Global markets are increasingly focused on weather patterns and the size of the US fund short for fresh direction. Widespread flooding and below average temperatures in the US plains and Midwest remains a flag for growing crops, while warmer forecasted weather could compound the problem as snow-melt will add to ground moisture levels.
Conversely, soil moisture levels in the EU remain below normal everywhere except southern Russia, and now possibly Iberia where we see some short-term precipitation in the forecast.
US funds still hold a huge short position around 17 million tonnes, indicating they see the market trading lower despite the widely reported weather concerns. As a result, CBOT futures gained just 2 cents last week.
US soft red winter wheat traded into Egypt yesterday but again, this wasn't enough to support futures markets. Matif traded firmer in anticipation that France would feature in this trade but they were out-priced by the US, missed out on the business and futures closed €3 off the highs.
On Friday, the USDA will release wheat planting and stocks data which should give fresh direction. The average trade estimate of the planted area sits just below 67 million acres vs. 67.8 million last year, but this slight reduction could be offset by a projected increase in March stocks from last year.
Domestically, the market remains thin with currency bouncing around and adding to the uncertainty of UK supply and demand figures. Northern feed wheat premiums remain elevated to encourage the trade-flow of grains from further south but, in the main, consumers remain subdued with a 'hand-to-mouth' approach to buying.
