For soybeans to build on their momentum of the last session,
when strong basis boost prices, required perhaps some setback to expectations
for a huge US crop.
And there is some chance of that.
"Soybeans are most in need of a soaking rain as the critical
pod-filling period advances," Gail Martell at Martell Crop Projections said.
And while a "wide swathe of the upper Midwest", taking in
states such as Minnesota, North Dakota, South Dakota, Michigan and Ohio, will
receive strong rains this week, dryness looks likely to "worsen over the
south-central US", Ms Martell said.
"Low rainfall, or none at all, is expected in Kansas,
Missouri, much of Illinois and the Mid South where high pressure would block
"The GFS model predicts little if any rainfall this week in
Kansas, Missouri, most of Illinois and the lower Mississippi Valley where
stable high pressure takes control."
That said, there are, of course, different interpretations
of the weather outlook and its impact.
MDA said that "warm temperature in the south western Midwest
later this week are not expected to result in any significant stress on the
corn or soybeans".
Meanwhile, "additional rains in the north western and
eastern Midwest this week will continue to replenish moisture, which will favour
the late growth of the soybeans".
Besides, soybeans look in fine shape, and able to lose a bit
of condition without threatening ideas of a huge yield.
The US Department of Agriculture's weekly condition rating
pegged the US crop at 71% "good" or "excellent" – a rise of 1 point week on
week, and defying expectations of a decline.
Improved ratings for Missouri and Ohio soybeans fuelled the
increased rating, which defied condition declines in the likes of Iowa, Kansas
Furthermore, after some somewhat mixed comment issued from
the ProFarmer crop tour, the findings of day one came out promising overall,
with the pod count in South Dakota seen at 1,057.80 per square yard (ie 3 feet
by 3 feet), up from 1,016.68 last year.
The other leg of the tour put the Ohio pod count at 1,342.42
per square yard, up from 1,283.61 last year.
The impact was to send Chicago soybean futures lower in
early deals, by 0.6% to $10.51 ¼ a bushel for November delivery, as of 09:45 Uk
time (03:45 Chicago time).
The contract received little help from futures on the Dalian
exchange in China, the top soybean importing country, where the January lot
closed down 0.6% at 4,560 yuan a tonne.
Elsewhere in the oilseeds complex, Kuala Lumpur palm oil set a fresh four-year low,
standing down 0.5% at 2,077 ringgit a tonne.
'Early frost would be
Back in Chicago, corn maintained its downswing, with the
December lot falling 1.0% to $3.67 ¾ a bushel, dropping back below its 10-day
and 20-day moving averages.
Sure, again, there was some downbeat talk from the ProFarmer
"Crops in part of Ohio/Indiana were noticeably behind in
maturity. In other words, an early frost would be devastating," Mike Mawdsley
at broker Market 1 said.
And the estimated South Dakota yield, at 152.71 bushels per
acre was, shock horror, below that of last year's 161.75 bushels per acre.
'Losses of 20m tonnes'
But for the Ohio arm, the tour pegged the yield at 182.11 bushels
per acre, which would be a record if realised, and ahead of the 171.64 bushels
per acre seen by last year's tour.
(The actual result in 2013 was 177 bushels per acre,
according to the USDA.)
And there are also some rains due for China, which may be
looking at a drop in corn production this year thanks to dryness in some areas.
The drought in Jilin and Liaoning provinces is the worst
since 1961, according to the Ministry of Water Resources.
"Talk revolving around this issue typically hones in on
potential losses of 7m-8m tonnes, with some looking for losses of 20m tonnes,"
Brian Henry at Benson Quinn Commodities said.
Still, even if losses are large, "I have to seriously
question what short or long term positive effect this could have on US values
as China routinely indicates they have ample supply", and there is the fuss of
course about US supplies containing genetically modified corn unapproved in
'Moisture will become
Wheat fell too,
if by a more modest 0.8% to $5.38 ¼ a bushel in Chicago for September delivery,
continuing to feel pressure from the waning in Russia-Ukraine tensions for now.
Still, there are some worries about the northern rains,
while beneficial for row crops, holding back an already slow US spring wheat
harvest, at 17% complete, half the progress typical by this time of year.
And the rains are provoking quality fears too, particularly
over levels of vomitoxin, a residue of the fungal diseases encouraged by wet
"With harvest upon us, moisture will become troublesome as
quality will be watched closely," CHS Hedging said.
"Currently on everyone's radar are vomitoxin levels. Several
reports are coming in well over maximum levels."
Indeed, Minneapolis spring wheat for September outperformed
in falling a relatively small 0.5% to $6.05 a bushel.
Among soft commodities, cotton
rose 0.3% to 64.06 cents a pound in New York for December delivery.
Improved ideas for the US crop took a bit of a dent when the
USDA cut the condition rating by 2 points to 50% rated good or excellent as of
Condition declined in states including Texas, the top
producer, neighbouring Oklahoma and Alabama.