- Chicago row crop futures rallied on wet weather and potential for further heavy rainfall in the coming fortnight. However, growers in the W Midwest are seeding quickly and struggle to know where to place their focus. Should rates focus on W Midwest speed of planting or the waterlogged E Midwest and Delta? Tomorrow’s USDA update will likely do little to relieve this dilemma. Currently all we can do is work on trend line yields for corn, soybeans and spring wheat. This may well prove an obstacle for the longer established bearish trends particularly with fund short positions as they are as well as the reluctance of both US and S America farmers to sell at current prices.
- Bears may well claim that stock levels are, and will remain, large, which is undoubtedly true; however, prices are as low as they have been in the last five years, and any adverse weather will likely trigger a price spike higher. Weather is and will remain the key driver in coming weeks.
- The soybean markets remains focus upon strong demand patterns and the requirement for US and S America to continue to produce record large crops does not go away. Wet weather in Central US has the potential for disease issues and EU wheat offers remain firm; the mid term outlook appears as if we may have formed a market low and any extended wet conditions could well put risk premiums back into prices for the foreseeable future.