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Corn, soybeans rebound after weather-inspired selloff

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  • Corn hit contract low overnight, soy dropped to 6-week trough
  • Expectations of favourable weather will remain a drag on futures

By Manolo Serapio Jr

MANILA, July 7 (Reuters) – U.S. corn and soybean futures rebounded on Thursday following a selloff in the prior session pinned on favourable weather that boosted hopes for a bountiful harvest in the fall.

The gains are likely to be fleeting though, analysts say.

“The U.S. near-term weather narrative remains decidedly bearish,” Commonwealth Bank of Australia analysts said in a note, citing forecasts of more rain in the U.S. Midwest.

“Forecasters have flagged that the southwestern Corn Belt will likely turn drier again after this week, but on balance U.S. crops are in very good shape,” they said.

Corn for December delivery on the Chicago Board of Trade CZ6 gained 0.7 percent to $3.50-3/4 a bushel by 0214 GMT, after touching a contract low of $3.46 overnight.

CBOT soybeans SX6 gained 0.3 percent to $10.76-3/4 a bushel, having dropped to $10.40-1/2 on Wednesday, its weakest since May 25.

Expectations by weather forecasters that the onset of the La Nina weather pattern, which could trigger a dry summer in the U.S. Midwest, had been pushed back to September suggests that soybeans won’t get hit during their key development stage in August, CBA analysts said.

“The less threatening outlook will continue to weigh on the market,” they added.

The U.S. Department of Agriculture’s weekly conditions report on Tuesday showed strong ratings for corn, soybeans and wheat.

Chicago wheat WU6 rose 0.5 percent to $4.30-1/2 a bushel.

Black Sea wheat exporters Russia and Ukraine have started harvesting and are seeing higher yields and the same quality as a year ago, analysts and traders said.

Corn extends losses into fifth session

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  • Corn falls, lingers near lowest since October, 2014
  • Wheat falls 1 percent, soybeans edge lower
  • USDA to report latest crop condition report on Wednesday

By Colin Packham

SYDNEY, July 6 (Reuters) – U.S corn fell for a fifth consecutive session on Wednesday as favourable weather forecasts added to expectations of bumper supplies.

Wheat fell 1 percent, while soybeans fell nearly 0.5 percent.

The most actively traded corn futures on the Chicago Board of Trade CZ6 fell 0.35 percent to $3.56-3/4 a bushel after closing down 2.5 percent in the previous session when prices hit a contract low.

Front-month corn futures Cv1 were little changed, having closed down more than 6 percent on Tuesday when prices fell to a low of $3.33-3/4 a bushel – the lowest since October, 2014.

Analysts said expectations of ample global supplies continue to weigh on prices.

“The reality is there are favourable conditions,” said Phin Ziebell, agribusiness economist, National Australia Bank. “We occasionally get some supply concerns but none of them seem to come through to impacting production.”

The outlook for more rain in key growing areas of the U.S. Midwest during the next two weeks outweighed concerns about some dry conditions in about 15 to 20 percent of the Midwest, including southeast Iowa and western Illinois.

Front-month wheat futures Wv1 fell 1.2 percent to $4.15-1/4 a bushel, having closed down 2.5 percent on Tuesday.

Front-month soybean futures Sv1 eased 0.54 percent to $11.11 a bushel, having closed down 1.8 percent on Tuesday.

Soybeans are under pressure amid signs of weak demand for U.S. supplies.

The U.S. Department of Agriculture on Tuesday morning said export inspections of soybeans totalled just 191,426 tonnes in the latest week, down from 295,816 a week ago and below the low end of analysts’ forecasts.

Analysts said the U.S. Department of Agriculture’s latest weekly update on crop conditions, which will be released at 3 p.m. CDT (2000 GMT), will likely drive the next price trigger.

Analysts are expecting the report to show that good-to-excellent conditions for both corn and soybeans fell 1 percentage point.

‘Era of high ag prices quite likely over’ – OECD, UN

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The period of high ag commodity prices is “quite likely over”, sapped by a slowdown in population growth, the OECD and United Nations said – although milk powder, ethanol and soymeal values look poised to outperform.

The drop in agricultural commodity prices last year – when the sector offered negative returns of 15.6%, taking three-year losses to 34%, according to Bcom indices – highlighted a structural shift in value prospects.

“Prices for the main crops, livestock and fish products all fell in 2015, signalling that an era of high prices is quite likely over for all sub-sectors,” according to a report from the OECD and the UN’s Food and Agriculture Organization.

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Food commodity prices to remain stable over next decade – FAO/OECD

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PARIS, July 4 (Reuters) – Higher agricultural productivity and slightly larger crop areas in the coming decade will cover rises in food demand, leading to stable prices and a period of more restrained agricultural markets, the FAO and OECD said on Monday.

In their annual Agricultural Outlook report, the Food and Agriculture Organization and the Organisation for Economic Cooperation and Development said food consumption would be tempered by moderate economic growth, slower population increases and the trend for households to allocate extra income to non-food items, including in developing countries.

The 10-year projections reinforced the view that agricultural commodities are emerging from the era of intense volatility unleashed by price spikes and supply tensions in 2007-2008, as faltering global economic growth curbs demand and strong output bolsters stocks. (Full Story)

“With supply and demand growth broadly matched, real agricultural prices are projected to remain relatively flat,” the FAO and OECD said.

“The increased demand for food is projected to be satisfied through productivity gains, with modest changes in crop area and livestock herds,” the organisations said in their report.

For crops, yield increases would account for 80 percent of production growth, the remainder coming from the expansion of crop areas, notably in Brazil and Argentina, they said.

Developing countries would continue to lead consumption growth due to rising populations and higher per capita spending.

This would cut the number of undernourished people to 8 percent of the global population, or under 650 million, in 2025 from 11 percent, or nearly 800 million, now, they estimated.

Developing countries, like developed nations, would see the consumption of sugar, oils and fats increase faster than that of cereals and protein as people consume more processed food, the FAO and OECD said.

There would also continue to be a shift in demand in developing economies towards animal proteins such as meat, fish and dairy products, leading to higher prices for livestock and feed products compared with staple food grains.

Per capita consumption of fish in developing countries, excluding sub-Saharan Africa, is set to exceed that of developed countries by 2025. This would result in fish produced by aquaculture overtaking volumes of caught fish, the report said.

Agricultural exports will remain dominated by a small group of countries, with several commodities forecast to be dependent on one country for more 40 percent of export flows in 2025, such as Brazil for sugar and soybeans, the FAO and OECD said.

Reforms being introduced in China were one source of uncertainty for the market outlook, however, notably the scale and timing of the country’s planned release of part of its huge maize stocks, they said.

Monsanto, Microsoft to invest in agricultural technology in Brazil

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SAO PAULO, July 4 (Reuters) – U.S. biotech company Monsanto Co MON.N and Microsoft Corp MSFT.O announced on Monday a partnership to invest in agricultural technology startups in Brazil.

Monsanto will join a Brazilian investment fund with up to 300 million reais ($92 million), managed by Microsoft, evaluating ideas for new digital tools to be applied to agricultural production in the country, executives said.

Selected ideas will receive initial funding of up to 1.5 million reais ($459,000) for early development. Project owners will have the option to pay back the investment after three years or convert the money into equity.

“We want to foster new startups in the agricultural sector. There is a vast area for research and development,” Rodrigo Santos, head of Monsanto in Latin America, told reporters on the sidelines of the Global Agribusiness Forum (GAF 2016).

Technology company Qualcomm QCOM.O is also investing in the fund.

($1 = 3.263 Brazilian reais)

Oil eases as weak demand tempers bullish Saudi energy minister comments

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  • Saudis, OPEC say oil market heading into balance
  • But analysts warn that slowing refineries will cut crude orders
  • Tankers wait outside NY Harbor, gasoline tankers diverted

Updates settlement prices

By Ahmad Ghaddar and Catherine Ngai

LONDON/CALGARY, July 4 (Reuters) – Global oil prices eased on Monday after comments by Saudi Energy Minister Khaled Al-Faleh that the market was heading towards balance were tempered by slowing demand in Asia, pockets of gasoline oversupply and signs crude output could rise.

Brent crude futures LCOc1 settled down 25 cents to $50.10 per barrel. U.S. crude futures CLc1 were trading down 23 cents at $48.76 per barrel.

U.S. markets are closed on Monday for the U.S. Independence Day holiday, so trading remained thin on the day.

The energy minister of Saudi Arabia, the world’s top crude exporter, and the secretary general of producer club OPEC agreed that global oil markets were heading towards balance, and that prices reflected this.

However, analysts at Morgan Stanley said there were also signs prices could fall again soon, pointing at stalling gasoline demand and more oil from Canada and Nigeria after production problems.

In the New York Harbor, at least two tankers carrying gasoline-making components have dropped anchor, unable to discharge their cargo. Several tanks with gasoline also have been diverted, underscoring the latest oversupply issue

Meanwhile, the Nigerian National Petroleum Corporation said last week that output was rising following repairs after attacks in the Niger Delta that had pushed crude output to 30-year lows.

A deal to unify Libya’s rival national oil corporations could pave the way for the OPEC member to boost output which currently stands at less than a quarter of pre-2011 levels of 1.6 million barrels per day (bpd).

“If the deal materialises it will have a real and considerable impact on the oil market balance for 2017, potentially cancelling out any projected deficit,” SEB Markets chief analyst for commodities Bjarne Schieldrop said.

Oil demand and, as a result, prices, could come under pressure as weak refining margins prompt run cuts at a time when plants in Asia are already gearing up for seasonal maintenance work.

“Asia refiners have already started to pull back … and there are reports of cargoes struggling to sell,” Morgan Stanley analysts said on Monday.

Russian oil output in June rose slightly from the previous month to 10.84 million bpd.

In Norway, oil workers signed a deal on Saturday, avoiding a strike in western Europe’s top producer.

Posted in Oil

GRAINS-U.S. wheat, soybeans, corn fall on rising supply view

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By Mark Weinraub

CHICAGO, July 1 (Reuters) – U.S. wheat futures sank to multi-year lows on Friday, pressured by an ample global stockpile that was expected to grow even larger due to a bountiful harvest, traders said.

Corn and soybean futures also weakened, with soybeans settling back from a rally on Thursday that pushed prices to a two-week high.

The U.S. Agriculture Department’s acreage report from Thursday, which showed a surprise bump in corn and spring wheat acreage, continued to cast a shadow over the grains market.

“The market is back to trading fundamentals,” said Greg Grow, director of agribusiness at Archer Financial Services. “The acreage increase in corn was unexpected, the acreage increase in spring wheat was unexpected. The world is well supplied in feed grains right now.”

The front-month Chicago Board of Trade soft red winter wheat contract Wc1shed 3.5 percent to a nine-year low while K.C. hard red winter KWc1 wheat touched a fresh 10-year low.

Forecasts for benign weather across much of the U.S. Midwest during the next few weeks – a key time for corn development – also weighed on prices.

“Highs warm into the mid to upper 90s (degrees Fahrenheit) for the far southern/western Midwest next Wednesday to Friday, but the rain ahead of this event will recharge soil moisture and lessen stress to pollinating corn,” Commodity Weather Group said in a note to clients.

Private analytics firm Informa Economics forecast U.S. corn production at 14.531 billion bushels and soybean production at 3.89 billion bushels. Both estimates were above the current U.S. Agriculture Department outlook. 

CBOT soft red winter wheat for September delivery WU6 settled down 15-1/4 cents at $4.30-1/4 a bushel, K.C. September hard red winter wheat KWU6 was 11 cents lower at $4.11-1/2 a bushel and MGEX September spring wheat 1MWEU6 was down 9 cents at $4.99-1/4 a bushel.

CBOT December corn CZ6 was off 4-1/4 cents at $3.67 a bushel. CBOT November soybeans SX6were down 15-3/4 cents at $11.37-1/2 a bushel.

For the week, CBOT soft red winter wheat was down 7.7 percent, its biggest weekly decline in two years. K.C. wheat was off 6.7 percent, its fourth straight weekly loss.

CBOT corn fell 4.5 percent this week and soybeans were up 5.5 percent, their biggest weekly gain since October 2014.

Wheat faces fourth week of decline, lingers near 6-year low

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  • Wheat down 10 pct in 4 weeks of decline on supply pressure
  • Corn has lost 15 pct in 2 weeks, USDA boosts planting outlook

Adds details, quotes

By Naveen Thukral

SINGAPORE, July 1 (Reuters) – U.S. wheat lost more ground on Friday with the market set for a fourth week of decline, as a U.S. Department of Agriculture (USDA) report that pegged plantings above expectations dragged on prices.

Corn, which has lost around 15 percent in two weeks of losses, is expected to decline further as excess wheat supply takes its market share in the animal feed market.

Chicago Board Of Trade most-active wheat contract Wv1 is down nearly 5 percent this week. In the previous session, prices hit a low of $4.36 a bushel, the weakest since June 2010.

Corn Cv1, which plumbed an 11-week low of $3.65-1/4 a bushel on Thursday, has given up more than 3 percent this week.

“Corn had rallied due to spillover from gains in the soybean market but the reality is that there is too much corn around and now we have increase in U.S. acreage,” said Phin Ziebel, agribusiness economist at National Australia Bank in Melbourne.

“The supply and demand situation is bearish for grains and more so for corn as feed wheat is going to eat into its market share.”

The USDA, in an acreage report, said domestic all-wheat plantings totaled 50.816 million acres, topping analysts’ forecasts for 49.869 million and the agency’s March estimate of 49.559 million.

Corn seedings were 94.148 million acres, above the high end of analysts’ estimates. On an average, they had expected acreage to fall from the government’s March forecast of 93.601 million.

The USDA, in a separate report, said corn inventories as of June 1 were the biggest since 1988 while soybean stocks for that period were the third biggest ever.

Soybean futures Sv1 are up nearly 7 percent this week, the biggest weekly gain since October 2014.

The acreage report showed farmers planted a record 83.688 million soybean acres, above the government’s March forecast of 82.236 million but below analysts’ estimates for 83.834 million.

Commodity funds were net sellers of CBOT corn contracts on Thursday and net buyers of soybean futures.

Trader estimates of fund selling in corn ranged from 15,000 to 25,000 contracts, and estimates of fund buying in soybeans ranged from 14,000 to 25,000 contracts. Estimates of fund buying in wheat ranged from zero to 5,000 contracts.

Grain markets sunk, ahead of a slew of US government data

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PM markets: sugar futures surge to 4-year high
Sugar and coffee futures soared, as the currency of top grower Brazil rallied, while wheat prices slumped as the market remains glutted, with fresh US stocks data out on Thursday.

Raw sugar futures shot up more than 6%, fuelled as strength in the real out of its previous trading range, to its highest level in four years.

Raw sugar prices are now on track to close the quarter up 36%.

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Stiff U.S. corn export competition redrawing global grain flows

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By Karl Plume

CHICAGO, June 28 (Reuters) – U.S. corn export sales have outpaced last year as steady buying by Mexico helped to offset sluggish early-season purchases by traditional Asian customers like South Korea and Japan.

Now, Mexico is primed to overtake Japan as the single largest U.S. corn importer, knocking Tokyo from the perch it has occupied since the mid-1980s and taking the top spot for the first time ever.

The shift illustrates how the United States, once the world’s lone grain trading superpower, is now relying on its southern neighbor to absorb more of its ever-growing corn stockpile, analysts said, as rising suppliers like Ukraine and Brazil have disrupted global grain trade flows.

It is also the product of a multiyear commodities boom that began in 2007 which bolstered farming in South America and Eastern Europe and grain shipping investments by local governments and large grain traders such as Cargill Inc CARG.UL and Archer Daniels Midland Co ADM.N.

At risk is the long-standing dominance of U.S. corn exports, valued at $8.3 billion last year and a crucial outlet for about a third of every U.S. corn crop.

“There’s been a shuffling of the top of the deck,” said Dan Basse, president of Chicago-based consultancy AgResource Co. “It’s a very competitive world out there.”

The change in export patterns highlights how quickly the fortunes in the farm economy can turn, and how little time companies have to respond to those changes, said traders. U.S. corn exports account for a 6.2-percent share of the agricultural products export total, according to the USDA.

Despite a three-month buying flurry, Japan remains on pace to buy its second-smallest U.S. corn volume since at least 1999, according to the most recent U.S. Department of Agriculture data. South Korea’s haul through mid-June is the second-lowest in a decade.

STALLING RALLY

But the recent rise in demand by Asia’s largest importers could soon stall, thanks in part to Brexit which has riled currency markets.

The U.S. dollar .DXY has rallied to a three-month high against a basket of currencies after Britain’s vote last week to split from the European Union, making dollar-denominated commodities costlier for those holding other currencies. Meanwhile, Brazilian and Argentine corn prices are easing as their late-season corn harvests accelerate.

“Buyers respond to price. If you’re not able to offer grain cheaper than the next guy, you’re not going to get that business,” said a U.S. corn exporter who asked not to be named.

When Asian buyers started shunning U.S. corn last fall, some of the largest American grain exporters and sellers scouted markets closer to home to offset the losses, said traders.

In particular, they turned to markets that industry-funded groups, such as the U.S. Grains Council, had been wooing for years and regularly hosted at U.S. grain elevators and farms.

Mexico, traders said, was an obvious place to pitch due to proximity and favorable trade status. For Colombia and Peru, free trade agreements also made buying corn from Brazil and Argentina less appealing than American grain.

UNCERTAIN FUTURE

Latin American demand for corn is rising with growing livestock and corn processing industries. But as U.S. farmers look to harvest another massive corn crop this fall, questions remain about whether these markets can absorb the surplus.

Mexico’s import appetite can vary significantly depending on the size of its own grain crop and the availability of alternative feed grains like sorghum, analysts cautioned.

The USDA’s attache in Mexico this month cut the country’s corn import outlook by 1 million tonnes, or 7.4 percent, from the official USDA forecast due to higher-than-previously-estimated domestic production.

And, globally, competition from South America is only going to grow.

Brazil’s agriculture minister last week proposed raising the minimum corn price, a move that could shift more of the country’s soybean area into corn production. Corn plantings in Argentina could jump 20 percent after changes to the country’s export policies.

  • U.S. corn export markets