Europe, and in particular France, did its bit to undermine global grain markets on Tuesday.
France’s farm ministry issued a relatively upbeat estimate for this year’s domestic corn harvest, of 13.4m tonnes.
As Terry Reilly at Futures International noted, that is “nearly 5% above last year despite the recent hot temperatures”, although to be fair, the increase reflects extra sowings in 2019, with the yield forecast a touch lower than in 2018.
The increase came as France raised its forecast for the domestic soft wheat harvest by some 1.2m tonnes, to 38.2m tonnes.
And harvest results from some other European Union countries, such as the UK, are coming in decent too.
“EU wheat prices continued to trend lower as harvest results exceed expectations and quality looks good,” said CRM AgriCommodities.
Indeed, Paris wheat futures for December ended down 1.1% at E175.50 a tonne.
CRM also noted that “EU wheat was offered in the latest tender to Egypt as the market tries to shift some of the excess crop from this harvest”.
To be exact, Lecureur offered Egypt’s Gasc grain authority 60,000 tonnes of French wheat at $206.50 a tonne, excluding freight.
However, “Black Sea origin remains most competitive with Ukrainian wheat cheapest at $198.70 a tonne,” CRM noted.
Indeed, Gasc purchased 415,000 tonnes of wheat, all from Romania, Russia and Ukraine, at an average price of $202.69 a tonne, excluding freight, which was in line with the price paid at the previous tender, two weeks ago.
‘Plentiful wheat stocks’
If French wheat is out of the running against Black Sea prices, then that only revived jitters over US demand too.
“A good [US] harvest and lack of business adds pressure to the market, as the US and world have plentiful wheat stocks,” CHS Hedging said.
Chicago wheat tumbled by 2.0% to close at $4.84 a bushel for September delivery, back below its 100-day moving average.
And with rival grain wheat lower, corn struggled too, although shedding a far more modest 0.4% to $4.12 ½ a bushel for December delivery, a contract which also fell below its 100-day moving average, but remained above its 200-day.
CHS Hedging flagged a setback to corn prices from “spillover weakness from wheat”, saying that “additional pressure comes from a crop progress report that was within expectations, and a large world crop”.
The US Department of Agriuclture’s weekly crop progress report lowered its rating of the US corn, but only by 1 point to 57% good or excellent, as investors had predicted.
On the demand side, CHS Hedging noted that “South Korea’s Korea Corn Processing Industry Association rejected all offers received in their tender for 55,000 tonnes of corn, on thoughts that offers near $215 per tonne were too high”.
As for US weather, it was “a mixed bag” from a crop pricing perspective, said Richard Feltes at RJ O’Brien.
He noted “stress areas holding at 25% of the Midwest,” ie southern Iowa, north east Missouri, central Illinois), while there is an “absence of any above-normal temperatures the next two weeks” in the forecast.
Maxar said that in the Midwest, “rains in western areas will improve moisture, but rains will remain too limited in central/eastern areas to improve conditions”.
Whatever, soybean futures for November ended a modest 0.3% lower at $8.65 ¾ a bushel, with ideas that the oilseed was protected from selling in part because hedge funds already have a reasonably large short position in it.
Still, soft commodities fared better, including cotton, like soy, particularly attuned to US-China trade tensions, but which unlike soy suffered a large downgrade in the overnight US crop rating.
The USDA lowered by 7 points its forecast for the proportion of US cotton in good or excellent condition, matching the biggest week-on-week decline since June 1997.
New York cotton for December ended up 0.4% at 58.72 cents a pound, although its still down 8.0% so far this month.
Arabica coffee for September gained 1.5%, to close at 97.05 cents a pound, helped by some decline in harvest pressure, with not much of Brazil’s crop left to harvest.
Cepea said that its sources reported that “harvesting activities were ending in most arabica-producing regions” of the country.
The institute also said that “the trading pace is slow in Brazil, due to the sharp price oscillation in both the domestic and the international markets during the month”.
London robusta coffee for September closed up 0.8% at $1,307 a tonne.
‘Caught up with a vengeance’
However, New York raw sugar for October dipped by 0.6% to 11.75 cents a pound, undermined by decent weather.
In Brazil, “dry conditions are expected” over cane-growing areas “for the next 10 days, causing little harvest disruption”, Marex Spectron said.
By contrast in India, where precipitation is needed, “good rains have been recovered over almost the entire Maharashtra state in the past week, as well as northern Karnataka”, with more rainfall expected this week.
“The monsoon has caught up with a vengeance,” Marex said, albeit seeing the moisture as more of a benefit to the 2020-21 cane crop than the one harvested in 2019-20.