- As suggested yesterday we have seen London wheat play “catch-up” and prices, with gains as much as £6.00/mt recorded in the front month Nov ’13 contract although closing levels were (only) £4.45 higher. Nearby Paris contracts finished either side of unchanged; both markets experienced volume significantly above normal as traders came to terms with yesterday’s moves in Chicago.
- As we approach the close in CBOT markets the soybean complex, which has been trading in positive territory for much of the day, has turned around and is trading lower, presumably on profit taking after its recent positive run. Corn has been trading lower (as much as 2% in nearby contracts) and wheat is following although to a lesser degree.
- Initial CBOT trade showed further fund demand in soybeans and the September highs $14.09¾ managed to prove a tough enough resistance point which (today) held firm and the market retreated lower. Funds were cautious sellers in both corn and wheat according to reports.
- Weather reports suggest we may well be hitting the peak of temperatures and that the central US is forecast to receive cooler and wetter conditions later in the week and into the weekend. However, the market is unlikely to react strongly until such time as actual rain falls and temperatures reduce.
- The latest US crop condition report showed corn to be 59% good/excellent, a decline from last week’s 61%, which was within expectations. Soybeans declined 4% to 58% good/excellent, again as expected. Spring wheat condition improved by 1% to 67% good/excellent.
- Early harvest reports show corn to be progressing quickly in southern US states with Texas and Louisiana having cut over 50% with reported yields to be at record levels. Soybean harvest has similarly commenced in southern states with little data available in terms of output at present.
- In a day of little else in the way of news revelations we continue to view the last few days rally as just that, a rally which we believe will be looked back upon as a selling opportunity before we give way to lower levels. The likely triggers for lower levels will be a crop benefitting weather event (in the US), rain and colder weather, or the ramp up in US harvest. Either way we would be reluctant to buy into the current price level right now.