The market’s attention has shifted from concerns about dryness to worries about too much moisture.
Recent rains on the Prairies have been mostly welcome, particularly on the western half of the grain belt.
But in U.S. corn and soybean growing areas, repeated downpours are raising concerns that the soggy soils might reduce production of the two key crops. Rainfall totals in many locations in the Midwest ranged from 150 to 250 millimetres in May, well up on the normal 80 to 120 mm.
The American grain futures markets were closed for Memorial Day as this was being written, but expectations were that the weekend storms would support prices when trading resumed June 1.
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While the immediate concern was about seeding delays and flooded acres, the wider impact might eventually serve to depress prices. The adage that rain makes grain is true and improved yields from wet, but not flooded areas usually make up for acres that were damaged. The full impact will depend on whether the heavy rain continues.
Nevertheless, the immediate price support from the weather woes in the U.S. partly offset continuing negative market news from China where soybean crushers are reeling from an oversupply of expensive imported soybeans and weak demand and prices for oil and meal.
Chinese buyers have recently rejected several Brazilian soybean shipments, saying they were tainted with seed treaded with a fungicide used to combat Asian soybean rust.
There is speculation that the rejections might have more to do with the high price of the beans than the concern for food safety.
There was good news May 31 when it was revealed that Chinese crushers had met on the weekend and agreed on a minimum price for soy meal, recovering some market power that had shifted decidedly in favour of soy meal buyers. Soybean prices in China rose on the news.
