Grains end higher for a third day on speculative short covering and corrective buying.
However, DuWayne Bosse, Bolt Marketing says wheat is still putting in risk premium and pulling corn and soybeans along.
Wheat got a boost from lower winter wheat crop ratings from USDA, which dropped 5% nationally. However, the wheat markets are also putting in weather premium on emerging global crop concerns especially with hot, dry conditions in Southern Russia and parts of Europe.
So, does the wheat market have enough weather premium?
Bosse says, “We might because we’ve got some rains in the forecast for Kansas, so I could see the market slowing down tomorrow and saying well if these rains materialize the crop condition decline will stop. But that was quite a decline in crop conditions the last two weeks in Kansas and Oklahoma. However, rain is critical for wheat development this time of year so if those areas miss it the market will need to go higher.”
July Kansas City wheat is now above the 100-day moving average and even corn is above its 50-day moving average. So, can wheat continue to lead the complex higher and is this the start of a bigger fund short covering rally in corn and soybeans?
Bosse says corn and soybeans are being pulled up by wheat. However, he thinks it might be too early to say it’s the start of a bigger correction.
With planters rolling there is also less hedge pressure or farmer selling on this rally than previous rallies according to Bosse. However, that may change soon with option expiration and first notice day coming up which may force liquidation.
