(Agrimoney) – For most investors, Saturday will be the biggest day of the week, when Greece holds its referendum on the latest bailout extension package.
In fact, share markets were on Tuesday pretty sanguine about the potential for Greece to end up quitting the eurozone, and the near-certainty that the country will not be able, by midnight, to make a E1.6bn payment due to the International Monetary Fund.
Shares on many Asian markets showed gains, notably in Shanghai, where the benchmark index rebounded by 5.6%, while European stocks opened with only small losses.
Data later
But for grain investors, Tuesday will be significant, bringing not only Statistics Canada data on crop sowings, which are actually expected to show little change on April numbers, at 24.6m acres for wheat, compared with 24.76m acres before, and 19.5m acres for canola, compared with 19.41m acres.
It will also bring the US Department of Agriculture’s quarterly stocks report, and an annual briefing on US crop sowings, big market events.
It is also the end of the month, and quarter, typically times when funds sell, although the stocks and acreage reports have a habit of promoting big price swings either way.
Besides, investors had USDA overnight data to factor in too, showing further deterioration in the condition of the US corn and soybean crops, although not in winter wheat, while spring wheat showed further improvement.
‘Not sure how this was possible’
Indeed, while that was something of a confusing backdrop for investors, it was not such a surprise that investors took the opportunity to take profit on some of the 12% gains in Chicago wheat in the past three sessions.
The USDA crop progress data overnight showed farmers making some progress on harvesting last week, despite wet weather in many areas, putting 19% of their crop in the barn to take the total to 38% complete, although that remains behind the average of 46%.
Soft red winter wheat states of Illinois, Indiana and Missouri remain notably behind the average pace, by 21 points, 21 points and 19 points respectively.
Still the winter wheat condition rating did not decline, remaining at 41% rated “good” or “excellent”, although there was a question mark over the figure.
“We are not sure how this was possible since 11 out of the 18 states reported showed reduction in the combined good and excellent categories,” said Terry Reilly at Futures International, compared with only three states showing an increased rating, although one of the latter was top grower Kansas.
Whatever, the broker trimmed by 0.9 bushels per acre to 61.4 bushels per acre its estimate for the average US soft red winter wheat yield.
‘In dire need of a correction’
The spring wheat rating, meanwhile, edged up 1 point to 72% good or excellent.
“It is shaping up to be as good as, if not better than, last year’s crop,” said Brian Henry at Benson Quinn Commodities, taking a something cautious view of prospects for wheat prices overall.
“Wheat does not need to be trading these prices, but hasn’t shown enough signs of slowing down to give the spec seller any courage,” Mr Henry said.
“These markets… are in dire need of a correction,” he added.
“We should be trading cheaper prices by the end of the week. How much pain between now and then remains in question.”
Dry fields
And a factor reducing the risk of pain for now was, besides the data later, the weather threats in a number of countries beyond the US.
“Weather forecasters continue to expect Canada’s Prairies to dry further this week – the degree will largely depend on temperatures as there is little rain forecast,” said Tobin Gorey at Commonwealth Bank of Australia.
The outlook too is “for dry conditions in parts of Europe that may evolve into problems given already dry soils”.
And “weather forecasters expect largely dry conditions to continue this week in Australian grain regions” too.
Price moves
OK, Sydney wheat for January rose by Aus$4.00 to Aus$331.00 a tonne, but that was largely a reflection of the strength in Chicago, the world bellwether, in the last session.
Other markets found headway harder going, with Chicago soft red winter wheat for September itself down 0.9% at $5.78 ¼ a bushel as of 09:20 UK time (03:20 Chicago time), while its Kansas City hard red winter wheat peer dropped 0.8% to $5.76 ¾ a bushel.
Minneapolis spring wheat for September was 0.5% lower at $6.15 ¾ a bushel.
Yield doubts
Fellow grain corn, however, did better, in edging 0.3% higher to $3.93 a bushel for September, and by 0.2% to $4.03 a bushel for the new crop December contract.
But then it had support from more the USDA crop progress data, which showed a 3-point decline to 68% in the proportion of domestic corn rated good or excellent, again reflecting largely drops in wet Illinois and Indiana.
The decline took the rating further below last year’s figure, of 68%, and posed further doubts over yield prospects.
“I would suggest this really calls into question the ability of the crop to reach above-average [yield] at this point, and that 160 bushels per acre could be now the top-end of the trade bias going forward,” said Mike Zuzolo at Global Commodity Analytics.
Unsown soy
The soybeans rating also showed a decline, although at 2 points to 63% good or excellent, the drop was in line with expectations, albeit well-below the year-ago figure of 72%.
Soybean plantings, at 94% complete, were a touch behind expectations, besides the 97% average.
“There are 3%, 2.5m acres, of soy that should be in the ground that are not and a total of 5.1m acres total unplanted,” Richard Feltes at RJ O’Brien calculated.
‘The most inherently weak’
Still, there are doubts about soybeans’ staying power, especially ahead of the report, with Mr Zuzolo noting that in the last two sessions, soybeans had “given up” first in their rally.
“Soybeans are continuing to show to me through their price-action that they are the most inherently weak without help from the USDA on Tuesday.
“They can rise with the other complexes, but on their own they have a lot of premium in the price already it would appear to me.”
Soybeans for July were 0.7% lower at $9.95 ¼ a bushel, with the new crop November lot down 0.7% at $9.73 ½ a bushel.
