- Chicago futures have been mixed with corn lower wheat and soybeans a shade higher today in somewhat better traded volumes. Volume improvement is attributed to rolling Jul contracts ahead of first notice day on Friday. The real story continues to be spring wheat in Minneapolis and the continuing supply loss. Yield forecasts continue to shrink with expectations now in the 34-35 bushels/acre range as below average rain and more heat continues to threaten US production. There is also a further concern that Canadian growers have sown more canola (rapeseed) at the expense of spring wheat, and less than optimal growing conditions will not aid the demand pattern. Spot Minneapolis futures have broken our $7.00/bu target, reaching $7.13/bu earlier today, and it feels as if prices can go higher still as demand rationing is not evident yet. High protein physical (cash) wheat is difficult to secure – read all but impossible – and cash premiums continue to rise.
- We would anticipate a further sideways trend in Chicago until such time as we see some greater clarity on central US weather conditions and the June Stocks and Seeding report is published.
- Early Russian wheat yields are being reported to be below last year, but its far too early to establish any kind of trend. Most cash related wheat watchers remain convinced of another large Russian wheat crop and that yields will recover to levels equal to last year. The current heat and dryness could actually help crop quality and boost protein levels. Traders are more concerned by the heat and dryness that is being applied to summer row crops of corn and soybeans, it is something to monitor with Russia now being a modest world corn exporter of 3-4 million mt.
- The wait continues! Fund managers want to reduce their risk ahead of the USDA report and the end of the quarter. World wheat prices keep rising with HRS in the spotlight. Our concern remains one of July following June and being warmer and drier than normal. Very warm temperatures at night will be the worry for US corn yields.