...MOREHow high can grains go?
There was talk around early in the week, as Agrimoney.com reported, of grains being vulnerable to a "powerful rally", given the potential for weather setbacks to prompted an about-turn by speculators who have been betting big time on price weakness.Should funds be prompted to exit their, record, net short position on grains en masse, the result would indeed likely be a surge in prices.The Minneapolis spring wheat market, meanwhile, the epicentre of recent strength - thanks to hot and dry weather which has sapped the condition of the US crop to the second lowest on record for the time of year – has not quite realised yet the "potentially explosive" tag it was given.'Not offering much relief'Sure, Minneapolis spring wheat futures for July, amid expectations of further dryness in the northern US Plains, gained a further 0.5% in early deals on Wednesday, to reach $6.01 ½ a bushel as of 09:05 UK time (03:05 Chicago time), to take above 13% its gains over the past month, on a spot contract basis."Spring wheat regions in the US and Canada remain dry. Weather forecasters are not offering much by way of relief," said Tobin Gorey at Commonwealth Bank of Australia.However, the contract has been measured in its gains, this session, as in the last, wary of setting a new high for the move, and able so far only to match the intraday high of Tuesday.And Thursday's price is well short of potential, with Richard Feltes at RJ O'Brien highlighting that Minneapolis wheat is "one of the most inelastic of ag markets" – ie there is little alternative for users of high protein wheat, unlike in, say, feed markets, where many consumers can alternate between [lower quality] wheat and other grains."Recall the $11.20 a bushel in late June of 2011," Mr Feltes said, with the all-time high for Minneapolis wheat at $24.25 a bushel, set in February 2008.Data aheadOne reason for caution in grain markets is that a slew of key crop data are due later this week, which act as a distraction for a market which has been focused on weather.On Thursday, Conab will release estimates for Brazilian crops, while on Friday, the US Department of Agriculture unveils its monthly Wasde crop report, which are expected to make little change to estimates for world and US crop inventories as of the close of 2017-18..
Ag Commodities: Weather Taking a Toll on Spring Wheat Sayeth Yesterday's Crop Progress Reports
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