After days of profit-taking and modest selling in the Chicago soybean pit, prices have once again jumped higher in today's trade.
The Jul-16 contract settled 18 cents (1.5%) higher to close at 1080 cents per bushel. On a rolling spot month basis, the close this evening was the highest in 2 � years.
La Nina fears driving buying
Darrell Holaday from Country Futures noted unequivocally, that "the overwhelming US drought psychology has taken over the entire sector". Referring to the meteorological shift underway from El Nino weather patterns through to La Nina.
La Nina weather models are typically associated with hotter and dryer conditions for the key US spring cropping areas, and as a result, reduced agricultural output. This fear may drive pre-emptive buying from both speculative and commercial traders alike.
But the negative effect on US spring crops is far from established for this particular year. Mr Holaday is quick to note that "projecting long-term weather is a dangerous game" and as it stands right now in the US the "planting progress is certainly not bullish".
Especially with the spring corn crop planted ahead of typical schedule (current plantings standing at 75% versus average pace of 70%) and the season going ahead against the backdrop of "extremely large stock levels".
New-crop corn prices hit six-month highs
In the corn pit, new crop prices broke important ground today after closing above the psychologically important $4 per bushel level.
Prices today consolidated yesterday's close and the Dec-16 contract posted 1.1% gains to close at $4.04. This is an important level for many growers as it allowed them the first opportunity to price their crop at over $4 after planting.
The close today was the highest close since November 2015
German farmers switch crops on price signals
Chicago wheat also managed to carve out solid 1.5% gains across the curve. News from continental Europe showed German forecasted production which reflected lower planted winter wheat and higher planted rapeseed.
As a result, the German wheat crop, EU's second largest producer behind France, is expected to fall by 3.7% year on year to 25.57m tonnes. In contrast German rapeseed production is forecast to rise by 1.8% up to 5.1m tonnes.
Sugar pares early losses
Once again sugar prices were sold off early in the session, only to pare back heavy early losses to close slightly lower, 0.77%, for the session.
Given the strong crushing data from UNICA in the previous session and the near-record speculative long the market continues to show good strength.
