Over the last week or so the funds had managed to build a long position in US grains. Last night saw this position, or a fair chunk of it, most likely liquidated in one session.
US soft red wheat futures gapped lower triggering sell orders to the close, where it set the low. Hard red wheat futures were hardest hit. Over the weekend 15mm – 30mm fell across parts of central Kansas, enough to end a drought, well it doesn’t really matter to a fund manager does it. This sudden sell off has technically put both soft and hard wheat futures in the US at a very oversold position on the stochastic chart. It has also primed the market for a correction if the March 30th planting intentions report has any surprises…. but don’t mention the phrase “constructed volatility”.

Soybean futures saw some downside too pulling the oilseed complex lower. Canola and Paris rapeseed both settled lower. The reasoning behind this is some half decent falls of rain in Argentina. Now I’m not sure of how many of these fund manager can read a sowing and harvest table but in Argentina soybeans tend to grow in the summer, that makes them harvested in the autumn, the southern hemisphere’s autumn. So harvest starts about mid March and goes through to about mid May. So saying the rain has been beneficial to soybeans in Argentina over the weekend is like saying that rain 2 weeks ago would have saved our sorghum crop on the LPP. It’s simply impossible at least for the early plant. Late plant beans may see some help but the establishment was already hurt in that case.