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Excess rain replaces drought as main market worry

It is hard to believe that the worst drought in decades last year in the U.S. Midwest is being followed by the wettest spring in Iowa in the 141 years that records have been kept.

Ed White’s travels described on previous pages shows the moisture continues into North Dakota.

It is pretty wet in parts of the Canadian Prairies too, although central and northern areas are dry.

The water has delayed seeding, likely resulting in fewer sown acres than were expected just a few weeks ago. The weather problems stopped the early May crop price declines, but it is not clear if they will generate a real rally.

An average of responses to a Reuters poll of analysts puts U.S. corn area at 95.11 million acres, down from U.S. Department of Agriculture’s estimate of 97.3 million.

Soybean acres are seen at 78.24, up from USDA’s estimate of 77.1 million.

USDA might adjust its acreage outlook in its next monthly report June 12 or it might wait until its next acreage survey, due for release June 28.

In Canada, the CWB believes summerfallow acres will be millions more than the record low amount farmers expected in the Statistics Canada March 31 seeding intentions report. StatsCan’s seeded area report comes out June 25.

In the U.S., the question hanging over the market is whether the adage “rain makes grain” will be proven or will late seeding hurt yields.

Technical analysts early this week suggested that if concern about wet fields pushed corn prices above resistance points, at about $6.685 in the July contract and $5.7375 in the December, then a rally was possible to drive it up to another resistance point in the December contract a few cents higher than $6, a high not seen since January.

On Monday this week, the price failed to break the $5.7375 resistance, sparking an immediate 20-cent decline before recovering a little.

Prices remained at a point where more production-negative news could push vales a bit higher or neutral-to-positive news could push them significantly lower.

In wheat, the excess moisture in the U.S. is coming at a bad time when it might not help yield but could lead to disease and quality declines in hard and soft winter types just as the combines are about to come out.

Another factor in the wheat market is a belief among analysts that the export potential from the Black Sea is a few million tonnes less than USDA’s current forecast.

Globally, wheat production might not be as large as was expected a few weeks ago but the market still expects to be adequately supplied.

The corn market is tighter and so has greater potential to spark significant price moves. The crop is now mostly in the ground albeit fewer than expected acres. As always, weather will dominate the summer trade. Will a wet June follow a soggy May?

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