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Fears of another US hurricane send cotton futures limit up

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Just when cotton growers thought it was safe to return to the fields, along comes another hurricane threat.

With much of Texas and the Mississippi Delta region still recovering from the inundations brought by Hurricane Harvey, and its remnants, another storm, in the form of Hurricane Irma, is bleeping on the radar for parts of the US cotton belt.

The reaction in New York was to send cotton futures up the exchange limit.

'Strength of the storm looks impressive'

"Hurricane Irma remains the big weather story of the week," said broker Allendale.

"The track that the storm will take remains to be seen, but the strength of the storm looks impressive," with Irma now rated a category 5 hurricane.

"Hurricane Irma is currently forecast to affect the South East next week," said weather service MDA.

"But the situation will need to be monitored for any westward adjustment," which might take it into more significant areas for growing cotton and other crops.

'Cotton fields could be in danger'

Benson Quinn Commodities, saying that "Irma will be watched closely", noted that "current predictions indicate that the system may be tracking further to the west than previously thought.

"Some current forecasts indicate it will likely impact south Florida before making landfall again in Alabama."

At Rose Commodity Group, Louis said that Irma was "currently forecast to come ashore central eastern Florida as a hurricane over the coming weekend or early next week.

"If such occurs, cotton fields across the South Eastern states could be in danger," although he too added that the "path of this storm remains far from certain".

Cotton futures for December closed 3.0 cents higher, the maximum daily move allowed by the exchange, at 74.88 cents a pound, a jump equivalent to 4.2%

That represented the contract's highest close in nearly four months, and took to 12% its bounce from a mid-August low.

India boost

Many other ags achieved gains too, although less impressive ones.

October

raw sugar

futures settled up 2.0% at 14.03 cents a pound in New York, retaking the psychologically important 14.00 cents-a-pound mark, on renewed talk that India will soon allow imports of 300,000 tonnes of raw sugar on the country's southern ports.

This represents the latest twist in a long-running, on-off saga of import needs, with the latest rumours coming after Food Minister Ram Vilas Paswan in a Twitter post on Monday said that India would soon decide on imports.

'May stress soybeans'

And in Chicago,

soybeans

outperformed, adding 2.0% to $9.68 ½ a bushel for the November contract, which closed back above its 100-day moving average.

If Irma is the biggest market weather worry, at least in the US, it is not the only one, with cool and dry weather a concern too in particular for soybeans, which are later developing than some other autumn-harvested crops, such as

corn

.

"Dry weather is expected across the Plains and the central and western Midwest for most of the next 10 days," said MDA.

"The dry weather will favour maturation of the corn crop, but may stress soybean filling, especially in Iowa and Illinois, preventing soybean yields from reaching their full potential."

'Concern about prolonged dryness'

Darrell Holaday at Country Futures flagged "fundamental support" for soybean prices "from concern about prolonged dryness in the Midwest late in the growing season and the concern that it has trimmed soybean yields".

Indeed, the dry outlook comes after a "large portion of the Corn Belt has seen drier conditions than normal over the course of the last couple of weeks", Benson Quinn Commodities noted.

"You get the impression that a large portion of the crop isn't getting much of an opportunity at the potential extra bushels."

And there was some support from demand factors too, with weekly US data showing exports of 644,909 tonnes, in line with market expectations, and an additional sale of 136,000 tonnes to China on top.

"The bulls remain hitched" to hopes for Chinese demand for soybeans in the last three months of 2017, and that "the US should be competitive with Brazil on prices", said CHS Hedging.

Export upgrade ahead?

Corn

futures for December added 0.6% to $3.58 ½ a bushel, again with some help from US export data.

US corn exports last week (the last of 2016-17), at 797,555 tonnes, were well ahead of forecasts of at best 600,000 tonnes.

Indeed, a marketing year total of 2.24bn bushels from this source was "15m bushels larger than the US Department of Agriculture estimate of 2.225bn bushels" for 2016-17, Country Futures' Mr Holaday said.

"This would argue for a 15m-bushel increase in the next Wasde" crop report from the USDA, next week, in terms of the estimate for US corn exports last season.

'USDA is overstating corn yields'

CHS Hedging noted that "farmer selling dried up on the price break" which took corn futures to contract lows earlier last week.

"For the second year in a row, many feel the 'lows' were etched in stone the final week of August."

And there remain ideas that the USDA is too generous in its forecast for the domestic corn yield.

"Early yield reports confirm big crops in the Delta, while limited Midwest returns suggest the USDA is overstating corn yields," said Richard Feltes at RJ O'Brien.

Texas hiccups

Wheat

futures kept pace in Chicago, adding 0.6% to $4.43 a bushel for December delivery, with the contract earlier touching its 20-day moving average for the first time since mid-July.

USDA data for US wheat exports last week were poor, at 252,465 tonnes.

But that was for a week in which southern US shipments were hampered by Hurricane Harvey, with Gulf ports particularly important for wheat.

"There were no wheat inspections out of Texas for the week ending August 31," Futures International's Terry Reilly noted.

Also on bulls' side was the growing worries over dryness in Australia, as highlighted earlier by Agrimoney.com.

By Mike Verdin

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