How much unfulfilled buying pressure was left over in cotton in the last session?
Then, the New York December contract locked up the exchange
limit on daily price moves of 3.00 cents a pound, lifted by worries over Hurricane
Irma, which is currently over the Caribbean, and heading for Florida.
But the market was notably more muted on Wednesday, with the
lot hitting 75.50 cents a pound, a gain of just 0.8% (albeit setting a
five-month high) before falling back again.
As of 09:45 UK time (03:45 Chicago time), the contract stood
at 74.83 cents a pound, down 0.1% on the day.
The threat of Irma appears to have receded a little, with the
centre of Irma, up to the 120-hour forecast, seen staying clear of the US, heading
to the west of Florida, according to the US National Hurricane Center.
That said, even of landfall "doesn't quite happen, the heavy
rainfall that will follow the storm is a threat to cotton crops in the US South
East, the nation's second biggest producing region", said Tobin Gorey at Commonwealth
Bank of Australia.
And where then? There is the possibility that the storm
would then veer off east into the Atlantic, a course which, from the
perspective of US cotton output would be benign.
The big worry for the market is that it heads north or a bit
"The threat lies in Irma entering the Gulf of Mexico and
heading up towards the Delta, Mid-South cotton states," said traders at Ecom.
This could bring fresh crops into the line of fire for
hurricane damage, after the Texas and Delta ones tested by Hurricane Harvey.
'Very bad feeling'
"God forbid if this huge storm tracks toward the heart of
the Gulf of Mexico and the warm waters in place there," said Ron Lee at Georgia-based
"It is not forecast to do that, but each update seems to
shift the storm more west than east."
Mr Lee added that "normally I would tell you and relay the
same message that nine times out of 10, tropical storms and hurricanes are
selling opportunities" in the cotton market.
"However, since Harvey hit and since Irma developed, I have
had a very bad feeling about the potential of this storm and its impact on the
cotton crop here in Georgia and up the east coast"
Still, as an extra support for bears, the weekly US
Department of Agriculture crop progress data underlined that damage to US cotton
from Hurricane Harvey had been localised.
Sure, the Louisiana crop suffered particularly, with its "good"
or "excellent" rating down 14 points week on week to 49%.
But the figure for Texas was nudged 1 point higher to 59%,
helping the national crop rating figure hold steady at 65%.
on a Wednesday'
Futures in fellow row crop soybeans eased too in Chicago, with Benson Quinn Commodities
cautioning that the contract was "becoming overbought on the daily charts while
the weekly and monthly are just starting to turn higher.
"'Turn-around Tuesday' on a Wednesday seems an appropriate
way to start the week for beans."
Not that losses were huge, with the November contract down
0.2% at $9.67 a bushel, remaining comfortably above the 100-day moving average
it broke back above in the last session.
Indeed, Irma has some worries for this market too, in terms
of disrupting early US harvesting.
The hurricane "could track into the Gulf an impact soybean
harvest in the Delta," Benson Quinn Commodities said.
'Concerns about later-planted
Furthermore, there remain worries about cool and dry weather
in parts of the Midwest.
CHS Hedging said that "forecasts for cool dry weather this
week raise concerns about whether the later-planted crop can, or will reach
full maturity" – comments actually aimed at corn, but which reflect market concerns on soybeans too.
And Chinese demand is seen reviving, after a string of
orders of US soybeans announced by the USDA through its daily alerts system.
The weekly USDA US soybean crop condition rating, at 61%
good or excellent, was unchanged week on week at 61%, with a drop in the
Louisiana Mississippi readings balanced out by small improvements in more major
growing states, including Iowa and Illinois.
Mato Grosso upgrade
For corn, the UDSA
crop condition reading did fall, by 1 point to 61% good or excellent, although this
is hardly unusual for the time of year.
A bigger point in bulls' favour was the rating of crop
maturity, which at 12% was 6 points behind the average, and spoke indeed of a
crop potentially to be tested by dry and cool Midwest weather.
That said, on the positive side for world corn supply
expectations, the Imea institute raised its forecast for corn production in
Mato Grosso, Brazil's top producer of safrinha crop (the source of teh country's
corn exports) to 30.45m tonnes, from 29.5m tonnes.
Chicago corn futures for December eased 0.2% to $3.57 ¾ a
better, gaining 0.1% to $4.43 ½ a bushel in Chicago for December delivery,
helped by further gains in prices in Australia, where dryness is gaining fresh
The January east coast contract on Sydney's ASX exchange settled
up a further 1.2% overnight at Aus$266.40 a tonne, taking gains so far this week
"The worry factor for Australian crops is bolstering prices,"
CBA's Tobin Gorey said.
Russia, meanwhile, did its bit for wheat bulls, in terms of
a strengthening rouble, which gained
0.2% against the dollar to make the
country's exports of assets such as its huge wheat supplies that much less
Furthermore, Russian Agriculture Minister Alexander Tkachev
told the RIA news agency that the country needed to remove 3m tonnes of grain
from the domestic market, potentially by intervention buying, to stabilise
prices in the face of a huge 110m-tonne harvest, on the ministry's estimates.
He also forecast Russia to export 30m tonnes of wheat in
2017-18 – a record, but below figures of as high as 32m tonnes seen from some
Statistics Canada will later release inventory data as of the
end of July, which may have a particular impact on wheat and canola markets. Agrimoney.com
apologises for Tuesday's premature announcement of these statistics.