PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 20:20 GMT, Tuesday, 11th Jul 2017, by Mike Verdin
Ags revive from early lows, but not all post positive closes

Ags found headway difficult on Tuesday but not impossible, at least for grains, which recovered a bit of poise as fears for US weather reasserted themselves.

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 year production."

'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 May.

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 a bushel, only 0.1% down.

Soybean futures for November rebounded from a low of $10.22 a bushel to finish at $10.43 a bushel, up 0.4% on the day, so recording an outside day higher in theory, a positive indicator.

'Stronger-than-expected thunderstorm cluster'

The better closes actually reflected the outcome of a three-act session.

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," 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.)

'Legitimate concern'

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.

Data ahead

Furthermore, there was the complication of the USDA's much-anticipated Wasde world crop supply and demand briefing on Wednesday to factor in

"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 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.

AM markets: corn, soy struggle despite US crop deterioration
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