It appears the funds are now placing bets as to which commodity will be the winner for summer crop acres in the US and the punters favourite appears to be soybeans and why wouldn’t it be. The funds appear happy to buy up corn futures in anticipation that corn acres will fall as better priced beans take the lead. If this was to unfold and isn’t just a fade spread trade deal than one might also assume that lower grade wheat in the US will also be dragged along as feed grain values rise as supplies begin to shrink for corn.
The big mover in the US at present is the dry spell in the hard red wheat belt. Looking at the 90 – 30 and 14 day anomaly map it continues to show much of Kansas and big slices of the major wheat portions of Oklahoma and Texas have only see 20% – 40% of the normal rainfall for that period. Obviously a good spring can counter all this dryness in a heartbeat but it is a key driver to wheat prices at present.
The 15 day forecast is showing the chance of some rain across the NE corner of Oklahoma and SE Kansas but as a percentage of normal rainfall it is still not enough to bring soil moisture back to the average so we may see the market continue to support these values for a little while longer. Technically wheat at Chicago may struggle though as it is now looking overbought. Closes above this level over the last couple of weeks signalled a sell which resulted in profit taking pushing prices lower……..welcome to the silly season for 2018.