PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 09:41 GMT, Monday, 30th Jun 2014, by
Morning markets: grain, soy prices ease ahead of key US data

The big day arrived on something of a muted note, as they often do, amid past minute positioning by investors.

The US Department of Agriculture will later release much-anticipated data on US grain stocks, as of June 1, and crop sowings.

The statistics are expected to show a sharp drop in US soybean inventories year on year, of 13.1% to a squeezed 378m bushels, while corn stocks are seen up 35% at 3.72bn bushels, reflecting last year's strong harvest.

On sowings, corn area is seen at 91.725m acres, up 34,000 acres on the USDA's March estimate, with soybean plantings estimated at 82.154m acres, up 661,000 acres.

However, DuPont's profits warning last week on poor corn seed sales, combined with a drop by Monsanto on corn seed profits, have raised questions over whether seedings of the grain will fall short of expectations, spurring a rise in futures on Friday.

'Negative input'

That failed, however, to carry through into this session.

The Commodity Futures Trading Commission, in its weekly update late on Friday on investors' positions in commodity futures and options, reminded of a sizeable net long in corn, even after a drop of 22,000 contracts week on week.

"With the corn drop developing in the manner it is, the size of this position remains a negative input," said Brian Henry at Benson Quinn Commodities.

Traders have also noted a pick-up in producer selling, although farmers are still "significantly behind selling new crop production relative to where they are historically for late June", said .

On the demand side, USDA data late on Friday showed the US hog herd falling by 5%  year on year as of June 1, above the 3% figure expected.

More rain

Back to supply, and thinking of the development of US corn, while wet areas of the country did receive more, and unwanted, rainfall over the weekend, precipitation was largely in line with forecasts.

In the Midwest, "weekend rainfall was near expectations," MDA said, although was "slightly above expectations" in the northern Plains and Canada's Prairies.

Still, in Canada and the likes of North and South Dakota, "drier weather should return Tuesday through Friday", allowing some drying out of wet areas, in many of which crops are viewed as being on their last life as far as flooding goes.

There is also some scope for sowings, for which July 4 is generally seen as the final cut-off date for US farmers.

'Big heat ridge'

Meanwhile, for Midwest corn, the big threat, as ever at this time of year, is of hot and dry weather, which would hamper the forthcoming pollination process.

And the GFS weather model does show a "big heat ridge over the Rockies and Plains" in the 11-15 day outlook, "implying heat for the Plains into the western Corn Belt", said.

That said, the European model "has seasonal temps with no heat ridge of any kind" over the US, with "a fairly dry pattern but not very dry".

Certainly, traders were not too worried in early deals, sending new crop December corn down 1.1% to $4.42 ¼ a bushel as of 09:45 Uk time (03:45 Chicago time), with the September contract down 1.1% at $4.37 ¼ a bushel.

Crop condition debate

The declines allowed new crop November soybeans to recover some lost ground, in terms of the soybean:corn ratio, which fell heavily in the last session, if to still elevated levels.

November soybeans fell 0.5% to $12.22 a bushel, reviving the soybean:corn ratio to an elevated 2.76:1, if still below the territory above 2.8:1 reached last week.

The extent of deliveries revealed later against the expiring July contract may have a bearing on movements later in the week, besides what emerges from today's USDA reports, although no deliveries are expected.

Also, there is the prospect of the weekly crop progress data due later too, in which Benson Quinn Commodities flagged a "general consensus for the rating to decline nominally to 70% from 71% rated good or excellent".

Still, Citigroup said that "we do expect crop conditions to improve on Monday afternoon's report and the weather conditions are continuing to be excellent for crop development".

Old crop soybeans were certainly doing relatively well in easing only 0.2% to $13.75 a bushel for August delivery.

It little helped Chicago futures that contract in the Dalian exchange in China, the top soybean importer, fell too, by 0.5% to 4,465 yuan a tonne for January delivery.

'Quality issues, specifically vomitoxin…'

There seems more broad agreement on quality threats to US winter wheat, especially the soft red winter wheat crop grown in the Midwest, where the rain helping spring crops in many areas (if proving too much in some) are proving a disease threat.

"There is a backdrop of support in the winter wheat markets related to the relatively slow pace of the winter wheat harvest, lagging producer sales and quality issues, the latter related to the soft red winter wheat crop," Benson Quinn Commodities' Brian Henry said.

CHS Hedging said: "Quality issues, specifically vomitoxin, continue to cause problems with the soft red winter wheat harvest in the east."

Still, there is also a backdrop of pressure on prices from the boost to supplies stemming from the northern hemisphere harvest, a factor which tends to see a seasonal low in futures around July.

Soft red winter wheat for September fell 0.6% to $5.90 a bushel, while the Kansas City hard red winter wheat contract for September eased 0.2% to $7.20 a bushel

Mixed softs

 Among soft commodities, cotton for December edged 0.1% higher to 74.95 cents a pound, extending its slow recovery from last week's two-year low.

But raw sugar for October eased 0.6% to 18.22 cents a pound. One, small, negative factor was data showing a 20% rise to 128,300 tonnes in output from Bangladesh in 2013-14, ending today.

A bigger downer was a drop of 1.8% to 4,545 yuan a tonne in September sugar on the Zhengzhou exchange in China, historically a big importer of the sweetener, but where inventories may be on their way to their highest in at least a decade, according to Australia & New Zealand Bank.

Cocoa soars, coffee cools. Corn, soybean futures diverge too
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