To download our USDA report resumé as a PDF file please click on the link below:
- Today has seen some sizeable volume trade in Chicago markets with a pattern that looks very much like a “blow-off top” although we will need to see a drop in current price levels to confirm this. There appears to have been a large inflow of new money into Chicago, evidenced by soybean open interest pushing above the 2012 drought year high of 836,000 contracts. This is (in our opinion) what has triggered the latest price rally and once fresh cash inflows slow down/stop the game will be “hunt the buyer”.
- Fund buying in corn has been noted and met by huge farmer selling volume, and farmers are reported “not believe their luck” at the windfall price uplift as seeding starts. Currently prices have elevated to pre-March report levels and have broken through the 50 and 100 day moving averages (basis May ’16 contract).
- Global cash wheat prices appear little changed on the back of today’s Chicago rally and there have been suggestions that if there is much more uplift in US prices we will see French wheat able to trade into SE USA, a position the US will NOT want!
- Rain damage to Argentine soybean crops is the subject of very mixed opinion at present, the latest we hear is that low lying regions are affected and it is possible that damage will be limited to between 1.2 and 3 million mt.
- US and S American weather prospects are improving. Today’s huge Chicago volumes strongly appear to be a reflection of fresh money and (as we said earlier) a “blow off” – we urge extreme caution to those tempted to follow this market on the long side. Doubtless we will see Friday’s COT report showing a sizeable increase in fund net long positions.