export Inspections (later today) and Quarterly USDA report (30th of June). On Export Inspections, momentum of Export Sales need to show up in the stats, especially with falling prices, there’s risks of cancellations. On the USDA’s report, stocks are expected to be higher than Jun 2015. Corn is expected to 123.23MT (+1.68% from last June and logically -42.01% from March 2016 though), soybeans at 22.56MT (+32.22% from last June and logically -45.85% from March 2016 though) and wheat to 26.73MT (+30.59% from last June and logically -28.43% from March 2016 though). So this should confirm that there’s no shortage of grains by any means, even with strong demand from China and demand shifting from South America on corn and beans. As per the surfaces, wheat is expected to be higher marginally to 49.869M acres (+0.54%), above 50M acres will be psychologically bearish. There’s a bit of switch expected from corn to soybeans but this is not as much as the talks at the start of the planting: corn is expected to an average of 92.896M acres (-0.705M acres) and soybeans up to an average of 83.834M acres (+1.598M acres). In other words, bigger global surface, corn would lose 3MT but soybeans would gain 2MT based on respectively 168 bushels per acre and 46.7 bushels per acre. This quarterly report can be a market mover, so let’s fasten the seat belt!


In France, even though the weather is better (center and south of France, temperatures and sun exposure are rising, matching season’s expectations, additional rains are forecasted at the end of the week but at least it will dry quicker), there are more and more quality concerns, winter wheat and winter barley are said to be hit by fungal deceases. Operators are expecting the milling and malting cash basis to raise and the feed cash basis to decrease dramatically. Wheat conditions deteriorated to 68% of G/E (-7% from the week before), it stays fair enough but there is not a lot of margin. The prospect of a 2014 crop is looming again. Similarly, winter barley is 67% G/E, -6% from last week and soon, durum classification will be useless (however, it is a small market in France, less than 2MT): 58% only is now G/E, -9% from the week before.


On a week from Wednesday 15th to Tuesday the 21st of June, Reuters had estimated funds were seller of 14,000 Wheat, 68,000 Corn and 25,000 Soybeans. Actual CFTC’s COT data is showing once again a dramatic underestimation, funds are resisting on their Soybeans and Corn long, they are feeling the pain but the short covering and stop loss were contained to 27,468 lots on Corn and 6,299 lots on Soybeans. Funds continued to sell Wheat, selling 15,053 lots. So as of Tuesday, funds were long 224,827 lots of Corn, 200,789 lots of Soybeans and were short 63,288 lots of Wheat. It’s estimated by Reuters that from Wednesday to Friday, the same doom and gloom mood prevailed, fund selling approximately 7,000 wheat, 32,000 Corn and 19,000 lots of Soybeans. Next COT will be massively interesting.


Night session is rebounding across the US market, Soybeans in excess of +20 cents, Corn +7 cents and Wheat +5 cents. MATIF is likely, despite higher US market and lower EURUSD, to consolidate its Friday bounce.


Jordan is back with its still tough specs tender, seeking 100,000T of hard wheat.


A week end that shook the world. During the night from Thursday to Friday there was concession of ‘Remain’ would win, then hope of ‘Leave’ would win, backtracking to ‘Remain’ and finally in the middle of the night, the trend showed that the unexpected would happen: ‘Leave’ won 51.9% versus 48.1%. So Brexit has happened, but will it actually? Nothing is more sure. So ‘when’ is even tougher to say. Firstly, inside the UK, there are now 3 sides. The ‘Remain’: well, they’ve lost. The extreme ‘Leave’, wanting the Article 50 of the Lisbon Treaty to be triggered (this article is about the process of a county leaving the European Union). And the ‘Soft Leave’ camp, wishing to negotiate as much as possible with the EU. So all this cosmopolitan world will have to agree at some point on a Parliament debate and it might be proven difficult. Even with David Cameron stepping down, let’s assume he’s replaced by the obvious Boris Johnson who did there a genius political move supporting the leave, he will find opposition in his own camp so triggering a General Election is not science fiction, delaying the process. And all the scenarios are opened, what about a Labour victory? Officially in favor of ‘Remain’. This is unlikely but UK politics could become very messy. But on top of that, add the Scots in the equation. For them it’s the best result, in the backstage it’s exactly what they were hoping for: Scotland to vote ‘Remain’ in a global ‘Leave’ victory. Then they off course say they don’t want to be taken out of the EU out of their consent and want a second referendum about independence and even threaten to block the triggering of the Article 50 in their Parliament. So PM David Cameron will step down, George Osborn, the Chancellor of the Exchequer, just vanished during the week-end, he was nowhere to be found and finally reappeared this morning. And funnily enough the punishing emergency budget he was threatening to put in place won’t be put in place, he said “adjustment” is most probably needed as recession will be tough to avoid but that is it “perfectly sensible to wait for a new prime minister”. But the ‘Leave’ campaign on its side is also accused of holding promises that they won’t keep: Nigel Farage, UKIP leader, has been cornered, he said he would not do the promise to allocate the £350M per week that are sent to the EU directly to the NHS. This was heavily relayed by media. However, this was an argument of the official ‘Leave Campaign’ and Nigel Farage was leading his own campaign. The infamous bus (more less driven by Boris Johnson when he was not on his bike) catch phrase was saying “We send the EU £350M per week, let’s fund our NHS instead” one cannot say genuinely they thought the whole alleged saving would be allocated to the NHS: the catch phrase is not saying this by any means and it’s a typical figure of speech in a political campaign. But a part of ‘Leave’ public opinion think they’ve been lied to and there’s a petition asking for a new referendum with that would only validate the result with a bigger turnout and with a better winning margin. This petition has reached more than 2 million signatures but it’s mostly a scam: allegedly 39,411 resident of Vatican City have signed. Heavily manipulated by hackers! So UK politics is in a big messy situation and actual leave process is not ready to be triggered anytime soon, whatever the form it takes.  Witnessing this from the outside, France and Germany (mainly, plus the four other founding members, they held a EU ‘Gentlemen Club’ meeting, obviously excluding the UK and 21 other members as they apparently obviously don’t count or don’t have their word to say…) are not really happy, they obviously want a speedy process (some say they want the Article 50 to be triggered this week) in order not to poison their election (in 2017) and they want to be as punishing as possible in order to show other countries they are not joking.


So uncertainty will be the keyword of the next days, weeks and most probably month. GBPUSD is hammered again this morning, trading just above 1.34 but hasn’t reached the lows of Friday (1.3224). EURUSD is also trading lower, back around 1.1050 but also far from Friday’s low (1.0909). Cross rate GBPEUR is obviously under pressure, trading down more or less -1.5%. Gold is surging again and this is no surprise, trading around $1,325 per ounce.

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