- Markets in Chicago rallied on what we believe at present to be relatively lightweight news. The sale by France of 200,000 mt wheat, to China, for August delivery and a forecast for hot weather in the US next week. Our reason for considering these items as “lightweight” is that a 200,000 mt wheat sale is pretty small in the whole scheme of things, and hot weather in summer is far from unusual! That said, it underlines the nervousness which pervades markets right now, the 28th June stocks and seeding report is looming. Traders with short positions attempting to square up appeared to be sufficient to rally markets in something of a “panic” style. There is a feeling that China may, once again, have been somewhat misleading in its information concerning its wheat crop and if this is the case we may well see market dynamics changing. A substantial wheat import programme by China was not in the forecast.
- Informa Economics released reduced acreage estimates for US 2013 corn, soybean and spring wheat plantings, corn at 95.262 million (down from 96.827), soybeans at 77.756 (down from 78.286) and spring wheat at 11.791 (down from 12.401). Corn yield was left unchanged at 160.9 bu/acre and output was forecast at a record 14.078 billion bu with soybean output estimated at 3.366 billion bu. These numbers cams as little surprise to the market and created little in the way of reaction.
- In summary, we have a nervous market, a key report (as far as stocks is concerned, the market seems sanguine about acres), jitters over weather following a delayed planting season and now the Chinese “curved ball” over wheat demand. It appears likely that we will see some marked volatility, particularly in old crop which will drag new crop along for the ride. Buckle up!