Grain futures fell back from the multi-year highs of the previous session, as traders took profits ahead of a big data release.
Friday will see the release of the World Agriculture Supply and Demand Estimates, shedding light on global market fundamentals.
Brian Henry, at Benson Quinn Commodities, noted grains “caught a wave of profit-taking with help from overbought conditions and a slightly negative shift in the weather forecasts”.
“Taking profits is never a bad idea, especially ahead of a report that will be issued tomorrow morning,” Mr Henry said.
“Grain markets are lower as traders take profits before the USDA report,” said Paul Georgy, at Allendale.
“We are seeing light profit taking in corn while wheat continues to give back recent gains,” said Jennifer Webster, at CHS Hedging.
Support from export sales
Still, the outlook was not whole bearish, with signs of good export demand for corn and soybeans.
The USDA reported weekly soybean export sales at 758,500 tonnes in the 2015-16 marketing year. This was well above the top end of estimates, which ranged from 300,000 to 500,000 tonnes.
The total number of sales booked is now 102.3% of USDA soybean export forecast for the current marketing year, which runs until the start of September.
“We should see an adjustment to exports in tomorrow’s WASDE report,” said Joe Lardy, at CHS Hedging.
Soybean export sales for the next marketing year were touch below expectations, at 475,500 tonnes, but the USDA announced a fresh sale of 240,000 of soybeans to China for the 2016-2017 marketing year.
July soybean futures finished down 0.2%, at $11.76 a bushel.
Strong corn sales
Mr Lardy is also expecting an upgrade to the US corn export forecast, after another very strong set of sales numbers.
Sales in the 2015-16 season were 1.56m tonnes, well ahead of expectations. Sales in the next marketing year were at the bottom end of expectations at 475,500 tonnes.
But US wheat export sales were disappointing, at 223,800 a tonne for the 2016-17 marketing year, which recently began.
Still, there was support as it was announced that Japan purchased at 112,000 tonne cargo of US milling wheat, following a 32,000 tonnes purchase overnight.
Brazil favours local wheat supplies over US corn
The tight corn market in Brazil is encourage wheat feeding there.
“Due to the supply shortage of corn in Brazil, they have now turned to wheat as an alternative for feed,” said Ms Webster.
“Since this has not been done in a decade, producers are grabbing from stockpiles that would normally be used for human consumption, as lower quality wheat stocks have ran out.”
But although this is supportive for Brazilian wheat demand, it is bad news for any US corn exporters hoping to find a new market for their product in Brazil.
“Corn out of the US does not seem attractive to Brazilian importers as they are concerned with GMO issues to feed to their poultry stock,” Ms Webster said.
July corn futures finished down 0.9%, at $4.26 ½ a bushel.
July Chicago wheat futures finished down 1.6%, at $5.10 ¼ a bushel.
Coffee falls back from recent highs
Arabica coffee futures failed to hold their frost-fuelled rally, tumbling back from a 13-month peak earlier in the session.
Rabobank lowered its forecast for the global 2015-16 coffee deficit to 800,000m bags from an earlier forecast of 1.2m bags, although the bank did say that the fears of frost in some Brazilian arabica areas could widen the production shortfall.
Rabobank raised its estimate for the 2016-17 deficit estimate to 2.2 million bags from an earlier forecast of 700,000 bags
July arabica coffee settled down 4.1%, at 133.95 cents a pound, after hitting at 14-month high of 145.00 cents a pound
July robusta settled down 0.7%, at $1,685 a tonne.
Sugar futures extended their rally, reaching their highest level since October 2013.
“The market feels electric again this morning and the commodity basket (particularly the grains) is making the financial press headlines,” said Tom Kujawa, at Sucden Financial early in the session.
“We seem to be in a commodities perfect storm at the moment with global weather concerns, governments actively pushing for growth… and a financial sector seemingly feeling more and more chaotic/fragile by the day,” Mr Kujawa said.
Mr Kujawa saw the market being driven by “factors not typically associated with the underlying commodity per se but more rather the short term imperatives of cash flow, margins and limits”.
July raw sugar settled up 0.7%, at 19.74 cents a pound, after reaching as high as 19.92 cents, the highest level since October 2013.
August white sugar settled up 0.2%, at $528.70 per tonne after hitting a contract high of $532.40.
(Source – http://www.agrimoney.com/marketreport/pm-markets-traders-take-profits-ahead-of-big-data-release–3638.html)