Crop-saving rains in drought areas of the US Southern Plains was the main trigger for a significant sell off in ag futures contracts.
Key producing states of Texas, Oklahoma and Kansas have all received much more rain than was forecast. This bearish input, combined with higher-than-expected soybean selling from Brazilian farmers, and reports of Chinese cancelling US corn purchases, was enough to evoke a heavy round of selling.
Grain merchants around the world will become weather forecasters for the next three months, as well as try to predict what Mother Nature will provide the Northern Hemisphere crops. So far conditions appear to be ideal in the US, okay in the EU and excellent in Russia.
The ‘grain corridor’ is due to expire on May 16th but the market is assuming exports will continue uninterrupted. There is still a lot of pollical uncertainty that could dramatically change trade flows. With so much uncertainty, prices are likely to remain volatile.