The grain market is going pretty much to schedule.
Research on seasonal patterns had suggested ahead of time
(as Agrimoney.com reported) that corn futures in August would show some
resilience, if losing ground against wheat, before starting a new lurch lower
in September toward a harvest low perhaps next month.
That seems to be what is playing out, with prices, after
their tumble of the last session, falling further on Thursday, if at a slower
pace, amid a debate about just how low the harvest nadir will be.
"December corn is eventually expected to trade down near the
$3.25-a-bushel area," Terry Reilly at Chicago broker Futures International said.
Another broker said: "We expect the downtrend to resume for
corn, wheat, and soybeans especially now that new contract lows have been made
after a consolidation period.
"Post Labor Day, markets can also be rather weak so we have
to take into account the seasonal pressures of harvest."
(Harvest time typically sets a low in prices for a crop as
it allows the removal of the last vestiges of risk premium and brings a spike
in supplies which shifts some market power towards buyers.)
In fact, there remains one foreseeable threat – frost - to
the ideas of ultra-high yields being talked about, of well over 170 bushels per
acre for corn, and 47 bushels per acre for soybeans.
At Benson Quinn Commodities, Brian Henry said: "Forecasts
for the last couple of sessions have hinted at a potential frost/freeze event
in western Canada, which was the first of that kind of talk for this year."
Some weather models "are trying to move the potential for
freezing temperatures into the Dakotas and northern portions of Minnesota for
late next weekend," he said.
Still, "at this point, confidence in this forecast can be
questioned", although forecasts "will be watched closely to see if the
potential system continues to shift south".
Futures International's Terry Reilly said: "The chance for
frosts across western Canada is not out of the question for later this week,
but the events are viewed as non-threatening."
Meanwhile, early harvest results, from the US South, remain
strong, if the rumour mill is to be believed.
"Reports from the US Delta and major southern growing areas
are indicating large yields with favourable conditions," CHS Hedging said.
Nor are there strong enough signs on demand to prompt
investors to think twice for now about selling, although the day will bring
weekly US ethanol production data.
At RJ O'Brien, Richard Feltes said that "end users are
becoming more confident in sustaining hand-to-mouth buying mode".
Mr Henry said: "Demand for corn is routine. Supportive
fundamentals are an endangered species."
Early deals saw fresh selling, albeit not on the scale of
the last session, with December corn easing 0.1% to $3.51 ¾ a bushel as of
09:30 UK time (03:30 Chicago time).
November soybeans fell 0.4% to $10.15 ¾ a bushel, although
the lot has at least yet to set a fresh contract low.
The January contract on China's Dalian exchange offered
little support, falling 0.8% to 4,585 yuan a tonne.
With Ukraine and Russia apparently on a move towards peace, wheat dropped too, by 0.5% to $5.33 a
bushel in Chicago for December delivery.
With Russia and Ukraine both major exporters of
competitively-priced wheat, the wheat market has been acting as something of a
barometer of regional tensions.
There is also some talk of the US spring wheat harvest
making better progress, as northern areas dry up a little.
"Weather patterns for the Midwest are expected to improve,
aiding harvest in some areas," CHS Hedging said.
Mr Henry said: "The current forecast indicates a better
chance to make progress into the end of the week, weekend and likely into early
next week. However, the pace will remain slow."
Unusually, palm oil
was a haven for bulls, adding 1.6% to 2,009 ringgit a tonne in Kuala Lumpur for
November, looking for its first close since June above its 10-day moving
average, on a continuous chart.
Investors expect Malaysia Palm Oil Board data scheduled for
Tuesday to show Malaysian palm inventories at a seven-month high of 1.96m
tonnes, lifted by seasonally strong production, and soft exports.
However, has this been priced in, with futures remaining
near five-year lows?
There is talk too of demand picking up at these lower prices,
particularly for energy use.