PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 10:09 GMT, Friday, 23rd Aug 2013, by
Morning markets: corn, soy prices rise as US heatwave looms

To judge by the alternate up and down trend of sessions that grain and soybean markets have been running of late, Friday was going to be up a positive session.

And it indeed started that way, helped in part by some easing off, early overnight at least, of an easing-off in the rains across northern Nebraska and Iowa, and even into Chicago, that sank prices in the last session.

"The major cluster of heavy thunderstorms has weakened considerably," said in an overnight report.

"But the feature is detectable and dropping moderate rains over northeast Indiana, western Ohio and southern Michigan."

'Looks very hot'

So investor attention turned more to the heat wave set to begin hitting the US next week, potentially preparing the Midwest for its hottest Labor Day holiday weekend ever.

The European weather models shows temperatures of 96-100 degrees Fahrenheit reaching 80% of South Dakota, Nebraska, Iowa, southern Minnesota, the northern half of Missouri, central and northern Illinois and Indiana on Thursday next week through Sunday, said.

"The model actually forecasts 100 degrees over southern Iowa, 101 degrees at Omaha, 100 degrees at St Louis, 99 degrees at Springfield Illinois on August 31," the weather service said.

"The six-to-10 day outlook looks very hot over the Midwest."

'Continue to be bullish'

That encouraged the emergence of ideas that maybe the sell-off in the last session, when December corn futures lost nearly 4%, had been overdone.

"Despite the heavy rainfall, the moisture provided might not be enough to ease concerns in the driest areas of the Midwest," Joyce Liu at Phillip Futures said.

"Thus, if there is no forecast of more rain, we continue to be bullish on the corn market."

Benson Quinn Commodities said: "Without forecasts continuing to offer at least some optimism towards rainfall, Thursday's correction may have been enough," for soybeans especially.

Tour results

There was some mixed data from the Pro Farmer crop tour to factor in.

On corn it was not so bad, with the Minnesota yield pegged at 181.1 bushels per acre, ahead of last year's 156.2 bushels per acre and a three-year average of 172.5 bushels per acre.

(Remember, the three-year average will have been depressed by drought-hit 2011.)

The Iowa yield was pegged at 171.9 bushels per acre, compared with 137.3 bushels per acre last year and an average of 157.1 bushels per acre.

But there were cautions over the tardiness of development, a reflection of late plantings and cool weather for much of the summer.

'Can't discount the dry spell'

And for soybeans, for which development delays are especially significant, the latest tour findings were not so encouraging.

In Minnesota, pod density was 869 per plot (3 feet x 3 feet) compared with 934 last year and an average of 1,099.

For Iowa, the figure was 927 pods per plot, below last year's 1,000 and an average of 1,190.

"Soybean yields are still widely disputed," one US broker said.

"But we can't discount the recent dry spell. If we were looking for a 44-bushels-per-acre national average bean yield a month ago, we may be looking at the August US Department of Agriculture estimate of 42.6 as a more realistic number today."

Prices recover

Benson Quinn Commodities forecast that the "theme of soybean fields having potential, but likely needing plenty of help from Mother Nature will continue".

As of 10:00 UK time (04:00 Chicago time) soybeans for November were 0.5% higher at $12.93 a bushel.

December corn did a touch better, up 0.8% at $4.68 a bushel, having lost more in the last session, and indeed driven the soybean: corn ratio to unusually-high levels heading towards 2.8: 1.

'Inability to hold a rally'

As for wheat, it maintained its habit of tagging behind the row crops, although offered some help by further signs of demand, with Japan buying 153,000 tonnes overnight and Bangladesh purchasing 50,000 tonnes.

Furthermore, there is talk that a Saudi tender is around the corner too.

Still, at current price comparisons, "the likelihood of any new large scale demand, outside of Brazil, hitting US shores anytime soon seems unlikely," Benson Quinn Commodities said.

And indeed, Thursday's weekly export sales were poor.

"The short-term picture for wheat isn't particularly encouraging, with the market's inability to hold a rally well-documented at this point."

Chicago wheat for December added 0.4% to $6.42 a bushel.

Mixed softs

Among soft commodities, raw sugar staged a rebound, adding 0.3% to 16.32 cents a pound for October delivery.

And cotton for December rebounded 0.5% to 84.57 cents a pound.

But arabica coffee prices eased a further 0.2% to 116.80 cents a pound.

Peru's government has become the latest to offer farmer support, following Brazil and neighbouring Colombia, in the face of prices at their lowest in four years, offering to refinance debt and to give a credit line for replanting.

Evening markets: Midwest rains wash out corn price bulls
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