manage a Turnaround Tuesday?
Chicago contracts have a habit, traders say, of reversing on
the second session of the week a strong move in the first.
And soybeans had a weak Monday, dropping more than 2% thanks
to a number of factors, not least the turn wetter in the US weather outlook,
holding the potential for some stabilisation in yields, after an unusually dry
'Turn significantly wetter'
The rain factor remained alive.
Indeed, WxRisk.com, on a 30-day outlook, forecast "large
scale shifts in the overall hemisphere pattern over North America", which mean
that "the pattern will turn significantly wetter in each of the next four weeks".
The outlook is linked to the development of a substantial
low in Alaska, which will push the jet stream south.
"This will drive a cold front deeper into the Plains and
Midwest," the weather service said.
"This development, along with the opening of the Gulf of
Mexico, means a wet 30-day period for much of the Plains and Midwest."
'Time is running out'
But will it come too late to revive yield fortunes much?
"Time is running out for any rains this month to provide a
late boost to yields, like they did last year," the US Department of Agriculture
"Many Midwestern soybeans are getting too mature for further
Still, the late development of the crop, following spring
sowing delays, is at least a help on this score, with Richard Feltes at RJ O'Brien
flagging separate data out overnight showing that only 25% of the US soybean
crop is at leaf drop stage, compared with 35% usually by now.
That suggests that "mid-September rains can still be of some
benefit to the final soybean yield", Mr Feltes said, viewing the leaf drop
figure as a "flat out negative" to soybean price prospects.
Some further worries for soybean bulls have emerged from
seasonal patterns, with Chicago's January soybean contract, at least, having a "strong
tendency" to underperform the December corn lot from mid-September for a month
or so, Mr Feltes said.
Other bearish points include weak US exports, as revealed on
Monday by cargo inspection data, and the prospect of weak demand for the next
few days from China, which is to celebrate its mid-autumn holiday, besides August
US crush data which was, at 110.5m bushels, a little short of expectations.
'Big elephant in the
However, as US Commodities said, "the big elephant in the
room is the Farm Service Agency updated acre estimates" due today at about
13:00 UK time (07:00 Chicago time).
These give an idea of the extent of insurance claims by
farmers for the likes of "prevent plant", meaning where sowing was prevented
by, typically, wet conditions.
And "these acre adjustments will be put into the October Wasde
report," the USDA's flagship monthly crop report, although other data will be
The feeling is that the October Wasde will cut the estimate
for US soybean plantings by some 500,000 acres, and corn seedings by 1m-2m acres.
But will it? The FSA report will give a clue as the figure,
remembering that a 1m acre change on corn sowings does make a large change to
production prospects – of very roughly 150m bushels.
As an extra help to agricultural commodities broadly, the dollar eased, making dollar-denominated
ones more affordable to buyers in other currencies.
And shares eased
too in Asia, by 2.1% in Shanghai and by 0.7% in Tokyo, as investors focus on
the prospect of more Federal Reserve information on the "tapering" off of easy US
There was a feeling that the ag losses of the last session
were fuelled by a drift of cash to shares.
"Money flow away from commodities and into equities was
apparent on Monday as the Dow and S&P indices both edged back towards
August's all time record highs," Benson Quinn Commodities said.
And soybeans also had support from growing chatter over a
closure by Cargill of a crushing plant in Rosario, Argentina, thanks,
apparently, to a shortage of crop for processing.
"What happened to the never-ending South American soybean
crop? Looks like the US will be exporting soybeans to South America this year,"
one investor noted.
Back in the US, the crop condition was cut by the USDA
overnight too, with 50% rated "good" or "excellent", down two points on the
Soybeans for November stood 0.6% higher in Chicago at $13.56
¾ a bushel as of 09:45 UK time (03:45 Chicago time).
Corn gained even
more, by 1.6% to $4.63 ¾ for December delivery, despite continued talk of
decent US yields.
The US crop was downgraded by one point to 53% good or
excellent in the USDA report, in line with expectations.
However, it also gained support from the prospect of the
FSA, which encouraged covering of some of the extensive short positions that
speculators hold in the grain.
Indeed, while there is downside to prices, it may not be too
great for now.
To repeat comments from Darrel Good, farm economist at the
University of Illinois: "At this juncture, there is a high probability that the
2013 US corn crop will be large enough to result in a meaningful increase in
stocks by the end of the current marketing year.
"Prospects of ample supplies point to an average marketing
year farm price in the mid-$4.00-a-bushel range," kind of where it is now.
'Struggling with wet
And with fellow grain corn higher, that helped wheat make ground too.
Besides a hangover from strong US export data on Monday, of
46m bushels, mainly to Brazil and China, wheat was also helped by a caution
from Abares, the Australian commodities bureau, of a relative shortage of quality
Indeed, there are revived concerns of rains cutting the
quality of the Russian harvest, even if better precipitation in the US in
boosting hopes for winter wheat sowings.
"Russia is struggling with wet conditions on the tail end of
their wheat harvest, which has raised more concerns about the overall quality
of the Russian crop," Brian Henry at Benson Quinn Commodities said.
"The pace of planting winter grains in the Black Sea region has
been slow, but it is taking place," he added.
Wheat for December added 0.8% to $6.46 ½ a bushel in Chicago.