- Key to today’s price action has been the advent of non-threatening weather forecasts, which is a change from what we have been seeing in the last few weeks or so. US and EU weather models are in better agreement, raising confidence in their accuracy and traders are taking this to heart. Both models are showing 11-15 day rain chances as improved on previous forecasts as Gulf humidity flows move northwards. If proven correct, the dry areas of the Plains, NW Midwest and Delta regions will be shrinking.
- The morning has been slightly lower in Chicago in modest volume trade. Weather and the upcoming August USDA reports will limit trader’s appetite for fresh new positions. The August USDA reports tend to place something of a cap on weather markets going forward, whether this will be the case in 2017 remains to be seen. We should not forget that August is the month that makes or breaks soybean crops, the soybean plant has a remarkable ability to add pods and yield as and when weather conditions are favourable.
- Chicago markets have bounced, but we doubt that any bull run can be sustained with rain in the Central US forecast and the USDA crop report due next week. Rain seems to fall in areas around dry IA, but this is not enough dryness to alter the US yield outlook with cool temperatures. We continue to look for Chicago markets to range trade into the August USDA crop report.