- Monday in Chicago sees a stronger soybean complex and weaker grains, led by wheat a volumes appear limited on lack of fresh news input. The soybean rally appears led by strengthening on the Brazilian Real as well as continued uplift in US cash soybean oil values, which is supported by strong domestic demand as well as potential for improved US biodiesel demand on the back of a shutout of Argentine and Indonesian soybean oil due to rising US tariffs. Our explanation for falling IUS wheat values is fundamentally lacking and fund selling appears the only cause. Global cash wheat values are steady to directionless .
- June and early July are key to Black Sea and EU wheat harvests and the weather in the coming six or so weeks will better define global supplies as US production in 2017 will see a substantial drop from last season.
- Away from our usual topics, it is the cotton markets that has everyone talking as July futures rose to $0.87/lb, the highest level in three years. It was May 2014 when sport futures were last trading at these levels. The point is that one has to take care when dealing with old and long established bear trends, particularly when demand patterns are strong. Recall our aged mantra of “big crop” vs. “big supply”, and our suggestion that whichever side of the equation emerged the stronger would dictate the likely next price trend.
- Spain’s cereal organisation has forecast their latest cereal crop at a mere 9.5 million mt, about half that of last year, which will leave them as potentially strong importers in the coming season. Dry conditions and lower pantings will continue to erode crop output. Weather in the next six to seven weeks will be important as further dryness will potentially see further output decline. The UK is also seeing dry conditions and rainfall in the coming six or seven weeks will be influential in determining overall grain output.