Weather development unsettles stock market players - Time of the weather markets - Status 20.06.2013
The stock market prices for grain and oilseeds currently lack any fundamental orientation. The constant ups and downs in prices are attributed to differing assessments of future weather developments and the uncertain status of harvest estimates. This brings back the negative experiences of last year. At the same time last year in mid/end June, a bearish market trend was expected for 2012/13 and then came a week-long drought in the USA and the Black Sea region and the bulls were off.
The latest weather reports predict a "heat dome" for the US Midwest in the coming week. Fears of a similar development to last year are being voiced and are reflected in hectic upward price movements.
The bullish prices are supported by reports from forecasting institutes (Informa Economics and Lanworth), whose latest statements, supported by satellite images, assume significantly lower crop estimates than the latest results of the USDA forecast. "Lanworth expects a wheat harvest of 52 million tons for Russia and 19.1 million tons for Ukraine. However, the first threshing results in the Black Sea region, which were brought forward by around 15 days, suggest favorable yields.
The harvest result for wheat in China is expected to be around 3 million tons lower. It is unusual to note that China has purchased 200,000 tons of wheat for delivery in the autumn months.
The global wheat harvest is estimated at 693 million tons, or 3 million tons below the latest USDA figures.
"Informa" decreases US soybean area by 530,000 acres to just under 77.8 million acres. Still being sown. The US bean crop remains at an estimated 91.6 million tons.
Some stock market participants believe that wheat and corn are undervalued and soybeans are overvalued.
The American price changes are also partly affecting Paris. The recent heat wave in Europe is causing grain to ripen more quickly, resulting in lower yield prospects. In addition, a strong euro exchange rate is distorting price trends.
ZMP assessment: The phenomenon of the weather markets will remain with us for a few more weeks before a clear line can be drawn.
