- This morning saw soybean futures pressured in early week trade as further fund long liquidation persisted, and this dragged corn prices lower in a sympathetic tone. US wheat prices remained higher as funds covered short positions amid reduced and uncertain crop prospects in Europe, particularly in France. Paris future eased a touch, unsurprisingly, on some profit taking following the price surge late last week although traders remain nervous of any further wet conditions that may leave some quality deterioration in Germany, Poland and Scandinavia. There is a concern that the EU crop can ill afford any volume or quality losses as suggestions of some regional French yield losses as high as 30-50% (as yet unconfirmed) and quality standards reported to be well below export specifications.
- On a more positive note, in the US MDA weather forecasting, which utilises satellite technology has suggested corn yields could reach 172 bushels/acre and soybeans as much as 50 bushels/acre. Record corn yields could well be possible whilst soybeans at 2 bushels/acre above previous record levels feels a touch premature, however, it just marks the territory for now and confirms things are looking pretty good! August and early September weather conditions are crucial for soybean yields to be optimised, as we have previously mentioned.
- Funds need to get to flat or square positions in soybeans and meal before we can assume a bottom has formed or can be held. Selling in the grains is slowing and the European quality/yield issue remains a supportive issue, particularly in wheat, which will leave Chicago corrections modest in our view. Today, and current price levels are not the place to become bearish and we await more clarity on August weather conditions with interest.