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Soybeans rise for a second session on demand for U.S. supplies

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  • Soybean rally capped by favourable weather outlook
  • Corn pressured by bumper supply forecasts
  • Wheat firms for second straight session

By Colin Packham

SYDNEY, Aug 4 (Reuters) – U.S. soybeans rose for a second session on Thursday, drawing support from international demand for U.S. supplies, though favourable weather forecasts for key producing regions capped the rally.

Corn was little changed, under pressure from expectations of silo-bursting supplies, while wheat rose for a second session.

The most active soybean futures on the Chicago Board Of Trade Sv1 rose 0.31 percent to $9.58-1/2 a bushel, having firmed 0.3 percent on Wednesday.

“The market will be tallying the net impact of strong U.S. export demand against a potential bumper U.S. harvest,” said Tobin Gorey, director of agricultural strategy, Commonwealth Bank of Australia.

Exporters on Wednesday reported sales of 441,000 tonnes of U.S. soybeans to China for delivery in the 2016/17 marketing year, which begins on Sept. 1, the U.S. Department of Agriculture said.

There were 256,000 tonnes of soybeans sold to reportedly unknown destinations with 66,000 tonnes for delivery in the 2015/16 marketing year and 190,200 tonnes for delivery in 2016/17, according to the USDA.

It was the sixth consecutive business day on which the agency confirmed soybean sales, with volumes to China and unknown destinations totalling more than 2 million tonnes over that period.

While demand appears strong for U.S. crops, with favourable weather expected across the Midwest, forecasters are increasingly confident of bumper U.S. supplies.

The most active corn futures Cv1 rose 0.1 percent to $3.35-1/4 a bushel, having gained 0.3 percent in the previous session.

The most active wheat futures Wv1 rose 0.3 percent to $4.11-1/2 a bushel, having closed up 2.2 percent on Wednesday.

Corn is under pressure from the weather outlook, but also drew support from news the Brazilian government is working to adjust its regulations on imports of genetically modified organisms (GMOs) to allow more corn imports from the United States.

Corn futures sharply pare losses on export hopes…

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20:43 GMT, Tuesday, 2nd Aug 2016, by William Clarke (Agrimoney.com)

Corn futures tumbled to six-year lows – only to recover on the news that the Brazilian government is working to open up its livestock feed sector to genetically modified corn from the US.

Corn had a weak start to the session, after weekly US Department of Agriculture overnight reported better-than-expected US crop ratings.

The USDA saw corn condition at 76% good or excellent, despite the hot weather, where markets were expecting at 1 point drop in condition.

And the development of corn is well advanced, having got through the crucial month of July with no severe heat damage, with 91% of corn in the silking stage.

Favourable crop outlook.

Meteorologist Gail Martell said the good crop condition, and a benign weather outlook “points to a favourable corn harvest in the making.

“Summer growing conditions in corn have been mostly favourable, though not ideal.

“Rainfall has been ample, promoting strong growth and development in corn,” she said, although some periods of heat have “proved detrimental”.

But the warm June temperatures, along with ample rainfall, “has spurred corn development,” Ms Martell said.

The prospect of ample US supply pushed December corn futures to session lows of just $3.29 a bushel, the lowest level for second-month futures since late 2009, but prices pared losses later in the session.

Brazilian demand

Rich Nelson, at the US broker Allendale, ascribed the change in mood to “a new story out there”.

This was an announcement by the Brazilian government that it was working to allow the import of more varieties of genetically modified US corn, for use in the country’s livestock industry.

Shipping corn to Brazil, the world’s second ranked corn exporter, during the middle of its’ second crop, or safrinha, harvest might seem like sending coals to Newcastle.

But a crisis in corn supplies is developing in Brazil’s southern livestock regions, sending prices soaring.

A long period during which the currency was very weak, making Brazilian corn highly competitive in international markets, lead to heavy exports.

Brazilian stocks were depleted, and much of the current crop was forward sold.

Now, with estimates of the safrinha crop ever declining, the corn supply is getting very tight.

Running out of corn

Last week the analyst Dr Michael Cordonnier reported that “livestock producers are very concerned that the corn situation in Brazil is so tight that the country could essentially run out of corn again before the 2017 safrinha corn harvest gets underway next June”.

“Even though the corn situation is expected to get very tight in Brazil, the country is still exporting corn, but all the corn now being exported is to fulfil old contracts from months ago,” Dr Cordonneir said.

“Once these contracts are fulfilled, no new export contracts are expected for the foreseeable future because domestic corn prices in Brazil are expected to be much higher than the international price.”

Domestic demand

“They do have a need for corn domestically,” Mr Nelson told Agrimoney,.”The country’s exporters oversold.”

He noted ideas that export sales could be made within the next few week.

But he pointed out that it was “interesting that they’re making such a move on a government basis now,” rather than ahead of the safrinha crop, when supplies were tighter.

December corn futures bounced back from the session lows, to finish the day unchanged, at $3.34 a bushel.

Export prospects limit losses

Soybean futures couldn’t make any such recovery, although they did trim losses on good export potential.

Soybeans were rated 72% good or excellent in the USDA report.

This is actually a 1 point increase from last week, where a 1 point decline was expected.

Still, at least there was a touch of export demand, as the USDA announced a 252,000 tonnes ale of soybeans to China, for delivery next marketing year.

And the dollar declined through the session, supporting dollar-denominated prices, and increasing export prospects, falling 0.7% against a basket of currencies, to a five-week low.

November soybean futures finished the day down 0.9%, at $9.53 a bushel, falling below the 200-day moving average for the first time since April of this year, but 10 cents above the session low.

Wheat extends losses to 10-year low

But Chicago wheat markets plumbed a fresh 10-year low, under pressure from the weight of world supplies.

Adding to the bearish tone was the news out overnight that Japan and Korea had both taken steps to restrict US imports, due to concerns over unapproved genetically modified wheat verities.

And Gasc, the stat grain buyer for Egypt, appears to have curtailed its buying in Tuesday’s tender, taking just one 60,000 tonne cargo, of Russian wheat.

This is the smallest purchase of the marketing year.

Gasc bought 60,000 tonnes of Russian wheat from Midgulf at $168.90 a tonne, after many sellers lifted their prices from last week.

September Chicago wheat futures finished down 1.1%, at $4.01 ј a bushel, its lowest level since September 2006.

Corn falls to near two-year low on USDA condition report

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  • USDA pegs condition of corn crop above forecasts
  • Soybeans hit near three-month low
  • Wheat little changed

By Colin Packham

SYDNEY, Aug 2 (Reuters) – U.S. corn fell to a near two-year low on Tuesday, slipping for a second session after the U.S. Department of Agriculture pegged the condition of the crop at above market expectations.

Soybeans fell more than 0.5 percent to hit a three-and-a-half month low, while wheat was little changed.

The most active corn futures on the Chicago Board Of Trade Cv1 fell 0.2 percent to $3.33-1/2 a bushel by 0315 GMT, having earlier hit a session low of $3.33 a bushel – the lowest since October, 2014. Corn closed down 2.5 percent in the previous session.

Analysts said corn was coming under pressure as any lingering weather related supply concerns ease.

“The proportion of U.S corn rated in good to excellent condition [has] added to the bearish tone,” said Tobin Gorey, director of agricultural strategy, Commonwealth Bank of Australia, adding that updated weather models are also favourable.

“While corn is not yet totally in the clear, the window for significant weather related losses is quickly closing.”

The USDA rated 76 percent of the corn crop as good to excellent, unchanged from the week before and ahead of analyst forecasts.

The outlook is increasing market confidence of bumper U.S. corn production.

Commodity brokerage INTL FCStone INTL.O on Monday projected U.S. 2016 corn production at 15.146 billion bushels, a record high if realized, with an average yield of 175.0 bushels per acre.

The U.S. weather outlook also continues to pressure soybeans, analysts said.

The most active soybean futures Sv1 fell 0.4 percent to $9.57-1/2 a bushel, near the session low of $9.55-1/2 a bushel – the lowest since April 19. Soybeans slumped 4.1 percent on Monday.

The USDA rated 72 percent of the U.S. soybean crop as good to excellent, up from 71 percent the previous week and above market expectations.

The most active wheat futures Wv1 was little changed at $4.05-3/4 a bushel, having closed down 0.4 percent on Monday.

Rabobank sees wheat, corn futures in ‘race to the bottom’

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Rabobank slashed its outlook for feed grain prices, citing a “global feed grain glut”.

Chicago feet wheat and corn are in a “race-to-the-bottom”, thanks to heavy supplies and big harvests.

Rabobank forecast corn and wheat price well below the current forward curve.

Exceptional US harvest

Rabobank lowered its forecast for Chicago wheat prices, “record projected global feed supplies, ensuring a particularly competitive export environment”.

“Wheat prices fell significantly through late June, as exceptional US harvest prospects and heightened confidence in the US corn crop sparked a price race-to-the-bottom across feed grain cash markets,” Rabobank said.

“Both record US yields and near-record ending stocks… plus an impending EU feed-quality crop will contribute to a 2016-17 global feed grain glut,” said the bank.

“Following the northern hemisphere harvest, wheat is expected to follow the corn market more closely, as both grains compete for demand.”

Undershooting the curve

And Rabobank warned that the USDA’s latest forecast for Chinese 2016-17 wheat feeding, at 15m tonnes “is somewhat optimistic in our opinion”.

“Government intentions to auction domestic corn stocks, having also removed the price support mechanism, should result in high availability of competitively priced Chinese feed corn, which could force a further 2m to 3m tonnes of wheat onto the global balance sheet,” the bank said.

Rabobank forecast Chicago wheat prices averaging $4.00 a bushel in the July to September period, and $4.30 a bushel in the October to November period.

In comparison, September Chicago wheat futures are currently trading at $4.18 a bushel, with December Chicago wheat futures are currently trading at $4.45 a bushel.

Heavy Russian crop

Rabobank forecast European wheat production at 154m tonnes, compared to the USDA forecast of 156.5m tonnes.

But Russian production was seen at a record 65.6m tonnes, 600,000 tonnes ahead of the USDA number.

“With crops in good condition, demand for high-quality grain is likely to shift across to the Black Sea, driving Russian exports to 27.1m tonnes,” Rabobank said.

Corn in ‘very good shape’

And the size of the US corn crop is weighing on price prospects for grains as well, Rabobank said.

“Traveling through the US over the course of the last few weeks, we have seen a lot of corn planted, and most of it is in very good shape,” Rabobank said.

“US crops are currently experiencing severe heat, but forecasts still hold good rains and a cooler outlook,” Raboank said.

“We therefore still predict yields to exceed those currently forecast by the USDA.”

Stocks pile up

The size of the harvest means that US stocks are set to build, despite “very strong expected exports, potentially hitting a 30-year high of 2.3bn bushels.

Rabobank saw corn futures in Chicago averaging just $3.00 a tonne for the rest of the year.

Corn futures for September are currently trading at about $3.36 a bushel, with the December contract at $3.43 a bushel.

France to support grain farmers after crops hit by weather

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  • Fall in grain output and low prices hit growers’ revenue
  • Farm minister aims to help cash flow ahead of next harvest
  • Growers see wheat crop plunge over 25 pct to some 30 mln T

Recasts to lead with government plan

By Sybille de La Hamaide

PARIS, July 27 (Reuters) – France will help grain farmers cope with an expected plunge in revenue after torrential rain and a lack of sunshine in late spring hit the country’s cereal crops.

First results of the still ongoing harvest point to a crop of soft wheat, the most cultivated cereal in France, at some 30 million tonnes this year, growers group Orama said on Wednesday.

This would be down more than 25 percent on last year’s record for European Union’s largest producer.

The fall in production, which also affects grains such as barley and rapeseed, comes at a time of low prices due to ample global supplies, with plentiful wheat crops expected in top producers such as the United States and Russia.

Agriculture Minister Stephane Le Foll presented new measures to help grain farmers at a cabinet meeting, including tax rebates or deferrals as well as a speeding up in the repayment of value added tax (VAT), minutes of the meeting showed.

Pointing to adverse weather conditions in the spring that damaged crops and fuelled plant disease, he also extended existing aid such as public loan guarantees and the possibility of postponing loan repayments.

“These are initial emergency measures for farmers’ cash flow so that they can start their crops for next year,” a farm ministry official said.

Total costs were still unknown because so were the scope of the damage and the number of farms which would claim, she said.

“The situation we are experiencing is extremely serious and totally unprecedented,” Orama President Philippe Pinta told reporters ahead of the government plan. “The figures (for soft wheat) that we are getting are so bad it’s hard to imagine.”

Separately, in response to several farm unions’ demands, Le Foll is envisaging a change in France’s application of the EU Common Agriculture Policy as part of a review due by July 31.

Paris could slow down the implementation of extra aid for small farms, which lead to a transfer of EU subsidies from large grain farms to smaller livestock ones, the official said.

Oilseed crops were also hit by adverse weather conditions although to a lesser extent, Orama said. First results pointed to a French rapeseed yield between 2.8 and 3 tonnes per hectare compared to a ministry estimate of 3.5 t/ha in 2015.

($1 = 0.9088 euros)

Wheat ticks up after deep losses, U.S. yields in focus

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  • Chicago wheat edges higher after Tuesday’s over 3 pct fall
  • Dryness trims North Dakota spring wheat yield prospects
  • Soybeans up for 2nd day as market recovers from 3-month low

Adds details, quotes

By Naveen Thukral

SINGAPORE, July 27 (Reuters) – Chicago wheat rose on Wednesday as the market recovered from a more than three percent fall in the previous session, supported by a widely watched crop tour that found lower U.S. spring wheat yield prospects.

Corn edged higher after closing about half a percent lower while soybeans rose for a second session on bargain buying following a decline to three-month low on Tuesday.

The Chicago Board Of Trade’s most-active wheat contract Wv1 rose 0.4 percent to $4.16-3/4 a bushel, having closed down 3.3 percent on Tuesday on pressure from ample global supplies.

Corn Cv1 gained 0.4 percent to $3.40-3/4 a bushel and soybeans Sv1 added 0.8 percent to $9.81-1/2 a bushel.

Yield prospects for hard red spring wheat in southeast North Dakota were below average following a dry spell earlier this year, scouts on an annual crop tour said on Tuesday.

The wheat crop in the southeastern corner of the state was developing one to two weeks ahead of normal, aided by early planting as well as dry weather in May and June that may have advanced the crop’s maturity.

Reduced estimates for the harvest in the top exporting region of the European Union had pushed Chicago wheat to a 10-day high on Monday, but ample global supplies are keeping a lid on prices.

“There are some periodic concerns about yields and adverse weather but overall global supplies are looking really good,” said Phin Ziebell, agribusiness economist at National Australia Bank.

“You need to see a big decline in yields or significant period of adverse weather for prices to rally. There are some bargains to be had but beyond that it is all about fundamentals.”

For soybeans, extended weather forecasts reaching into August – the most crucial month for establishing U.S. yields – showed sufficient precipitation that could help offset the potential for stress caused by high temperatures.

Midday weather models on Tuesday showed a stronger ridge of high pressure in the central United States growing belt that could lead to increased dryness, according to an agriculture meteorologist at Lanworth, a division of Thomson Reuters.

The U.S. Department of Agriculture after the close of trading on Monday left good-to-excellent condition ratings unchanged for the U.S. soybean and corn crops, when analysts were predicting slightly lower ratings due to heat. US/COR, US/SOY

Historically high U.S. crop ratings increased the likelihood for higher-than-normal yields at harvest.

Brazil 2016/17 soy area should grow modestly – AGR Brasil

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SAO PAULO, July 26 (Reuters) – The area planted with soy in Brazil in 2016/17 should grow 2 percent to 33.8 million hectares as some farmers favor corn, Chicago-based analysts AGR Brasil told Reuters on Tuesday.

Brazil is facing a corn shortage, driving local prices up to record highs and changing a trend of farmers favoring soybeans in recent years. Soy planting will start in late September but farmers need to finalize their decisions now.

“The increase in summer corn, in our opinion will not threaten the increase in soy area but will merely limit its growth,” AGR Brasil’s President Pedro Dejneka said in an interview.

The soy crop could be 98 million to 108 million tonnes, according to AGR Brasil.

“The forecast is still for La Niña … but it is possible that it is a moderate La Nina,” Dejneka said, explaining that the climate phenomenon tends to lead to favorable rains and temperatures in most agricultural areas.

La Nina, however, tends to hurt the far southern state of Rio Grande do Sul as well as neighboring Argentina, he said.

Renewed oil weakness sparks demand fears

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By Jessica Resnick-Ault

NEW YORK, July 26 (Reuters) – U.S. oil prices topped $50 a barrel in June, boosting optimism a two-year price rout might end. Six weeks later, the long hoped for recovery has yet to take hold.

Mounting fears that demand has fallen short of expectations as production increases and rig counts rise has analysts believing that any oil price recovery may be a year or more in the future.

The demand response has been slower than bulls had hoped. U.S. drivers have covered fewer miles than expected this summer, and as they speed toward the Labor Day holiday in September, the overhang of gasoline in storage may put downward pressure on crude and refined product prices.

“Right now, the only thing that would drive prices higher is robust demand,” said John Paisie, executive vice president at Stratas Energy Advisors, a Houston-based consultancy. The growth must be across the board, for products including distillates like diesel and jet fuel, as well as gasoline.

“Demand just can’t be made up by one product,” he said, and demand for diesel has been lagging.

Instead of seeing $60 a barrel, which would support an increase in production, the demand questions, and ongoing supply concerns, mean oil could fall further. U.S. crude CLc1 settled at $43.13 on Monday, after earlier hitting a three-month low.

“Demand is growing very moderately,” said veteran oil economist and independent consultant Phil Verleger. “There’s no real surge to it – call it the great moderation.”

While gasoline prices have declined, the lower cost at the pump has only a moderate effect on consumer’s buying habits, Verleger said. Instead of racing out to fill their tanks, consumers are using the savings to pay down debt, he said.

The U.S. Department of Energy has trimmed its outlook for gasoline demand growth for the remainder of the year, and now forecasts growth of 160,000 bpd, compared with 220,000 bpd previously.

Gasoline demand data often lags by two months or more, but as figures for the beginning of this year’s summer driving season have been released, analysts have trimmed their outlook for 2016 growth. U.S. drivers logged two percent more miles in May than a year earlier, compared with 2.2 percent in April, according to the U.S. Department of Transportation.

U.S. gasoline demand rose by a modest 0.8 percent in April according to the Department of Energy. May data is due out on Friday.

Experts agree that rebalancing the market will take strengthening demand, as crude from shale formations and deepwater fields has continued to come into production despite lower prices.

“There’s got to be a reckoning that we only have a few weeks left of peak gasoline demand, and then we hit a shoulder season,” said Michael Cohen, head of energy commodities research at Barclays. In the so-called shoulder season during the autumn, diesel usually drives petroleum demand.

European diesel demand also may be weaker than expected because of Britain’s Brexit vote to leave the European Union, Cohen said. In China, stockpiles have built, which may limit Asian demand growth.

Without a surge in demand, the market will be unable to use up the gasoline that refiners stockpiled ahead of a summer driving season that shaped up to be more lackluster than expected.

Cohen said he did not expect to see prices fall into the $20s or $30s as in January and February. However, he said, “our view continues to be slightly lower than where we are.”

Posted in Oil

U.S. corn, soy crop ratings seen declining on heat stress

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CHICAGO, July 25 (Reuters) – The U.S. Department of Agriculture will likely show decreased condition ratings for U.S. corn and soybean crops after hot temperatures stressed developing plants last week, a Reuters poll of 10 analysts showed on Monday.

USDA in its weekly crop progress and conditions report due at 3 p.m. CDT (2000 GMT) is expected to show corn ratings at 75 percent good to excellent and soybeans at 70 percent good to excellent, each down 1 percentage point from last week, according to average analyst estimates. US/CORUS/SOY

Hotter-than-normal temperatures negatively impacted corn and soybean fields, especially in the lower half of the United States, while crop conditions also tend to ease seasonally in the warmest days, the analysts said.

However, plentiful rainfall in much of the U.S. Corn Belt limited the potential for heat damage, they said.

Analysts expect the government to report 69 percent of the U.S. spring wheat crop as good to excellent, unchanged from a week earlier. US/WHE

They predicted the winter wheat harvest would advance to 86 percent complete, up from 76 percent in the previous week.

All figures below in percent:

Category Average Range Prior week
Corn condition* 75 74-76 76
Soybean condition* 70 70-71 71
Spring wheat condition* 69 68-69 69
Winter wheat harvested 86 81-89 76
*Percent good/excellent

Corn faces 5th week of losses as U.S. weather improves, soy falls

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  • Corn extends decline on forecasts of cooler U.S. weather
  • Soybeans give up Thursday’s gains, wheat little changed

Adds details, quotes

By Naveen Thukral

SINGAPORE, July 22 (Reuters) – Chicago corn futures were on track for a fifth consecutive week of decline on Friday as an outlook for cooler temperature across the U.S. grain belt boosted expectations of a bumper crop.

Soybeans slid, giving up overnight gains, while wheat was steady after ending up on Thursday with prices underpinned by concerns over wet weather hurting crops in Europe.

Chicago Board of Trade most-active corn contract Cv1 has lost 5.2 percent this week. Soybeans Sv1have also given up about 5 percent after finishing last week largely unchanged.

Wheat Wv1, however, is down more than 1 percent in its second week of decline.

“For corn, (adverse) weather concerns for the U.S. crop have failed to materialise. A lot of speculative length has been unwound,” said Brett Cooper, senior manager for markets at FCStone Australia.

“One supporting factor in the wheat market has been the impact of very wet couple of months in Europe, lowering quality and yields.”

The latest U.S. weather view calls for high temperatures currently hovering over the corn belt to quickly moderate, with some beneficial rains also in the mix for the weekend.

There is additional pressure on corn stemming from U.S. data showing a drop in demand.

A weekly U.S. Department of Agriculture report said that old-crop corn export sales came in at 345,100 tonnes in the seven days ended July 14, down from 667,777 tonnes a week ago.

New new-crop sales were 506,300 tonnes, down from 687,843 tonnes. The old-crop figure was below market forecasts while the new-crop number was in line with expectations.

New-crop soybean export sales totalled a bigger-than-expected 1.002 million tonnes, sharply up from 547,046 tonnes a week earlier. Old-crop soybean sales were 325,000 tonnes.

In more bearish news, Argentina raised its view for the country’s 2015-16 soybean and corn crops on robust yields.

The Agriculture Ministry said it now expects 39.8 million tonnes from the 2015-16 corn crop, up from 37.9 million in its last monthly report, and it forecast 58.8 million tonnes of soybeans, compared with 58 million before.

Commodity funds were net sellers of CBOT corn futures contracts on Thursday. They were net buyers of wheat contracts and even in soybeans.