Sellers lost a bit of their focus on grains, but maintained
fire on soybeans, which took their
losses this week above 5% on continued ideas of benign Midwest weather for what
is the crop's key month.
Chicago corn futures
reversed some of their early losses to stand down 0.3% at $3.77 ¼ a bushel for
December delivery in midday deals, helped by an Informa Economics estimate of a
165.9 bushels-per-acre corn yield.
There were some questions raised at an INTL FCStone yield
estimate of 162.8 bushels per acre earlier in the week, well below the US
Department of Agriculture forecast of 170.7 bushels per acre, with one broker
saying that "market action is an indication that the market is not concerned
with those [FCStone] numbers".
But with Informa, known for taking a conservative approach,
coming in with an estimate so far below the USDA's investors did challenge
ideas that so much risk premium needed to be removed from values.
After all, at their early low of $3.75 a bushel, December
futures were among their lowest levels in 10 months, appearing to make little
allowance for somewhat difficult conditions in parts of the Midwest over the key
pollination month of July.
And as an extra support to bulls, Ag Resource pegged corn yield
at 165.9 bushels per acre, with output at 13.77bn bushels, some 485m bushels
below USDA figure.
That is not to say that bulls had all the fundamental talk their
own way at all, with weekly US exports sales, at 36,700 tonnes old crop, the
lowest of the marketing year, and down 60% week on week.
While sales for 2017-18 (which starts next month) were better,
at 438,300 tonnes, and within the range of market expectations, they were not
viewed as that encouraging either.
Indeed, they "are running well below average", said Terry
Reilly at Futures International.
"Slowing demand in an ample stock environment shows US corn
faces tough competition," said Benson Quinn Commodities.
Corn's recovery allowed some revival too in wheat futures from intraday lows, although
with Chicago's September contract down 0.8% at $4.57 ¼ a bushel, the lot remained
down nearly 5% for the week.
US export sales data were hardly encouraging here either, at
145,500 tonnes for last week, a low for 2017-18.
"Total sales to date are falling behind last year's pace,"
said Benson Quinn Commodities, while Futures International's Terry Reilly
merely termed the data "poor".
But at least, on the positive side, the weaker prices this week
have put US supplies closer to the frame in tenders, and actual exports last
week, at 583,300 tonnes, were thoroughly healthy, up 22% week on week.
Furthermore, the USDA bureau in Buenos Aires cautioned of rain
damage to Argentine wheat output prospects.
Soy sales smallprint
As for soybeans,
they stood 2.1% lower at $9.57 ¼ a bushel, hit by a cocktail of factors,
including a negative hidden within some other OK export sales data of 233,400
tonnes for 2016-17, and 367,500 tonnes for new crop.
"Beans sales were in line with expectations… but big
cancelations this week were negative," said Benson Quinn Commodities.
"New sales [for 2016-17] were 473,400 tonnes, while cancellations
were 240,000 tonnes, with China and Mexico each cancelling cargoes and a third
cancel by unknown importer."
The cancellations touched a raw nerve, following talk
earlier this week of Chinese buyer hawking around orders for resale.
In the firing line
And, as an extra cloud over the market, there are growing
worries that soybeans could be on the front line for Chinese trade curbs, should
Washington-Beijing trade tensions heighten further.
According to one report, "Chinese officials have mulled
stemming US soy imports should retaliation be necessary.
"Under a draft plan, soybeans have been singled out as the
top product that can be dialled back."
China is, of course, the top buyer of the oilseed.
'Nice and well
And this before factoring in the continued forecasts for
largely benign US Midwest weather, with CHS Hedging saying that "weather forecasts
continue to show below-average temperatures across the US Corn Belts for the
next two weeks.
"Precipitation models look generally favourable for
above-normal rain," although Iowa "remains at risk for lack of precipitation".
Benson Quinn Commodities said that "a really nice and well
organised rain system is moving across the western Midwest and offered
resistance to the grain and bean prices overnight".
After refreshing the northern Plains, "rains have since
moved across Minnesota and into central Iowa bring nice slow and steady rains
to dry regions".
And none too soon, with the weekly USDA drought monitor
placing 36.2% of the key state of Iowa in drought, up 1.5 points week on week,
and with 7.1% of the state now seen in "extreme" drought.
Informa Economics estimated the US soybean yield at 47.3 bushels per acre, not far from the USDA forecast of 48.0 bushels per acre.