Descriptions of the weather the US is facing over the sound
"Flooding rain will occur from eastern Oklahoma to central
Illinois this weekend with rainfall of 4.00 to nearly 10.00 inches of rain
expected," Friday through Sunday, said Terry Reilly at Chicago broker Futures
Indeed, the eastern Corn Belt will "see 100% coverage" of
rain during this window, although an estimate 25% of the western Corn Belt will
"More rain is slated for both belts Tuesday through May 4,"
Mr Reilly added.
'Some crops might be
Tobin Gorey at Commonwealth Bank of Australia, also noting
forecasts of a "significant rain event" for the Midwest this weekend said that
"investors will be anxious about the prospect of torrential rain and flooding.
"Some crops might have to be replanted."
And this after a slowish start to corn sowings anyway.
"With the large short position that managed money currently
holds and the upcoming weather forecast, things could become interesting as
planting delays mount," Benson Quinn Commodities.
Futures could show sharp gains if funds are tempted en masse
into closing short bets in corn.
Meanwhile, in winter
wheat country, "nightly frost and
freezes are expected from the west-central high Plains region into the Dakotas,
Minnesota and north western Wisconsin through Monday," Mr Reilly said.
Benson Quinn Commodities said: "It looks like Sunday has the
best possibility of seeing cold temperatures" which "may reach as far south of
"The advanced stage of the crops further south makes them susceptible."
This after mild frosts in the central Plains earlier this
week, thought to have caused "some crop damage", but "above levels that would
cause significant damage", the broker said.
French crop condition
And if anyone doubted the potential for poor weather to hurt
crops, a reminder came from France, the European Union's top grains producer,
which has suffered unduly dry weather, as well as frost.
FranceAgriMer, the official crop bureau, rated the French
soft wheat crop at 78% "good" or "excellent" as of Monday – down 7 points week
on week, and 10 points year on year.
For winter barley,
the good or excellent reading was 71%, also down 7 points week on week, and a drop
of 16 points year on year.
For durum wheat,
the rating tumbled by 12 points week on week to 63%, a decline of 19 points
year on year.
Spring barley fared a bit better, at 80% good
or excellent, a drop of 5 points week on week, and 14 points year on year.
So the potential was there for rises in Chicago especially
in corn and wheat prices. (Soybeans,
being a little later seeded than corn, can see area rise if wet weather prompts
farmers to ditch some corn sowing plans.)
However, there was a potential fly in the ointment in bulls in
corn in particular, in the form of some revived concerns about President Donald
Trump's stance on Nafta.
Overnight reports underlined that he was yet willing to
withdraw the US from the trade agreement with Canada and Mexico, fears of which
hurt trading on Wednesday before an announcement that the President had agreed
to talks on the treaty.
"If I'm unable to make a fair deal for the United States,
meaning a fair deal for our workers and for our companies, I will terminate
Nafta," Mr Trump said.
How seriously are investors taking the chance of a US exit
The Mexican peso,
which has become a barometer of Nafta fears, did fall against the dollar, but by a modest 0.2% as of 09:30
UK time (03:30 Chicago time).
It remains some 1.1% weaker than before Wednesday's Nafta
Corn, meanwhile, of which Mexico is a huge importer from the
US, eased by 0.1% to $3.68 ¾ a bushel in Chicago for July delivery, finding
technical resistant too in an effort earlier to bust above its 200-day moving
average, at $3.69 a bushel.
Hard vs soft
Wheat, for which Mexico is not quite such as important market
for the US, fared better, adding 0.4% to $4.33 a bushel for Chicago soft red winter
wheat, the global benchmark.
Still, Kansas City-traded hard red winter wheat - as grown
in the Plains, so facing the freeze concerns - fared better, adding 0.9% to $4.37
½ a bushel for July.
Indeed, the contract built on the premium to its Chicago
peer it regained in the last session (and which is more typical, given hard
wheat's higher protein count).
The premium, at $0.04 ½ a bushel, stood just below its 50-day
moving average, having jumped above the 100-day line in the last session.
Minneapolis spring wheat added 0.4%to $5.55 ¼ a bushel for
July, gaining support from wet northern US Plains/ Canadian weather which is
raising fears for spring sowings progress.
Soybean futures, meanwhile,
nudged 0.1% lower to $9.57 a bushel for July delivery, maintaining something of
a consolidation after their tumble from levels above $10.90 a bushel reached in
If unusually strong US export sales (for the time of year) last
week of 808,100 tonnes old crop were a boost to bullish sentiment, the latest
news coming from Argentina was not, with the Buenos Aires grains exchange returning
to a stance that it may upgrade the country's harvest from 56.5m tonnes.
"Thanks to the high yields of areas harvested so far,
and good weather forecasts over the short term, it is possible that the season
will end with a bigger crop than currently estimated," the exchange said.
This after earlier in the month cautioning over crop losses
'Didn't pick up any
Another factor which has disappointed some soy bulls is the
failure of soyoil to respond much to
a move which might increase US consumption of the vegetable oil in biodiesel
This week, 14 senators introduced bipartisan legislation to
increase renewable fuels use with a biodiesel tax credit, although switched to producers
from the blenders that credits have applied to historically.
This would limit the risk of the benefit spilling abroad,
with blenders often turning to Argentine or Indonesian biodiesel imports.
However, Futures International's Terry Reilly noted that "talk
of the biodiesel tax credit coming back for US producers didn't pick up any
steam" in market terms.
Soyoil futures for July stood down 0.2%at 31.89 cents a
pound, while in Kuala Lumpur, rival vegetable oil palm oil eased 1 ringgit to 2,505 ringgit a tonne.