PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 10:00 GMT, Tuesday, 17th Sept 2013, by Agrimoney.com
Morning markets: jitters over acres data lift grain prices

Could soybeans 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 August.

'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 said.

"Many Midwestern soybeans are getting too mature for further bean development."

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 room'

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 used too.

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.

Macro markets

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 monetary policy.

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.

Cargill closure

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 week.

Soybeans for November stood 0.6% higher in Chicago at $13.56 a bushel as of 09:45 UK time (03:45 Chicago time).

Corn rebounds

Corn gained even more, by 1.6% to $4.63 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 conditions'

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 supplies.

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 a bushel in Chicago.

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