PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 08:47 GMT, Thursday, 26th Jun 2014, by
Morning markets: grain prices rise amid pre-report nerves

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."

Briefing estimates

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.

For soybeans, 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.

Data later

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 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 abandoned?

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 welcome."

Price rises

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 way.

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 up

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%

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