Contrasting weather conditions and the responses of speculative traders remain the key market influences this week according to Helen Plant, senior analyst at AHDB.

For soya bean prices and rapeseed prices, the critical issue is the uneven rainfall in South America. This is slowing soya bean planting in Brazil and makes for challenging growing conditions. In Brazil, soya bean planting is now 65% complete according to Conab but still well behind the past few years. More rain is expected this week and next, but there’s uncertainty about how much and where.

Reflecting the recent price rises, speculative traders are buying into Chicago soya bean futures, potentially adding further support to the upward movement. As of last Tuesday, ‘managed money’ held a sizeable net-long in Chicago soya bean futures, a tactic often used by speculative traders to profit from price rises. Speculative traders hold a net-long position in Chicago soya beans but are short in wheat and maize.

The weather is also likely to impact maize production as most Brazilian maize is planted after the soya beans are harvested, known as the Safrinha crop. For now, this has only given maize prices a small lift. But speculative traders are still net-short in Chicago maize and have been for a few months now, a tactic often used to profit if prices fall. So, if Brazilian weather concerns sparked a rally in global maize prices, speculative traders may need to adjust their positions in Chicago maize futures, which could well add to any rally.

Meanwhile, US wheat futures prices remain under pressure. As of last Tuesday, speculative traders held a net-short position in Chicago wheat futures, and anecdotal reports suggest they may have extended this over the past week as reported by LSEG.

This arguably reflects the recent pace of US export sales, plus a good start for the 2024 US winter wheat crop. 48% of the crop is in good/excellent condition according to the USDA. This is up from 47% a week before and the best for the time of year since the 2020 crop. This said maize will influence the outlook for wheat prices. If maize prices rise, sooner or later wheat needs to follow to avoid too much animal feed demand switching from maize to wheat.