Free fall mode on for the GBP yesterday, at some point it was below 1.21! The flash crash may just become a soft fundamental crash if the doom and gloom mood about Brexit is keeping on. EU want to make them the price, businesses in the UK are pointing the lack of competence and real plan of the government, economist and international organisation or overbidding on each other when it’s about putting a number on the cost of a hard Brexit. So there’s still a lot of scaremongering and time will show what happens… Or maybe not as if the intention of triggering the Article 50 is said to be there, one can still doubt it’s going to happen! Good rebound this morning though, actually almost fully retracing and GBPUSD is back to almost 1.23. It was a day for the US dollar, globally strengthening versus major currencies. The case of the rate hike is there and market will read very carefully the FOMC minutes released tonight. EURUSD is still down this morning, below 1.1050, 1.10 will be surely a strong psychological support.


Back to the grains, yesterday was a bit all over the place, Soybeans finished down just -1.00 cents, Corn was up +2.25 cents and wheat up +3.25 in Chicago with a lot of calendar spread action and spreading with Kansas (HRW was down -2.00 cents on the close) and Minneapolis (front month ending up +1.25 cents and the curve was down, we’ll see if the front month calendar spread will  become inverted). So it was still a bit of clean-up before the USDA WASDE later today. Funds bought 6,500 Corn, 1,500 Soybeans and 3,000 Wheat. Being the cut off the CFTC’s COT week, market will look for funds to have been buyer of 8,000 Wheat, 6,500 Corn and seller of 1,000 Soybeans over the week. On the other side of the pond, MATIF was flat to down while CME EU was up, the premium keeps increasing. Thinking out loud, there could be a story that MATIF is on port silos and market participants are maybe scared they will be stuffed with foreign wheat while inland silos are less likely to be filled with Romanian or Bulgarian wheat, that’s why they would accept to pay a premium on the assumption French wheat would be delivered. Not sure it worth the arbitrage but hey, sometimes one has to accept the verdict of the market even if it appears not to be logic!


Soybeans are reverting this night session, -3.25 cents, Corn is mostly flat, barely ticking up while Wheat is down in Chicago and Kansas (-2.50 cents) and resisting in Minneapolis, just ticking down. Main eent will be the USDA WASDE so market is likely to be in a wait and see mood, but ready to react promptly! MATIF and CME EU expected flat so far.


Export inspections were as good as expected on corn and exceeded the required proportional weekly split: 1,131.7kT. It’s a bit less than the previous week but still above the 1MT mark which is going to be a must this season. Soybeans were stronger than expected to a very good 1,801.1kT, the start of the season is the best moment to take some advance on the pace because during the next 47 weeks, 48.82MT will have to leave the US. In this grain stampede, there was not much more room for wheat, only 432.9kT were shipped (a 9 week low, 10 week average is 609.6kT), slightly short of what is needed indeed, now 449.5kT for the next 34 weeks is required. Forgetting the trivial proportional split, there’s no real issue on soybeans and corn, the exports are within the seasonal trend and so far there’s no reason to believe the exports won’t increase by respectively +1.22MT and +6.61MT but it will be surely a data to follow closely during the season. As per wheat, if the seasonality is better than last year, it’s not really obvious compared to the 5 year average, and one as to bear in mind exports should be +4.77MT higher than last year. This is the main point to focus at this stage of the season.


Crop progress was expected slightly anxiously but with no real fear. The talks were about obviously hurricane and the rains: have the quality and the harvest pace been impacted by some rains? As far as quality is concerned, no. Corn ratings are unchanged from last week to 73% GE and 8% P/VP. Last year it was respectively 68% and 10% so this is a very good year. Similarly, soybeans ratings are unchanged to 74% G/E and 7% P/VP, versus last year 64% and 11%. As far as harvest and planting are concerned, no real issue either: 18% of the soybeans have been harvested this week, harvest is reaching 44%. This is 11% behind last year and 3% behind the 5 year average. So the delay have slightly increased but there’s nothing much to worry about just yet. On corn, 11% have been harvested last week, harvest reached 35%. This is 3% behind last year and also 3% behind the 5 year average. The delay from last year slightly increased but in decent proportions but the delay compared to the 5 year average stood the same. Winter wheat is now planted at 59% (+16% from last week), just 1% behind last year and the 5 year average.  So it is fair to say there was no dramatic impact by extreme weather event in the US. On wheat there’s some talks farmers will not plant of the wheat as it’s becoming tough to make money at these price.


Jordan is back seeking feed barley, 100,000T. Taiwan flour mills are seeking 80,630T of US wheat, Philippines privates are seeking 155,000T of feed wheat and 117,000T of soybean meal.


On the USDA WASDE, one interesting data to follow also will be the US crush of old crop. NOPA Crush totalised 51.33MT last season while USDA WASDE is still at 51.71MT, always nice to see consistent data… So in theory, old crop balance sheet -0.36MT. Also old crop inspections are still, compared to exports, short -1.887MT on corn, -1.467MT for soybeans and -0.842MT short for wheat. But no clue if there should or will be an adjustment as part of the difference is explained by export to Canada, differences with standard weight for exports by truck, container and train and finally 15,000T exemption per non-port export location.


Oil was softer yesterday and is retracing slightly today. The Russian news gave some strength for NYMEX Crude to trade above $50 but the level seems very sticky: the cut is not going to drastically change the supply situation and whether everyone will enforce it is another story. NYMEX Crude is trading just below $51 while ICE Brent is above $52.50. On Freight, Baltic Dry Index BADI was unchanged, still at 922. Gold is currently trading above $1,255 per ounce.