Grain markets moved lower today, with wheat weighed down by the prospect of ample global supplies, while corn and soy faced the prospect of the imminent US harvests.
Markets are awaiting the publication of new crop estimates from US Department of Agriculture at the end of next week.
But as Mike Zuzolo from the Global Commodity Analytics notes that the corn harvest is likely to begin before that date, so harvest data from farmers is about to start hitting the market.
‘Substantial decline’ needed
Mr Zuzolo expressed scepticism that there would be a significant downward revision in the very high corn and soy yields which were forecast last month, which forced a sharp downward correction in prices.
He notes that that there would have had to have been a “substantial decline” in corn conditions in Monday’s US crop report for markets to have looked to a cut in the corn yield forecast next week.
And there have already been a flurry of strong forecasts for corn and soybean yields.
On Wednesday Chicago-based brokerage Allendale pegged hopes for corn yields at 167.1 bushels, and soybeans at 45.4 bushels an acre, below the USDA figures but the second strongest on record.
After markets closed on Tuesday commodity broker INTL FCStone raised its forecast for US corn yields to 165.9 bushels an acre, from the 165.0 bushels an acre it forecast last month.
Soybean yields were seen at 45.4 bushels, an acre, from the 45.0 bushels an acre forecast a month ago.
Chinese equity markets had another rocky day’s trading, reaching down over 5%, but recovered to close down 0.4%, still their lowest close this week.
Richard Feltes of RJ O’Brien said that he suspects buyers are maintaining a “hand to mouth buying stance until global equity markets stabilise,” which he suspects will take at least two weeks, by which time the USDA report will be out, and the harvest will have begun.
Chinese stock markets are now closed until Sunday evening, to mark the 70th anniversary of the end of the Second World War, which means a respite from the bad news that has weighed on commodity markets.
The holiday also means that soybean crushers will not be online, and that means a break purchases in Chinese soybean purchase.
But November soybeans, the most widely traded contract, managed to close up 0.1% at $874 a bushel, even as all other contracts ended the day down.
And wheat sunk from technical selling and further evidence of the cheapness of global wheat supplies, compared to US prices.
The Algerian grain agency paid $195-$196 a tonne in a wheat tender on Wednesday. This is about $30 a tonne cheaper than the price paid at this time last year.
December Chicago wheat closed down 1.4% at $4.79 a bushel, the lowest the contract has closed so far.
December Kansas wheat closed down 1.6%, at $4.47 a bushel.
December corn closed down 0.5% at $3.67 Ѕ a bushel.
The Brazilian real continued its freefall against the dollar on Wednesday down 1.7% in the afternoon to fresh 12-year lows after some disappointing economic data.
And as usual, the currency weighed on sugar and coffee, of which Brazil is the world’s biggest producer, by increasing the real-denominated receipts of growers and encouraging production and sales.
The rise in the real choked off an early rally in sugar, which had seen raw sugar up 3.5% in the morning.
Nick Penney, senior trader at Sucden Financial, warned that the next report from Unica, the Brazilian cane industry group, was due out this week and expected to be bearish.
October raw sugar SBc1 settled up 0.02 cent, or 0.2 percent, at 10.73 cents per pound.
And coffee suffered too, particularly arabica, which extended losses when it passed a prior contract low, triggering a selloff.
Benchmark arabica prices extended losses after sell-stops were triggered below $1.2025, the prior
December arabica settled down 2.0%, at $118.35 a pound, after plumbing a 1-1/2-year low.
November robusta coffee in London settled down 1.4%, at $1,581 a tonne, after hitting a contract low earlier in trading.
Cocoa prices fell amid demand worries, and some easing of the dryness in key West African producers.
Jack Scoville of Price Futures noted “demand continues to be a real problem, and demand ideas got no help last week.”
“West Africa has been getting isolated to scattered showers and the forecast calls for more of the same,” he added.
December New York cocoa settled down 0.8%, at $3,117 a tonne, while December London cocoa closed down 0.7%, at £2,112 a tonne.
(Source – http://www.agrimoney.com/marketreport/pm-markets-grains-weaken-ahead-of-us-corn-harvest–3276.html)