April 25, 2019

New contract lows across the board

With the 2018/19 marketing season coming to an end, attention is now turning to the improving 2019 crop outlook although harvest is still far away.

As expected, US winter wheat conditions have continued to improve in recent weeks with soil moisture in the central Plains much higher than normal and as such, yield potential remains good, not to say excellent with 62% of the national crop rated ‘Good/Excellent’ ie +31% on last year, +18% on the 5-year average and its best since 2012.

However, the ongoing excessive rainfall across the Midwest means that crop conditions in the eastern cornbelt are much below average and spring plantings keep being delayed. As of the end of last week, only 6% of the US corn was planted against 12% between 2014-2018 and operators continue to talk about a well overestimated 92.8Mac forecast from the USDA. However, it did not prevent new crop Dec-19 CBOT corn to score fresh contract lows over the last 3 sessions with historically 70% of the US corn being planted between the last week of April and mid-May and very good yields in South America.

For now and until threat materialises in yield loss, speculators are still comfortable in building record short position on US grains.

April 25, 2019