We are definitely in a weather market currently. Wet weather and the associated delayed planting of corn and therefore possibly soya beans in the U.S. is making the market very choppy. Whilst the U.S is behind with its soya bean plantings there are still many questions with unknown answers such as will the unplanted corn acreage be switched to soya beans (as they can be planted later) or will the farmers take the prevented planting insurance?
If we look at the demand side of things then it’s hard to see how this is going to increase dramatically over the coming weeks as China and other parts of Asia are still struggling to control the spread of African Swine flu and there are now rumours in the market that bird flu may be on the increase again.
Over the past week or so the Funds have again decreased their short positions as they have at least one eye on the U.S. weather and were feeling understandably concerned about their exposure. What this does mean is that if planting progresses well in the current slightly drier conditions then they have plenty of ammunition to push the market lower again.
The Below graphs shows the Jul ’19 contract movements for CBOT Soybean meal futures.