Wet US Conditions Boost Corn, Wheat Prices

The US grains market has finally found the fundamental support needed to squeeze the record short that had been building over the past few months.

The US Department of Agriculture released its latest weekly planting progress last night and it showed the slowest corn planting progress on record since 1980, while soybeans posted the slowest planting progress since 1996 at 19%.

The Bloomberg grains index, led by corn and wheat, has rallied by close to 10% during the past seven days and the potential for more short-covering exists after The US National Weather Service said via Bloomberg that more rain is coming to further soak the US crop belt.

Potent storms on Monday in the central and southern plains may bring flash floods and tornadoes, and parts of the northern Midwest are under frost. Heavy precipitation has pushed back corn and soybean planting in the central US, placing wheat quality at risk.

While wheat and corn have rallied strongly, soybeans have been held back by booming inventory levels with nowhere to go due to lack of Chinese demand (ASF and trade war). Adding insult to injury, we now have the potential risk of corn acreage, weather permitting, being switched to later-planted beans.

Ole Hansen, Head of Commodity Strategy at Saxo Bank.

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This article is provided by Saxo Capital Markets (Australia) Pty. Ltd, part of Saxo Bank Group through RSS feeds on FX Empire.