PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 20:55 GMT, Tuesday, 17th Sept 2013, by
Evening markets: wheat holds firm. But not soy, corn, coffee

The last time, a month ago, that US farm support officials revealed data on the extent of US sowings prevented by the wet spring, corn and soybean futures managed, and kept, healthy gains.

On Tuesday, the Farm Service Agency revised these forecasts, upwards, meaning that farmers had to shelve plantings on even more acres than thought.

This time, while corn and soybean prices initially soared again, their gains proved fleeting, and both crops closed decisively in the red.

Not so bullish after all

The trouble was in part that many investors had already factored the data in, especially for soybeans, in which the FSA lifted its estimate for prevent plantings by a relatively modest 68,000 acres, but lifted its forecast for actual sowings by nearly 2.6m acres to some 74.7m acres.

While that is below the 77.2m-acre figure the US Department of Agriculture currently holds, a shortfall would be expected, given that FSA data, based on insurance claims, do not include all holdings.

"We questioned how supportive the soybean number was because it is not hard for us to believe that 2.5m acres of soybeans are planted and not enrolled in the programme," Darrell Holaday at broker Country Futures said.

Furthermore, the USDA has already lowered its estimate for soybean area, in last month's benchmark Wasde crop report.

'Somewhat supportive'

For corn, the data did look more price positive, despite lifting the estimate for plantings by 2.7m acres to 91.4m acres.

"The corn acreage number is somewhat supportive to prices as it would suggest corn acres between 94.5m-96m acres," Mr Holaday said.

"That is significantly lower than the 97.4m acres that USDA is carrying at this time."

And indeed, corn prices showed the greater initial reaction, jumping more than 2%.

'Short-term bounce'

However, what is trumping all forecasts and estimates is actual yield results.

"Unlike the August release of FSA data, which caught the market off-guard, today's updates are occurring during the early stages of harvest where corn yields so far are tracking above expectations," Richard Feltes at broker RJ O'Brien said earlier in the day.

"We view today's rally as a short-term bounce that will fade if corn yields continue to flow in on high side of trade expectations," he said, even as prices were around their day highs.

Informa downgrades

And harvest results indeed are continuing to prove strong, although combines have yet to roll in earnest in Midwest states such as Illinois and Iowa where summer drought hit worst.

"Yield reports continue to be positive even as harvest advances further north supporting ideas that an already large crop is growing," Benson Quinn Commodities said.

Informa Economics lowered its corn harvest estimates after the FSA data, but not by much - by 213m bushels to 13.80bn bushels for corn, leaving its forecast in line with that the USDA has with its existing acreage data.

For soybeans, Informa trimmed their harvest forecast by all of 19m bushels to 3.22bn bushels, compared with a USDA number of 3.149bn bushels.

'Needs to get here quickly'

Bulls did have some other cards to play, especially in soybeans, with dryness continuing to delay the start of plantings in Brazil.

(That is also a positive for corn, in that delayed soybean sowings reduce the window for planting a follow-on crop of safrinha corn after the oilseed is harvested early in 2014.)

And while, in the US, rains have improved, and more are on the radar, are they in time to bolster yield prospects even for soybeans?

"Crop conditions showed beans are maturing rapidly and, if moisture help is on the way, it needs to get here quickly," Paul Georgy at broker Allendale said.

No freeze

Indeed, the USDA itself said that time was "running out" for yield repair, in a briefing which also eased concerns over the slow start to 2013-14 for US soybean exports, saying that volumes would increase as harvest supplies came on line.

Still, one danger missing from the weather outlook is frost, which look off the agenda for major US growing areas into October.

Soybeans for November closed down 0.4% at $13.42 a bushel in Chicago, closing below the 20-day moving average for the first time since August 9.

December corn dropped 0.6% to $4.54 a bushel.

'Dryness continues'

Against that backdrop, the surprise was that wheat did not follow the row crops lower too, instead closing 0.3% higher in Chicago at $6.43 a bushel for December delivery.

After all, winter wheat planting is on track, at 12% complete as of Sunday, USDA data overnight showed, with US rains refreshing seedbeds for the grain, and some rains in dry Argentina too.

However, "dryness continues across La Pampa, Cordoba, southern Santa Fe, and north western Buenos Aires," weather service MDA said.

"Dryness will begin to spread again over the next 10 days as drier weather prevails."

Furthermore, "very cool conditions across the region have slowed wheat growth once again".

Hard vs soft

The Brazilian wheat belt, meanwhile, is getting rains, but these are late in the season, and "will slow wheat harvesting", MDA said.

Late rains also pose a threat to quality, a topic which returned on the agenda in the form of a caution from Abares over the less plentiful supplies of higher protein wheats.

In fact, Kansas City hard red winter wheat for December underperformed its soft red winter wheat peer in Chicago, adding only 0.5 cents to $6.89 a bushel.

But it did not have the support from Chicago wheat, the speculators' favourite, of the continued closure of "long soybean, short wheat" bets.

Paris soft milling wheat went more to the Abares script, in losing 0.1% to E184.75 a tonne for November, as did London feed wheat, which for November delivery dropped 0.6% to £151.25 a tonne.

Cocoa cools

Among soft commodities, cocoa eased, despite an upbeat note from Macquarie, calculating the world production deficit this season, 2013-14 and 2014-15 at a combined 300,000 tonnes or so.

The bank also - foreseeing the potential for prices even to hit $2,900 a tonne a level not reached for two years highlighted the squeeze in supplies facing processors.

Still, with values having already enjoyed a strong run, New York's December contract closed down 0.8% at $2,614 a tonne, having hit a one-year high of $2,648 earlier.

London cocoa for December dropped 1.0% to £1,705 a tonne.

Coffee freezes

However, New York arabica coffee did far worse, collapsing 3.6% to 114.95 cents a pound for December delivery, and earlier hitting 114.25 cents a pound, the lowest for a nearest-but-one contract in four years.

The decline reflected technical disappointment, against a backdrop of expectations of huge supplies.

Joyce Liu at Phillip Futures had warned earlier that "coupled with the current surplus, arabica coffee prices could fall further despite recently rebounding from its four-year low".

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