(AgriMoney) – Investors hoping for a Turnaround Tuesday – one which reverses the trend of the previous session – proved out of luck.
Even despite some weather forecasts which appeared to favour the injectin of some premium into prices.
One big determinant will be the weather outlook, which is taking a bigger profile now that northern hemisphere spring plantings are ramping up, and with autumn-sown crops emerged from dormancy, increasing their moisture needs.
Weather is not such an issue in the likes of Russia and China, where rainfall in major growing areas has eased dryness concerns.
But in the US, there has been too little rain in much of the Plains, challenging hard red winter wheat seedlings, while some areas further east have seen too much moisture, hampering corn plantings.
Crop condition
It was a story borne out in US Department of Agriculture data overnight, showing the condition of wheat in major hard red winter wheat states depressed and, in the likes of top growing state Kansas, deteriorating.
Just 33% of the Kansas crop was rated in “good” or “excellent” condition.
And ideas of rain relief are mixed.
“The GFS weather model offers a better chance for meaningful moisture in the southern Plains into early next week, which could be followed by a more active weather pattern,” said Brian Henry at Benson Quinn Commodities.
“However, the better chances for moisture tend to be focused east of the key winter wheat growing regions.
“The confidence in the southern plains receiving meaningful moisture isn’t where it needs to be to really ease concerns in the US.”
‘Substantial premium’
At Commonwealth Bank of Australia, Tobin Gorey said that “weather forecasters are sceptical that US hard red winter wheat regions will receive much more than a smattering of rain this week and that will fall short of evaporation”.
That said, “prices do already have a substantial premium in them for weather risk so the market will continue to zig and zag with rainfall prospects”.
Still, the concerns were more than offset by comfort in USDA data showing decent wheat condition in many soft red winter wheat states, such as Ohio.
These lifted the over winter wheat condition rating to 44% rated good or excellent, a little above market expectations, although below the typical 47% figure at this time of year.
Hard red winter wheat for May fell, although by 0.7% to $5.71 ½ a bushel as of 09:20 UK time (03:20 Chicago time), while soft red winter wheat, as traded in Chicago, dropped 0.9% to $5.23 ¼ a bushel.
A rise in the dollar – up 0.3% against a basket of currencies, so reducing the appeal of dollar-denominated exports – weighed on prices too.
‘Could delay plantings’
For corn, while the USDA data did not give an overall figure for planting progress, selected state statistics, from early-sowing areas, showed that farmers had made substantial headway last week, if remaining behind the average pace.
In Louisiana, for instance, farmers had seeded 67% of corn as of Sunday, well below the typical 93% by then, but up 51 points in a week.
That said, the big question is how sowings will go in the Midwest proper, and here there are some weather concerns.
“Cool, wet weather conditions are moving around in the Midwest this week, which could delay some of the early corn plantings,” CHS Hedging said.
At Chicago-based Futures International, Terry Reilly said: “Wet weather will occur in the lower US Midwest and Delta this week causing fieldwork to be sluggish.”
‘Discordant weather’
CBA’s Tobin Gorey said: “The US Midwest is experiencing discordant weather – way too wet in some places, a shade dry in others,” with the wet areas the biggest concerns.
“Weather forecasters see little near term relief from wet conditions so worries about planting delays may emerge more fully.”
Nonetheless, corn for May stood 0.1% lower at $3.84 ¾ a bushel.
The important December new crop corn contract stood down 0.1% too at $4.09 ½ a bushel, although still not far short of the insurance price for US farmers, set at $4.15 a bushel.
Soybean shorts
The December lot also kept up with the new crop November soybean contract, down 0.1% at $9.67 ½ a bushel, keeping the important soybean: corn ratio, an indicator of the appeal of the competing crops in spring sowings programmes, at 2.37.
November soybeans showed losses too, down 0.2% at $9.76 ½ a bushel, with funds still not tempted to take profits on their large number of short positions.
Hedge funds had, as of a week ago, their biggest net short in soybeans in nearly nine years, official data show.
The USDA bureau in Buenos Aires estimated the Argentine soybean crop at 57.0m tonnes, 1.0m tonnes above the official USDA estimate, although a drop to 55.5m tonnes was forecast for next season.
Palm down
Soybeans did not this session, as on Monday, receive support from fellow oilseed palm oil, which shed 0.9% to 2,214 ringgit a tonne in Kuala Lumpur.
Palm oil was undermined by ideas of a strong rebound in Malaysian production last month, while also digesting Indonesia’s plans to levy a $50-a-tonne tax on exports of the vegetable oil at low prices which, under the existing regime, would rule out duty.
A similar levy may also be made on coffee and rubber.
