Have grain traders given up for the week?
One common comment about the last session was that, in the
words of one trader, "it was a rather quiet trading session".
And something of that continued into Thursday, for which
Citigroup's Sterling Smith said that "there is a high potential for stagnant
trade after export sales numbers.
"The grain space looks ready to start the weekend early, as
the stale news flow and the looming reports are cooling action."
The reports referenced are Monday's US Department of
Agriculture briefings on US grain stocks, as of June 1, and on spring sowings.
For corn, the
data are expected to show a sharp rise in inventories, year on year, of 35% to
3.72bn bushels, with sowings at 91.725m acres, up a touch from the original figure
of 91.691m acres.
inventories are seen falling, by 13.1% to 378m bushels, with sowings seen at a
record 82.154m acres, up from a March forecast of 81.493m acres.
And for wheat,
sowings are seen little changed, at 55.818m acres, although spring wheat area
is seen a little reduced, by 149,000 acres to 11.86m acres, by heavy rains, while
stocks are pegged down 16.7% at 598m bushels.
There are some other factors on which to focus minds, such
as the export sales data due later, expected for corn to come in at
150,000-300,000 tonnes for this season and 200,000-300,000 tonnes for 2014-15,
both figures better than seen the week before.
For soybeans, sales of 50,000-150,000 tonnes are expected
for 2013-14 delivery, further pushing the total commitments for the season
above the 1.625bn bushels the USDA has forecast for the whole season.
For new crop, export sales are pegged at 200,000-400,000
tonnes, in line with last week's.
And for wheat, for which the 2014-15 season started this
month in the US, export sales are pegged at 400,000-450,000 tonnes, implying a
figure in line with last week's 372,614 tonnes.
Furthermore, on Friday, Statistics Canada will unveil
Canadian sowings data, which are expected to show some reduction in sowings of
wheat from original intentions, by 400,000 acres to 24.5m acres.
'Some lost acres'
But the market's main focus remains on Monday's reports, and
with some idea that maybe investors have been too quick to take a negative
slant, with the heavy rains in the northern US, including the north west US,
raising questions over the extent of risk premium removed from prices so early.
Michael Cordonnier, the influential crop scout, restated his
estimate, made to Agrimoney.com last week, that up to 2m acres may be been lost
to rains in parts of Dakota, Iowa and in Minnesota, where in southern areas "the
number of acres under water may be 5% of the total".
"Additionally, there may be some lost acres in Nebraska,
Iowa, and Minnesota due to hail damage and I do not expect the hailed-out corn
to be replanted," Dr Cordonnier said.
"Some additional acreage could be lost in Indiana and Ohio
due to excessive moisture."
Not planted, or
And there is the question of whether this will actually show
up in a reduced sowings figure, or a higher crop abandonment rate.
"Last year, final US corn area declined 2m acres from June
to the final estimate, while US soy area shrank by 1.2m acres," Richard Feltes
at RJ O'Brien noted.
"Above-normal loss of 2014 US corn and soybean area from
flooding should be reflected in higher abandonment – not in fewer planted acres
as occurred last year."
And there is more rain on the way too, a factor which might
generally be viewed as benign, under the "rain makes grain" idea, but is
raising question marks given the extent of moisture already received.
While some seem have deemed northern Plains, and western
Canadian, weather "favourable… given the potential rain totals called for over the
course of the next 7 days in many of these areas and extremely wet conditions
lingering from the prior rains, the favourability aspect of additional moisture
has to be questioned", said Brian Henry at Benson Quinn Commodities.
"Considering many low areas didn't get planted, and many areas
adjacent [have] standing water, local amounts in excess of 2 inches are not
Wheat had some other factors offering support too, such as
rumours that Brazil is in the market for US hard red winter wheat, of which
supplies are of course squeezed by damage from drought, and now late rains.
Kansas City hard red winter wheat for September nudged 0.1%
higher to $7.15 a bushel as of 08:45 UK time (02:45 Chicago time), bumping up
against its 200-day moving average, although Chicago soft red winter wheat did
better, adding 0.3% to $5.85 ¾ a bushel, without any major moving averages in the
Corn did better still, up 0.5% at $4.43 ¼ a bushel for the
July contract, and to $4.42 a bushel for the December contract, putting a bit
of distance between it and the $4.35 a bushel mark, a low set in January, which
is seen as a danger point.
Soybeans for July were 0.3% higher at $14.20 a bushel, with
the new crop November lot up 0.5% at $12.34 ½ a bushel.
Palm oil offered
some support to oilseeds by standing 0.6% higher at 2,498 ringgit a tonne in
Kuala Lumpur, attempting for a second session to set camp back above 2,500
ringgit a tonne.
The vegetable oil is getting support from dry weather in Malaysia
which could prove a sign of the El Nino weather pattern, which tends to bring
the country prolonged such conditions, with exports picking up too. .
Data late on Wednesday from cargo surveyor SGS showed
Malaysian shipments turning positive, in terms of month on month growth, for the
first 25 days of June, if by a modest 0.4%