Funds are short futures and options and farmers are long cash, both old and new crops! Have we discounted the bearish factors on the board? Do we feel the rest of the bearishness of decent crops in the basis when the time arrives when farmers have to give up title? Cash needs and/or storage tightness might become major factors sooner than normal. There appears to be no sense of urgency for spreads to strengthen.
Crop tours are reporting that yield potential for hard red wheat is excellent while soft red wheat needs some sunshine and wind to improve. The USDA will release its first winter wheat production estimate next Friday at 11:00 Chicago time.
Respect the USDA! Remember the March Stocks and Prospective Acreage reports which surprised the market with the high corn stocks figure? Black swans arrive at any given time. Also, respect Mother Nature as cooler and drier than normal conditions in the Plains might introduce some problems to developing wheat.
The world appears to be flush with beans, corn and wheat for the time being yet, the planting delays this Spring might limit the crop sizes for the 2019/2020 marketing years. It’s a long growing season and normal Summer weather and a late frost might allow for great crops. Or, it might go the other way. End users appear to be more willing to extend coverage at present values. Good hedging strategy!
The information contained on this site is the opinion of the writer and obtained from sources cited within the commentary. The impact on market prices due to seasonal or market cycles and current news events may already be reflected in current market prices.
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