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.
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.
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
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
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
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", WxRisk.com 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
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.
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
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,
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.