So wheat managed
in the last session to end a long losing spree.
Can corn achieve
the same this time?
While Chicago's July corn contract hasn't managed quite the
losing spree that corn managed - of 10 successive losing sessions, the longest downward
streak in 20 years - it closed down on Wednesday for the fifth day in a row.
Still, the contract in early deals on Thursday signalled
that bears retain a grip , taking aim at a sixth successive negative finish.
The same went for the new crop December contract too.
'Strong straight down
In fact, that could be the size of it, with research by
broker Allendale indicating the pressure on prices from strong condition
ratings. (The US crop has been pegged by the US Department of Agriculture as
being 76% in "good" or "excellent" health.)
The broker said that "hoping to answer the question about
the chances for a rebound to sell", with many farmers concerned they may have
missed the boat for high prices, it "looked at price action in other strong
rating years at this time.
"In five of the past six similar years there was a strong
straight down move with no stopping until July-August."
And as for the extent of the drops, "the minimum decline,
off this year's pricing, would imply $4.16 a bushel".
The average drop would show a price of $3.93 a bushel, and
the maximum a figure of $3.72 a bushel.
'Talk of potential replanting'
There are some factors around which could counter this,
including concerns over wetness in the western Corn Belt which is delaying late
sowings, and earlier this week brought hail which may require some of what has
been planted being reseeded.
"There will be some talk of potential replanting due to
hail," Brian Henry at Benson Quinn Commodities said.
The market is also keeping one eye on whether cold weather
in southern Brazil has caused any damage to corn. (There have been no reports
of a threat to sugar cane or coffee.)
Furthermore, there is
little farmer selling reported at current prices, which for the July contract
are some $0.50 a bushel lower than futures were offering a month ago.
Yield upgrade ahead?
However, "favourable weather, weak technical structure and
corresponding fund activity continue to set the tone", Mr Henry said.
CHS Hedging said: "We continue to trade weather, weather,
weather, until something better comes along to focus on," and the US weather outlook
remains broadly benign.
In fact, returning to the strong condition of the US crop,
US Commodities said that "corn yield models tied to weekly crop condition
rating reportedly indicate a 2014 corn yield slightly above USDA's May forecast
of 165.3 bushels per acre".
Corn for December dropped 0.4% to $4.51 ½ a bushel as of
09:40 UK time (03:40 Chicago time), although the old crop July contract did
manage a 0.25 cent gain to $4.56 ½ a bushel.
'New losing streak'
As for wheat, not
all observers were wholly reassured by the first rise in Chicago futures in 11
sessions on Wednesday.
Mr Henry said it "doesn't appear to be anything more than a
minor correction" which was "tied to oversold conditions.
"I expect it had as much to do with the offer backing off as
new buying interest."
At Citigroup, Sterling Smith said that the higher close "was
not a convincing gain and price action was rather poor".
"We expect to see a new losing streak start on Thursday," he
said, citing the prospect of poor weekly US export sales data.
In fact, the USDA is expected to show negative US export sales
for last week, the last period of 2013-14 for the grain on the domestic
calendar, of 50,000-150,000 tonnes, with new crop positive sales of
And that is not the only data which awaits, with Informa
Economics expected later today to revise its estimate for the US winter wheat
crop, and to downgrade its forecast.
There also remain some fears over the final chapter of spring
wheat sowings, and how much acreage wet weather will force into abandonment, or
to later sown crops.
Indeed, spring wheat for July added 0.2% to $6.90 ½ a
But Chicago soft red winter wheat, the world benchmark, returned
to downward movement, easing 0.3% to $6.12 ½ a bushel.
Sure, "the debate about wheat production in the Black Sea
region continues," with some concerns over dryness in Volga Valley and North Caucasus,
"but those without much concern are winning", Mr Henry said.
hardly in too much demand either, despite the US data on Wednesday showing
imports in April at a meagre 7.1m bushels, half the rate needed to meet the USDA
target of 90m bushels for 2013-14, and to resolve the tight US balance sheet.
(This figure was revised up from the original 6m bushels, which
Agrimoney.com reported yesterday.)
At broker RJ O'Brien, Richard Feltes said that he was "somewhat
surprised that the soybean board and spreads did not react more forcefully to
the lower-than-expected soybean imports.
"The soy market is either confident that the pace of
subsequent US soybean monthly imports will accelerate appreciably, or that [the
USDA] will revise the 2013 US soy crop higher," a possibility which is being widely
With the data also showing US soybean exports at 43.7m
bushels, well above the 37.7m bushels shown by export inspection data, "further
tightening the US soybean balance sheet, we have raised our export estimate by
6m bushels to 1,606m bushels," New York based Jefferies Bache said.
The broker also cut its estimate for the end 2013-14 US
carryout by 6m bushels to 124m bushels.
Also Abiove estimated this season's Brazilian soybean crop
at 86.5m tonnes, 1.0m tonnes below the USDA figure, and lifted its estimate of
the crush to 37.6m tonnes, 600,000 tonnes above its previous forecast, and the
Still, with funds in a mind to sell, and technical factors
turning more negative, Chicago's July contract eased 0.3% to $14.78 a bushel.
The new crop November lot did manage 0.5-cent gain to $12.17
¾ a bushel.
Among soft commodities, arabica
coffee showed no sign of pulling out of its decline, falling 0.7% to 169.05
cents a pound in New York for July delivery.
Colombia produced 1.1m bags of coffee in May, up 12% year on
year, and easing concerns over a surprise decline shown in the April data.
But raw sugar for
July added 0.2% to 17.08 cents a pound, showing no signs yet of wanting to
break through the floor of its three-month trading range.
"We do see this [17.00 cents a pound] as a value area, and
the market has done a solid job of bouncing off of support here," Citigroup's
Sterling Smith said.
"We have little reason to suspect that this time will be