Grains made a strong start to the week, helped by the return
of some weather premium to prices, amid some less-than-ideal rainfall forecasts,
and evidence of the extent of the selldown that hedge funds have already
particularly well, closing up 2.0% at $10.77 ½ a bushel in Chicago for November
But corn wasn't
far behind, ending up 1.9% at $3.69 ½ a bushel for December.
And Chicago wheat
for September closed 1.8% higher at $5.44 a bushel,
The rise came against a backdrop of worries about a US
weather outlook which remains a little drier than desirable if, it has to be restated,
more of an issue about just how much corn and soybean crops will set records by.
(Indeed, FCStone reminded of crop potential by pegging the
US corn yield at 172.4 bushels per acre, easily a record, if a figure well out
there already, in line with Doane and Linn Group estimates from last week. And
Rabobank forecast prices falling to $3.50 a bushel.)
However, "the reality is that both weather models [European
and GFS] are not moving moisture as far east as they were late last week,"
Darrell Holaday at Country Futures.
Still, they are putting a lot of moisture in the western
Corn Belt through the weekend.
"If there is any area that may be shorted by the systems this
week, it would be eastern Illinois, Indiana and Ohio."
'Need for early
"Areas needing rain over next week include northern Indiana,
south and north Illinois, Minnesota, Dakotas and Nebraska," said Richard Feltes
at RJ O'Brien.
Indeed, RJ O'Brien research indicates a "need for early
August rains across most areas".
It also shows a "dearth of farm selling, old crop and new".
That said, less positive for prices is that there is "ample
time for soybeans to respond to August rains and expectations for an autumn
storage crunch—especially in the western Midwest".
Still, Citigroup's Sterling Smith flagged "light bargain
hunting and continued worries over the weather" which had "allowed for a bounce
off of support" in technical terms.
And buying was encouraged by the increasingly bearish tone
of hedge fund positions, implying potentially less selling pressure ahead.
And corn also had some support from strong US export data
for last week, at 1.14m tonnes, up from 817,000 tonnes the week before.
For soybeans, although weekly exports were soft, at 39,256
tonnes, down from 112,345 tonne the week before, the US Department of
Agriculture did announce sales for 2014-15 of 102,000 tonnes to Taiwan and 110,000
tonnes to China.
'Enough of a short
Wheat had less on
the US export front to support it, with volumes last week at 351,503 tonnes,
down from 396,453 tonnes the week before.
But the European harvest remains a concern, on quality
terms, thanks to harvest-time rains, which encourage sprouting of ripe grains.
And there was a rise reported in prices of Russian wheat,
renowned for its competitiveness, tallying with
Furthermore, there was the rise in hedge funds' net short in
Chicago wheat futures and options to the second highest on record, raising the threat
of a wave of short-covering.
"The Chicago wheat is the strongest item of the group as
there is enough of a short interest to keep the rally propelled for the time
being," Citigroup's Sterling Smith said.
Fire damage – or not
Among soft commodities, raw
sugar for October ended down 3 cents at 16.32 cents a pound, undermined by
confirmation by Brazilian sugar and ethanol giant Cosan that damage to its
facilities at the terminal 19 in the port of Santos had not been so disastrous.
"The fire was confined to warehouse X, which had a capacity
to store 18,000 tonnes, compared with 500,000 tonnes total capacity of Rumo at
the Port of Santos," Cosan said, adding that the "amount stored at the moment
of the fire was approximately 15,000 tonnes of sugar", not a huge amount.
Furthermore, as for fears of Santos suffering major
disruption because of the fire, "terminal 16 is operational and has not been
But cotton rallied
in line with rival row crops cotton and soybeans, besides getting some support
from the small extent of hedge fund longs, and an upgrade by the International Cotton
Advisory Committee to its price forecast.
Cotton for December added 1.5% to 64.24 c, while the spot
October contract soared 2.3% to 63.92 tonnes.