There was some consolation for grain bulls on Wednesday.
"US corn now
competitive," US Commodities said.
And, as if to underline that observation, the US Department of
Agriculture unveiled US export sales, for 2014-15, of 101,600 tonnes of corn to
Japan, and 107,696 tonnes to "unknown destinations".
But the growing competitiveness is coming at a heavy cost to
producers, in terms of lower prices, and little sign that investors won't make
values cheaper still.
"The freefall has continued," Darrell Holaday at broker Country
"There continues to be a large amount of long liquidation
and much of it coming from funds that were extremely long the corn and soybeans," with some producers "selling
of cash inventory all over the world" too.
New crop corn futures for December, the best-traded
contract, which was well above $5 a bushel two months ago, slipped below $4 a
bushel for the first time, ending down 1.6% at $3.98 a busel.
The old crop September lot, which surrendered the $4-a-bushel
mark in the last session, ended down 1.8% at $3.91 ¼ a bushel, a fresh four-year
closing low for a nearest-but-one contract.
'Likely to plant less
Sure, the newsflow was quite not all bearish.
Besides the US export orders, "Argentina's farmers are
likely to plant less corn in the upcoming year as Argentina experiences
economic issues," CHS Hedging said.
But there was more than enough cause for funds to justify
yet more liquidation, the most important factor, of course, being the continued
benign US weather.
Mr Holaday said: "The midday GFS model was just a little
drier in the western Midwest for next week.
"But it still indicates a major system moving through next
week and cool temperatures across the Plains and Midwest after the system moves
through at the end of next week," with coolness constructive for corn
In fact, there are thoughts that the USDA, when it on Friday
unveils its latest Wasde crop report, will take the unusual step, so early in the
season, of raising its estimate for the US corn yield.
"Trade is debating whether or not USDA will raise its yield
estimate based on excellent condition ratings and the favourable weather
forecasts," Benson Quinn Commodities said.
The USDA, which is currently projecting the corn yield at
record large 165.2 bushels per acre, tends to wait for field survey results in
August to make changes.
"However, trade feels based on conditions, we could see an
upward revision on Friday, with the market already trading a 170-172 bushels
per acre national yield potential," the broker said.
That would represent, in production terms, an extra 400m
bushels or so of corn, ensuring a record harvest too.
And there were some other factors to chip in too, notably talk
of feeble Chinese demand for US corn and distillers' grains, the corn-derived
One Chinese analyst has pegged the country's DDG imports (which
are surrounded by a debate over a GM variety unallowed in China) at
500,000-1.0m tonnes in 2014-15, down from the current season's record 4m
As a final dent, Conab raised its estimate for the 2013-14
Brazilian corn crop to 78.2m tonnes from 77.9m tonnes.
Holding above $11 a
Soybeans did a
better job of decent their own psychologically important price point, with November
futures ending at $11.03 ¾ a bushel, having come 1 cent earlier from slipping below
$11 a bushel.
Still, that still meant a 1.1% decline on the day, again with
benign US weather the main pressure, although there is less talk of an upgrade
to the soybean yield forecast, with the crucial pod-setting period still a
There is negative talk on Chinese imports here too, with
rumours of fresh cancellations of orders.
And soybeans were also weighed down by a poor performance by
soyoil, which for August ended down 2.0% at 37.14 cent a pound, the lowest
finish for a nearest-but-one contract in four years.
Still, one scrap for bulls was that "soybean acres in India are
expected to drop to the lowest in five years because of a weak monsoon season",
CHS Hedging noted.
A 1.1% rise to $406.10 a short ton in August soymeal was not deemed a more suspect bull
point, seen down to spreading against soyoil.
'Yield seems to be
Nor could wheat
avoid fresh losses, ending down 0.9% at $5.51 ¼ a bushel for September in
Chicago, again the lowest finish for a nearest-but-one contract in four years.
Besides weakness in US row crop prices, the grain is feeling
pressure from the northern hemisphere harvest, deemed better-than-expected in
northern Kansas and upwards, and with higher yields in Russia too.
"As US hard red winter wheat harvest moves north, yield
seems to be improving," CHS Hedging said.
Indeed Kansas City hard red winter wheat did even worse,
ending down 1.2% at $6.52 ½ a bushel for September, undermined also by the
delivery of nearly 90 contracts against expiring July futures, implying a
better option for sellers than cash markets.
Paris wheat for November edged 0.8% lower to E181.75 a
tonne, the lowest close for a spot contract since late 2011, given at least
some support by signs from an Egyptian tender of the growing competitiveness of
French wheat on export markets.
London wheat for November fell 0.8% to £132.00 a tonne, matching the lowest finish for a spot contract in four years, hardly helped by a raised estimate for sowings in England and Wales.
This time, many soft commodities were weaker too, notably raw sugar, which fell 1.5% to 17.42
cents a pound in New York for October delivery, ahead of data due tomorrow from
industry group Unica on progress in the Brazil Centre South cane crush.
The data are expected to show rapid progress, thanks to dry
weather, although the dryness is expected eventually to prove a negative in
leaving mills without cane to crush.
Czarnikow unveiled a first estimate for the 2014-15 sugar
balance sheet, a 500,000-tonne deficit, the latest in a rather disparate set
Arabica coffee for
October dropped just 0.05 cents to 172.90 cents a pound.
If Brazil's unseemly exit from the World Cup will turn the
country's producers back to focusing on selling their coffee, a pick-up in
sales hasn't happened yet.
As for ideas of damage from early-year dryness to Brazil's
crop, Commerzbank said that "the consensus appears to be that the drought in
Brazil may have caused some damage but that the damage is not as serious as had
been feared for a time.
"Many of the beans are not big enough, however, meaning that
more of them are needed to fill a standard 60kg bag."