(Agrimoney) – There was some better news around on attempts to sort out the Greek crisis with hopes rising for some kind of “cash for reforms” deal.
The euro was in positive territory, and shares broadly higher too, although the Shanghai market, which has been ploughing a particularly negative furrow of late, was closed.
But, for grain markets, was there better news around on the weather concerns which have driven prices of soybeans higher, and lent some stability to wheat futures, at a time when the US harvest would typically being causing weakness?
Some good news, from US farmers’ perspective, is that some more south easterly areas of the country, which has been unduly dry, is to see rainfall.
This week, “showers in south eastern Midwest crop areas will ease moisture stress,” said weather service MDA.
‘Improve harvest progress’
Furthermore, some drier weather lies ahead of parts of the Plains where farmers have been struggling against rainfall to get their crops in.
“Drier weather in southern and central areas will improve harvest progress,” MDA said.
However, the outlook is not ideal for all crops, with much of the Midwest set for further rains which, while seen as largely beneficial for corn, are seen as less of a blessing for soybeans.
Farmers are still undertaking the last plantings of soybeans, which have a slightly later sowings window than corn, and fieldwork is hampered by the rainfall.
Soybeans are also less water-tolerant than corn, with the phrase in common use that they “do not like getting their feet wet”.
Ridge vs trough
WxRisk.com said that this week will see a ridge of high pressure over the US west coast into south western Canada, which itself has been suffering unduly dry weather.
Meanwhile, a low pressure trough “will drive a series of cold fronts into the Midwest that will bring areas of moderate to heavy rain with pretty good coverage to most the Midwest region.
And in the six-to-10 day outlook “all models show the ridge on the west coast reaching its maximum amplitude”, WxRisk.com said.
“And if that happens, it means that the trough over the Midwest will actually increase in size and intensity.”
While areas west of the Mississippi River will see a “fairly dry pattern, overall in the Midwest this sort of deep trough in the jet stream during the summer months always produces significant rains”.
‘Condition expected to decline’
Soybean futures for July rediscovered upward progress, after profit-taking in the last session, and added 0.3% to $9.74 ¼ a bushel as of 09:40 UK time (03:40 Chicago time), climbing back over their 100-day moving average, which they closed over on Thursday for the first time in nearly four months.
The better-traded, new crop November contract added 0.2% to $9.41 ¾ a bushel.
Also in focus will be the prospect of weekly US crop data released after the close of markets, and expected to show continued deterioration in the soybean crop.
“Crop conditions are expected to decline 2-3 points” in the proportion of soybeans rated good or excellent “because of all the moisture in the southern Midwest and eastern Corn Belt this week”, said CHS Hedging.
Traders will also seek clues as to whether farmers in Kansas and Missouri, who have been woefully behind in soybean sowings, have managed to catch up.
“Monday’s planting progress and harvest reports are expected to show decent progress in Kansas, while Missouri is still running behind,” said Benson Quinn Commodities.
‘Going to be hit and miss’
The prospect of Midwest rain was helpful too for wheat prices, in that the area is the main growing region for soft red winter wheat, as traded in Chicago.
The weekly US crop progress report will be closely monitored for the extent of harvest last week too.
“Harvest progress on the soft wheat crop is going to be hit and miss as many areas in the southern Midwest have seen too much rain to expect very good progress,” Benson Quinn Commodities said.
Indeed, Chicago wheat futures for July added 0.7% to $4.92 a bushel, outperforming their Kansas City hard red winter wheat peers, which gained 0.5% to $5.05 ¾ a bushel.
‘Did not get much rain’
The hard wheat complex is also fixated on the weather in Canada, a huge producer of hard red spring wheat, which did receive some rain over the weekend.
But was it enough?
“Canada’s dry prairies did not get much rain on the weekend and that is unlikely to change much this week,” said Tobin Gorey at Commonwealth Bank of Australia, with the dry outlook chiming with WxRisk.com’s analysis.
Still, with US spring wheat faring well, Minneapolis wheat added just 0.3% to $5.44 ½ a bushel, with canola futures seeing more of the benefit from Canadian dryness. Canada is the top exporter of the rapeseed variant.
Canola for July rose 0.9% to a one-year high for a spot contract of Can$508.00 a tonne, while November canola gained 1.0% to a 14-month high for the contract of Can$507.60 a tonne.
‘Limited worries’
However, corn proved out of favour, dropping 0.4% to $3.51 ¾ a bushel for July delivery, with the crop seen less disfavoured by Midwest rains.
CHS Hedging said that corn crop condition in the US crop progress report is seen declining by a more modest 1-2 points, from an elevated 73% last time.
For corn, “traders’ list of crop worries will be extremely limited, if not empty, right now”, CBA’s Tobin Gorey said.
