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last release: May 2017

Futures Markets

Apr 2017
Average

% Change

M/M

Y/Y

Wheat

154

-1.7

- 10.7

Maize

143

+0.1

- 2.6

Rice

218

+2.5

- 3.7

Soybeans

348

-5.0

-1.7

Source: CME - USD per tonne

  • Futures prices: Prices for soybean fell about 5 percent m/m while prices for wheat and maize barely changed, departing from their usual tendency to react with considerable upward or downward momentum following the USDA March planting intentions report. Despite a slow start to the US planting season, overall conditions remained favourable for crop development in the northern hemisphere while soybean and maize harvests continued apace in South America. A sizable switch in acreage from maize to soybeans was projected in China in the government’s effort to remedy the burdensome surplus of the cereal crop. Among exogenous factors affecting prices, declining crude oil prices appeared to weigh on agricultural commodities. Wheat and maize prices were 10.7 and 2.6 percent lower y/y while soybean prices, which had traded higher y/y for the last eleven months, were lower by 1.7 percent. Rice prices were up by 2.5 percent m/m based on lower than expected planting intentions and quarterly stocks in the US but fell sharply at month end, reflecting a 1.7 percent decline y/y.  
  • Volumes and volatility: Wheat, maize and soybean volumes rose significantly m/m but fell short of record levels. Both implied and historical volatility declined to varying degrees for all three commodities and in the case of soybeans, to the lowest level in a year.
  • Basis levels and transport: Basis levels for wheat, maize and soybeans firmed slightly since the previous month in parts of the interior, conforming to normal seasonal tendencies when producers begin field work. In Illinois the interior bids to local elevators were quoted below the May futures prices at minus USD 11 and minus USD 14 per tonne for maize and soybeans respectively, while in Iowa the bids for the respective crops were minus USD 15 and minus USD 26. Domestic soft red wheat values remained negative relative to May futures prices. Gulf export quotations also were steady for maize at around USD 14 for maize, higher for soybeans at around USD 12 and lower for soft red wheat at around USD 17 – calculated on a per tonne basis over the respective May futures. First quarter export clearances for wheat, maize and soybeans were record at 35.7 million tonnes, led by maize which was up 58 percent from last year. Nonetheless, barge freight declined slightly m/m to USD 13 per tonne (Illinois River to Gulf quotation).
  • Forward curves: Forward curves for wheat and maize remained in a holding pattern of upward slopes (contango) m/m. The soybean curve was fairly flat, maintaining a negligible premium between the July 2017 and November 2017 contracts (the old crop/new crop spread) which once exhibited USD 17 inverse. Maize and soybean deliveries against the May futures of 1 100 and 1 016 contracts respectively were larger than normal, reflecting a well- supplied cash market while wheat deliveries of 441 were about standard.   
  • Investment flows: Managed money extended its bearish strategies in wheat, maize and soybeans, establishing the largest combined net short positions on record (405 000 contracts, over 50 million tonnes). This is a departure from its usual bullish positioning at the commencement of the growing season. Several analysts have remarked that market prices reflect only a negligible weather premium.