How low can wheat futures go?
They extended losses in early deals on Friday. This after in last session ending 2.9% lower in Chicago at their weakest finish of 2017, for the best-traded July contract.
The spot May lot, for which expiry is approaching, set a contract closing low.
Hedge funds, importers
The trouble for wheat is of course the extent of world supplies, which look like remaining ample for 2017-18, despite historically weak sowings in the US.
Market forecasts for April 21 StatsCan data on Canada's 2017 sowings prospects, (2016 area)
All-wheat: 22.4m acres, (23.212m acres)
Range of forecasts: 21.4m-23m acres
Includes durum: 5.0m acres, (6.19m acres)
Range of forecasts: 4.7m-5.7m acres
Canola: 21.3m acres, (20.367m acres)
Range of forecasts: 19.5m-22.5m acres
Barley: 6.0m acres, (6.39m acres)
Range of forecasts: 5.7m-6.4m acres
Soybeans: 5.9m acres, (5.467m acres)
Range of forecasts: 5.6m-6.1m acres
Lentils: 5.1m acres, (5.86m acres)
Range of forecasts: 4.5m-6.1m acres
Sources: StatsCan, Reuters
And this is being reflected not just in selling by hedge funds, which have raised their net long within record highs (weekly regulatory data after the close of trading in Chicago will reveal any changes in that situation.
The dynamic is also being seen in a lack of enthusiasm among importers for buying.
Analysis of US Department of Agriculture estimates for 2016-17 shows the world's wheat inventories are being built up in exporting countries, and China.
By contrast, "carryout stocks in the world's wheat importing countries are expected to fall 16% year over year to 67.1m tonnes," a figure 11% below the five-year average, US Wheat Associates noted.
Presented as a proportion of world stocks, the trend looks even more stark, with importers expected to end this season with 27% of world wheat inventories, "down 10 percentage points from the 5-year average".
US Wheat Associates, which promotes US wheat exports, added that the decrease in importer stocks "is due in large part to a shift in purchasing behaviour.
"Four consecutive record production years have enticed many buyers to adopt a 'just-in-time' approach to take advantage of the lower prices and reduce storage costs where possible," US Wheat Associates analyst Stephanie Bryant-Erdmann said.
"That is why ending stocks in the top 20 markets for US wheat, excluding China, are expected to cover just over two months of consumption."
Kansas drought eradicated
Both this dynamic, and the large hedge fund short, hold out the potential for quite some buying pressure ahead, if – in fact, when - these investors are tempted to reverse their stances.
But it looks like it will need more than the current threats to production to inspire such second thoughts, especially with rains easing concerns over dryness in the US southern Plains, hard red winter wheat country.
The proportion of Kansas, the top wheat-growing state, rated in drought has fallen to 0.3%, from 8.6% last week, and 31% at the start of the year, US Department of Agriculture data on Thursday showed.
'Dry and cold weather is persisting'
Where there are live concerns is in Europe, where Agritel reported a "worrying climatic context", thanks to late frosts and dryness.
"Dry and cold weather is persisting," the Paris-based consultancy said, adding that "operators are hoping that conditions will change with the new moon from April 26".
UK-based CRM AgriCommodities flagged forecasts of frosts for north eastern France and Germany, "although greater risks lie in the persistent dry conditions observed across western Europe".
Agritel flagged "erratic" weather in Ukraine, and some parts of Russia too, saying that "the recent snow fall in oblasts of Dnepropetrovsk, Zaporojie and Kharkov is delaying the progression of sowing, raising fears of a negative cold impact on spring crops which have just germinated.
"Same thing in the region of Lipetsk in the middle of Russia where a 10cm snow layer was observed at the beginning of the week."
There are also some spring wheat concerns in the northern US and Canada too, with wet weather seen slowing the pace of early seedings.
The issue of Canadian plantings will come into focus later, with data from Statistics Canada on farmers' seeding intentions, expected to show all-wheat area of 22.4m acres, below the 23.3m acres planted last year.
This figure includes durum sowings pegged by the market at 5.8m acres, down from 6.4m acres in 2016.
In fact, spring wheat futures for July added 0.1% to $5.35 ¾ a bushel in Minneapolis as of 09:20 UK time (03:20 Chicago time), rebuilding premium over Chicago winter wheat, the world benchmark, which fell by 0.2% to $4.20 ¾ a bushel for July delivery, closer to a contract low of $4.20 a bushel.
Tobin Gorey at Commonwealth Bank of Australia flagged as a "likely catalyst" the tensions between Russia and Turkey – Turkey being a major market for Russian wheat exports.
"Some [Russian] wheat cargoes have been diverted elsewhere which will drag prompt pricing down sharply for a short period," Mr Gorey said.
Canola vs soybeans
Where the rains soaking Canada's Prairies have been more successful in raising flat prices, as well as spreads, is with canola, which added a further 0.2% to Can$516.60 a tonne in Winnipeg for July.
That took to 5.8% the contract's gains so far this month, or 4.6% in dollar terms, outperforming a flat start to the month for rival oilseed soybeans in Chicago.
"The market is pricing itself as though wet conditions in Canada's Prairies are a significant problem," CBA's Tobin Gorey said.
"Canola's premium to soybeans in the old crop contracts has rallied to extremely high levels," going in the May contracts "from $2 a tonne to near $40 in the space of a month".
Soybeans did manage some headway themselves, although by a marginal 0.1% to $9.57 ½ a bushel in Chicago for July delivery.
This reclaimed only part of the losses of the last session, when the oilseed was pressed by poor US weekly export sales data, at 211,000 tonnes for 2016-17, down 48% week on week, and just 14,000 tonnes for next season.
Joe Lardy at CHS Hedging, terming the data "underwhelming", said that 2016-17 soybean export sales were the second lowest of the marketing year.
"What is more concerning is the pace of new crop sales. At 2.6m tonnes, the total is only slightly ahead of last year, but well behind every year going back to 2010.
"This is especially concerning since South America is harvesting a record crop and if their export tail is longer than usual, it could really cut into US export potential."
Corn vs wheat
Corn, however, sided with fellow grain wheat and fell in early deals, by 0.3% to $3.63 ¼ a bushel for July delivery, amongst its lowest levels of 2017.
As well it might.
Sure, rains in the Midwest are slowing sowings, and offering some cause for risk premium.
"Slow planting in the US Midwest remains on the market's radar," Mr Gorey said, if adding that "forecasters say some key growing regions should get some respite from the wet weather over the next few days.
"Planting should have a chance to advance before more significant rains return next week."
But on the demand side, wheat's tumble has left it looking tempting for uses, such as feed, where it is an alternative to corn.
'Illuminated the tightness of US stocks'
One commodity which in the last session broke ranks with bearish feel in other row crop markets was cotton, which in the last session added 1.0% in New York for July, and gained a further 0.2% to 79.27 cents a pound in early deals on Friday.
Louis Rose at Rose Commodity Group flagged "constructive" US weekly export data released on Thursday.
While sales of 237,000 running bales, upland and pima cotton combined, were lower week on week, it remained a decent figure.
And actual exports pf more than 367,000 running bales remained robust.
The data released "continued to illuminate the tightness of US old crop stocks", Mr Rose said.
"Our calculations show that only around 1.35m bales remains available for sale from the 2016 crop," with much of this already accounted for – eg through 300,000 bales certified for delivery against New York derivatives, and 540,000 bales "listed as committed on-call" for pricing against futures.
May vs July
Indeed, there may be some technical factors in play, if some investors feel the imminent expiry of the May contract, on May 8, could force, say, a squeeze on those with cotton to price.
Mr Rose said that the jump in the May contract to a premium over July in the last session "suggests that there are takers of ICE certificated stock against the May contract".
The May contract added a further 0.1% to 80.15 cents a pound.
Elsewhere, back in the oilseeds complex, palm oil added 0.4% to 2,513 ringgit a tonne, gaining support from canola, an oil-heavy oilseed, as well as hopes for a pick-up in demand ahead of Ramadan.
"Ramadan typically sees higher consumption of palm oil for cooking purposes in regions such as India and the Middle East, as day-long fasts end with communal feasting," Oriental Pacific Futures said.