Wheat futures will remain volatile
This week there are 5 key reports to watch that could have significant impacts on commodity markets the week of June 2nd, 2024. This Farms.com column tracks key events in commodity marketing impacting the agriculture industry! The series of article shares issues to watch the following week, issues that may have an impact on commodity prices in the coming weeks.
By Devin Lashley
Farms.com Risk Management Intern
1. Keep an eye on the price of wheat as more bad news continues to befall the Russian wheat crop. Russian wheat faces growing challenges, with current crop estimates dropping to the low 80s and potentially mid-70 million tonnes.
Scarce rainfall and rising temperatures, forecasted to be 4-6°C above normal, are exacerbating the situation. These adverse conditions have driven MATIF wheat prices nearly 20% higher since May 1. (MATIF is a private corporation which is both a futures exchange and a clearing house in France, as per Wikipedia.)
A Russian wheat export ban and news that India may import 3-5 mmt of wheat for the first time in six years in the month of June will keep the party going in wheat futures.
2. OPEC+ meeting on June 2 could fail to extend their production cuts and cause more volatility in the crude oil markets. Expectations are that they will extend their 2.2 million barrels per day to the end of 2024 from the end of Q2. They most likely do not have any appetite to bring more barrels to the market. The risk is to the downside if no changes are made.
3. The USDA Crop Progress Report will be released on schedule next week on Monday June 3rd and will likely show planting progress still at a slight delay as it stays wet/soggy through the first week of June.
Recent weather across the U.S. Midwest has delayed planting and has not shown any signs of letting up. Quite the contrary as a long-lasting series of thunderstorms known as a derecho has been wreaking havoc across major planting areas in the U.S. Corn Bet.
Additionally, the first crop condition report of the season may be impacted by said storms as well as late planting. The fund sentiment is that “rain makes grain” but there is a fine line when it is just too much! The month of May was one of the wettest in 132 years for the U.S. Midwest!
4. The U.S. Drought Monitor will be released Thursday June 6th and will likely show continued improvement across major corn and soybean growing areas, as the weather forecast remains wet through mid-June. Will the drought in Mexico finally travel North into the Southern Plains?
5. The U.S. Employment Report comes out Friday June 7th and a lower-than-expected number could help ignite U.S. interest rate cuts. The Bureau of Labor Statistics reported that the U.S. economy added 175,000 jobs in April 2024, the slowest gain in six months and below market expectations.
The unemployment rate rose slightly from 3.8% to 3.9%. With Higher interest rates comes increased borrowing costs, reducing demand for goods, services, and investments, which in turn lowers employment levels due to decreased demand for workers. The U.S. consumer maybe tapped out until interest rates start coming down.
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