Grain markets bounced back from Wednesday’s rapid sell off, as the market mulled the contents of the US Department of Agricultures’ world supply and demand estimates.
An unexpected upward revision of US corn and soy production figures by the USDA triggered a selling spree on Wednesday, but Thursday saw a more sceptical tone dominate the market, helped by a flurry of short-covering and profit taking.
There were no nasty surprises for US exports, and some uncertainty over US weather, which combined to support prices, while the rate of decline of the Chinese Yuan has slowed, despite another cut in the guidance rate, which will help ease worries in the broad commodity complex.
Darrel Holaday of Price futures pointed out the prospect of dry weather in the US Midwest, which is bullish for row crops in particular.
“The inconsistency of the weather models has made the market somewhat nervous regarding rainfall next week,” he said.
Meanwhile, Richard Feltes of RJ O’Brian noted ‘scepticism’ over the USDA’s soy yield figures, pointing out that they were down only 2% from last year while USDA crop surveys have shown condition ratings down 11%.
And export sales data released by the US today at least showed business as usual, with no nasty surprised for export demand.
Old crop soybean sales were reported at 96,000 tonnes, while new crop beans came in at 661,000 tonnes, against expectations of 0.4m-1.0m tonnes.
Joe Lardy, of CHS hedging said “soybean sales were ok this week,” noting that old crop total commitments are now at 102.2% of the USDA export figure, while new crop sales were the fourth largest of the marketing year”.
September soybeans closed up 2.0% at $9.36 ј a bushel, while November new crop beans closed up 2.0% at $9.27 a bushel.
The German association of farmer cooperatives cut its estimate of this year’s rapeseed crop by 100,000 tonnes from last week, to 4.91m tonnes.
November Paris rapeseed closed up 0.4% at E375.25 a tonne.
Old crop corn sales were at reported at 29,000 tonnes, while new crop sales came in at 502,000 tonnes.
“Old crop sales were very small, but commitments are still right on the USDA export number” said Mr Lardy. “New crop sales were the second largest of the marketing year.”
Meanwhile, the German association of farmer cooperatives slashed its estimate for this year’s German corn harvest to 3.91m tonnes, down from the 4.64m tonnes forecast in July.
There was also some bullish news for ethanol, as the US energy agency reported that production of the corn-based biofuel increase by 4,000 barrels a day to 965,000 barrels a day.
October ethanol closed up 1.5% at $1.451 a gallon.
September corn closed up 1.9% at $3.63 ѕ a bushel, with new crop December corn up 2.0% at $3.75 ј a bushel.
Black sea competition
US wheat export sales came in at the low end of expectations, at 422,000 tonnes.
Meanwhile, a wheat tender from Gasc, Egypt’s state grain buyer unearthed a plethora of well-priced Black Sea supplies.
Gasc bought 175,000 tonnes of Russian and Ukrainian wheat for September delivery.
Egypt is the world’s largest wheat importer.
GASC paid an average price of $194.74 a tonne including freight, compared with an average of $198.91 a tonne on August 5.
The deal underlined the continued competitiveness of Black Sea wheat compared with other global supplies.
French bids fail to hit
Bidding from French sellers was less aggressive than in the previous Gasc tender.
The possibility of French supplies undercutting Black Sea product, as sellers scramble to offload wheat before of a forecast bumper harvest, has failed to manifest.
French wheat was offered no lower than $197.74 a tonne excluding freight, compared to offers of $188.94 on August 5.
However, with grain markets rallying, and Wednesday’s data release considerably less bearish for wheat than for corn and soy, futures rose today.
September Chicago wheat closed up 2.3% at $5.03 ј a bushel.
Cotton prices extended Wednesday’s stellar gains, closing at a 1-month high.
USDA export sales showed cotton exports sales of 541,000 tonnes this week.
Writing before markets opened on Thursday, Tobin Gorey of the Commonwealth Bank of Australia said “weather forecasters continue to forecast too little rain for a hot and dry US Delta so cotton yields are likely to start declining if the dry forecasts are realised”.
“The US southern plains cotton areas are likely to remain on a drying trend and so is on track to raise crop worries,” he added.
December cotton closed up 1.2% at 65.46 cents a pound.
Short covering, and concerns about the Brazilian crop, send arabicacoffee soaring to a three month high on Thursday.
Debate continues to rage on the size of the Brazilian coffee production, as analyst group Intelligent Coffee Insights cut its estimate for the 2015-16 crop to 46.1m bags, at the low end of market estimates.
December arabica coffee settled up 4.0 percent, at 140.60 cents a pound. September robusta coffee closed up 0.3 percent, at $1,704 a tonne.
Meanwhile raw sugar eased back on the weak Brazilian currency. October raw sugar settled down 0.5%, at 10.49 cents a pound.
(Source – http://www.agrimoney.com/marketreport/am-markets-grains-bounce-while-cotton-extends-rally–3260.html)