If there was any doubt about what is driving this market, the market just told you. Weather – predominately corn planting and the increasing risk of an already horrible situation getting worse. The maps show >5 inches to fall through Missouri and into Illinois. These states were, according to the USDA, 52% (vs 87% avg) and 11% (vs 83% avg) planted respectively – another 5 inches certainly wont help get more in the ground coupled with the area that will undoubtably need to be replanted.

This event has been brewing for a while but the market has been reluctant to buy into the story given the gains in efficiency and ability for the farmer to plant fast. However, it feels like we have past the threshold in many states, especially with the forecast.

We’re reluctant to turn into chicken little but it’s not just a simple issue of a smaller planted area. The yield loss across the wider corn crop coupled with outright abandonment of country already planted can potentially magnify this event.

The market is taking notice – aside from price its worth noting that there was a huge spike on absolute volume traded. Given the record short has been the unlit fuse sitting in the corner the question will be how the funds can exit without blowing the market up. 20usc/bu doesn’t get this solved.

Elsewhere the wires are now looking for problems elsewhere in the world – increased talk of dryness throughout Russia – but unlikely this will/can have a meaningful impact however.

Australian weather is less than exciting with little to no rainfall for NSW/Qld on the 8 day forecast. Once again – still time, but patterns not overly encouraging. Markets locally are digesting the approval of a vessel of high protein wheat to be imported into Australia. Given the lack of this kind of protein (APH2 equiv) on the east coast market comparisons to domestic values are difficult at best. With planting delays in Canada and quality concerns in the HRW/SRW belt in the US its reasonable to assume that the import margin for protein wheat has moved negative. However – given how rare it is for our government to approve imports the market will remain sensitive to the precedent this sets, if any.