Soybean futures rallied, despite bearish US demand figures, as markets hold tight for news from the US harvest, and insight into South American sowings.
Monthly crush numbers from Nopa, the US oilseed industry body, missed expectations, dashing hopes of a record August crush.
Nopa said that its members crushed 131.82m bushels of soybeans in August, down from 143.72m buehhels during July, and down 135.30m bushels in August.
Analysts had been expecting an August crush of 136.23m bushels, on average.
But the news did little to stall the soybean rally.
“Beans traded the Nopa crush number for a few minutes before continuing to maintain their rally,” noted CHS Hedging.
Waiting for the harvest
Speaking to Agrimoney.com, Jim Sullivan at Leese Trading Group noted the saw that historical data “is a history lesson, and this is a futures market”.
Instead, markets are waiting for hard data on the US corn and soybean crops.
“The bull and bear are waiting for the harvest,” he said, pointing to declining volumes this week.
“It was such a light volume day I wouldn’t read too much into price action,” he warned.
And he said that with front month soybean prices still well below any levels of technical resistance, the move was “technical white noise”.
Argentine sowings under the microscope
News from South America lean supportive for soybeans, and bearish for corn.
Argentina’s grain exchange forecast the country’s corn sowings at 5.7m hectares, up 18% year on year.
This was lower than other estimates, but still represents heavier corn sowings, at the expense of soybeans.
The increase in corn sowings is seen as coming largely at the expense of soybean sowing, which Dr Michael Cordonnier has forecast dropping by some 3% for 2016-17 to 19.4m hectares.
And Brazilian soybean sowings look to start the season slowly as well, thanks to competition from corn, the prices of which are very high in domestic markets.
A key factor which could depress Argentine soybean sowings would be if the government decides to keep the soybean export tax at its current levels, reneging on a pledge to cut it by 5 points next year.
Darrell Holaday, at Country Futures, noted “corn and soybean spreading tied to ideas that the Argentina will not lower there soybean export tax from the 25% level as originally planned, but will leave their corn and wheat export tax at zero.”
“The natural thought is that this would increase corn and decrease soybean acres in Argentina,” said Mr Holaday, although he warned that “there are a lot of things that will determine planted acres”.
Soybean export sales were in line with expectations, at 1.02m tonnes. This is the lowest number in seven weeks
November soybean futures finished up 0.8%, at $9.50 ½ a bushel.
Midwest harvest expected to pick up next week
Corn export sales missed expectations, at 703,500 tonnes, below market expectations of 800,000 to 1.10m tonnes.
This was the smallest combined export sales since February.
Mr Sullivan noted that traders are likely to get their first hard news from the heart of the US Corn Belt next week, with weather models pointing to two or three days of dry weather in the region, which will allow combines to start rolling.
December corn futures finished down 0.8%, at $3.30 a bushel.
Weak export sales
US wheat export sales came in at 402,200 tonnes, in line with expectations, but hardly anything to write home about.
And the European Union granted export licences for 371,000 tonnes of soft wheat this week.
This leaves exports so far this season at 2016-17 season at 5.4m tonnes.
Prospects for EU wheat exports are sharply down, partially due to the very small French harvest, but also due to low quality.
December wheat futures in Paris finished down 0.3%, at E158.75 a tonne.
December Chicago wheat futures finished down 1.1%, at $3.99 ½ a bushel.
Cotton trims losses
Cotton futures fell in New York after the USDA announced sharply lower export sales.
Weekly export sales showed net upland cotton sales at 136,400 running bales, compared to 344,500 running bales in the prior week.
But prices rallied later in the session, helped by concerns over wet weather in Texas.
“The rains could delay any harvest and could hurt open bolls,” said Jack Scoville, at Price Futures group.
December cotton futures settled up 0.3%, at 67.72 cents a pound.
Wet weather slows harvest
Raw sugar futures rose, helped by strength in in the expiring front month white sugar contract.
October white sugar in New York settled up 2.6% percent, at $553.70 a tonne, with 138,250 tonnes of sugar delivered against the expiring contract.
The December contract settled up 1.8%, at $556 a tonne.
And bi-monthly sugar production data from the Brazilian cane belt came in under expectations, after wet weather.
March raw sugar futures settled up 2.1%, at 21.16 cents a pound.