European market

Tensions persist in the Middle East with missile strikes reported overnight on both sides of the Persian Gulf. Prospects for peace and the reopening of the Strait of Hormuz are therefore affected. As a result, crude oil rebounds to stand above 95 $ in New York, its highest level since May 22. Still inversely correlated with oil, the euro/dollar, which closed last week at 1.1660, is now weakening to 1.1620.

On the grain market, declines dominated yesterday, with a detachment from the macro-economic and geopolitical context in favor of more fundamental and weather-related considerations. Favorable rainfall across the US Corn Belt, Western Europe, the Black Sea region and even Australia is reassuring market participants and prompting funds to sell.

In such an environment, technical supports are giving way on wheat and corn futures contracts on both sides of the Atlantic, and the decline is feeding on itself.

With a low yesterday at 203 €/t, the Sep 26 Euronext wheat contract reached its weakest level since February 17. Although still tight in the nearby, corn is retreating under the influence of wheat. Only rapeseed is managing to contain the prevailing downward pressure each day, supported by vegetable oils and a still very firm canola market in Winnipeg.

American market

Despite the first crop ratings of the season coming in below last year at 67 % good to excellent for corn and 66 % for soybeans, prices declined yesterday on the Chicago market. Market participants are mainly focusing on the coming weeks, with weather expected to be wet and therefore largely favorable for crop development across the Corn Belt.

Funds have therefore continued, as they have for the past week, their massive wave of liquidation of positions in corn, soybeans and even wheat. The latter is also suffering from harvest pressure that is beginning to build and from its lack of export competitiveness. 

The US market did not react to a rather disappointing first crop rating for spring wheat at 47 % good to excellent, well below expectations. As with corn and soybeans, operators are mainly looking ahead to favorable rainfall expected in North Dakota.

Black Sea market

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