Heat-tested US crops have stopped getting worse, condition
At least, so investors seem to believe, after broader-than-forecast
weekend rains for the Midwest, and expectations of cooler temperatures ahead.
And with that, went any chance of prices getting stronger on
Indeed, at no point did Chicago corn, wheat or soybean futures post gains, although
contracts did at least manages to pare losses by the close.
CHS Hedging flagged "easing concerns over weather after
weekend rains hit parts of northern Iowa, Minnesota, Illinois and the eastern
one-third of the Dakotas".
Meanwhile, "the latest weather model has average-to-below-average
temperatures settling over the Corn Belt".
MDA flagged a "wetter" turn in forecasts for Iowa on
Wednesday and Illinois on Thursday.
"Dryness remains a concern across south western Midwest
areas, but showers this week may lead to some improvements."
In fact, Darrell Holaday at Country Futures underlined the
outstanding dryness worries too, saying that "we believe that there are still a
large number of dry areas in the western Corn Belt".
Still, at RJ O'Brien, Richard Feltes said that "pessimistic
US corn and soybean yield forecasts are sidelined for now in the aftermath of
mid-July rains, a reversion to normal late July temperatures and a downsizing
to 15% the growing area labouring under moisture stress.
"Bulls are no longer able to make a strong case for a sub-160
bushels per acre corn yield, and a sub-46 bushels per acre soybean yield.
"We cannot be confident on the final size of the US corn and
soybean crops, but we can be confident that further deterioration has abated
into month end."
'Demand is a concern'
Still, December corn
futures, in ending down 0.8% at $3.90 ¼ a bushel, at least managed to close
above their day low of $3.84 ¾ a bushel, and indeed settled too above their 100-day
and 200-day moving averages.
Sentiment was helped somewhat by, besides residual dryness
fears, some positive export news, with the US Department of Agriculture reporting
the sale of 135,000 tonnes of US corn for delivery to an "unknown" importer for
US export data for last week were less upbeat, at 935,262
tonnes - not a bad figure, but down from 1.12m tonnes the week before, and 1.32m
tonnes the same week last year.
"Demand is a concern, with weak cash basis values being a
sign of slow export demand for US grains after the recent rally in futures,"
said Benson Quinn Commodities.
'Less heat stress'
For soybeans, the
US actually exported 596,920 tonnes last week, up nearly 300,000 tonnes week on
week, although behind the 720,573 tonnes a year before.
Still, soybeans futures for November eased by 1.2% to $10.10
a bushel, although again ending well above an earlier low of $9.98 ¼ a bushel.
CHS Hedging flagged the "forecast that calls for less heat
stress for the soybean crop going into August", a key month for the US crop, in
ended down 2.1% in Chicago at $4.88 ¾ a bushel for September delivery, weighed
by weakness in spring wheat, which has been the complex's leader, besides
softness in row crop peers.
wheat for September fell by 2.0% to $7.50 ½ a bushel, amid some idea of weekend
rains wreaking some improvement to northern Plains crops.
RJ O'Brien's Richard Feltes flagged a "view that recent
Dakota rains have thwarted further deterioration of row crops and small grains".
Furthermore, commercial buyers "are flush with cash hard red
spring wheat supplies, thus meaning no need for a tightening of basis or [futures]
led the rally on the way up, has ample room to erode short term."
Furthermore, Mr Feltes noted a risk that a much-watched crop
tour of US spring wheat will not prove "as pessimistic on the US spring wheat
crop's size as private sector trade".
Also weighing on grain prices was concern over the extent of
hedge fund long bets – with worries that the extent of them means extra potential
By contrast, there are ideas that short bets in soft
commodities have become excessive, potentially signalling short-covering and
upward pressure on values.
Still, that was not the case on Monday when arabica coffee futures plunged 2.9% to
132.55 cents a pound for September delivery, retreating from a two-month high
hit in the last session.
The decline was attributed largely to technical factors,
with Sucden flagging earlier that with relative strength index and stochastics indicators
"overbought we could see some weakness" in prices.
'Seen the price low
of the year'
Raw sugar for
October closed unchanged at 14.40 cents a pound, despite some more upbeat comment
on the market, after Patrobras raised Brazilian gasoline prices, boosting prospects
for ethanol values, and so meaning sugar has to compete harder for its share of
The Petrobras move, coupled with a tax on gasoline, lift the
ethanol parity level (ie where mills have equal financial incentive to turn
cane into ethanol or sugar) "from sub-13 cents a pound to well over 13 cents a
pound" in sugar terms, said Sucden Financial.
Flagging "some indications that perhaps it's not all going
the sugar bears way", Sucden added that "it seems we probably have seen the low
of the year" for sugar prices.
Still, on a more negative note for values, data from China,
the top importer, showed that its buy-ins last month tumbled 62% to 139,519
Growth in imports for the first half of 2017 was curtailed
to 5.9%, with total volumes for the six months of 1.41m tonnes.