The market wires are explaining the sharp drop in HRW futures on Friday night as a round of profit taking. The HRW contract is neither oversold nor overbought. It may be more accurate to call the sell off a case of boredom. With the HRW belt currently experiencing a very nice start to their growing season and nothing threatening on the short term weather map the funds may well be looking at a stable market and we all know there’s no money for them in that. Daily volume in the HRW May contract has been generally slipping since mid-March and with the expiry date really not that far away unless we see some big changes to the US weather forecast we may be looking at a rangebound market that simply finds it’s direction from the weekly USDA crop rating report.
Soybean futures at Chicago ran the usual race, is the China deal going ok, yes, no maybe. It seems that every movement in US soybean futures is underpinned or undermined by speculation on the trade negotiations with China. Many political analyst have suggested that under the current US government the trade deals may well go on for months. It’s a little like giving the media the ability to make market prices on a commodity, imagine if the media had links to the speculative money in the futures markets…….it would be like they could push the market whichever way they needed to. Did you pick up on the sarcasm there, tell me you did.
Spring wheat futures were the biggest loser for the week shedding around 5.8% on the back of speculation that the Canadian’s will walk away from canola in favour of spring wheat and potentially durum. This should, in the mid to long term, decrease the supply side for canola thus potentially inflating values much later in the year but it is also likely to result in greater wheat stocks in N.America.