AgDay TV Markets Now: Ted Seifried Explains Why the Window for a Fund Led Rally in the Grain Markets is Closing

Grains end lower Tuesday on fund selling and U.S. and South American weather.  

Ted Seifried, Zaner Ag Hedge, says improved rain forecasts in Brazil had traders removing weather premium from the market.  "Specifically, what's going on down in Brazil their forecast is for rain and there are more rain chances behind it.  The farther we go along the closer we get to the end of their growing season for that second crop safrinha corn crop in Brazil without any major concerns."  

Seifried says extended forecasts can change but if it doesn't and they get what is advertised for rain in Brazil he thinks the market needs to add bushels to the second corn crop estimate, not subtract them.  "And it doesn't really scream that we're going to have a hot and heavy export season because of shortfall happening there.  So that's a reason to take some weather premium out of the market," he adds.

Weather in the U.S. is also a factor.  Seifried says a few weeks ago the U.S. Drought Monitor showed areas of concern, but plentiful moisture recently has resulted in an improvement, especially compared to last year.  He says the extended forecast for the end of April and May shows there will be some windows of opportunity for planting.  

So, are the grain markets running out of time for a spring weather rally or for the funds to cover their short positions? 

Seifried says that may be the case unless there is a major shift in the weather and a moisture situation similar to 2019.  "But that's what it's going to take because last week the funds were adding to their short positions," he says.