Friday will see the US Department of Agriculture release quarterly stocks data, and markets will be looking closely to see how much the heavily booked autumn export campaign removed from US inventories.
The average of trade expectations is at just over 200m bushel, up 10m bushels from the September Wasde.
But there are ideas that grains which are in transit before export may be missed, leading to a smaller number.
Stocks could be missed
Richard Feltes, at RJ O’Brien, noted that “some analysts indicating that large autumn export soy program will increase bushels in transit and thus reduce September 1 US soy stocks on tomorrow’s report”.
“There is some talk in the industry centring around the soybean number,” agreed Darrell Holaday at Country Futures.
“Normally during late August and early September the export activity out of the US is very slow,” Mr Holaday said. “This year it was very active.”
“USDA sometimes has a difficult time picking up stocks that are in the export pipeline,” he said. “That could result in a lower than expected number.”
“Anything below 185m bushels would be a surprise and could be an indication of a problem picking up the pipeline supplies,” Mr Holaday said, suggesting that any rally resulting should be sold.
Risk of price erosion
Still, despite the anticipation, Mr Feltes said the report was “unlikely to change overall narrative of abundant supplies, brisk US soy demand, range-bound renminbi and dollar, near normal harvest pace (with bean yields outperforming corn) and risk of further soy price erosion in absence of adverse South American weather”.
Mr Feltes suggested that attention should instead be focused on the monthly World Agriculture Supply and Demand report, out of Friday.
The real question is just how big the US corn and soybean harvest is going to be.
The weather forecasts suggest no major disruption to the harvest in the near future.
“Weather looks favourable for the bulk of the Corn Belt through the end of this week,” said Brian Henry, at Benson Quinn commodities.
Big soybean sales accounted for
Soybean export sales came in at a very large 1.69m tonnes, compared to analyst expectations of 1.10m-1.30m tonnes.
These are the highest sales so far this marketing year.
But Mr Holaday noted that “once again most of this was known because the public received the daily announcements that accounted for most of the sales”.
November soybean futures finished up 0.6%, at $9.50 ¼ a bushel.
Corn sales were very weak, at just 575,000 tonnes, where markets were looking for sales of 750,000-950,000 tonnes.
“The corn number was disappointing, but the export announcement yesterday to Mexico helped soften the blow of the disappointing number for last week,” Mr Holaday said.
December corn futures finished unchanged, at $3.29 ¼ a bushel.
Wheat futures rallied early on, supported by corn and unwanted rains in Australia.
“Concerns about the Aussie wheat crop continue as wet conditions are expected to continue deeper into October and possibly longer in south eastern regions,” Mr Henry noted.
But the IGC raised its forecast for 2016-17 world wheat production to a record 747m tonnes, despite a downgrade to the EU crop.
But December Chicago wheat futures ran into some technical resistance, after a failed attempt on the 30-day moving average, and finished down 1.0%, at $3.99 a bushel.
Rising cocoa production
On Wednesday the Cote D’Ivoire, the world’s top cocoa grower, announced a 10% boost to farm gate cocoa prices.
This was seen as bearish, because it will encourage farmers to invest in increasing their output.
The Ivorian cocoa marketing board had previously advised that farm gate prices were left unchanged due an expected drop in global prices.
“The market remains under selling pressure overall from ideas that world production this year could be much better,” said Jack Scoville, at Price Futures group.
“West Africa has seen much better rains this year and alternating warm and dry weather with the rains,” he said.
“Bigger production is expected this year in all countries.”
New York December cocoa settled down 3.4%, at $2,728 a tonne, plumbing 17-month lows.
Sugar futures suffered a late session reversal, after breaking new four-year highs early in the day.
March raw sugar futures settled down 1.8%, at 23.35 cents a pound, after rising to 24.1 cents earlier in the session, the highest level since July 2012.
(Source – http://www.agrimoney.com/marketreport/pm-markets-will-us-data-underestimate-sobyean-stocks–3788.html)