The Good: Wheat futures moved lower today but spring wheat futures were mostly mixed with nearby contracts trading on both sides of unchanged. Winter wheat futures were down three to five cents per bushel. At the same time the bids for the latest GASC tender were released which showed an increase of over US$13 per tonne to US$225 per tonne. The question one has to ask is “If the global wheat situation is so bearish, why are FOB prices rising?”.
The Bad: New crop corn sales were 2.39 million tonnes, which pushed the total new crop sales to 15.8 million tonnes. The 2020-21 crop year will have the largest sales going into the crop year since 1995. The U.S. drought monitor continues to show worsening drought conditions in the western Corn Belt. This, one would think, would be a bullish day for corn, but futures dropped by five cents per bushel. In order for wheat prices to move higher in the coming months, corn prices need to stay strong, so today’s weakness is not a good sign for grain markets in general.
The Ugly: The improvement in the jobless claims to 881,000 last week was partially due to a new procedure for reporting the claims data. Nevertheless the filings continue to show an economy that is not on a robust path. The monthly employment data is going to be released tomorrow morning and the market is expecting a number below 10 per cent for the unemployment rate. It is very hard to see how this economic recovery is V-shaped.