For once, grain futures ended the day much as they began it,
with wheat futures outperforming and
soybeans lagging, although the
oilseed managed some catch-up, helped by support from both supply and demand
On demand, Chinese buyers purchased 360,000 tonnes of US
soybeans for 2014-15 delivery, with Mexico purchasing 134,700 tonnes
of soymeal too.
That added to the upbeat picture for US soybean exports of
late, as prices have fallen.
As for supply, expectations are still high, gargantuan even,
for US production, given record sowings and benign weather too.
But some holes are appearing in the idea of perfect
conditions as soybeans head for August, their key development period, bringing
'Some crop stress'
"The [six-to-10-day] forecast has trended slightly warmer in
the south central Midwest," said MDA, which is preparing for its annual crop
tour of the region.
"Continued drier weather in the western Midwest will allow moisture
to decline further, and some stress will likely begin to develop, mainly on soybeans
in south western areas," although cool temperatures will limit harm.
In Canada, "dryness will rebuild in the western Prairies"
and in the US, "in the far north western Plains wheat belt also," the weather
'Slight drop in crop
Sure, as Benson Quinn Commodities said, "the market views
the drier July and forecasted below-normal precipitation next week as nominal
risk events," given the cool temperatures this month and in the forecast.
But the forecasts have, for now at least, stolen momentum from
rocketing yield ideas, with some whispers even that high US crop ratings may
start to show some decline.
Citigroup's Sterling Smith, thinking particularly of soybeans,
said that "we do expect a slight drop in crop conditions, although the overall
effect on aggregate yields should be negligible".
The consensus seems to be, however, for steady numbers when
the US Department of Agriculture on Monday unveiled weekly ratings.
That said, the oilseeds sector had some fresh offerings for bears,
such as talk of Chinese soybean crush margins turning negative, taking some of
the glory away from today's import order.
Palm oil closed
down 0.7% at 2,265 ringgit a tonne, within an ace of 11-month lows, after SGS
estimates Malaysia's exports of the vegetable oil at 1.08m tonnes in the first
25 days of July, down 1.6% month on month.
Rival Intertek had earlier estimated a rise in shipments, of
And the European Commission raised its estimate for European
Union rapeseed production by 982,000
tonnes to 22.265m tonnes. (While still below some other forecast of 22.5m
tonnes or more, the EC uses a conservative figure of "usable production".)
The upgrade countered some of the disappointment over the UK harvest, and slow farmer selling, to erode rapeseed futures for November, the
best-traded contract, by 0.1% to E327.50 a tonne in Paris.
In Chicago, soybeans for November closed down 0.3% at $10.83
½ a bushel, falling just short, for a second session, of retaking their 10-day
managed decent gains, rising 1.8% to $5.38 a bushel in Chicago for September
delivery, closing above its 10-day moving average for only the third time in
Signally, this time Kansas City hard red winter wheat for
September kept up with its soft red winter wheat peer, adding 1.7% to $6.31 ¼ a
bushel, indicating that there was more at work than position covering by
speculators, who have a large net short position in Chicago (but not in Kansas
There is some demand around at lower price levels, albeit
likely much of it going for now to Black Sea exporters.
Turkey, a big customer of Russia, bought 165,000 tonnes of
milling wheat on Friday, plus 65,000 tonnes of barley.
Summer low being formed?
And, on the demand side, while Ukraine's agriculture
minister, Ihor Shavaika, said that Ukraine could lose 500,000-550,000 tonnes of
grain due to conflict, not much out of a harvest of some 60m tonnes, the
revived tensions in the region continued to weigh.
"The EU and US are considering sanctions on Russian banks,
which could be negative on farm credit and exports," US Commodities said.
The broker added that "wheat and corn are beginning to
perform as if a summer low is being formed", an outcome which tallies with
forecasts from ABN Amro, and has some historical support too.
Pressure in wheat futures tends to ease as the northern
hemisphere harvest closes, while Moore Research indicates a tendency for corn
futures to stagnate from mid-July to mid-August, if heading lower into the autumn
Corn in fact
closed up 0.6% at $3.71 ¾ a bushel for December.
Weather is not so important for the grain, which has largely
passed its key pollination period in the US, reducing the threat posed by drier
US conditions ahead.
And there is the negative of China's growing antipathy to MIR 162, the Syngenta corn variety grown in the US, but not yet approved by
Beijing, at the centre of rejections of American cargoes of the grain and of
distillers' grains (DDGs), a corn-derived feed ingredient.
However, with many investors believing the MIR 162 fuss has
already been discounted, there were positives for investors to look at too,
with Mexico purchasing 245,716
tonnes of new crop US corn, plus 23,368 for 2013-14, which finishes next month.
there has been revived talk of US environmental officials rowing back on steep
cuts to the country's ethanol mandate, with the White House apparently saying
that revised figures are "imminent".
Coffee fears revive
commodities, arabica coffee extended
its recovery, closing up 0.5% at 182.80 cents a pound for September 0.5% at
179.15 cents a pound for September delivery amid fresh downbeat talk on the
drought-hit Brazilian harvest.
Silas Brasileiro, president of Brazil's Conselho Nacional do
Café producers' group, returned to the study it commission by Procafe in April
showing a drop in output to 40.1m-43.3m bags, from the figures near 60m bags
investors had initially expected.
could end up at the lower end of that range," he said, adding that next year's
production could fall below 40m bags.
FCStone earlier in the week underlined the compromised prospects for 2015
Brazilian coffee production, besides confirming substantial damage to the crop
currently being harvested.
Cotton fails again
Raw sugar extended its recovery too, adding 0.5% to
17.14 cents a pound for October delivery, taking the contract back over its
10-day moving average at the close, amid concerns of a slowdown in Brazilian
output, and of the impact of a poor monsoon on Indian output.
ABN Amro forecast prices returning to 19.00 cents a pound in the autumn, for the first
time since October last year.
But cotton again struggled to find
traction, ending down 1.1% at 65.35 cents a pound in New York for December
delivery, the contract's lowest close, as technical support levels continued to
fail, spooking a market still highly concerns about the prospect of a slump in
imports by China, which is reforming a subsidy regime which has led the country
to monster stocks.
remains a problem as China remains mostly out of the market," Jack Scoville at
Price Futures Group said.
of Chinese buying reflects in part the moves by the government to sell cotton
into the domestic market and to reduce stocks in warehouses."
in the US, the top cotton exporting country, "crop prospects remain very good
even with the lower crop ratings," Mr Scoville said.
weather and the increased planted area create ideas of big production."