Round one went to bears.
Or did it?
Certainly, the first set of data of many to be released on Thursday
– including a monthly report on Brazilian grains from Conab, a twice-monthly
briefing on Brazilian sugar output
from Unica, and the US Department of Agriculture's monthly Wasde tome – looked at
first sight negative for prices.
The Malaysian Palm Oil Board showed Malaysian palm oil inventories far bigger than
investors had expected last month, provoked by the biggest surge in output in
nearly three years.
Still, palm oil futures extended gains after the data, to
stand up 1.3% at 2,664 ringgit a tonne in afternoon deals in Kuala Lumpur.
Which goes to show the difficulties for ag investors of
positioning ahead of key data – not only to judge the figure right, but the
reaction to the data too.
Forecasts for US 2017-18 corn data in Wasde and (existing figure)
Harvested area: 83.418m acres, (83.496m acres)
Range of estimates: 83.1m-83.5m acres
Yield: 166.2 bushels per acre, (170.7 bpa)
Range of estimates: 162.8-168.5 bpa
Production: 13.855bn bushels, (14.255bn bushels)
Range of estimates: 13.59bn-14.07bn bushels
Year-end stocks: 2.003bn bushels, (2.325bn bushels)
Range of estimates: 1.642bn-2.375bn bushels
Year-end stocks, 2016-17: 2.386bn bushels, (2.37bn bushels)
Range of estimates: 2.34bn-2.73bn bushels
Sources: USDA, Reuters
Take the Wasde, on which investors are expected to focus on
and soybean yield estimates, but which could spur contrary forces too.
"Yield estimates are the wild card," Benson Quinn
"If USDA surprises high and the bears sell off the board,
look for end users to come forward to buy any big break" in prices.
"If USDA surprises low with yields, farmer will be a seller
of any rally, while improving soybean crop ratings and ample old crop stocks
should cap upside."
No wonder in corn,
for instance, many investors have quit, taking profits on short bets where possible,
with open interest in Chicago future down more than 80,000 lots over the past
In fact, for corn, the trade is expecting the Wasde to issue
a downgrade in the yield number to 166.2 bushels per acre, from the current
estimate of 170.7 bushels per acre.
Price Futures added its weight to such a figure overnight,
with results of a crop tour of Illinois, a high production state, coming in with
figure for the centre of the state of 190 bushels per acre, down from 196
bushels per acre last year.
The broker flagged a nationwide yield estimate of 166
bushels per acre.
The estimate for "harvested acres could provide a surprise"
also, Benson Quinn Commodities said.
'Unchanged to drier'
For soybeans, for
which August rather than July (which was unduly dry in many Corn Belt areas) is
more of a yield-determining month, investors expect the yield estimate to be
trimmed by 0.5 bushels per acre to 47.5 bushels per acre.
Forecasts for US 2017-18 soy data in Wasde and (existing figure)
Harvested area: 88.669m acres, (88.731m acres)
Range of estimates: 83.3m-88.731m acres
Yield: 47.5 bushels per acre, (48.0 bpa)
Range of estimates: 46.9-48.0 bpa
Production: 4.212bn bushels, (4.26bn bushels)
Range of estimates: 4.165bn-4.307bn bushels
Year-end stocks: 424m bushels, (460m bushels)
Range of estimates: 424m-460m bushels
Year-end stocks, 2016-17: 401m bushels, (410m bushels)
Range of estimates: 370m-420m bushels
Sources: USDA, Reuters
Indeed, some turn less benign in the US weather has been viewed
as one reason for firmness in the oilseed, which nudged 0.3% higher to $9.76 ½ a
bushel for November as of 10:10 UK time (04:10 Chicago time).
"Weather models look unchanged to drier for Iowa, Illinois
and Indiana, with heavy precipitation staying in the Delta region over the next
10 days," said Benson Quinn Commodities.
Resilience elsewhere in the oilseeds complex, in canola futures as well as palm oil, has
been another supportive factor.
"Recent rallies in the soy complex have found support in
both dry weather in the central Midwest as well as in the concerns over the
size of the Canadian canola crop," thanks to Prairies dryness, CHS Hedging said.
Terry Reilly at Futures International said: "Canadian canola
crop worries are aiding to the recent Chicago soybean rally.
"Canadian canola estimates are starting to come in below 18m
That said, canola futures for November in early deals in
Winnipeg stood unchanged at Can$511.20 a tonne.
Canadian dryness is also being monitored in the wheat market, given the country's huge
spring wheat (ie high protein) crop.
Benson Quinn Commodities, noting a "warm and dry" weather outlook
for Canada, forecast the potential for a downgrade in the Wasde from the USDA's
current 28.35m-tonne estimate for Canada's wheat harvest.
"USDA should lower that estimate, with private analysts' estimates
ranging from 24m-27m tonnes," the broker said.
Still, wheat futures dropped nonetheless in Chicago, by 0.4%
to $4.57 ¾ a bushel for September, weighed by improving expectations for
another major producing country, Australia, where rain is relieving drought.
Forecasts for US 2017-18 wheat output in Wasde, (existing figure)
Hard red winter: 756m bushels, (758m bushels)
Range of estimates: 737m-775m bushels
Soft red winter: 307m bushels, (306m bushels)
Range of estimates: 300m-311m bushels
White winter: 215m bushels, (216m bushels)
Range of estimates: 205m-224m bushels
All winter: 1.278bn bushels, (1.279bn bushels)
Range of estimates: 1.258bn-1.293bn bushels
Other spring: 393m bushels, (423m bushels)
Range of estimates: 350m-440m bushels
Durum: 56m bushels, (58m bushels)
Range of estimates: 50m-56m bushels
All wheat: 1.711bn bushels, (1.760bn bushels)
Range of estimates: 1.550bn-1.784bn bushels
Sources: USDA, Reuters
"Weather forecasters' predictions of significant rainfall in
Australia's western crop regions are being realised," said Tobin Gorey at
Commonwealth Bank of Australia.
"And there is probably some more to come. Western
Australia's crop regions are likely on the way to gaining a significant boost
to soil moisture."
East coast wheat futures in Sydney fell by a further Aus$1.00
a tonne to Aus$263.00 a tonne – taking losses over the past month above 15%.
'Looking more bullish
by the day'
In New York, cotton
futures for December eased too, by 0.1% to 71.04 cents a pound.
That said, Ecom remained sanguine on prospects – depending,
of course, on what the Wasde produces.
"December cotton futures have seen a new high made each
session for the last six consecutive sessions," the trading house said.
"The market has been met with buyers each time there is a
small sell off.
"This is looking more bullish by the day for futures,
leading us to believe 72.40 cents a pound may not be too many session away."