Was that it? Or is another bout of turbulence on it way for
There was some doubt, heading into Wednesday's session, as
to whether selling in the complex - after the US Department of Agriculture unveiled
larger-than-expected forecasts for domestic corn and soybean crops –
would continue into this session, or whether it had played out in the last.
After all, while corn and soybean futures ended markedly
lower, they made closes nonetheless well above intraday lows.
Wheat, for which
the Wasde was not so negative, recovered to close higher.
In early deals, at least, it was the bulls which had the
balance of power in Chicago – and, for that matter, were in the game too in New
York, where cotton futures for
December followed up a limit-down fall in the last session with only a marginal
easing in this one.
for November traded 0.3% higher to $9.53 ¼ a bushel as of 09:40 UK time (03:40
Chicago time), earlier attempting a rise back above their 100-day moving
average, at a bit over $9.59 a bushel.
OK, the USDA did make a surprise upgrade to its US soybean
yield forecast, of 0.5 bushels per acre to 49.9 bushels per acre.
But many commentators took issue with the revision.
"Traders may not feel entirely confident in the USDA's
assessment of the bean yield," said CHS Hedging.
'USDA took some
To be more exact, the scepticism concerns officials' calculation
of pod counts and weight used in the yield forecast (but which is, it has to be
said, based in part on field observation).
"USDA took some liberties by using a record pod weight of 0.34
grammes," said Benson Quinn Commodities.
At Kansas-based Country Futures, Darrell Holaday said that "the
most interesting aspect of the new yield projection is that USDA is actually
using an implied pod weight that is 4% above the final pod weight a year ago.
"That is amazing given the fact that August and early
September was substantially drier in many key areas, and the fact that there
are about 6m more acres of soybeans planted.
"Keep in mind this is 4% above the implied pod weight a year
ago, which was a record weight."
Still, there were other factors mitigating against further
price declines too.
"The fact that funds are already short took some of the
pressure off corn and beans," Benson
Quinn Commodities said.
This was particularly true of soybeans, a market in which "funds
aren't typically as comfortable being short".
Furthermore, comparing the oilseed with corn "because the soybean
market has better potential to invite demand, I would be more cautious selling
into weakness in that market".
'Stop wasting money'
And corn futures for December indeed underperformed their
row crop peer, but still edging a modest 0.1% lower to $3.51 ¼ a bushel.
There was some question over the yield forecast here too,
with Darrell Holaday, expressing "surprise", noting that the USDA "increased
the ear population by about 500 ears per acre".
Was that justified, given a hot July, and in some places a
dry August too, which appears to have held crop condition, as measured by
separate weekly USDA data, well below year-ago levels (as Agrimoney has focused
"We might as well stop wasting money on the Crop Condition
report," Mr Holaday said.
"These are awfully good yields given they are the worst
rated crops in five years."
'Too dry in Brazil, too
wet in Argentina'
Terry Reilly at Futures International was more generous in
his interpretation, saying that the "US yields show us just how resilient crops
are these days to weather related stress events
"Technology has improved over the past five years, and the
yield trend lines appear to have been forever changed, at least for soybeans
Still, Mr Reilly flagged another reason for sellers to be
cautious, with the South American sowing window opening for main crop corn and
soybeans, and conditions less than ideal.
"It's too dry in Brazil and too wet in Argentina, and
traders will start trading these elements more often as the month of September
draws to a close," he said.
"The two-week outlook maps for central Brazil are not all
that promising for wet weather, and this is starting to raise concerns," a
factor which helped coffee prices in
the last session too.
"Too much rain in Argentina is delaying early summer
plantings," although it was "too early to start cutting acreage".
As for wheat, it
showed the strongest gains of all, adding 0.4% to $4.43 ¾ a bushel in Chicago
for December delivery, lacking pressure from a bearish Wasde, and indeed
without the prospect of harvest pressure on prices too.
While harvest is in its early stages in Australia, given the
poor state of the country's crop, that is hardly likely to weigh too much on
Indeed, January east coast wheat futures in Sydney settled overnight
up 2.0% at Aus$271.00 a tonne, matching a six-week high.
Benson Quinn Commodities, speaking of US markets, said that
the late recovery in futures in the last session "offers some optimism that the
wheat market can hold the current values".
Tobin Gorey at Commonwealth Bank of Australia said: "The
market seems to have found a seam of buying near the lows - that might be the
day's most significant development."
'Cheap enough for now'
Benson Quinn Commodities added that "given Tuesday's price
action, it feels like the wheat markets may be cheap enough for now", terming the
late revival in the last session "constructive for all three wheat classes", ie
Chicago soft red winter wheat, Kansas City hard red winter wheat and
Minneapolis spring wheat.
In fact, Kansas City wheat lagged a bit, in adding 0.3% to $4.43
a bushel for December delivery, so remaining at a slight discount, which reopened
this week, to its Chicago peer.
Minneapolis spring wheat for December added 0.3% to $6.43 ½ a
As for New York cotton,
traders at Ecom had talked of a "most interesting" session on Wednesday, after the
"massively bearish" reaction by investors to Wasde upgrades to US and world cotton
"We will be looking to see if more sell orders need to be
executed," as from 12:20 New York time on Tuesday "the market never got even a
"So the sellers who missed out before [12:20] probably
haven't had a chance to get their orders done."
As it is, the December contract fell back a bit more, to 68.47
cents a pound, early on Wednesday before recovering to 68.98 cents a pound, a
0.2% decline on the day, and has at some points dipped its toes in positive