Bertrand Oesterle, Vice President, Clearing and Execution Sales at StoneX, details how policy shocks and uneven weather are steering global grain and oilseed prices.
Key Takeaways
Threatened U.S.–EU tariffs and dollar volatility add persistent downside pressure
U.S. spring-wheat ratings shocked, but align with the 5-year average
Speculative funds continue to liquidate rallies, leaving spreads and rolls in focus
Geopolitics and Currency Moves
“We’ve had quite a few elements this week”, Oesterle notes, starting with U.S. budget wrangling that knocked the dollar lower and lifted euro-denominated wheat. The subsequent budget passage reversed the currency move but talk of a 50% tariff on European goods, now postponed until 9 July, rekindled uncertainty. Added to that were intensified Russian strikes near Ukrainian ports and a 50,000-troop build-up on the border.
Tariff Uncertainty and Market Pressure
A federal court ruling calling existing tariffs “illegal” has pushed the issue back into appeal, prolonging ambiguity. As Oesterle points out, “that uncertainty is probably going to mean risk-off attitude for many”. For wheat and rapeseed on Euronext, consecutive shocks kept prices under pressure even before fundamentals came into view.
Crop Ratings and Weather Divergence
Last week’s hope for a wheat rebound was “very short lived”. Beneficial rain eased drought in China’s northern plains, trimming affected area from 25% to 15%, yet yield losses still span 3.5-10 million t, depending on starting estimates. In the U.S., the first spring-wheat rating printed 45% good-to-excellent versus analyst expectations of 71 %, but it nearly matches the 43% five-year average, muting bullish reaction. Corn’s 68% good-to-excellent also fell short of forecasts, while soybean ratings are pending.
Speculative Positioning and Spreads
Managed-money shorts cut 27,000 lots on the brief wheat spike, mainly in September futures. Oesterle notes that the September-December spread remains near –€12 t, signaling that the traditional roll is still ahead. He adds that bears believe the spread could sink to –€30 t if French export demand continues to lag, while bulls expect support nearer –€15 t. In the U.S., July corn slid sharply as physical buyers switched to cheaper, newly harvested Brazilian supply.
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---- Expert: Bertrand Oesterle, StoneX VP of Clearing and Execution Sales
Grains & Oilseeds
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