THE grain markets are still digesting the planted acreage numbers released by the US Department of Agriculture just ahead of Easter.
For wheat it is both the wheat acreage number and the corn acreage number which are of interest.
Corn acres are much lower than expected, providing support for corn futures.
At the same time, we have a late winter which will delay corn planting in some US states.
So now there is added speculation about what that might do to final yields and total US corn production.
Stronger corn prices against this speculation is supporting wheat.
For wheat the acreage numbers were quite negative, with a much larger acreage than expected, but there could be delays to spring wheat planting, and in parts of the hard Red Winter wheat belt the drought just seems to be getting worse.
To add to the confusion, the US has just had a cold snap spread over large parts of the wheat growing areas during last weekend.
There may be some losses in both Hard Red Winter wheat and Soft Red Winter wheat.
At the same time there appears to be no relief for drought stricken areas.
The support from corn prices, and the weather issues for wheat itself, were enough to push futures prices to their highest levels since March 19, and to therefore push prices out of the US446 to US464 cents a bushel trading range that the market has been held within for most of the time since mid March.
Sitting behind the weather issues for wheat are the crop condition ratings.
We are now getting weekly updates on the national US wheat crop condition.
The initial ratings put 30 per cent of the US winter wheat crop in the poor to very poor condition rating, with 32pc in the good to excellent category.
Last year’s numbers were 14pc poor to very poor and 51pc good to excellent.
All of this has set the week up for another push higher for wheat prices, with the assessment of the weather from the weekend, and another crop condition report that should confirm that the US wheat crop is still in very bad shape.
However, any a surge in US wheat prices will simply shut off export demand and leave more wheat within the US market.
This will continue to make any price surge hard to sustain.
We also have the monthly USDA Supply and Demand Report out mid week which should remind the market that wheat stocks globally, and within the US, remain very high, and will continue to remain high even if there is a pull back in the size of the US and global wheat crops this year.
The current factors at play in the grain markets are likely to cause some volatility, but it won’t be until we get some actual harvest results in, that the market will be able to settle on a true price level.
While what is happening to the US wheat crop is important, as we saw last year, a major setback in the US will count for nothing if the lost production is once again covered by output from the Black Sea region.
We also have a hangover of stocks from the last couple of big crops from Russia in particular, that need to work their way through the global marketplace, and that will keep EU prices in check as well.
