Ags found headway difficult on Tuesday – but not impossible,
at least for grains, which recovered a bit of poise as fears for US weather
Soft commodities closed broadly lower, if comfortably above
intraday lows, amid comfortable ideas for supplies.
New York cocoa,
for instance, ended down 1.1% at $1,817 a tonne for September delivery, after
data on the European cocoa crush for the April-to-June period, up 2.1% at 331,850
tonnes, came in at the bottom end of market expectations of 2-3% growth.
And this on top of ideas of strong production in the key
West African region.
"Harvest activities in West Africa are completed [for
2016-17], and development of the next crop is called good," said Jack Scoville
at US broker Price Futures.
"All of the countries in the region expect higher year on
'Pressuring the price'
In London, robusta
coffee for September eased by 1.3% to $2,072 a tonne, after official data
showed Vietnamese exports last month at 122,000 tonnes – the same figure as for
That was above market estimates of a figure of
90,000-120,000 tonnes, and eroded a touch the idea of tight Vietnamese supplies
after a weather-affected harvest.
Meanwhile, New York raw
sugar for October ended down 0.9% at 13.44 cents a pound, although recovering
from a low of 13.21 cents a pound.
Commerzbank flagged the negative influence of India's lift
to 50%, from 40%, in duty levied on sugar imports, making them "more expensive
and thus less attractive.
"As a result, more supply will remain on the world market
for which buyers will need to be found elsewhere.
"This is pressuring the price."
'Look quite damaging'
However, in the grain markets, futures proved a touch more vigorous
in their recoveries, with soybean futures reviving to end higher for an 11th
successive session, November basis, building on their longest winning streak
since 2012, an avoiding a dent to their chart too.
"Both corn and soybeans are working on putting in
outside-day-lower trading sessions, which would look quite damaging to the
technical structure of these markets," said Benson Quinn Commodities.
Outside-day-lower trading means futures swinging beyond the boundaries
of the previous session, and ending in negative territory, and is indeed viewed
as a negative technical indicator.
But corn futures for December, the best-traded contract,
revived from a low of $4.07 a bushel to end at $4.14 ¼ a bushel, only 0.1%
Soybean futures for November rebounded from a low of $10.22 ¼
a bushel to finish at $10.43 ¼ a bushel, up 0.4% on the day, so recording an outside
day higher – in theory, a positive indicator.
The better closes actually reflected the outcome of a
In very early deals, futures traded higher, after US
Department of Agriculture weekly crop condition showed bigger-than-expected
drops in US corn and soybean crops.
However, reports of crop-friendly rains in much of the Corn
Belt, from Iowa to Ohio, then curtailed gains.
"During the overnight hours a stronger-than-expected
thunderstorm cluster known in the weather business as a "MCS "
developed over southern central Iowa that moved into south eastern Iowa, then
into north west Illinois," WxRisk.com said.
Furthermore, Conab, the official Brazilian crop bureau,
raised to 96m tonnes from 93.83m tonnes its estimate of the domestic corn
harvest in 2016-17, citing higher sowings and yield figures for the safrinha
crop currently being harvested.
(The estimate of the 2016-17 Brazilian soybean crop was left
unchanged at 113.92m tonnes.)
However, the revival was spurred by ideas that poor crop
conditions lie ahead after all.
"As the [US] morning has progressed, there was realisation
that the models are certainly not wetter next week," said Darrell Holaday at
Kansas-based Country Futures.
"The weather concern is still alive and well.
"We believe the concern is west of the Mississippi River,
but we do believe it is a legitimate concern."
While there is some rain in the Corn Belt outlook, "areas
that don't receive it this week will be under significant stress by the end of
next week," with a particular focus on corn,
going through its heat-sensitive pollination process.
Furthermore, there was the complication of the USDA's
much-anticipated Wasde world crop supply and demand briefing on Wednesday to
"We are probably due for a bit of profit-taking on this
Turnaround Tuesday, but doubtful markets are going anywhere fast given the
forecast and ahead of the USDA reports tomorrow," said Tregg Cronin at Halo
Commodity Company earlier.
The Wasde is expected to trim expectations for corn and
soybean yields, but by how much? And will the estimates be deemed credible given
figures for corn yield doing the rounds – well below the 170.7 bushels per acre
the USDA is currently factoring in.
"Some private analyst are now pegging the crop at 165
bushels per acre," said CHS Hedging, with lower estimates around too.
Spring wheat question
As for spring wheat,
which has garnered much attention of late thanks to drought in the northern US
Plains and Canadian Prairies growing areas, the Minneapolis September contract
ended down a marginal 0.1% at $7.96 ¾ a bushel, unable to keep its head above
$8.00 a bushel.
Halo Commodity Company's Tregg Cronin said that the good or excellent
rating of 35% applied to the US spring wheat crop by overnight USDA data
implied a yield "of 29.3 bushels per acre".
That compares with 47.2 bushels per acre last year.
"But we are not expecting the USDA to deliver a yield that
low Wednesday," Mr Cronin said, with officials typically cautious over getting
too gloomy too early.
Richard Feltes at RJ O'Brien said that he was hearing "more
talk of a 300m-320m bushel US hard red spring wheat crop," down from 493m bushels
last year, although the USDA was "unlikely to post number that low tomorrow".
Chicago winter wheat recovered
from lows to close up 0.2% at $5.53 a bushel, offered too some help by worries
over crops in the likes of Australia and Europe.