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Corn eases on stable U.S. crop condition, wheat struggles

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  • Corn falls on better-than-expected U.S. crop condition
  • Soybeans underpinned by strong demand, concerns over dryness

Adds details, quotes

By Naveen Thukral

SINGAPORE, June 28 (Reuters) – Chicago corn futures lost ground on Tuesday, falling for a sixth out of seven sessions, as a U.S. government report showed healthy crop conditions despite concerns over dry weather.

Soybeans rose for a second session, underpinned by forecasts of dry weather in the U.S. crop belt next month while the wheat market faced headwinds from a rapidly progressing U.S. harvest.

Chicago Board of Trade most-active corn contract Cv1 was down 0.3 percent to $3.84-1/4 a bushel by 0215 GMT, while soybeans Sv1 gained 0.3 percent to $11.08-1/2 a bushel. Wheat Wv1 lost 0.1 percent to $4.58 a bushel.

“U.S. corn conditions came in unchanged on the previous week, so prices struggled,” said Tobin Gorey, director of agricultural strategy at Commonwealth Bank of Australia.

“Some of the driest areas of the U.S. Midwest received rain over the weekend. The Delta and Southeast mostly trended drier, but meteorologists say the region should see widespread precipitation today.”

After the CBOT closed on Monday, the U.S. Department of Agriculture rated 75 percent of the U.S. corn crop as good to excellent, bucking expectations for a downgrade. US/COR

Wheat futures have come under pressure on reports of large yields from the U.S. winter crop.

U.S. farmers have finished harvesting 45 percent of the winter crop as compared with 25 percent a week ago and above the five-year average of 41 percent, the USDA said.

Soybeans were underpinned by forecasts of a return to hot temperatures in the second half of July.

The USDA rated 72 percent of the U.S. soybean crop in good to excellent condition, down from 73 percent the previous week and in line with analyst expectations.

The agency in a separate report confirmed sales of another 150,000 tonnes of U.S. soybeans to unknown destinations on Monday, following sales announcements of more than 400,000 tonnes on Friday.

The USDA is set to release closely watched stocks and plantings estimates on Thursday.

Those reports will show the extent to which brisk export demand has whittled down corn and soybean inventories, and whether farmers planted more soybeans and less corn than initially expected due to a spring rally in soy prices.

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

Trade estimates of fund buying in soybeans ranged from 6,000 to 18,000 contracts, and estimates of fund selling in wheat ranged from 4,000 to 5,000 contracts. Estimates of fund activity in corn ranged from net sellers of 6,000 contracts to net buyers of 4,000 contracts.

Corn rises after deep losses, market eyes U.S. weather

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SINGAPORE, June 27 (Reuters) – Chicago corn edged higher on Monday as the market took a breather, after suffering its biggest weekly decline in three years, with investors watching the U.S. weather for a price direction.

Soybeans rose almost 1 percent after coming under pressure in the last session amid a broad selloff in commodities and financial markets after Britain voted to leave the European Union.

FUNDAMENTALS

* Corn Cv1 lost more than 12 percent last week, its biggest weekly decline since June 2013 as improving weather across the U.S. Midwest prompted funds to liquidate their long positions.

* Soybeans gave up six percent last week while wheat dropped 3.4 percent.

* Investors in the grain markets will be closely watching a weekly crop progress report to be issued by the U.S. Department of Agriculture later on Monday.

* Large speculators cut their net long position in CBOT corn futures in the week to June 21, regulatory data released on Friday showed.

* The Commodity Futures Trading Commission’s weekly commitments of traders report also showed that noncommercial traders, a category that includes hedge funds, increased their net short position in CBOT wheat and cut their net long position in soybeans.

MARKET NEWS

* Asian stocks opened weaker and the British pound fell almost 2 percent in early Asian trade on Monday as markets struggled to shake off deep uncertainty sparked by Britain’s decision to leave the European Union.

GRAINS-Corn, wheat, soybeans falls 2 pct as Brexit rattles markets

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  • Corn down 13 pct this week, most since June 2013
  • Britain’s exit from EU rattles financial markets
  • Pressure from improving U.S. crop weather
  • Soybeans, wheat faces weekly losses; funds sell grains

Recasts with Britain’s exit, updates prices

By Naveen Thukral

SINGAPORE, June 24 (Reuters) – Chicago corn, soybeans and wheat slid around two percent on Friday as Britain’s vote to leave the European Union hammered global financial and commodity markets.

Carnage came to world markets as major television networks said Britain had voted to leave the European Union, sending sterling on a record plunge and pummelling share markets around the globe.MKTS/GLOB

“The agricultural markets have been caught in the storm on Brexit,” said Luke Mathews, senior risk management consultant at FCStone Australia.

“The macro-economic environment is going to be the key driver for all markets including agriculture for a while. Obviously, agricultural markets won’t lose site of their own fundamentals.”

The Chicago Board of Trade most-active corn contract Cv1 fell 2.4 percent to $3.78 a bushel by 0504 GMT, after hitting its a six-week low of $3.77 a bushel earlier in the session.

Soybeans Sv1 gave up two percent to $10.79-1/2 a bushel, its lowest in about three weeks and wheat Wv1 dropped two percent to $4.45 a bushel.

Fundamentals remained bearish for agricultural markets.

Storms rolled through the U.S. corn belt this week, easing concerns about dryness in some areas. With the crop heading into its pollination phase, which typically occurs in July in the U.S. Midwest, weather remained the focus.

“Corn and soybeans have come down in recent days because of good rains across the Midwest,” a Singapore-based grains trader said. “It has been dry in wheat areas which is good for the winter crop harvest.”

For the week, corn is down more than 13 percent, the most since June 2013 and soybeans have shed almost 6 percent, the biggest weekly drop since July 2014. Wheat has lost more than five percent this week.

Commodity funds were net sellers of CBOT corn, soybean and wheat contracts on Thursday. Trade sources estimated that funds sold 13,000 corn contracts, 12,000 soybean contracts and 4,000 wheat contracts. COMFUND/CBT

The soybean market faced additional pressure from improving supply outlook in Argentina.

Argentina increased its 2015-16 soybean crop estimate to 58 million tonnes from a previous forecast of 57.6 million, citing a faster-than-expected recovery of areas thought to have been lost to floods caused by unusually hard April rains.

“Very high yields continue to be seen, despite some excessive wetness, in Buenos Aires and La Pampa provinces, as well as in the parts of Cordoba and Santa Fe that were not affected by the floods,” the agriculture ministry said.

Posted in Ag

US officials cut Brazil corn crop hopes – and warn of further downgrades

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Brazil’s corn imports will soar five-fold to a 16-year high, thanks to the supply squeeze prompted by a disappointing safrinha crop, US officials said, cutting their harvest forecast and flagging “great challenges” for livestock farmers.

Brazil, better known as the second-ranked corn exporter, will see its imports swell from 330,000 tonnes last season to 1.5m tonnes in 2015-16, the US Department of Agriculture’s Brasilia bureau said, the kind of volumes more typically bought by the likes of Egypt, Israel or Turkey.

Imports at that level would be the biggest since 1999-2000, besides being ahead of the 1.1m tonnes that the USDA has officially forecast, and the 1.0m tonnes expected by Conab, Brazil’s own crop bureau.

The raised estimate reflected a weaker forecast for Brazilian corn production, which the bureau pegged at 75.0m tonnes, below the USDA’s official 77.5m-tonne figure, and the 76.2m tonnes expected by Conab.

More downgrades ahead?

The bureau said its production forecast, “down 12% from the previous year’s record crop”, reflected weaker expectations for the dryness tested safrinha, or second crop, harvest which accounts for some two-thirds of total output.

“An early start to the dry season [had] an adverse effect on the safrinha crop,” the bureau said, cautioning that further downgrades could be in the offing.

“Inconsistent weather patterns continue to challenge producers in corn growing regions in Brazil, and set expectations that the safrinha corn crop could be reduced by up to 10m tonnes from the previous year.”

While the bureau did not break out its own safrinha harvest forecast, Conab currently pegs the crop at 50.0m tonnes, a drop of 4.6m tonnes year on year.

Broker INTL FCStone earlier this month cut its forecast for the safrinha crop by 434,000 tonnes to 49.4m tonnes.

‘Struggling to maintain operations’

With the disappointing harvest coming on the heels of a strong corn export campaign, Brazil has been left with a “significantly-lower-than-anticipated supply” of the grain, driving port prices to some $250 a tonne on bureau estimates, equivalent to $6.35 per bushel.

US Gulf corn exports for spot sale were, according to broker Benson Quinn Commodities, on Wednesday priced at $0.54 a bushel above July futures, which closed at $3.92 ¾ a bushel.

Indeed, Brazilian poultry and pork producers are “struggling to maintain operations due to inflated feed prices”, which account for some 70% of output costs, the bureau said.

“Plants across Brazil responded to the increased input costs by cutting work shifts, enforcing mandatory vacation for employees, shutting down operations, and even prematurely slaughtering animals they are unable to continue feeding.”

Industry data shows a 10% drop in Brazilian chicken output over the past three months, while pig inseminations are down 15% – reductions reflected in a drop of 225,000 tonnes in the country’s monthly meat production.

Corn import origins

Meat producers’ struggle for feed has forced them to turn to neighbouring countries for supplies, although there are doubts as to how far these can stretch.

“While many producers are finding… relief from Paraguay and Argentina, neither country has sufficient corn to export large volumes to Brazil for an extended period of time.”

Imports from the US, the world’s top corn exporter, are complicated by Brazil’s policy on genetically modified crops, with 13-14 biotech varieties grown in the US not passed by the South American country, which operates a zero tolerance policy on traces of unapproved seed.

Meat imports to grow too?

Some livestock farmers are turning as an alternative to high-grade wheat for feed.

“Sources estimate that the meat industry has purchased 220,000 tons of bread-quality wheat since May 2016 for feed,” buying which means that “flour prices may also rise”.

However, Brazil may also see the squeeze play out in terms of higher imports of meat itself, as well as corn.

“US poultry and pork producers are cautiously optimistic for a boost in exports to Brazil.”

Corn drops for 4th day as rains boost U.S. crop outlook

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SINGAPORE, June 23 (Reuters) – Chicago corn slid for a fourth session on Thursday with the market hitting its lowest in more than a month as widespread rains across the U.S. Midwest lifted crop prospects.

Soybeans edged lower after firming in the last session on the back of strong demand, while wheat ticked up on support from concerns over Black Sea crops.

FUNDAMENTALS

* Storms rolled through the U.S. corn belt on Tuesday and Wednesday, easing concerns about dryness in some areas. With the crop still heading into its crucial pollination phase, which typically occurs in July in the Midwest, weather remained the focus.

* Thunderstorms were reported over parts of South Dakota, Missouri, Iowa and Illinois, bringing bursts of heavy rainfall totalling more than 2 inches per hour in spots.

* That triggered liquidation of long positions by investors. Commodity funds were net sellers of Chicago Board of Trade corn futures contracts on Wednesday and net buyers of soybean futures.

* Trade estimates of fund selling in corn ranged from 3,000 to 13,000 contracts, while estimates of net fund buying in soybeans ranged from 4,000 to 8,000 contracts. COMFUND/CBT

* The soybean market was underpinned by demand for U.S. supplies. Firming CIF (cost, insurance and freight) premiums for soybeans at the U.S. Gulf export terminal fuelled talk of fresh business, in addition to sales confirmed on Tuesday by the U.S. Department of Agriculture.

* Soybean spot basis bids were higher at U.S. Midwest river terminals on Wednesday, with the basis extending the previous session’s steep gains on strong export demand and slow farmer sales.

* The wheat market drew support from worries about the quality of wheat crops in Russia and Ukraine.

* The rainy weather has reduced protein levels in Russian wheat and raised concerns over fungal disease while also reducing the proportion of milling wheat in Ukraine.

MARKET NEWS

* Asian shares edged up and sterling stood close to its peak for the year on Thursday, as investors were cautiously optimistic that British voters would opt to remain in the European Union at a referendum later in the session.

DATA/EVENT AHEAD (GMT)
Britain holds referendum on membership in European Union
0700 France Markit manufacturing flash PMI Jun
0700 France Markit services flash PMI Jun
0730 Germany Markit manufacturing flash PMI Jun
0730 Germany Markit services flash PMI Jun
0800 Euro zone Markit manufacturing flash PMI Jun
0800 Euro zone Markit services flash PMI Jun
1230 U.S. Weekly jobless claims
1230 U.S. National activity index May
1345 U.S. Markit manufacturing flash PMI Jun
1400 U.S. New home sales May
1400 U.S. Leading index May

Corn ticks up from 1-mth low, wheat firms after 2 days of falls

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6/22/2016, 6:06:49 AM
  • Chicago Corn firms after hitting a near 1-month low
  • Easing concerns over U.S. crop to keep lid on prices
  • Wheat up almost 1 pct after two days of declines

Adds details, quotes

By Naveen Thukral

SINGAPORE, June 22 (Reuters) – Chicago corn edged up on Wednesday after hitting a near one-month low earlier in the session on headwinds from improving prospects for the U.S. crop.

Wheat gained ground with concerns over the Black Sea crop supporting prices, while soybeans inched up on strong demand for U.S. products.

Chicago Board of Trade most-active corn contract Cv1 was up 0.6 percent at 3.98-1/2 a bushel as of 0230 GMT, after dropping to its lowest since May 24 earlier in the session.

Soybeans Sv1 gained 0.3 percent to $11.13-1/2 a bushel and wheat Wv1 added 1 percent to $4.63 a bushel, heading for its first gain in three sessions.

“Good rain has fallen over a significant portion of the U.S. Midwest, with some follow-up falls expected later this week,” said Tobin Gorey, director of agricultural strategy at Commonwealth Bank of Australia.

“Consequently, concerns over seriously dry conditions will remain contained within the southwestern Corn Belt for at least a few more weeks. The additional rain will buy crops elsewhere some additional time.”

Corn’s 5.9 percent drop on Tuesday was the biggest since July 2013 for the most-active contract. After the close, the CME Group, parent of the Chicago Board of Trade, said it would change the daily trading limit in corn to 40 cents a bushel for Wednesday’s session, expanding from the normal limit of 25 cents.

Commodity funds had built up a massive net long position in CBOT corn in recent weeks on strong demand tied to tightening South American supplies and uncertainty about the U.S. growing season.

But the U.S. Department of Agriculture’s weekly crop progress report released late on Monday rated 75 percent of the U.S. corn acreage in good to excellent condition, unchanged from the previous week, despite a hot spell in the Midwest. Analysts surveyed by Reuters had expected a decline in crop ratings. US/COR

Forecasters called for much-needed rains this week, easing worries about dryness. The USDA’s report showed topsoil moisture declining in big corn states, including Iowa, Illinois and Missouri.

Soybean futures rose as fresh export sales of U.S. soybeans and soyoil lent underlying support. The USDA said private exporters sold 132,000 tonnes of U.S. soybeans to China for 2016/17 delivery.

Wheat rose on support from renewed concerns over the Black Sea crops.

Rainy weather has reduced protein levels in Russian wheat and raised concerns over fungal disease while also reducing the proportion of milling wheat in Ukraine.

Rains could hit wheat quality in the Black Sea bread basket

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By Polina Devitt and Pavel Polityuk

MOSCOW/KIEV, June 21 (Reuters) – Russia and Ukraine’s wheat crops will be of lower quality than expected before recent rains, analysts and traders said on Tuesday.

The rainy weather has reduced protein levels in Russian wheat and raised concerns over fungal disease while also reducing the proportion of milling wheat in Ukraine.

The Russian harvest is expected to start in late June or early July and analysts have forecast a record post-Soviet crop. But crop quality in Russia and Ukraine — both major wheat exporters via the Black Sea — is unlikely to be much different from last year, analysts said, adding that the next two weeks’ weather would be crucial.

The harvest starts in the southern regions that this year have raised concerns over the protein content of the new crop and where reports of the fungal disease fusarium are concentrated.

“In percentage terms, there will be less third-class (wheat) than a year ago, but the crop quality will be sufficient for exports,” one Moscow-based trader said

In physical terms, there will be more fourth-class wheat than a year ago and the same amount of third-class, said Igor Pavensky, deputy head of rail infrastructure operator Rusagrotrans and a leading grain market analyst in Moscow.

“There might be problems with the quality at the start of the harvesting, but they should be solved towards August,” Pavenskyi added.

The reports about fusarium are widespread but the fungal decease did not affect exports in 2014, when it was also widespread, and it is unlikely to affect them now, the Moscow-based trader added.

Ukraine, which also starts harvesting in two weeks, will harvest more feed wheat than flagged in early spring forecasts, but analysts said it is likely to be less than a year ago.

“It is hard to estimate the share (of feed wheat) but it will be similar to the previous year. The quality of wheat in our south — the main wheat region — was most affected by rains,” the state weather centre’s Tetyana Adamenko said.

Two Ukraine-focused traders estimated that feed grain will account for 55 percent of Ukraine’s wheat crop this year, compared with 60 percent a year ago.

“The next two weeks will be critical. If rains continue, the share of feed wheat could grow up to 60 percent, but in dry and hot weather the ratio could even be 50-50,” one of them said.

Corn falls to near two-week low on positive U.S. crop condition

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By Melanie Burton

MELBOURNE, June 21 (Reuters) – U.S. corn fell to its lowest in more than a fortnight on Tuesday after the U.S. Department of Agriculture rated the Midwest corn crop in better condition than the market had anticipated after a spate of hot weather.

The U.S. Department of Agriculture’s weekly crop progress report rated 75 percent of the corn crop in good to excellent condition, unchanged from the previous week. Analysts surveyed by Reuters had expected a decline after a hot week.

“We continue to see weather driving the market. It’s been much hotter and drier in the U.S in the past few days and the outlook is maybe turning a little more favourable (for growing), and that’s why we are seeing markets trading a little bit lower,” said Graydon Chong, an analyst with Rabobank in Sydney.

U.S. corn Cv1 futures fell 0.6 percent to $4.18-3/4 a bushel by 0333 GMT at the Chicago Board of Trade (CBOT), extending Monday’s 3.8 percent decline following forecasts for much-needed rains in the U.S. Midwest. Prices fell to as low as $4.18, the lowest since June 3.

Speculators raised their net-long positions in the CBOT corn futures in the week to June 14 by 44,327 futures and options contracts, data released on Friday showed.

“We have seen little liquidation of that long position,” Chong added.

Elsewhere, U.S. wheat futures Wv1 rose 0.1 percent to $4.73-1/2 a bushel, with small gains also seen in soy futures Sv1 which rose 0.1 percent to $11.33-3/4 a bushel.

The USDA rated 73 percent of U.S. soybeans as good to excellent, down from 74 percent a week earlier and in line with trade expectations.

Commodity funds were net sellers of Chicago Board of Trade corn, soybean and wheat futures contracts on Monday, traders said. CBOT/FUNDS

Trade estimates of fund selling in corn ranged widely from 9,000 to 25,000 contracts, in soybeans from 6,000 to 10,000 contracts and in wheat from 3,000 to 5,000 contracts.

In wider markets, the dollar paused for breath after a risk on rally on Monday, after latest polls released over the weekend showed the “Remain” camp in the lead, reversing a recent rise in support for Britain pulling out of the European Union.

NTERVIEW-Argentine corn area to increase 20 pct in 2016-17, minister – RTRS

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17-Jun-2016 15:00

By Nelson Bocanegra

MEDELLIN, Colombia, June 17 (Reuters) – Argentina’s area planted with corn could increase 20 percent during the 2016-17 growing season, raising production by between 10 million and 15 million tonnes from the previous year, the country’s agriculture minister said.

The boost to corn in the world’s fourth-largest exporter of the crop would come at the expense of soy, Agro-Industrial Minister Ricardo Buryaile said on the sidelines of the World Economic Forum’s Latin America meeting in Colombia late on Thursday, as the two grains compete for cultivation space.

“We estimate that we are going to have an increase in the cultivations of around 20 percent,” Buryaile told Reuters. “We could have between 10 and 15 million more tonnes of corn.”

“We will obviously have a reduction in the area of soy as a consequence of the increase in the production of corn and we estimate that from the 60 million that there were, soy production will surely fall to 55 million tonnes.”

The minister said he based his increase estimates on 2015-16 corn production of 25 million tonnes, below the forecasts of the Rosario grain exchange and the U.S. Agriculture Department, which both predict output of 27 million tonnes.

Argentina is the world’s top exporter of soymeal used in livestock feed and soy oil.

The wheat crop will rise 50 percent in 2016-17 to between 15 million and 16 million tonnes, Buryaile said, up from 10.5 million tonnes.

Higher corn and wheat production will represent some $400 million in additional investment because of an increase in cultivated areas, the minister said.

The Argentine government will “surely” settle a dispute with Monsanto Co  MON.N over the inspection of shipments of genetically modified soybeans next week, Buryaile said.

Monsanto and President Mauricio Macri’s government have been at loggerheads since March over the company’s request to have exporting companies inspect soybean shipments to make sure farmers paid royalties on soybean seed technology.

Monsanto, the world’s largest seed company, threatened to suspend launches of future soybean technologies in Argentina, a move that could limit output of the country’s main cash crop.

“Basically what we’ve said is the state controls the legality of the seeds, deciding the rules of the game of how its arbitrated and private businesses work and earn money as they should,” the minister said.

“We are dynamic defenders of private activity,” Buryaile added. “But the government makes the rules.”

Early cut to U.S. soy stocks signals further tightening ahead

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By Mark Weinraub

CHICAGO, June 20 (Reuters) – The U.S. government’s quick cut to its domestic soybean stocks forecast suggests that supplies, currently under pressure from rising export demand, will remain tight for more than a year.

The U.S. Agriculture Department earlier this month lowered its outlook for 2016/17 U.S. soybean ending stocks by 14.8 percent to 260 million bushels.  The reduction – the USDA’s biggest-ever cut for soybeans in June – came just one month after it issued its initial forecast for the marketing year.

A further tightening of the balance sheet could lend support to an already strong price environment for soybeans, analysts said. The most actively traded Chicago Board of Trade soybean futures contract Sv1 rallied 25 percent this spring, peaking at its highest level in nearly two years.

The spring rally stemmed from a bump in export demand for U.S. supplies amid problems with the South American harvest. Worries about crop development in the U.S. Midwest could fuel further gains.

Uncertainty about the U.S. soybean harvest amid concerns about a dry and hot summer will likely extend the rally for the next few months, said Malinda Goldsmith, a partner at Four Seasons Commodities, which manages a portfolio of about $125 million commodity investment.

Farmers will not have visibility until August on whether their crop will be big enough to replenish the supplies which were drained by the South American shortfalls.

“We are on the razor’s edge for carry-out when it comes to soybeans,” Goldsmith said. “We do not have a cushion for crop adversity in soybeans.”

The market is already turning its attention to U.S. weather even as farmers finish up seeding, with gains in new-crop futures SX6 outpacing gains in the nearby July contract SN6 during June.

During the last 20 years, USDA has cut its new-crop stocks estimate nine other times in its June supply and demand report. In seven of those years, the final stocks figure has turned out to be even lower than the June estimate.

Stocks have come in higher only once following a June cut – in the 2005/06 marketing year. Final figures are not in yet for the 2015/16 crop year but the latest projections show end stocks 105 million bushels less than the forecast the government issued in June 2015 as the increased export demand has soaked up much of the soybean surplus.

EXPORT DEMAND RISING

The government has boosted its old-crop U.S. soybean export projections for three months in a row as rain in key exporter Argentina has slowed soybean harvest there, causing overseas buyers to turn to the United States. USDA also boosted its new-crop soybean export projection by 15 million bushels in its June report.

Some analysts have suggested that demand will rise even further in the coming months as the USDA has not factored in the likelihood that China, the world’s top buyer of the oilseed, will step up purchases. USDA left its import projections for China unchanged, at 83 million tonnes for 2015/16 and 87 million tonnes for 2016/17, in the June supply and demand report.

China imported 7.66 million tonnes of soybeans in May, up 8.3 percent from 7.07 million tonnes in April, according to figures from the General Administration of Customs of China.

On the supply front, the balance sheet faces potential pressure from expectations that a strong La Niña weather phenomenon could hit the U.S. Midwest this summer just as the soybean crop enters key phases of development. The hot and dry weather could roil forecasts that the U.S. soy harvest will be the third-biggest ever.

A hot summer also could cut in to any potential increases in production from farmers who scrambled to boost their soybean seedings amid the spring rally. Late-planted soybeans will likely be most at risk to scorching temperatures and parched fields during August.