- Traders have the big question of what is the Central US weather going to do into the end of summer, and what impact is it going to have upon crops, yields and ultimately output. Will conditions be sufficiently threatening to trigger fund managers into a substantial net long position in corn and soybeans. Funds have returned to their largest net long position in age (corn, wheat, soybeans, lean hogs live and feeder cattle) since late spring 2016. Fund do have a tendency to trade gas from the long side, and as a consequence upside risk does lie in corn and soybean markets.
- Monday saw soybeans finish slightly lower in mixed trade, deemed indecisive! Early strength faded as June crush data was below expectations. The lower close was well above last week’s low, a significant point. Crop condition declined, despite rains last week, with 61% of the crop rated good/excellent vs. 62% last week and 71% last year.
- Corn ended mixed and little changed as crop condition fell as expected together with weather forecasts continuing to trend hot and dry into month end, which will likely lead to further condition deterioration. 64% of the crop was rated good/excellent vs. 76% a year ago, and is the lowest condition rating since 2012 (drought year!).
- Wheat markets were mixed with winter crops shedding value whilst spring wheat added premium in declining condition and yield potential. US spring wheat condition fell to 34% good/excellent vs. 35% last week, and it seems NASS has not yet finished lowering HRS output estimates. Global cash wheat markets are a shade weaker amid €uro strength and profit taking in London and Paris futures markets. Russian output estimates are growing, with some forecasters on the upside of 73 million mt. Weather in Russia has been favourable although logistical issues and VAT rebate debates we would question whether this will allow their exports to grow significantly over 27 or 28 million mt, unchanged from last year. It feels very much as if global wheat trade patterns are about to change this coming year.