PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 20:39 GMT, Thursday, 26th Jun 2014, by Agrimoney.com
Datagro downgrade lifts sugar price. US exports support soy

Importers may have gone off US cotton.

US weekly export sales of the fibre dropped below 28,000 running bales, a figure deemed worse than disappointing by the trade, sending new crop December futures two a two-year low of 73.71 cents a pound in New York before they staged some recovery to end at 74.63 cents a pound, down 0.8%.

But importers can't get enough US soybeans.

US export sales of old crop soybeans hit 317,200 tonnes, twice the highest estimate, and putting the US in even more of a pickle if it is to satisfy all the demand out there.

US supplies are already forecast by the USDA as on course to end 2013-14 at the tightest, compared with consumption, on records going back to the 1960s.

'No sign of relief'

And that assumes that importers will actually not end up taking all the US soybeans they have ordered, at least not this season.

"Trade knows that old crop soybean cancellations are inevitable, although there is no sign of relief as yet," said Richard Feltes at RJ O'Brien, noting that old crop US soybean sales exceed the USDA's full-season forecast by 71m bushels.

"Large old crop soybean sales were a bit surprising to the market," CHS Hedging said.

At Citigroup, Sterling Smith said that "old crop soybean export sales were a surprise to the upside,  the best number seen for the old crop since February.

"While this is likely a onetime event it did catch the market by surprise and did lend some strength to the nearby contracts."

Prices rise

Indeed, old crop July soybeans outperformed, in adding 1.5% to $14.37 a bushel, retaking their 100-day moving average.

The new crop November lot added 1.2% to $12.44 a bushel, its best finish of the month, and getting back above its 50-day moving average.

The complex was also helped by soymeal, which for July soared 3.1% to $465.50 a short ton.

Soymeal export sales, at a combined 253,000 tonnes old crop and new combined, were strong too, well ahead of expectations.

'Looks a bit rough'

Corn export sales were also respectable, especially for old crop at 321,000 tonnes.

"Old crop US corn sales are 97% of the USDA's full-season forecast with 9.5 weeks remaining in the marketing year," RJ O'Brien's Richard Feltes said.

And there remain some concerns over the dampness of northern parts of the US too to help futures build some cushion above multi-month lows.

"The weather outlook looks a bit rough for much of the Midwest over the next four to five days as rain events roll through," CHS Hedging said.

'May further undermine crop ratings'

It should also be noted that there are plenty of commentators believing that the outlook for US crops remains, overall, pretty good, with the rains boosting prospects for crops for which have not received too much.

Still, looking short term, Mr Feltes highlighted that "another round of 2-5 inch weekend rains expected across the saturated north west Midwest that may further undermine crop ratings next Monday".

And did the crop actually get planted? While investors are looking to key US data on Monday to provide some answers, a survey by Roach suggested that US corn sowings had fallen below 90m acres for the first time in four years.

That is well below figures that Monday's report is expected to come out with.

New crop corn for December added 0.7% to $4.43 a bushel, while the July contract edged 0.4% higher to $4.42 a bushel.

'Just can't catch a break'

Corn's performance was a help to wheat futures too, as is poor weather, with southern US rainfall delaying the winter wheat harvest and raising fears of quality losses, with ripe grain vulnerable to sprouting and protein loss.

 "Wheat just can't catch a break," CHS Hedging said.

"Rain is in the forecast for parts of the hard red winter wheat areas, further hindering harvest and adding to quality concerns."

In the Midwest soft red winter wheat area, "rain delays are causing support" to prices too, US Commodities said.

'Another potentially large crop'

Still, as to the big question over whether rainfall is proving a help or hindrance to spring crops in the north of the US and Canada, more will be known on Friday when Statistics Canada unveils estimates for domestic sowings.

While this year's "Canadian wheat area will shrink, there is no shortage of moisture suggesting another potentially large crop," Mr Feltes said.

Amid the uncertainty, Chicago soft red winter wheat for September edged 0.5 cents higher to $5.84 a bushel.

Kansas City hard red winter wheat did a little better, up 0.2% at $7.15 a bushel for September.

Spring wheat itself nudged 0.1% higher to $7.21 a bushel in Minneapolis.

Datagro downgrades

Back in New York, raw sugar gained 0.6% to 18.73 cents a pound for October delivery as Datagro kept the renewed fears over dryness in Brazil's Centre South going.

After Unica on Wednesday cautioned against interpretations that a pick-up in cane harvesting was sustainable, flagging damage from dryness to crops, Datagro cut by 900,000 tonnes to 32.3m tonnes its forecast for Centre South sugar output, about 90% of the Brazilian total.

The estimate for the Centre South cane crop in 2014-15 on an April-to-March basis, was cut by 14.1m tonnes to 560.5m tonnes.

"Some mills have decided to not even bother to harvest [drought damaged] cane and leave it in the field until the start of the 2015-16 season in April," said Plinio Nastari, the Datagro president.

World deficit revision

All this supported an increase to 2.46m tonnes, from 1.61m tonnes, in Datagro's forecast for the word global sugar production deficit in 2014-15 on an October-to-September basis.

"The drop in output from Brazil, as well as in other major producers such as Thailand, due to dry weather will create a bigger world deficit in sugar," Mr Nastari said.

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