Grains pause ahead of WASDE report
- Wheat futures stabilise after Monday surge
- Current weather conditions threaten US crops
- Snow cover at multi-year highs
By Ole Hansen
US wheat futures have paused today after reaching a one-month high yesterday. The rally driven by fund short-covering came in response to the potential damage on the winter crop from current dry and cold weather conditions.
The latest jump was attributed to the weekly crop condition report, which found that the percentage of US winter crops in good to excellent condition has slumped to just 30%, a 16-year low.
The combination of US/China trade tensions and the ongoing weather woes have come at a critical time for US farmers, who are either watching their winter wheat production diminish or preparing to plant the summer crops.
The cold spell and snow cover is greater than it has been for a number of years, as seen in the graphic below.
Soybeans, meanwhile, have benefited from a record discount to Brazilian beans due to tariff fears.
Corn has also found support and although it is very early in the planting season, production potentially could be reduced with current weather conditions delaying planting and crop growth.
Up next is the WASDE report from the USDA at 1600 GMT.
Surveys are pointing towards a rise in US ending stocks for all three crops with the global outlook looking more supportive due to adverse weather-related drops in South American production.
-- Edited by Michael McKenna
Ole Hansen is head of commodity strategy at Saxo Bank