- This holiday shortened week has been mixed with the grains, corn and wheat, trading higher with corn leading the way whilst soybeans have turned a shade lower. It would seem that the ag markets have reacted to Friday’s CFTC report, which showed a move in fund positions revealing massive short positions in grains and, finally, a relatively flat position in soybeans. Macros lent some market support with spot crude oil some $0.60/barrel higher. European wheat futures closed higher holding onto early gains. Interestingly it has been weakness in soybean oil futures, presumably due to continued weakness in Malaysian palm oil futures, that has tempered the soybean complex.
- Malaysian palm oil futures have been driven by a slow but steady boost in monthly production. Palm oil production in March totaled 1.46 million mt, vs. 1.22 million in March of 2016. Palm oil stocks as of the end of March totalled 1.55 million, up slightly from February. The palm balance sheet is still somewhat tight, but barring adverse weather in the months ahead, palm oil stocks should reach a more normal level (1.7-1.9 million mt) by late spring/early summer. In US dollar terms, palm futures have fallen roughly $100/mt since the middle of February, and overnight fell to new five month lows.
- With a growing season ahead, and minor weather issues noted in the US and Argentina, funds are now paring back short positions in corn and wheat. With them having wiped out their cumulative net long position, market direction into summer will hinge solely upon N Hemisphere weather updates.