PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 08:52 GMT, Wednesday, 11th Oct 2017, by Mike Verdin
AM markets: grain prices dip, despite rain hit to US harvest

The US corn harvest is progressing even more slowly than investors had expected.

Just 22% had been completed as of Sunday, making it one of the slowest harvests on record, with Midwest rains prompting the delay.

In fact, it is the third slowest harvest in the past 20 years, behind on those in 2009 and 2014. (The 2013 harvest also lagged, although because of the government closedown at the time it is difficult to judge by how much.)

Investors had expected a figure of 26-27%.

'Rain throughout most of the week…'

Signally, harvest is particularly slow in some of the biggest corn producing states, including top-ranked Iowa, where just 8% is complete – 20 points behind the average pace, or "over two weeks" in time terms, US Department of Agriculture scouts said.

"Rain throughout most of the week prevented Iowa farmers from spending much time in their fields," the scouts said, adding that "there were only 2.6 days suitable for fieldwork [last week], the lowest this season since the last week in May".

Only 2% of the Iowa crop was harvested last week.

In Illinois, the harvest, at 38% done, is 14 points behind the average pace, although up 17 points week on week.

"Warm temperatures aided harvest across the state," officials said.

'Soggy field conditions'

Other states with double-digit delays, in percentage terms, included Indiana, Nebraska and Minnesota, where "continued soggy field conditions further delayed soybean harvest, which was still lagging behind the five-year average pace, and hampered the corn for grain harvest".

The Minnesota harvest, at only 4% complete, up 2 points week on week, was 22 points behind the average pace.

Still, the biggest laggard was South Dakota, at 6% done, up 3 points week on week, and 23 points behind the average, as rains which eluded the state for much of the summer, damaging spring wheat yields, arrived en masse.

"Corn and soybean harvest progress remained behind last year and average following another wet week across much of the east," South Dakota USDA staff said.

'Fieldwork should improve'

Still, if those delays might appear to warrant a bit of risk premium, well, it wasn't evident in early deals, with corn futures for December trading down 0.5% at $3.47 ½ a bushel in Chicago as of 08:45 UK time (02:45 Chicago time).

One issue is that the USDA data overnight also showed an improvement in US corn crop condition, by 1 point to 64% rated "good" or "excellent".

Investors had expected a 1-point drop, to 62%.

Furthermore, drier weather is reaching the Midwest, bringing the promise of harvest acceleration.

"Fieldwork should improve there" over the rest of this week, MDA said.

'Rolling along well'

If corn could not gain, soybeans had even less chance, with the US soybean harvest, at 36% complete, a more modest 7 points behind the average pace.

In fact, CHS Hedging said that "harvest is rolling along well in the western Corn Belt where dry weather has allowed many farmers to resume bean harvest".

And the resumption of harvesting has reminded investors of large yields this year.

This when the USDA will, on Thursday, in its monthly flagship Wasde crop supply and demand report unveil fresh corn and soybean production estimates, expected to make small upgrades to figures for yields of both crops.

Chicago soybean futures for November eased by 0.2% to $9.64 ¼ a bushel.

Russian release

As for wheat, it dropped 0.5% to $4.33 a bushel in Chicago for December delivery.

While the USDA data overnight showed a big delay in sowings, of 10 points, with plantings 48% completed, the rains causing the slow progress were much needed for boosting germination prospects.

"Conditions have improved for early development of the US winter wheat crop," said Benson Quinn Commodities, adding that with drier weather conditions for planting have "improved greatly".

Meanwhile, as an extra pressure, brokers flagged reports that Russia plans to sell 1.5m tonnes of grain from government reserves this season  to free up storage space and cash.

"This would include 500,000 tonnes that the government already had intended on releasing from its 4m-tonne stockpile," CHS Hedging noted. 

'Picture still quite varied'

Bulls had some recompense in that Sydney east coast wheat futures for January pulled out of their nosedive, adding 0.5% to Aus$267.80 a tonne.

Rain in Australia has "certainly been gratefully received, after an extremely dry September sapped yield potential from the nation's winter crop", Nidera Australia said.

"However, the crop production picture is still quite varied, particularly across the eastern seaboard.

"The southern Queensland harvest is underway and the vast majority of crops in that region are far too advanced to derive any benefit from the recent precipitation."

Benson Quinn Commodities noted "a wide range on Aussie wheat production estimates, which are 17m tonnes to about 22m tonnes at this point".

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