May 1 was the kind of day that shows what happens when you spook shorts.
Speculators bailed on short winter wheat positions after heavy snow hit the United States southern plains over the weekend, driving winter wheat futures more than 20 cents per bushel higher, with Kansas City nearby futures rising 28 cents.
The snow doesn’t likely change much in terms of wheat’s glutted situation around the world, but it triggered caution.
“You’ve got a market that’s heavily short. They have luscious profits. They’re not going to hesitate to cash them and put the money in the bank,” said Ken Ball, a broker with P.I. Financial.
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That’s how Jon Driedger of FarmLink Marketing saw it too.
“Funds are basically record short coming into this,” said Driedger.
“You get some short-covering, push through some chart signals, you get some additional buying and so you get an additional sugar rush of short-covering.”
Minneapolis futures rose, but not nearly as much.
The snow hit parts of western Kansas, Nebraska and Oklahoma and was heavy, estimated at 20 to 35 centimetres deep. Some crops are believed to have suffered stem damage from the weight. It will take several days to determine how much damage has occurred and how readily crops can recover.
Frost damage is also said to have occurred, with temperatures below freezing for a few hours in some areas.
Fall-seeded canola was also hit by the snow and frost, with some crops in bloom.
Damage estimates will be sketchy for a while.
Corn futures rose 10-11 cents per bushel, gaining from the wheat rally and the speculation that the storm had hit the corn belt with enough moisture and cold to slightly challenge seeding progress and prospects for already planted crops.
However, Ball thought the rally was hard to justify on lasting fundamental factors, with the snow and frost probably not enough to seriously challenge most crops.
“Ultimately, it’s all precipitation,” said Ball.
“In the end, snow makes grain.”
Driedger said the rally could continue for a second or third day just on short-covering, and following the trend of the last week.
But it’s hard to view the May 1 dramatic action as the beginning of a bull move in wheat. Rather, it’s most likely to be part of a bounce against the continuing bear market in wheat.
“You’d really need some significant loss of yields and production, not just in the U.S. but elsewhere to turn this thing around,” said Driedger.
May canola, which is little traded and will expire soon, rallied $14.50 per tonne.
Most-traded July rose only 90 cents or 0.17 percent, falling behind the gains of soybeans and soybean oil futures, which both climbed more than one percent.
New crop canola climbed over the $500 level, closing at $501.20.
U.S. CROP PROGRESS
After the market closed the USDA weekly crop progress report said that as of Sunday, 34 percent of the corn crop was in the ground, Behind last year’s rapid pace of 43 percent but right in line with the five year average of 34 percent.
Soybean planting rose to 10 percent, which was better than last year’s pace of seven percent and the five year average of seven percent.
It kept the condition of the winter wheat crop unchanged. The impact of the snow and frost will show up in the following weeks.
Spring wheat planting was lagging at 31 percent complete, compared to 52 percent last year and the five year average of 46 percent.
OUTSIDE MARKETS
Light crude oil nearby futures in New York were down 49 cents to US$48.84 per barrel.
In the afternoon, the Canadian dollar was trading around US73.09 cents, down from 73.22 cents the previous trading day. The U.S. dollar was C$1.3682.
Winnipeg ICE Futures Canada dollars per tonne
Canola Jul 2017 515.60 +0.90 +0.17%
Canola Nov 2017 501.20 +1.80 +0.36%
Canola Jan 2018 505.80 +2.40 +0.48%
Canola Mar 2018 510.30 +2.60 +0.51%
Canola May 2018 512.30 +2.50 +0.49%
Milling Wheat Jul 2017 245.00 +4.00 +1.66%
Milling Wheat Oct 2017 242.00 +4.00 +1.68%
Milling Wheat Dec 2017 244.00 +3.00 +1.24%
Durum Wheat Jul 2017 272.00 unch 0.00%
Durum Wheat Oct 2017 264.00 unch 0.00%
Barley Jul 2017 138.00 unch 0.00%
Barley Oct 2017 140.00 unch 0.00%
Barley Dec 2017 140.00 unch 0.00%
American crop prices in cents US/bushel, soybean meal in $US/short ton, soy oil in cents US/pound
Chicago
Soybeans May 2017 959.00 +14.75 +1.56%
Soybeans Jul 2017 970.25 +14.75 +1.54%
Soybeans Aug 2017 971.50 +14.75 +1.54%
Soybeans Sep 2017 967.00 +13.50 +1.42%
Soybeans Nov 2017 964.50 +12.00 +1.26%
Soybeans Jan 2018 971.25 +12.25 +1.28%
Soybean Meal May 2017 314.30 +2.90 +0.93%
Soybean Meal Jul 2017 318.60 +3.40 +1.08%
Soybean Meal Aug 2017 319.50 +3.20 +1.01%
Soybean Oil May 2017 31.89 +0.45 +1.43%
Soybean Oil Jul 2017 32.16 +0.44 +1.39%
Soybean Oil Aug 2017 32.27 +0.45 +1.41%
Corn May 2017 369.25 +11.50 +3.21%
Corn Jul 2017 377.50 +12.00 +3.28%
Corn Sep 2017 384.75 +11.25 +3.01%
Corn Dec 2017 394.50 +10.75 +2.80%
Corn Mar 2018 404.00 +10.00 +2.54%
Oats May 2017 243.25 +4.25 +1.78%
Oats Jul 2017 239.50 +11.75 +5.16%
Oats Sep 2017 231.75 +6.75 +3.00%
Oats Dec 2017 223.50 +3.75 +1.71%
Oats Mar 2018 225.00 -0.75 -0.33%
Wheat May 2017 442.75 +24.25 +5.79%
Wheat Jul 2017 456.00 +24.25 +5.62%
Wheat Sep 2017 468.75 +23.50 +5.28%
Wheat Dec 2017 490.00 +22.25 +4.76%
Wheat Mar 2018 507.00 +20.50 +4.21%
Minneapolis
Spring Wheat May 2017 549.75 +9.75 +1.81%
Spring Wheat Jul 2017 562.75 +8.75 +1.58%
Spring Wheat Sep 2017 567.50 +7.25 +1.29%
Spring Wheat Dec 2017 573.25 +5.75 +1.01%
Spring Wheat Mar 2018 580.50 +6.00 +1.04%
Kansas City
Hard Red Wheat Jul 2017 465.75 +29.00 +6.64%
Hard Red Wheat Sep 2017 479.50 +27.25 +6.03%
Hard Red Wheat Dec 2017 501.50 +26.00 +5.47%
Hard Red Wheat Mar 2018 514.25 +24.25 +4.95%
Chicago livestock futures in US¢/pound (rounded to two decimal places)
Live Cattle (P) Jun 2017 124.12 +0.04 +0.03%
Live Cattle (P) Aug 2017 120.18 +0.30 +0.25%
Live Cattle (P) Oct 2017 117.90 unch 0.00%
Feeder Cattle (P) May 2017 148.60 +0.12 +0.08%
Feeder Cattle (P) Aug 2017 153.75 +0.17 +0.11%
Feeder Cattle (P) Sep 2017 153.68 +0.10 +0.07%
Lean Hogs (P) May 2017 66.12 -0.80 -1.20%
Lean Hogs (P) Jun 2017 73.28 -0.70 -0.95%
Lean Hogs (P) Jul 2017 74.88 -0.34 -0.45%
