Corn futures made another attempt to bust through the ceiling.
The Chicago new crop December contract, since touching $4.54 a bushel on May 29, has tried a further five times to get above that level, but without success as yet.
This includes an attempt earlier on Thursday, when the contract got to $4.52 ¾ a bushel.
The behaviour, which is giving the contract’s chart something of the look of Monument Valley, is evident in the July lot too, which since peaking at $4.38 a bushel on May 29 has got close – hitting $4.37 ¾ a bushel earlier – but not managed to match it, or exceed it.
And that is important, as it is around this level that spot contracts have stalled in the past two early summer rallies, in 2015 and 2016, and getting above this ceiling would open the way to five-year highs.
The July contract stood at $4.36 a bushel as of 10:00 UK time (04:00 Chicago time), a gain of 1.4% on the day, with the December lot up 0.7% at $4.51 ¾ a bushel.
As to whether these lots can press higher later, the demand side of the equation may have some say, with weekly US export sales data for last week expected at 250,000-550,000 tonnes for 2018-19 (ending in August), and 100,000-300,000 tonnes for next season.
That would represent quite some improvement on the previous week’s figures of net cancellations of 8,788 tonnes for this season, and net sales of 23,458 tonnes for next.
And after all, “outside of the US, corn production is record sized in many regions, mainly South America,” said Karl Setzer at MaxYield Cooperative.
“Importers can easily shift buying interest to these sources for corn… which has already taken place in some cases.”
The weather outlook will have an impact too, although for corn, for which US sowings are close to an end, the nuances are changing.
That is, is wet weather now a help, in terms of boosting crop in the ground, on a “rains make grains” basis?
Even then, precipitation can get too much, with Mike Mawdsley at First Choice Commodities noting that rains are just what farmers in already-sodden areas “don’t want when trying to get young plants to take root”.
Ample wetness can dissuade crops from putting down deep roots, making them vulnerable to dry spells later on.
‘Big spread to trade’
Still, the big question for now is how many acres will actually end up getting seeding, compared with the original USDA forecast of 92.8m acres.
“There is a lot of speculation that prevent plant acres could be from 6.0m to upwards of 15.0m,” said Benson Quinn Commodities.
“That is a big spread to trade,” so conducive to price volatility.
The US plantings report later this month will be one staging post for answers on area, although there is anticipation too of initial prevent plant data due in August.
Soybeans returned to the back seat, after their market-leading performance of the last session, gaining this time a more modest 0.4% to $8.81 ½ a bushel for July delivery.
US export sales data for last week are expected at 200,000-500,000 tonnes for old crop, and 100,000-300,000 tonnes for new.
Meanwhile, the US outlook remains wet, with Agritel noting that “new rains are expected on the Corn Belt and this will again disrupt the soybean plantings”, with the oilseed having a slightly later seeding window to corn.
“With funds still on the short side, and plantings slow, just maybe we can see a pop in beans higher yet this month,” said Mike Mawdsley at First Choice Commodities.
In fact, there was some talk of soybeans’ outperformance in the last session being spurred by the unwinding by funds of short soybean/long corn spreads.
Still, it was wheat which showed biggest signs of position closing, with open interest in Chicago soft red winter wheat futures down by 3,476 lots in the last session, and by 1,422 contracts in Kansas City hard red winter wheat.
In fact, this should be taken in the context of investors getting out of July contracts (where loss of open interest was centred) as expiry looms on the horizon.
Nonetheless, some reluctance in rolling short bets forward could tell a story, with wetness slowing the US harvest, which typically weighs on prices at this time of year.
“Continued wet weather could lower the quality of the US hard red winter wheat crop and raise demand for hard red spring wheat blend,” said ADM Investor Services.
‘Hot and dry weather’
Furthermore, there remain worries over dryness in Russia, although this is coming late in the season to have a big negative effect on wheat output.
“Hot and dry weather is expected to continue across nearly all” of the Black Sea region over the next 10 days, Maxar said.
“This will lead to further soil moisture declines, especially in eastern Ukraine and southern Russia, stressing corn and sunflower growth.
“The dryness may also stress late growth of winter wheat, but the crop has already progressed through the most moisture-critical stages of development across most of Ukraine and southern Russia.”
Winter vs spring
Chicago wheat for July added 0.6% to $5.29 ¼ a bushel, with Minneapolis spring wheat for July adding a more modest 0.4% to $5.66 ¾ a bushel.
This after losing ground in the last session, by falling, undermined by improved weather for its North American growing belt, even as the winter wheat contracts climbed.
“It seems the dry pattern for the Canadian Prairies and northern US is breaking down and a more zonal flow will bring showers to major spring wheat growing regions in the 14-day forecast,” Benson Quinn Commodities.
US all-wheat export sales for last week are expected at 250,000-450,000 tonnes for 2019-20, which in the US began for the grain this month.