The hot, dry weather across much of Brazil was the major news article influencing international grain futures overnight. Soybean and corn futures were the major beneficiaries, the rally in the row crops creating a little spillover buying in the wheat futures market.
Recent dry weather in Brazil has slowed soybean planting and hurt the establishment of what has been sown. Combining the dry weather with the heat of the last week or so, and more heat being predicted this week, many analyst are starting to see some potential for yield reductions S.American soybeans.
Granted it is still early days for corn. Corn in Brazil is sown both now with soybeans and later after soybeans are harvested. Soybeans will not get a second chance though and may struggle to recover from this poor start to the season in Mato Grosso.
The international commentary on soybeans is still mixed. Some punters saying this is a beat up and prices are not expected to improve much more while others are saying that the damage to the Brazilian crop will place additional export volume in the lap of the USA. Time will tell.
At the moment stronger soybeans is creating some good spillover support for canola. Paris futures rallied sharply higher last night. The move in Aussie dollar terms is equivalent to a day to day improvement, when taking the variation into the AUD into account, of AUD$21.31. If the move is reflected in it’s entirety, and not partially by a reduction in basis, this may present a selling opportunity for those with stored canola.
The strength in the Chicago soybean market did lend a hand to wheat. Spill over buying saw the nearby SRWW contract close a few cents per bushel higher. Unfortunately the move higher in the AUD may all but counter the move at Chicago in AUD term.
Heavy rain across the north of France over the last fortnight has delayed the finalisation of winter crop sowing there. Falls of 50-100mm saw flooding in some places towards the far NE and far SE of France but generally the rain should help what is sown get off to a great start when the weather warms.