Typical good old two sided sessions. After starting in green territory across the board during the night session, gains vanished and market reversed to close on the red side across the markets. Soybeans were down and the backwardation lost a bit of its steepness, Q6 finished down -4.25 cents. The movement was pretty homogenous as Corn was down -6 cents and Wheat -5.50 cents on the close on U6 contracts. A bit of selling ahead the USDA report, a bit of selling on the rains forecast, a bit of selling on export inspections and anticipations of the crop progress and conditions,… There was not a lot of actual bullish news and funds are still significantly long of Soybeans and Corn and they are feeling the pain. Yesterday, funds sold 14,000 Corn, 3,000 Soybeans and 3,000 Wheat. MATIF was unimpressed and lived its own life, closing up +€2.50 on uncertainty about the quality. Whether market should go up on quality concern is a huge debate…


Night session is up across the board in a typical – well so far – Tuesday reversal mode. Soybeans are up +6.50 cents on Q6 and guess what, steepening the backwardation. Corn and Wheat are lagging with a shy and quiet +3 cents. MATIF is taking a breather, ticking down, after a few sessions of being on fire on quality concerns.


Indeed, as harvest is starting in France, the first grains in silo are showing the issue. Winter barley harvest is now well undergoing and test weight are topping 63 at best in the west while in the center it’s more like 55. On the wheat it’s more difficult as it’s the beginning, but the protein content seems to be not as worse as feared but yields seems to be so far -1T per hectare less than the year before.


Export inspection are especially interesting to follow on soybeans as the pace of the export sales commitments seems bigger than the actual shipments. And this week, finally, soybeans shipments paced up to a 13 weeks high. Indeed, last weekly data published above 375kT was for the week ending the 7th of April 2016! It’s been reported 274kT of soybeans have been shipped last week, but it was still shy of the 382.8kT needed and now, for the weekly average needed is 383.8kT for the next… 8 weeks! Time is running out! On the other side, corn shipments were enough: 1,357.9kT have been shipped last week, reducing marginally the average weekly needs to 1,242.5kT. Week had starting the season well but failed to keep up the momentum, but absolutely no worries as it’s the start of the season: 375.3kT have been shipped last week.


Crop progressed showed a relatively slow week on the winter wheat harvest, only 8% have been harvested last week, reaching 66%, still in advance compared to last year (66%) and slightly ahead still of the 5 year average (65%). On the conditions, the big question was for corn and soybeans: have the rains been actually beneficial? Indeed, there are some part in the South and on the west of the Corn Belt where the soil moisture is concerning. But the ratings improved! +1% G/E for corn to 76% (last year it was 69%), 5% unchanged of P/VP (9% last year). On soybeans, also +1% of G/E to 71% (62% last year) and also an improvement on the P/VP section: -1% to 6% (11% last year). So small but welcomed improvement. As a matter of comparison, on the 10th of July 2012, corn ratings were only 40% G/E and ratings had fallen -12% the next two weeks. So there’s no need to engage the panic mode just yet as the corn silking process is happening in pretty good conditions so far (32% is done, +17% from last week, +9% from last year and +8% from the 5 year average). On soybeans, 40% of them are blooming while 7% have set pods.


European Commission has reduced its soft wheat ending stocks estimates to 12.19MT, cutting previous by a big -6.19MT, due to a rise in higher feed use and a cut in the production to 144.6MT (-0.5MT from previous estimates). For sure these movements will will be also to compare with the tonight’s USDA WASDE report… Also, barley production estimates was raised by +0.2M to 62.4MT, corn production cut by -0.6MT to 65.2MT, cut rapeseed production by -1.2MT to 20.8MT. SovEcon increased it grains output for Russia to 108.8MT (+1.9MT versus their previous estimates).


So tonight on the USDA WASDE, let’s keep an eye on the US balance sheets, South America, European Union and FSU.


A busy day it will be: on top of the USDA WASDE report there will be the Egypt’s GASC! They were expected to be back indeed as the amount of local wheat purchased will need pretty quickly some fresh foreign quality wheat for blending. However, with the ergot story, not sure who will dare offering! If the tolerance is supposed to be clearly the international standard of 0.05%, some intolerance on the tolerance is still feared, and traders aren’t confident. It will be reflected for sure on the line-up. On top of this, new crop quality concern of France, traders would need to take an additional risk there and all other things equal, French wheat most probably would not be the most competitive anyway. Tomorrow, Algeria’s OAIC is in for Milling Wheat. Jordan tender to buy 100,000T of hard wheat is still on. Japan is offering to buy 180,714T of food wheat from US, Canada and Australia. South Korea agro-fisheries are seeking 20,000T of soybeans.


Oil has rebounded around $45, this $45/$50 range seems very sticky and in absence of big fundamental news, we could be stuck there for a while. On Freight, Baltic Dry Index BADI was up a little +1 to 704. Gold is trading more quietly these days as the panic is fading. Still trading above $1,355.


The Brexit World Apocalypse on financial markets has been short lived as S&P 500 closed to a historical high level yesterday night. FTSE 100 is on a one year high as market is expecting the BoE to cut the rate… And GBPUSD is up in excess of +1% (back above 1.31) as there is only one contender left to be the next UK Prime Minister, Theresa May, from the remain camp. Well she was a very light ‘remainder’ to be fair but it raises some anger on the ‘leave’ camp. On the other side, there’s a petition of UK barristers circulating, to remind the Government EU referendum was not legally binding and a very long legislative process is needed to trigger the Article 50 of the Lisbon Treaty. Theresa May anyway, won’t trigger it in 2016 for sure. So story is not over and the UK leaving the EU is far from being done. EURUSD is flowing and is back above 1.11.