- Lower volumes and prices has been the order of the day in Chicago today, and this has translated into London and Paris wheat markets too. Crude oil values easing to below $45 has placed a cap on prices and the early rally stalled. Expectations of the US Federal Reserve raising rates a quarter point later in the day has helped the US$ and again helped cap commodity price upside.
- Weather models have some agreement with returning heat and dryness in the last week of the month, and this has the potential to push prices higher as and when there is confidence in the forecast. Some US farmer reports are showing corn stress levels rising in hot, dry and windy conditions. Leaf rolling in the afternoon and unfurling at night is reported to be farly common right now.
- The wet and cool spring weather conditions followed by heat and dryness in late May and June make it look unlikely for corn to reach trendline yields in 2017. Soils have dried to hard pans in Central US and replanted corn has struggled to emerge or regrow, shorter plants with reduced potential appears to be the most likely outcome. Whilst this is not the case across the whole corn belt, it is being reported quite widely. Yields of 171 bushels/acre require the crop to have good conditions, this year has already seen a number of “bad” days and the question right now is how many more “bad” days is the crop going to endure?
- Clearly it is tough to trade weather markets when the weather models are in full agreement, but when there are divergences such as we are seeing at present it becomes doubly or trebly difficult. The current price break, albeit small, does not encourage us to become bearish and we prefer to see it as a buying opportunity rather than joining in with the sellers.