- Early gains in Chicago soybean and wheat have eroded in later trade whilst corn is currently in the middle of the day’s trading range. Early New Year fund flows appear to be dominating as some index fund rebalancing is under way and short grain positions are being reduced whilst long soybean positions are less affected. Regardless of the immediate moves we would anticipate new money flows into the ag space on the back of growing global economic growth and inflationary price pressures.
- New Year data suggests that there is a warming ENSO trend in the equatorial Pacific that could produce an El Niño pattern by Q3 2017 although a neutral position is anticipated into mid year. The upshot of this is that weather threats for N America look limited.
- The start to trading in 2017 is giving no sign that the pattern established in the latter months of 2016 is about to change in the short term.