Last week’s United States Department of Agriculture reports gave the markets little reason to move, but they gyrated anyway.
Some analysts said it was caused by the activity of speculative commodity funds.
“There was no bullish news to speak of (in the March 31 seeding intentions report), but I think the funds were just trying to agitate the market and see if they could get things going,” said Ken Ball of Union Securities in Winnipeg.
Soybean futures rallied soon after the report’s release, leaping 20 cents per bushel on the Chicago Board of Trade, even though USDA expects more soybean acres than many analysts expected.
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The yield estimates for wheat and soybeans were neutral to bullish, but these were largely a sideshow when compared with corn.
But by day’s end the market reversed and the May contract finished down by 14 cents per bushel. If fell again the following day.
The commodity funds failed to ignite a sustainable rally and “when they turned and tried to sell, there were no buyers and the market just collapsed,” Ball said.
USDA forecasted soybean acreage to fall by less than two percent from last year, and corn to rise by less than one percent. Some analysts had predicted corn would pick up more acreage from soybeans.
U.S. wheat acreage should be down about two percent, but the drop was in winter wheat. U.S. spring wheat acres are expected to rise more than four percent.
U.S. durum area was forecast to rise two percent to 2.61 million acres.
Barley acreage is expected to drop by more than 12 percent, but oats acreage will increase by more than four percent, the USDA predicted.
Canola area is expected to climb to 1.05 million acres, up 20 percent from last year, but similar to 2003.
The biggest impact for Canadian farmers could be the USDA’s expected 75 percent increase in flax acreage, which would be a crop of more than 900,000 acres.
“It’ll produce another competitor” in export markets, said Errol Anderson of Pro Market Communications in Calgary.
But it’s nothing to fear.
“There’s lot of weather ahead, and lots of opportunities for the flax crop to be limited in size,” he said.
The big U.S. flax area shouldn’t yet knock new-crop flax bids out of a range of $6.50-$8.50 per bu., he said. That range should survive until production is more secure.
