Funds are short and farmer’s are long and the growing season starts getting a little more interesting in May. We’ll get beyond liquidation ahead of first notice day against the May futures on Tuesday as it is first notice day and the majority of players usually have rolled out. Yet, it has been a bearish influence and the old adage of buying heavy deliveries may come into play. Barring a worldwide economic breakdown it appears that there’s more upside potential than downside risk in grain futures for the next few weeks.
The USDA will release its first yield estimate on winter wheat production on May 10 and it will be interesting to see how the recent crop ratings relate to yield estimates. Too wet in the eastern soft red areas and poor ratings might mean lower yields yet, if we get a couple of weeks of sunshine and warmer temperatures all that moisture usually turns into more bushels. Regardless, we’ll be looking at the weather in May and June just like always. Hard red areas are enjoying great top soil and sub soil levels and the potential for great yields is high. We are nearing harvest and there is room for basis levels to be the bearer of bearishness during harvest. Funds might take the opportunity of farmers giving up physical title to the bushels to get out of shorts. Of course, any hard freezes during heading and/or problems caused by too much moisture during harvest changes the game. Spring and durum acreage may not end up as high as Stats Can and/or others are projecting. The weather over the next three weeks matters!
We are near decade low prices in grains and beans and bears are in the driver’s seat if we enjoy normal weather through wheat harvest, corn pollination and bean flowering. Every year we watch the weather and this year is no exception. Trade deals? Who knows if and when! Importers with cash always get filled and exporters fight to satisfy.
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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