Soybean and cotton futures revived after official data
showed that weather extremes had taken an unexpectedly large toll on US crops –
although not large enough to support recoveries in grain prices.
Soybean futures for November added 0.7% to $10.17 ¼ a bushel
in early deals in Chicago, while in New York, cotton futures for December added
0.6% to 68.72 cents a pound.
The gains followed US Department of Agriculture data
overnight showing that the condition of US crops, beset by dryness in the
western Midwest and excessive rains in the east, had deteriorated further last
week than investors had expected.
"While trade has looked to the eastern half of the Corn Belt
as being in fair to good condition with summer weather mostly favourable to
date, the ratings say otherwise," said Benson Quinn Commodities.
Indeed, a 4-point drop to 57% in the proportion of the US
soybean crop rated in "good" or "excellent" condition reflected largely deterioration
in eastern growing states such as Illinois – where the reading tumbled by 8
points to 59% - and Kentucky, with a 7-point fall.
In Indiana, where the reading dropped 2 points to 47%, USDA
scouts said that "though the beginning of the week was mostly dry and hot, rain
storms moved across the state towards the end of the week, leading to localised
flooding and very humid air.
'Late-planted soybeans appear yellowed and stunted in some
"Farmers applied fungicide to corn fields, due to the
increase in rust from the hot and humid weather," the scouts added.
The 57% soybean good or excellent rating, besides being 3
points below market expectations, was well below the average of 68% for the
previous three years.
The US cotton crop was rated at 55% good or excellent – a figure
in line with the three-year average, but down 5 points week on week.
That matched the fastest week-on-week pace of decline since
1999, when a 6-point drop was recorded in September, and reflected drops in
states including top producer Texas where farmers' group Plains Cotton Growers
earlier this month cautioned of crop damage.
"High winds carrying dirt and sand, along with multiple hail
events have caused significant cotton crop losses in areas of the Southern High
Plains and the Northern Low Plains," said USDA scouts in Texas, pegging the
state's crop at 49% good or excellent, a 4-point fall week on week.
"Cotton fleahoppers were becoming a concern for some
producers in the Northern Low Plains."
Grain prices ease
The USDA rated the corn crop at 62% good or excellent, down
2 points week on week, ahead of the 1-point drop investors had expected.
The three-year average reading for US corn condition is 74%.
However, Chicago corn futures, while posting gains in early
trading, retreated to $3.87 ¼ a bushel, a 0.9% decline on the day.
Wheat futures eased too, by 0.7% to $4.85 ½ a bushel in
Chicago for September delivery.
While the USDA data showed the domestic spring wheat
deteriorating by 1 point to 33% rated good or excellent, that decline had been expected
"The prospect of cooler temperatures and some rainfall in the US – the world's leading grains exporter – is allaying fears of widespread drought and causing grains prices to fall," Commerzbank said.