Friday March 12, 2021

• Soybeans continue to spill lower at the end of the week as beneficial rains for Argentine crops are forecasted for the weekend
• U.S. wheat crop also looking to see some welcome rains over the weekend 
• The Buenos Aires Grains Exchange has lowered their production estimate for Argentine soybeans and corn – from 46 to 44 MMT and 46 to 45 MMT respectively due to the ongoing stress on the crop due to a dry season 
• Initial conditions ratings from France has soft wheat at 88% good/excellent – far above the 63% g/e rating last year 
• Grain trade association Coceral reduced their estimate for European soft wheat production for 2021 from 143 to 141.5 MMT due to crop stress in Germany, Italy and Hungary – however production still well set to exceed last years 128.2 MMT
• Funds position limits are changing as of Monday March 15th – what does this mean and how may it affect crop prices?
  • Currently spec funds – for example Hannah Simpson Spec Ltd can buy or sell a limit of 600 contracts per commodity at a time 
    • So HSSL if they were bullish and thought the market would continue to go up – could buy 600 corn contracts – hoping the price will go higher so they can sell them at a higher price
  • As of Monday that limit is changing to 1200 contracts. 
  • So that means that funds will be able to double their positions if they want to which will add even more volatility – potentially creating even higher highs and lower lows and allows a whole lot more money to enter the market place
  • This does not mean all the sudden spec funds will double their positions but this change will be something we will be watching closely to see the effects it will have on our commodity prices.