Grain futures started the week on the front foot.
Whether they will end the week that way may well depend on
the outcome of Thursday's US Department of Agriculture Wasde crop supply and
demand report, which is expected to cut the estimate for US corn yield prospects, with a potential
trim to the soybean figure too.
In corn, "private pundits are looking for corn yields from
162.8-166.5 bushels per acre," compared with a current USDA figure of 170 .7 bushels
per acre, Benson Quinn Commodities said.
For soybeans, "the market will likely be expecting a final
yield either side of 47 bushels per acre," said Water Street Solutions.
The current USDA figure is 48.0 bushels per acre.
Still, for now, grain futures had a couple of factors in
One was a stabilisation in the dollar, after its surge on Friday on data showing that the US
economy added 209,000 jobs last month, ahead of market expectations of a 180,000
A stronger dollar cuts the affordability as exports of assets,
such as many agricultural commodities, denominated in the currency.
And the reviving competitiveness of US grain exports, given
the depreciation in the dollar last week to 15-month lows, has been a source of
comfort to bulls.
Indeed, on Friday, US Census data showed soybean exports in
June at 1.76m tonnes, or 66.0m bushels – the largest since 1983.
"Census data for marketing year to date is 32m bushels more
than cumulated shipments reported in weekly export sales reports" by the USDA, for
2016-17, said Benson Quinn Commodities.
"This should have USDA raising export demand next week 25m-50m
bushels" in the Wasde report.
'Rains did not show
The second factor offering some price support was some
disappointment over US weather.
"The rains did not show up as forecasted this weekend" for
much of the Midwest, said WxRisk.com
"Although none of the forecasts called significant rains any
portion of Iowa they were still quite dry.
"Rains were over-forecasted for central and southern
Illinois Indiana and Ohio" too.
'Taken risk premium
That is not say that the weekend was dry for all areas.
"The rains did, however, show up over the south west half of
Missouri, the eastern third of Kansas, and eastern Oklahoma, with some areas
reporting 4-8 inches of rain," the weather service said.
Furthermore, while the outlook is dry for the "all the
Midwest" this week, it is cool too, limiting worries over evaporation and soil
Indeed, the overall narrative remains of improved US
conditions for growing corn and soybean crops.
"Cooler weather has taken the risk premium out of grains,"
said Water Street Solutions, adding that the "'hot dry' scare is past the
'Still on the dry
Still, there remain worries over dryness in some areas,
notably in the western Corn Belt, and Iowa, the top corn-growing state, and
sometimes the biggest soybean producer too.
Water Street Solutions, talking of corn, said that "many
areas still on the dry side that has taken the top of the post-pollination
"The market is yet to get a good handle on plant populations
which are likely 2,000-3,000 off the average."
Benson Quinn Commodities flagged "talk of north west Iowa
corn looking at max 175 bushels-per-acre potential, versus 225 in a 'normal'
That said, "conversely many Texas producers reporting
excellent yields of 180-190 bushels per acre on dry [ie non-irrigated] land.
"Other early harvest
states of Tennessee and Mississippi are reporting good numbers as well."
Certainly, the outcome as of 09:20 UK time (03:20 Chicago
time) was a 0.7% increase to $3.83 ½ a bushel in December corn futures in Chicago,
talking them back above their 10-day moving average for the first time this
Soybean futures for November gained 0.7% to $9.63 ½ a bushel,
earlier climbing back above 50-day and 100-day moving averages, but unable to
hold firm above those levels.
As for wheat, it gained
0.5% to $4.85 a bushel, lifted by its fellow grain corn, but also by ideas that
prices have gone cheap enough to price US supplies back into contention on
"The US Gulf is the most economical source which should help
futures find support near where we are at now," said Water Street Solutions.
The ag advisory group added that "growing Russian wheat
supplies are hanging on the global market but there are plenty of production
Terry Reilly at Futures International said that "the
improving US and Canadian weather may be too late as much of the spring wheat crops
are done for the northern hemisphere".
In New York, cotton
edged higher too, adding 0.3% to 70.83 cents a pound for December, earlier
hitting a near-two-month high of 70.89 cents a pound, helped higher by its
fellow row crops, but also by strong demand for US exports too.
Indeed, stocks ended 2016-17 (at the end of last month) "tighter
than the USDA-projected 3.2m bales by virtue of higher than projected exports",
said Louis Rose at Rose Commodity Group.
In fact, carryout stocks for last season will, in the Wasde,
"most likely be estimated near 2.8m-2.9m bales.
"Historically, ending stocks at levels below 3m bales have
spurred positive market action," Mr Rose said.
Furthermore, prices in the key Chinese market have been
recovering too, with the best-traded January cotton contract on the Zhengzhou
exchange closing up 0.8% at 6,273 yuan a tonne, now up 4.0% so far this month.