Can corn futures manage
a full week of positive sessions?
Corn's fourth successive higher close on Thursday, and a
rebound in soybeans too, met with a
somewhat sceptical reaction, seen more as an opportunity for selling by
producers than panic among investors with short positions.
Sure, there are ideas that lower values are improving demand
for corn, of which US supplies have been price leaders, before rising freight
costs have eroded this competitiveness a touch.
However, there are ample supplies to get through, with the
US harvest seen widely as likely to exceed US Department of Agriculture's
forecasts upgraded on Tuesday, but to levels seen very much as work in
"There is little
reason to think that this rally is sustainable for any sort of extended period,"
Citigroup's Sterling Smith said.
Nor are ideas over the last session's soybean rally more
optimistic, with a huge US crop on the way.
"We do expect these price gains to be largely transitory,"
Mr Smith said.
Another US broker said: "With an expected record soybean
crop on the way we don't see a sustained rally in the works and recommend using
the strength to add to hedges.
"It has been a long time since we have seen a large US
soybean carryout and the market may not be prepared for how low prices can get,"
foreseeing that futures will be "well below $10.00 a bushel at harvest assuming
the USDA's yield estimate holds or even grows".
Lowest since 2009
There was in fact some maginally upbeat data around for the
oilseeds complex in data from cargo surveyor Intertek showing Malaysian palm oil exports down 15.2% so far in August,
month on month.
While that may not look in the slightest bit bullish, it
shows a sharp improvement on the rate of 22% decline for the first 10 days of
That said, it is still a decline, and investors remain
cautious over buying Kuala Lumpur palm oil futures, after attempts last week at
bargain hunting proved premature.
The October contract touched 2,114 ringgit a tonne – the lowest
since October 2009 – before recovering a smidgen to stand at 2,115 ringgit a
tonne as of 09:30 UK time (03:30 Chicago time), down 0.8% on the day.
There are a few concerns over dryness in the US too, with
Mike Mawdsley at Market 1 saying that "the time is now [for crops] to get a
"Locally seeing soybeans on the light, sandy ground
shrinking every day now.
"It is not a disaster, but top yields are being trimmed."
Still, forecasts are benign, with Kim Rugel at Benson Quinn
Commodities noting that "weather forecasts are mostly bearish as models
continue to confirm rains for the weekend over Minnesota, North Dakota, South Dakota,
Iowa, Wisconsin and Illinois.
"But a warmer-above-normal temperature profile on the
horizon make this a critical event for beans in the drier areas of the upper
Ahead of the weekend, there is the prospect of more data, in
the NOPA industry group's monthly statistics on the US soybean crush for July.
The statistics are expected to show US soy processors further
slowed their crushing operations, thanks to tight soybean supplies which have
been reflected this week in rising basis levels.
Still, for now soybean futures for November actually dropped
0.5% to $10.51 ¼ a bushel, although the spot September contract was reluctant
to fall so much, standing down 0.2% at $10.96 a bushel.
December corn was more resilient still, in shedding 0.25 cents
to $3.73 ¼ a bushel, as some talk turned to the next, and last, potential
"The only outlier now would be an early frost," one US
broker said, with the danger period of early-mid September not so far away.
Corn's relatively strong performance helped wheat too, which has struggled this
week to put in the outperformance often seen at this time of year, as the
northern hemisphere harvest winds down and pressure from that source wanes.
Citigroup's Sterling Smith noted that Iraq, a major wheat
importer, "may lose as much as 30-40% of its wheat harvest, and the 2015
planting is at risk".
"While this is not a big issue for the total global supply
it can lend some transitory support to the market."
That said, CHS Hedging noted "talk that the Russian wheat
crop could be as high as 61.0m-63.0m tonnes", above even the 59.0m-tonne figure
unveiled by the US Department of Agriculture on Tuesday, itself a 6.0m-tonne
Wheat futures in Chicago rose edged 0.25 cents higher to $5.37
½ a bushel for September.