Corn came within an ace of touching $3.50 a bushel for the first
time since June 2010 as Midwest forecasts kept rain on the agenda for next
week, raising the chances of bumper corn yields, for which Linn Group released
an upbeat estimate.
Chicago corn for September touched a fresh four-year low,
for a spot contract, of $3.53 a bushel before recovering a little ground to
stand at $3.53 ¾ a bushel with half an hour's trading to go, down 0.9% on the
The new crop December lot shed 0.9% to $3.63 ½ a bushel ,
earlier setting a contract low of $3.62 ¾ a bushel.
The losses came amid growing confidence in a strong US corn
yield, which Chicago broker Linn Group estimated ending up at 172.8 bushels per acre,
putting the harvest at 14.52bn bushels.
Both would set records, with the US Department of Agriculture
currently putting the yield at 165.3 bushels per acre.
'Weather has just
"We see a lot of the big production states coming with
above-record yields," Linn analyst Craig Hays told Agrimoney.com.
"The weather has just been ideal."
There is the potential for crop setbacks, with some of the
northern crops looking in a "pretty critical state" and some corn further south
requiring rain which, if it fails to arrive, "could take the top end of yield
estimates out", Mr Hays said.
But in key Corn Belt states such as Iowa, Illinois and Indiana,
"crops are only about 10 days from being made", narrowing the potential for
'Will continue favourable'
Besides, rains look on their way.
"US weather will continue favourable over the next two weeks,"
World Weather said..
Sure, "Midwest rainfall through the weekend and into early
next week will be lacking from southern Illinois and the northern Delta through
Missouri, Kansas and parts of Iowa to Nebraska and portions of South Dakota.
But net drying in these areas "will cause little concern as long
as rain falls in the August 5-12 period, as has been suggested by both the
European and GFS model runs".
The weather group said that it "believes the set up for
improved rainfall in the lower and eastern Midwest is improving and concern
over dryness potentials may be notably relaxed".
'Worry over dryness'
The selling spread to soybeans
too, for which August is a crucial month, bringing pod-setting.
While Linn Group pegged the US soybean yield at 45.8 bushels
per acre, 0.6 bushels per acre above the USDA estimate, that was a "little
tougher to call", with rain next week "pretty important" for maintaining crop
potential, Mr Hays said.
World Weather said: "Worry over dryness in soybean
production areas in late August and early September might be eased if significant
rain falls in the August 5-12 period."
November soybeans tumbled 2.2% to $10.57 ¼ a bushel, with
little in the way of fresh talk of export orders to arrest the fall.
In fact, Taiwan is believed to have bought two cargoes of
new crop Brazilian beans within the last 48 hours.
Chicago soy took little notice of some favourable trends
elsewhere among oilseeds, with soybeans ending up 0.5% at 4,451 yuan a tonne on
China's Dalian exchange, while Malaysian palm
oil futures closed at 2,283 ringgit, up 26 ringgit in the October contract,
amid hopes of lower prices spurring orders.
It was wheat
which managed to buck the trend, with the lowball offer to Egypt's tender
continuing to boost expectations for US exports of the grain.
It helps too that the European Union – which had been
expected to take over top rank in world wheat exports in 2014-15 - looks like
being a disappointing force, in quality supplies at least, thanks to the rain
damage to its harvest.
There is now growing talk of the German harvest, which traders
are relying on for high quality grain to blend with/replace some of the worse stuff
from the likes of France, suffering elevated, if not alarming, levels of damage
Moisture on ripe grains encourages sprouting, reducing
kernels' milling specifications.
Chicago wheat for September added 0.9% to $5.34 ¾ a bushel,
and earlier touched its 20-day moving average for the first time in two months.
London feed wheat for November, meanwhile, hit a four-year low
for a spot contract of £119.50 a tonne before recovering most of its losses to
close down just £0.10 at £122.00 a tonne.
Large downgrades of EU milling wheat means of course more
feed wheat, at a time when US corn looks like being ample too.
'To add to the mayhem…'
Paris milling wheat is the wildcard. In theory, it should be
supported by a low quality harvest, but the vagaries of actually delivering against
the contract, and specification confusion, are making for some unusual moves.
"To add to the mayhem the French Matif wheat futures market
has collapsed due to the uncertainty surrounding the contract specification,"
UK co-operative Openfield said
" It is ridiculous that on August 1 the trade does not know
what the Matif quality criteria for delivery are, especially with 80% of the
French crop cut and reports of large swathes being downgraded to feed forcing
the spread between Matif and Liffe to narrow."
Paris wheat for November actually ended up 0.7% at E171.75 a
Among soft commodities, arabica coffee set a three month high of 207.40 cents a pound in New York for September delivery, boosted by growing concerns over Brazilian production – this year and next - only for pre-weekend profit-taking to kick in.
The contract closed down 1.4% at 192.35 cents a pound, with a round of producer selling once prices began with a 2 seen as also pressuring prices.
Raw sugar for October ended down 0.7% at 16.35 cents a pound, a five month closing low, little helped by downbeat comments from Australia & New Zealand Bank, and with supplies appearing ample for now.
Nick Penney, senior trader at Sucden Financial, said: "Overall we continue to favour the downside as we see a scarcity of supportive news. End user buying has hardly stopped the decline and physical prices continue weak.