Agricultural commodities sagged today, as the rising dollar pressured prices.
The US dollar extended yesterday’s rally against a basket of world currencies, on Thursday, following a speech from US central bank governor Janet Yellen yesterday, which reiterated the likelihood of an increase in interest rates this year.
A higher dollar pushes down the price of dollar-denominated commodities.
The greenback was up over 0.4% against a basket of currencies.
Hot temperatures draw attention
And there was little weather news to excite bulls, as the Corn Belt turned hotter and drier.
However, the warm weather, which will dry out waterlogged row crops, could also stress corn during the key pollination period.
Soy, which is not yet in pollination, stands only to benefit from an end to the soggy condition.
“There are some hot temps through the Corn Belt into the weekend that are drawing some attention,” said Brian Henry of Benson Quinn Commodities.
Export sales data was somewhat above expectations, but failed to excite the markets.
“Weekly export sales were uninspiring with wheat sales understandably low and old crop corn sales posting a marketing year low,” said Brian Henry of Benson Quinn Commodities.
Export sales of new crop corn came in above expectations, at 325,000 tonnes, compared forecast of 100-200,000 tonnes. Old crop sales were toward the lower end of estiamtes, at 331,000 tonnes, compared to forecasts of 325,000 tonnes, and a marketing year low.
Chinese feed demand seems to be strengthening, with 60,000 tonnes of corn sold to china, and 24,000 tonnes of sorghum.
Hot weather in Europe lead consultancy Strategie Grains to cut its expectations of the EU corn crop by 0.8m tonnes to 66.7m tonnes.
Strategie Grains warned that coming heat could further stress the EU corn crop, and prompt another downgrade.
“France will remain dry over the next two weeks and parts of the northern growing areas badly need rain,” said Terry Reilly of Futures International.
Consultancy Agritel warned that “producers are still concerned about corn vegetative development as another heatwave is coming”.
As the markets absorbed the prospect of hot weather, and the threat it might pose to pollination, prices slipped over and under Wednesday’s close, but September corn ended up 0.2% up at $4.30 a bushel.
Soybeans got some better-than-expected data in the export sales report, but sales are still down on the year.
Exports of new crop soybeans outperformed expectations, 557,000 tonnes, compared to expectations of 200-400,000 tonnes.
Old crop sales came in at 45,000 tonnes, in the middle of expectations.
And with US dryness on its way August soybeans were down 0.8% on the day, at $10.19 a bushel.
This is the lowest close since the middle of last week.
New crop November soybeans were down 0.7% at $10.11 a bushel.
Wheat was down on Thursday on a stronger dollar and harvest pressure.
Wheat export sales were reported in line with expectations, at 291,000 tonnes.
The Strategie Grains report also downgraded the EU soft wheat forecast, by 0.7m tonnes to 140.9 tonnes.
September Chicago wheat was down 0.8% at $5.62 ¼ a bushel. September Kansas wheat was down $5.31 ¼ a bushel.
And the continued firmness in the dollar pressured soft prices again on Thursday as well.
October raw sugar settled down 1.5 percent, at 12.27 cents a pound.
Sugar came under pressure with the announcement that Indonesia, the world’s top raw sugar importer, would be issuing fewer import licences than expected for the coming three months.
Nick Penney, senior trader at Sucden Financial, downplayed the possibility of a weather upside, presumably referencing the threat of unwanted rain in Brazil and Indian dryness.
“We are cognisant of the weather risks in the producing areas but believe that unless we see demand pick up leading to a reduction of stocks, the reduced potential supply caused by adverse weather will not be sufficient to establish momentum on the upside for sugar values and we expect continuing price erosion in the short/medium term” he said.
North American grind
Cocoa futures held steady ahead of data revealing US grinding demand, which will be released after the markets close later on Thursday.
The US grind will give an indication as to how resilient cocoa demand has been during the recent price rally.
September London cocoa ended down 0.2%, at £2,221 a tonne, while September New York cocoa went sideways, at $3,352 a tonne.
But cotton bucked the bearish commodity trend, on weather fears in the US.
US export data showed weekly new crop cotton sales of 114,600 bales.
December US cotton, the most widely traded contract, finished up 0.4% at 65.12 cents a pound.
(Source – http://www.agrimoney.com/marketreport/pm-markets-corn-and-cotton-buck-bearish-ag-trend–3222.html)