Grain prices appear to have found a found a floor analysts said, as markets maintained the gains made despite last week’s bearish production data.
True, there was little sign of pop in the markets, as wheat clawed back the previous session’s losses, and row crop prices flickered back and forth over both sides of unchanged.
But it appears that the market are viewing the bearish Wasde numbers for corn and soybeans as, at worst, not proven, with plenty of export demand around to limit the downside.
“At a minimum, both corn and soybeans are hinting that they have bottomed for the time being,” said Brian Henry, at Benson Quinn Commodities.
Markets wait for fresh data on crop
Soybeans held on to most of the previous session’s gains, helped by the USDA announcing a 119,000 tonne soybean sale to China, for delivery in 2016-17 crop year.
“Despite incredibly bearish data from the USDA on production last week, our markets have largely brushed the numbers off, looking ahead to the Pro Farmer Tour next week to either confirm or deny the estimates with some actual, objective data points on ear weights and pod counts,” said Tregg Cronin, at Halo Commodities
November soybean futures traded both side of the previous session’s close, but finished down 0.1%, at $10.07 ¼ a bushel.
Corn futures rose, as the scepticism over the Wasde yield forecast continues to proliferate.
“The industry does not believe the corn yield of 175.1 bushels an acre by the USDA on Friday,” said Darrell Holaday at Country Futures.
“Conditions remain historically high, but the market is yearning for observations from inside the field, not just the 65mph-windshield view we’ve gotten since May,” Mr Cronin said.
“The market’s disbelief with the USDA’s gargantuan production numbers is apparent in price action, but they will still be used as the baseline until at least the September Wasde,” said Mr Cronin.
Adding support to corn prices was the news that Brazil plans to increase its corn stockpiles by 2017 from 700,000 tonnes, to 2.0-2.3m tonnes.
Corn futures tried to make a move lower early in the session, but found support at the 10-day moving average.
December corn futures finished up 0.2%, at $3.37 ¼ a bushel.
Bearish news already discounted
Wheat futures trimmed the previous session’s losses, managing to finish on the 40-day moving average for the first time since mid-June.
“Wheat continues its sideways pattern with little reason to rally, but so much bearish news has been discounted by the lower prices that the downside also looks limited,” said CHS Hedging.
September wheat futures finished up 0.4%, at $4.23 ½ a bushel.
West African concerns
Cocoa futures rallied, helped by ongoing concerns about the crop just finished, and ideas that supplies may be tight going into the next season.
The harvest in West Africa is about over, and arrivals at Ivory Coast ports are down about 14% from last year for the entire season,” noted Jack Scoville, at Price Futures Group. “Ghana purchases are reported as lower.”
December New York cocoa settled up 1.5%, at $3,059 per tonne, the highest level since July 18.
Attention turns to emerging markets
Raw sugar futures in New York extended the previous session’s gains, despite continued concern over the size of hedge fund long positions, which many expected to have sapped the market of fresh upward impetus by now.
Tom Kujawa, at Sucden Financial, suggested that the strength in sugar may come from “the growing consensus that money flows (and potentially inflation) are moving into the emerging economies with higher potential returns and away from moribund western economies with almost zero interest rates and alarmingly “pumped” stock markets”.
October raw sugar settled up 1.4%, at 20.26 cents a pound.