Glacier FarmMedia — Weather conditions will be a major factor moving grain and oilseed markets in the United States over the next few months, as seeding operations wrap up and attention turns to the developing crops.
Grains
The U.S. corn crop came in at 68 per cent good to excellent in the first weekly condition ratings for the crop of the year, released May 27. That was five points below trade expectations. Spring wheat was an even larger surprise for traders, with only 45 per cent of the crop good to excellent — well short of average expectations around 71 per cent.
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“The corn condition suggests sub-180 (bushels per acre) yield, but we have a long, long way to go,” said Terry Reilly senior agricultural strategist with Marex in Chicago. He added that warmer temperatures through the summer will benefit corn yields.
Spring wheat also has a long growing season ahead of it, but Reilly said the poor start did not look promising for yields. As a result, spring wheat may drive wheat markets more than usual this year. However, he also noted that improving prospects for wheat crops in Russia, Australia, India and Europe were overhanging the market.
Soybeans
The first soybean condition ratings of the season will be released next week, but Reilly said a lack of significant export demand was keeping a lid on the upside for the oilseed with uncertainty over U.S. biofuel policy also overhanging the market. Final decisions on renewable fuel mandates, 45Z blending credits and small refinery exemptions (SREs) are all still outstanding.
Until there is concrete news on biofuel, “it will all be rumours knocking around the bean oil market, so there’s no clear direction on prices,” said Reilly.
Technicals
Investment funds are holding a record large short position in wheat, which means short covering could come forward and take prices higher, said Reilly. He placed chart support in the July Chicago soft wheat contract at US$5.20 per bushel, but said a short covering bounce could take prices up to US$5.60.
For corn, Reilly placed the July contract in a range between US$4.50 to US4.70. He placed July soybeans from US$10.40 to US$10.80 per bushel.
