- It’s been quietish in Chicago following “Turnaround Tuesday” as markets eased a touch further. July ’15 wheat is at its 50 day moving average ($5.03¼) and corn and soybeans enjoy favourable Central US weather conditions. There is some concern over potential dry and warm conditions in SE Russia but soil moisture conditions are reported to be adequate/surplus – for now, and there is a suggestion that early June will see further precipitation. Warm and dry conditions are actually assisting the Russian crop – for now, but rain will be required If concerns are not to emerge. Western Canadian Prairies are also in need of rain, and this may provide some price support for hard wheat. Clearly, at present, it is wheat that has been stimulating upward price breaks and spec buying.
- The €uro has seen a further 50 point down day, and with Kansas wheat offering support we have seen Matif gain €2 on the nearby positions. We need to get to the bottom of “too dry and hot in Russia”, “too wet in the US”, “too dry in Canada”. We are witnessing a classic weather market and have to ask, “Are these real issues today?”. Our opinion is, that they are probably not – right now, but if they persist it could become an issue. FSU and EU farmers could “shut up shop” and restrict sales, and the fund short could well show us a very narrow exit door should they choose to close out positions.
- That said, we are not yet in a position to raise concern levels, but awareness of the potential for a pinch point is always useful.