Soybean futures, helped by hopes for Chinese demand, held firm in early deals even as grains weakened.
Sure, corn futures put in a weak start to Tuesday, shedding 0.5% to $3.71 ¼ a bushel as of 10:00 UK time (04:00 Chicago time), after US Department of Agriculture data overnight showed a surprise improvement in the condition of the US crop.
The proportion rated “good” or “excellent” rose 2 points to 57%, rather than holding at 55% as investors had expected.
The reading in the key growing state of Illinois recovered by 4 points to 45%.
US weather “has been just what the doctor ordered for corn”, said Benson Quinn Commodities, adding that “last week’s warmer-than-normal temperatures helped the crop”.
And, with investors still mulling too Monday’s poor US corn export data for last week of 234,000 tonnes, termed “nominal” by the broker, and down from 1.35m tonnes a year before, bears had the advantage in early trading.
‘Raise a red flag’
However, for soybeans, the USDA ratings figure held steady at 54% good or excellent as of Sunday, a six-year low for the time of year, and spurring ideas that the crop will not be able to pick up before harvest.
“Crop quality concerns begin to take place ahead of the bulk of the soybean harvest,” said CHS Hedging, adding that “some of the later planted crop may not get a chance to reach maturity” given its slow pace of development.
Tobin Gorey at Commonwealth Bank of Australia said that “US soybeans are behind the normal development cycle, so the cooler weather evolving might raise a red flag for the market”.
Furthermore, on Monday, the USDA unveiled decent US soybean exports for last week, of 923,000 tonnes, ahead of market expectations.
And this was not the only demand story around, with talk of China buying 1m-2m tonnes of US soybeans, a figure later downgraded by the grapevine to 600,000 tonnes.
“China has booked up to 10 vessels of soybeans (600,000 tonnes) for October-November shipment off the Pacific North West,” said ADM Investor Services.
Dryness in Brazil, where soybean sowings are just beginning, remains an issue too, albeit one to which investors are not attributing too much risk premium as yet.
Still soybean futures for November managed a 0.1% gain to $8.93 ½ a bushel, holding above their 10-day moving average.
’Evolving weather issues’
For wheat, there are plenty of nascent weather worries around too – not that these could prevent the Chicago December contract falling by 0.7% to $4.79 ½ a bushel.
“Weather issues are evolving too slowly to have much immediate impact. But evolving they are,” said CBA’s Tobin Gorey.
“Argentina’s current season crop could still use some rain.
“Several winter wheat regions in the northern hemisphere in the US and Black Sea regions could use some planting rain,” yet forecasters believe “the rainfall prospects in those northern regions are modest at best for the next week or so”.
While the concern for grain investors “is a minor one for now because there is still time for enough rain to fall in all these regions… the weather forecast horizon will soon peer deeper into October”, when markets may take such issues more seriously.
’Firmness of the rouble’
The drop in wheat defied fresh strength too in Russia’s rouble, up 0.3% against the dollar to its highest since the start of August, besides the Ukrainian hryvnia.
Agritel said that “a certain firmness of the rouble and the hryvnia is… limiting somewhat the competitiveness of Black Sea origins on the international stage”
Still, USDA data overnight showed US winter wheat sowings at 22% complete, 4 points ahead of market expectations, and undermining ideas of southern Plains dryness causing farmers to hold off.
And this time Minneapolis spring wheat, the wheat complex’s star of late thanks to North America harvest worries, weakened by USDA data showing the spring wheat harvest at 87% complete, up 11 points week on week and 4 points ahead of the investor forecast.
There remain worries over North American spring wheat, with Benson Qunn Commodities flagging a “quality problem due to unending rains for North Dakota and western Canadian Prairies.
“Not only has delayed harvest caused falling number issues but now crops are running into a colour and sprout damage.
“There will still be plenty of quantity but the amount of quality milling wheat is getting tight.”
CHS Hedging said that “the durum and barley crops are suffering from adverse weather conditions as well”.
Still, with the faster-than-expected harvest weighing, Minneapolis spring wheat futures for December eased by 0.2% to $5.36 ¼ a bushel.