A red close to start the week. Funds were back on the selling side as funds sold 9,500 Corn, 4,000 Soybeans and 5,000 Wheat. Soybeans ended down -8.25 cents, Corn down -4.75 cents, Wheat down -8.75 cents in Chicago, -5.75 cents in Kansas and -9.50 cents in Minneapolis. The St-Thomas effect reversion basically, market will believe the damage when it will be proven, when it will be in the balance sheets,… And so far, between the speculation, the scaremongering, the legitimate fears,… No one as a clue! And US crop ratings and progress failed to show, so far the worse. Sure, it doesn’t mean that there’s no issue at all, but at least, it is still not obvious and widespread. USDA WASDE on Wednesday will surely set the tone as the first data of the new crop will be there. On the other side of the pond, MATIF went down -€1.25 and CME EU -€1.50. CME EU is at -€2.50 discount (U7), it makes sense and it is the prerequisite for the contract to work: it has to reflect the physical.


Crop ratings was feared… And considering all the fuss, -1% of G/E to 53% and +2% P/VP to 15% is quite a relief, it could have been much worse. It is still better than the 5 year average (46% G/E and 23% P/VP). As per the plantings, they are still running behind but the pace is clearly on: 23% of the spring wheat has been planted in a week, reaching 54% (74% last year 60% on average the last 5 years). Corn plantings are now at 47% completed, +13% in a week (61% last year, 52% for the 5 year average). If in a couple of weeks the delay is made up, there won’t be any real issue. Only soybeans were slow, only 4% planted last week, reaching 14% (21% last year and 17% on average the last 5 years).  So not outstanding but it seems there’s some light at the end of the tunnel.


On US Export Inspections, this was some kind of disappointing numbers for corn and soybeans: 720.6kT only for corn, it’s been a while it hadn’t been below 1MT! But to be fair, with bad weather there was some logistic disruption. Corn now needs to average 1,019.8kT per week for the next 17 weeks. As per soybeans, as well, the lowest level since a few months with 349.4kT, soybeans need to reach 313kT per week on average. Finally, with 615kT on wheat only, with 4 weeks to go, it’s 2.88MT still to be shipped, it’s going to be a miss. However, more or less, we must allow roughly 750kT of non-inspected shipments, so 2MT-ish needed in 4 weeks. It will be tight for sure.


USDA WASDE and the new crop: feeling like it’s Christmas!  On the old crop (talking now about the 2016/2017 crop), no major change on US balance sheet: +0.08MT on wheat, -0.24MT on soybeans and -0.24MT on corn. And a season of excess supply is expected on soybeans as stocks are seen rising to 15.10MT, while corn stocks are seen down to 53.85MT. It’s in the spirit of the corn to soybeans switch. On wheat, market sees 25.39MT at the end of the new crop, this would mean -20% crop for the same demand, this sounds pretty aggressive… And market actually expects on average 50.59MT of wheat for the new crop indeed (-12.27MT year on year), so stable demand and 20% hit on the crop is the story. Switching to the world, no major change on the old crop ending stocks: +0.3MT on corn, +0.1MT on soybeans and -0.1MT on wheat, so nothing. But surprises could come from South-America. On the new crop, market is expecting a tighter year. If it’s happening, market will have to be able to see the data in its context: from crop 15/16 to crop 16/17, stocks increased by +10.52MT on wheat, +11.15MT on corn and +10.28MT on soybeans… It cannot last forever! So with stocks at the end of the crop 16/17 down by -0.9MT on soybeans (86.6MT expected) and -6.1MT on wheat (246.1MT expected) this is mean reversion. A note on wheat, it means that other part of the world production will be up (if demand stable) +6.17MT, but EU, only as far as soft wheat is concerned, sees an increase of +7.5MT, so some areas will have to be cut as well… Captivating! Finally corn stocks are seen down -13.6MT, this is the major cut, especially considering US balance sheet will account only for more or less -5MT, most probably a bit a mean reversion assumption of South American crops.


Night session was e bit eventless, Soybeans up +1 cent, Corn +1.50 cent, Wheat ticking down in Chicago, ticking up in Kansas, and up +2.25 cents in Minneapolis. MATIF is up +€0.75 on U7, big spread moves as K7 (expiring tomorrow) is -€3.00. CME EU is just ticking up.


Algeria is seeking 50,000T of wheat. Japan is seeking for 138,188T of US, Canadian and Australian food wheat. Taiwan Flour Mills bought 97,750T of US wheat.


Next OPEC Meeting is on the 25th of May. OPEC was probably hoping for a build-up, seeing the price raisin. Nope. It’s now widely expected the current deal will be extended to the end of the year. It has been inefficient (if the objective was to see WTI at $60) so why would it be now? NYMEX Crude is trading just above $46.25 and ICE Brent just below $49.25.


The Macron effect was quick. EURUSD is back below 1.09 as Angela Merkel said “Nein” to Eurobonds. What’s Martin Schultz point of view? Indeed, Angela Merkel should really be careful, maybe she won’t be there in September! CDU has still a 8% lead over SPD, but things are changing quickly these days, 12 years in office, people may want a renewal and on top of this its politics is far from being applauded unanimously.

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