- We hesitate to “buck” trends, BUT, the Dec ’17 corn market has relapsed to the lower levels of the 2017 $4.17-3.74 range, and we believe this represents an opportunity with a very favourable risk vs. reward ratio. Just a thought!
- Nov ’17 soybeans have bounced off their 200 day moving average as fund selling pace slowed down. Corn futures initially followed with the December contract testing support levels with the wheat market mostly higher as Minneapolis made gains. Participants on the ongoing spring wheat tour are pessimistic on the actual acreage that will be harvested, and as the tour moves west it is reporting yields in single digit and low teens. This is causing the wheat market to turn higher and with the added pressure from extending drought across Canada we are becoming yet more friendly to higher wheat prices. The drought in Canada is gaining in importance from the perspective of canola (rapeseed),spring wheat and pulses. The canola balance sheet is beginning to “pep up” as Chinese demand starts to grow. Unlike the last year or so, US and world corn. soybean and wheat end stock estimates are in decline, and this will likely underpin prices and provide market support going forward, particularly when weakness is evident.
- Today’s back and forth trade was not unexpected as the markets attempt to repair the technical damage done by Tuesday’s wide ranging trade. The market now awaits location and amount of rain reports before deciding next direction and move.
- The German wheat crop is going backwards fast in terms of quantity and quality due to excessive rains. Another 1-2” of rain is expected in the next few days and the world’s availability of high protein wheat is further reduced. It is becoming nearly impossible to secure German high protein wheat and those that have sold it already are pulling on old crop supplies. We are beginning to see the total EU wheat crop at 145 million mt vs. the USDA forecast at 150 million mt, and cut of another 1-2 million are in the making if the rains don’t cease soon. Cash sources have reduced their estimates of the Canadian wheat crop to 24.1-24.6 million mt due to the worsening drought. This is down nearly 4 million from the July WASDE estimate of 28.35 million mt. The Canadian canola yield is estimated to be reduced by 9% to 2.00 mt/acre for a crop of 18.9 million mt (down 2.1 million).
- The next 12-18 hours holds the best chances for rain for the Midwest looking forward into August 6th. There could be a few afternoon pop up thunderstorms, but the GFS forecast appears to be overdoing the coverage. This is an arid weather pattern with warm (not hot) temperatures. Soil moisture will decline and the Plains and the W Midwest did not get the regional soaking that was desired. Crop stress will be returning.