- In good old tradition the markets have been trading in “turnaround Tuesday” mode so far with Monday’s declines being reversed, and sharply so in Chicago. London & Paris markets, having now closed, may need to play some degree of catchup in the morning if CBOT levels remain where they are right now. Front month, May ’13, in London made better gains (£3.15 in reduced volume trade) than its Paris counterpart, which only managed to put on €0.25; this has left the Paris premium over London at £13.60 having been around the £15.00 level over the last couple of days. Some degree of concern is being expressed at the inability of mainland Europe to trade a futures position before Nov ’13 when the May contract expires on 10th. The six month gap presents a degree of problem as the new crop position approaches; the London July is an alternative but not a preferred one and the same can be said for the CBOT contract as price correlations are poor.
- Slower than anticipated plantings of spring wheat and corn in the US as a consequence of current cold weather patterns have assisted the more positive market tone today. Spring wheat is only 6% planted, compared to 33% last year and the five year average of 13%. Corn is at 2%, behind both last year and the five year average of 16% and 7% respectively. Winter wheat condition is all but unchanged on last week, the slight change being poor to very poor, which has risen a point to 31%.
- Looking back at the history on this year’s US wheat crop does not make for encouraging reading; dry planting conditions in top and sub soils following the summer long drought, slow germination and emergence leading to poor plant populations, a late entry into dormancy as winter temperatures were slow to arrive, which left the crop to try and develop for longer in adverse moisture conditions. More recently the sharp freezing temperatures that have been experienced are doing little to aid the crop and boost its potential. Reduced plant numbers and the current high “poor to very poor” crop rating do not bode well for a bumper US wheat crop.