One of the main early pressures on grain prices – an
improved US weather outlook – reversed a bit, allowing futures a bit more
But the other main burden - the huge buying by hedge funds
in the complex, creating worries of an overhang of long bets – remained a
deterrent to higher prices.
encountered an extra setback, in terms of monthly US crush data from industry
group Nopa which came in, at 138.074m bushels for June, well below
Traders had forecast a 143.093m-bushel number, and even that
was well below the 149.246m bushels recorded for May.
Last year, US crushers processed 145.050m bushels of the
Soybean futures for November ended down 0.4% at $9.97 ½ a
bushel, surrendering the $10-a-bushel mark, although closing above an early low
of $9.93 ¾ a bushel.
Futures also received little help from US export data for
last week for the oilseed at 285,972 tonnes, down from 476,136 tonnes the week
The figure was also "lower than expectations of around 300,000-400,000
tonnes", said Derek Hullett at CHS Hedging.
futures fared better, in ending down a more modest 0.1% at $3.88 a bushel for
December, and well above an intraday low of $3.83 ½ a bushel, in part thanks to
more promising US export data.
Shipments last week totalled 1.11m tonnes, up from 1.01m
tonnes the week before.
But the main boost to prices was some turn less benign in
the outlook for major US growing areas at a time when corn plants are
undergoing the heat-sensitive pollination process.
"The 6-10 day temperature forecast is showing above-average
temperatures across all of the Corn Belt and northern Plains," said CHS Hedging's
The recovery in futures from lows stems from "forecasts that
point to hot and relatively dry conditions through much of the Corn Belt", said
Benson Quinn Commodities.
'Weather market alive
At broker Country Futures, Darrell Holaday said that "the
weather market is still alive and well", flagging that a "high pressure ridge
is setting up in the southern Plains, and a heat dome will extend up through
Kansas, Nebraska and parts of Iowa".
MDA said that "dryness continues to stress corn, soybeans,
and spring wheat across the north western
Midwest and northern Plains".
That said, "rains are expected to increase across the north eastern
Plains and northern Midwest this week, which should improve moisture supplies
and crop conditions".
'Heat still just as
Looking further ahead, WxRisk.com said that the latest run
of the GFS model "through day 10… has shifted the rains along the cold front
July 20-22 further to the north.
"The rainfall amounts on the front are still as impressive
as what was showing this morning with some areas receiving up to 6 inches of rain
"But the midday GFS model as you can see has these rains
restricted to the northern 25% of Iowa, the southern third Minnesota the
northern 25% of Illinois, and Indiana and southern Wisconsin."
"Most of central and downstate Iowa, Illinois see no rain
over the next six days according to the midday GFS.
"The heat is still just as impressive," reaching 100 degrees
Fahrenheit in Des Moines, Iowa late this week.
'On the defensive'
Futures would probably have fared much better, were it not
for the substantial hedge fund net long in grains, after a record pace of
buying in the latest week.
"Funds were significantly net long all of the grains as of
last Tuesday," Mr Holaday said.
"They obviously dumped many of those in the last three days,"
with prices tumbling later last week, "but those numbers have kept the markets
on the defensive".
In fact, winter wheat,
in which hedge funds have a penchant for going short, but are currently net
long, eased by 0.9% to $5.06 a bushel in Chicago for September delivery, closing
below their 20-day moving average for the first time in a month.
Richard Feltes at RJ O'Brien noted that winter wheat markets
were "well supplied", although there are increasing worries over Australia's
harvest, with increasing talk of sub-20m-tonne estimates, which Agrimoney.com
revealed two weeks ago.
fared better, adding 1.2% to $7.67 ¼ a bushel in Minneapolis for September
delivery, helped by ideas that weekly US Department of Agriculture crop
condition data later will show a decline in ratings.
Furthermore, the contract was one in which managed money did
not increase its net long in the latest week - cutting it in fact by 2,859 lots
to 11,158 contracts, so eroding ideas of an "overhang".
And the worries over drought damage to crops spreading from
the northern US to Canada are growing, with MDA cautioning that "dryness will
continue to stress the crops across south western Saskatchewan and southern
Alberta, and more rains will still be needAMNoned in eastern Saskatchewan and
Manitoba to end moisture deficits".
'Mix favouring sugar'
Among New York-traded soft commodities, by contrast, hedge
funds have built up a record net short position, including individual record net
shorts in cocoa and raw sugar.
Still, if that might be tempted to provoke some ideas of a potential
short-covering wave ahead, and bring upward pressure on prices, that has not
Raw sugar for October settled down 1.5% at 14.09 cents a pound,
Sucden Financial flagged continued disappointment at last
week's "bearish" report from industry group Unica on the Brazilian Centre South
"Last week's Unica report was bearish in that it showed the
mix favouring sugar to a larger extent than had been forecast illustrating the
producers rush to produce sugar out of the cane juice whilst weather conditions
(Centre South mills can turn cane into either sugar or
ethanol, with price incentives playing a big role in deciding to which, and by
"There is little rain expected until the end of this month
so this trend should continue in the short term."
'No damaging cold in
September arabica coffee
futures settled down a more modest or 0.1% at 133.55 cents per pound, after
earlier hitting a six-week high of 135 cents a pound, as investors keep an eye
on weather in Brazil's "winter", and whether there will be a deleterious frost.
"The weather in Brazil remains with temperatures above
damaging levels," said Jack Scoville at Price Futures.
"Most forecasts suggest that the temperatures could average
near-to-above normal much of this week after a couple of cooler nights early
"There is no damaging cold in sight for now."