If the trade debate earlier on had centred on corn, and whether key estimates
released by the US Department of Agriculture were "bullish" or not, it was the soybean forecast which appeared the
focus of later discussion.
In particular, doubts grew that the US will really export
2.15bn bushels of soybeans in 2017-18, as forecast by the USDA in its first full
global crop estimates for next season.
The forecast "is not realistic, given the current world
fundamentals", said Darrell Holaday at Country Futures," a feeling only
enforced by an upgrade by Conab of 2.8m tonnes to 113m tonnes to its estimate
for the Brazilian harvest.
That compared with a market expectation of a 111.8m-tone figure.
'Yield forecast is
The USDA's forecast of a 48.0-bushels-per-acre soybean yield
next year came under scrutiny too.
Richard Feltes at RJ O'Brien said he was "hearing more
chatter that USDA's US soy yield forecast is too low, given improving genetics
and a sufficiently long growing season in the north west Midwest, which
typically encounters the first autumn frost".
That was a reference to the decent sowing weather in north
western areas of the Midwest, with the south and east the bits where wetness
have been provoking sowing worries.
'Shipments on pace'
OK, the balance sheet is not all about production, with Darrell
Holaday noting too China's rising demand for oilseeds, over which there appears
"It should also be noted that USDA continues to push Chinese
imports higher with a projection of 93m tonnes next year compared to 89m tonnes
in 23016-17," he said.
And weekly US export data came in strong too for soybeans,
at 381,400 tonnes for 2016-17.
"Soybean sales and shipments remain on pace" to meet the
USDA estimate for this season "even with USDA raising export demand 50m bushels
yesterday to 2.05bn bushels," said broker Benson Quinn Commodities.
"Shipments were up week on week with total sales now 46m bushels
above the USDA export estimate."
Actual exports, while down week on week, "were on pace to reach
the USDA's increased forecast".
'Not really believing
Still, soybean futures found it hard to gain traction
against rising South American crop estimates, which heightened concerns over the
USDA's forecast for US soybean shipments next season.
Soybean futures for July closed down 0.5% at $9.66 ¼ a
"Obviously, the market is not really believing the USDA
2017-18 numbers," Country Futures' Darrell Holaday said.
Soymeal was little
help, ending down 1.1% at $314.90 a short ton for July delivery, losing share
of the crush to soyoil, which ended
up 0.7% at 32.49 cents a pound for July, helped by a firm performance by rival
palm oil on lower-than-expected Malaysian inventory data.
Weather improves for
Still, corn fared
even worse, dropping 1.2% to $3.73 ¾ a bushel, undermined not so much by the debate
over 2017-18 numbers as the return of traders' attention to the Midwest weather
– which is improving just in time for farmers trying to get the grain in the
Concerns over wetness in the southern and eastern Midwest
"It is fair to say that the current system spinning out of
the Southwest US has not been near as vigorous as was projected by the models,"
Mr Holaday said.
"There is going to be a window of opportunity for eastern
Corn Belt over the next five days."
Benson Quinn Commodities said that "right now, conditions
tend to look ok for the eastern Corn Belt and very good for the western Corn
"Gradually warming temperatures and lighter precipitation
are slowly helping the eastern Corn Belt get back to more favourable
OK, the news for corn was not all bearish, with Conab's
upgrade of 1.3m tonnes to 92.8m tonnes in the forecast for Brazilian production
in 2016-17 short of the market estimate of 95.1m tonnes.
(The USDA has the figure at 96.0m tonnes.)
However, weekly US export sales data for corn, at 277,000
tonnes for 2016-17, were "definitely weaker than expected", said Mr Holaday.
"The worst export news was the new crop corn sales were
actually negative, by 55,000 tonnes."
Running too slow?
It was left to wheat
futures to come to grain bulls' rescue, adding 0.6% to $4.33 ¾ a bushel in Chicago
for July delivery,
This despite some disappointment at weekly US export sales
data, at a marketing year low of a negative 24,200 tonnes for old crop (OK, 2016-17
ends this month), while hitting 273,400 tonnes for 2017-18.
Even an actual export number of 595,800 tonnes (21.9m
bushels) did not please all observers.
"There are only four weeks left in the marketing year,
all-wheat sales need to average 2.0m bushels and shipments need to average
37.8m bushels" to hit the USDA estimate for exports of 1.035bn bushels for the marketing
year, Benson Quinn Commodities said.
'Potential for short
However, on the plus side for prices, the USDA's estimate for
a decline in stocks in the hands of major exporters in 2017-18 is providing a
little cause for price support.
Especially given that hedge funds retain a large net short
in the Chicago market.
"The potential for short covering does exist in the Chicago
market," Benson Quinn Commodities said.
Paris wheat futures also managed some headway, edging 0.2%
higher to E170.00 a tonne for September delivery, despite firmness in the euro.
"The EU exported 249,000 tonnes of wheat last week taking
total exports to 21.2m tonnes or 2016-17 and sustaining a good pace which
helped support EU prices today," said CRM Commodities.
Still, for real gains, it was necessary to go to New York,
and cotton, which for July delivery soared
3.5% to 79.18 cents a pound.
This despite a mixed reception to USDA forecasts for 2017-18
– viewed as bullish on a global level, in foreseeing lower carryout stocks than
had been expected, but bearish for the US, where the opposite was true.
Weekly export sales data were fine, at 160,600 running bales
for this season for old crop upland cotton, and 146,600 running bales ordered for
But the actual export number of 412,800 running bales was strong.
Traders detected the hand of fund involvement in cotton's jump
too, noting that the increase was not repeated to anywhere near the same degree
in later contracts.