Crop futures appeared to stop their multiweek fall last week as prices reached levels that reflect the prospect for large world crops.
Also, excess rain in Canada and the American Midwest caused some crop damage. Worries about that helped support futures.
However, I don’t expect a sustained rally from the rain. Usually, the moisture helps lift yields on high ground, offsetting the losses in the low spots.
It will be hard for wheat to rally in the coming weeks because winter wheat is being combined in Europe and the Black Sea region.
Conditions in Europe look great thanks to favourable weather.
Analyst Strategie Grains increased its monthly forecast of the EU soft wheat crop last week by two million tonnes to 139.4 million, while EU grain lobby Coceral hiked its estimate to 141.9 million, Reuters reported.
Crops in Ukraine, Russia and Kazakhstan appear to be similar to last year’s record crops.
The average of forecasts in a Reuters poll of 15 traders and analysts showed the three countries producing 88 million tonnes of wheat, which was steady with the previous year.
Exports are expected to decline three percent to 35 million tonnes.
Even the U.S. hard red winter wheat harvest is providing a bit of downward pressure, even though the crop can’t get a break.
Drought through most of the year slashed yields, but now the region is receiving regular and in some places excessive rain. This is stalling harvest, and quality issues are emerging because of the moisture.
However, it is hard to spark a rally in North America when prices of competing European and Black Sea wheat are falling.
The price outlook for corn and soybeans is also not bullish.
The condition of the U.S. corn and soybean crops declined slightly this week.
However, the ratings are still better than usual for this time of year, and traders appear to think that the moisture will help guarantee big crops this fall.
One of the few factors supporting grain prices are the stories about the developing El Nino and how it could reduce rainfall in Australia, India and palm producers Indonesia and Malaysia.
However, El Nino is not all bad for world crops.
It traditionally means drier conditions for the western Pacific, but it usually increases moisture in South America and helps its soybean crops, which could put pressure on oilseed prices come winter.