Grain prices tumbled, alongside a drop in concerns about
growing weather for US crops.
The weather over the weekend proved not as threatening as
had been expected, with CHS Hedging saying that "temperatures failed to impress".
It has to be said they did reach mid-90s Fahrenheit in the western
Midwest and 100s in the north central Plains, according to MDA, although the
consensus seems to be that such highs were not as widespread as many investors
Furthermore, "this week's weather forecast makes a call for
beneficial rains throughout much of the Corn Belt", said CHS Hedging.
Benson Quinn Commodities said that the "current forecast
indicates a good opportunity for precipitation through much of the country
during this week," although there are some areas of the western Corn Belt "that
are expected to be missed.
"Temperatures are also expected to be a touch cooler this
'More rainfall needed'
Not that this means that the weather threat to US crops is
Sure, "showers will favour the northern Plains and northern
Midwest today and tomorrow and will favour the central and eastern Midwest
Wednesday through Friday," MDA said, adding that this precipitation will
improve soil moisture.
"But more rainfall will still be needed, particularly across
North Dakota, South Dakota, and Nebraska," largely spring wheat country, but important for corn and soybeans too.
MDA also flagged dryness threats in Australia, for wheat,
and north east China, for corn and soybeans.
Meanwhile, on the demand side, the US Department of Agriculture
unveiled the export sale for this season of 130,000 tonnes of corn (originally
billed as soybeans) to an "unknown" import destination.
And US weekly export data were viewed as strong, at 1.04m
tonnes for corn, 773,992 tonnes for wheat and 508,220 tonnes for soybeans.
Then there was the uncertainty over US data later on US crop
condition to factor in which were expected to show a drop, thanks to hot and
dry weather, of 1 point week on week to 67% in the proportion of corn rated "good"
The reading for spring wheat is expected to come in 2 points
lower week on week at 53%.
'Damage is a fact'
But what if the figures come in lower?
"Damage to the corn and bean crop this past weekend is a 'fact'
in my view, given the record high temperatures and winds all weekend long from
Kansas to Indiana," said Mike Zuzolo at Global Commodity Analytics .
"How will the trade contend with crop conditions this
afternoon if they see a marked drop?"
Still, that did not seem to be worrying investors on Monday,
when corn futures for July tumbled 2.8%
to $3.77 ¼ a bushel, back to the upper end of the trading range it had been
within before last week's breakout.
The new crop December lot shed 2.7% to $3.95 ½ a bushel,
back below the psychologically-important $4.00-a-bushel mark which had, when
futures were above it, been viewed as particularly important in switching on
In the wheat complex, winter wheat for July dropped 2.6% to $4.34
a bushel, undermined by corn, but also some decent reports from the US harvest,
which has been speeded by dry weather.
"Wheat prices being pressured by increased hard red winter
wheat harvest activity," said Darrell Holaday at Country Futures.
CHS Hedging said that "the wheat markets are trading down
today due to higher-than-expected yield numbers coming from the winter wheat
harvest in the southern Plains".
It report a "very active hard red winter wheat harvest over
the weekend in Oklahoma and southern/central Kansas. Hot and windy conditions
turned a lot of wheat."
What if rains
And what of spring
wheat, the toast of grain bulls last week, for its rally on the spreading drought
in the Dakotas?
The Minneapolis July contract closed lower, but by a
relatively modest 1.0% to $6.00 ½ a bushel – importantly, keeping its head above
the psychologically-important $6.00-a-bushel level.
"Rains are starting to come into the Dakotas as I write, and
the model updates are also coming in currently - the updated models so far as
wetter for the Dakotas in the next 48 hours," Mike Zuzolo said.
"If these rains disappoint, however, I'd say we are in for a
market that will likely make-up these losses very quickly, and potentially also
take out last week's highs."
for July, meanwhile, shed 1.0% to $9.31 ¼ a bushel, undermined also by improved
US weather, as well as expectations that the USDA will later unveil an elevated
initial rating of the domestic soybean crop.
"Private analysts expect good/excellent ratings to be at 70%,"
CHS Hedging said.
"This would be four points below last year's rating of 74%,
but still ahead of the five-year average of 68% good/excellent."
There were also concerns, on the demand side, of a potential
threat to Chinese imports of the oilseed from a clampdown ordered by officials
on imports of genetically modified crop, which is permitted for feed, but not
Among soft commodities, weakness was also evident in cotton, which eased 0.7% to 75.13 cents
a pound in New York for July, undermined by an upgrade by the USDA on Friday to
its estimate for domestic stocks at the close of 2017-18.
However, New York arabica
coffee for July managed a 0.8% gain to 127.60 cents a pound - despite
weight from a weakening real, which dropped
0.5% against the dollar – as worries
over cold weather in southern Brazil made themselves felt.
These countered the bearish pressure emanating from an
estimate late last week from Brazilian exporter Comexim that the country's 2017
harvest could hit 52m tonnes, in the top end of market expectations, with the
result for 2018 seen as potentially coming in at 65m bags.