New crop arrivals and relatively benign weather have kept a lid on crop futures values, with corn and wheat continuing to fall and beans unchanged on Tuesday - a position repeated in Wednesday morning trading.
“Current values and dollar strength have the US at a disadvantage - with declining bean crush totals, negative ethanol margins, lack of exports and less threatening weather, bulls have a problem,” commented Benson Quinn Commodities International (BCQI).
The Chicago September corn contract closed Tuesday at $435¼ per bushel and the December position 1.3% lower at $4.41 per bushel.
Last week’s concerns that the Hurricane Barry storms affecting the Gulf of Mexico region could move northwards and harm developing crops appear to have been unfounded.
The nearby CBOT contract was trading down at $4.32 per bushel in early Wednesday business.
CRM Commodities noes that the December corn position closing above $4.40 per bushel indicates some strength.
“After a slight improvement of the crops condition published earlier this week by the USDA, the new heatwave expected on the Corn Belt has pushed the forecasted rains into the background.”
Large Brazil corn crop
It adds that the confirmation of a large Brazilian corn crop points to the potential for increased exports from that country – greater competition with US origins could see a possible drop in US exports in the current marketing year and higher US end-season stocks.
The July WASDE has already raised the 2018-19 US corn carry over to 59.45m tonnes from the previous month’s 55.7m tonnes.
The Argentinian corn harvest is 53% complete, with both the Buenos Aires Grain Exchange and USDA estimating a 51m tonne crop, noted Benson Quinn.
“Market weakness at lower values indicates global buyers are apparently not worried about supply. Global demand remains weak.”
Turning to the US crop, it added: ”Conditions remain less than ideal but current market perception is the crop is improving and therefore getting larger”.
“Corn prices have thus settled back to levels ahead of last week’s price flare. A further five-cent fall could easily be absorbed in that description,” added Tobin Gorey of Commonwealth Bank of Australia.
EU analyst Agritel said the prospects of a return of the heatwave in France next week are raising concerns over spring cereal and corn crops, especially as irrigation restrictions are announced in some regions.
Wheat trading lower
September Chicago wheat closed $5.07½ per bushel on Tuesday, with the December position 0.1% lower at $5.19 per bushel. Wednesday morning saw nearby Chicago wheat down to $5.03 per bushel.
“Wheat looked to be an observer today - feed wheat demand is hitched to corn’s wagon,” said Benson Quinn.
With the US winter wheat harvest progressing and its season-to-date wheat exports up more than 20% on a year ago, “maybe the US still has a window to move exports as long as Russia doesn’t have record volumes to push out later in their marketing year”.
Mr Gorey added the modest falls in value mean Kansas and Chicago wheat prices are both just a little above the recent lows.
In Europe, Agritel noted: “The arrival of the new crop and the recent decrease explained by the harvest pressure are pushing some buyers to reposition themselves.
"Egypt has issued a call for soft wheat tenders for late August, which will be influenced by Black Sea origin values.”
Europe’s harvest progressing
The French soft wheat harvest has reached the north of Paris region, with good reports of yields and grain quality.
But forecasts of another heatwave are raising concerns over spring crop prospects.
The Ukraine’s wheat harvest is half complete, advised the Ministry of Agriculture with 13.06m tonnes harvested from 56% of the crop area. Average yields are better than last year.
Chicago soybeans closed at $8.87¾ per bushel Tuesday with the November contract 1.5% lower at $9.06 per bushel. Wednesday’s opener was little changed at $8.87.
CRM said the November soybean contract closing above $9.05 per bushel, as with the November corn contract, indicates market concern at the new heatwave expected on the US corn belt, as stormy weather fears recede.
Soybeans suffering corn’s recoil
“Soybeans are suffering from a recoil similar to corn: Hurricane Barry simply did not threaten US soybean crops all that much. Also, like corn, there is still plenty of time for new worries to emerge,” said Tobin Gorey.
He added that Canola prices fell only marginally - the ICE contract is 0.4% down at Can$445 per tonne - “perhaps only to grudgingly conform to the sharper falls in soybean prices”.
Agritel noted the DRV German cooperative body reporting a sharp decrease in winter rapeseed production to 2.97m tonnes, with France’s crop area also down.
“Indeed, on Euronext, yesterday’s price for the August 2019 contract (up E2.50 to E 373.00 per tonne), came at its highest level since October 17.”
But it warned the prospect of higher import levels could hold back rises in the later Paris futures positions.