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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.

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.

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.”

Asian millers face tight feed grain supply as rain disrupts Argentina exports

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  • Heavy rains disrupt feed grain cargoes from Argentina
  • S.Korea, Vietnam seen as worst-hit by delays in corn shipments
  • India still absent from export market

By Naveen Thukral

SINGAPORE, June 17 (Reuters) – Asian millers that churn out animal feed are expected to face a squeeze in supplies of key ingredients corn and soymeal in coming weeks as heavy rains disrupt shipments from major exporter Argentina.

Cargoes from the South American nation have been facing delays for the past few weeks due to strong rainfall, but millers have been able to operate using exports that were already en route and inventory, two trade sources told Reuters.

But as those stocks dwindle, Asian feed makers are set to feel the pinch from tightening supply, likely boosting benchmark prices already driven up by unfavourable crop conditions in South America.

Chicago soymeal futures SMv1 have surged more than 50 percent since early April, while corn Cv1has jumped by about a quarter.

“I think the real tightness in supplies will come from July onwards,” said a trading manager with an international trading company in Singapore. He declined to be identified as he was not authorised to speak with media.

“The situation seems to be improving slightly in recent days but even if a boat leaves today, it will take 45 days to get to Southeast Asia.”

Vietnam and South Korea are likely to be worst-hit in the region by tightness in corn supplies as they depend heavily on South American feed materials, traders said.

South Korea is the world’s third-largest importer of corn, buying about 10 million tonnes a year. Vietnam has seen a more than six-fold jump in its purchases of the grain to 7.3 million tonnes in 2015/16 from four years earlier, according to U.S. Department of Agriculture data.

For soymeal, buyers in Asia account for almost 30 percent of global imports.

“Indonesia, Thailand and the Philippines will not be impacted that much as far as corn is concerned because they have all been trying to replace corn with feed wheat,” a second Singapore trader said.

“But for meal, I think everyone will take a hit.”

In the past, Asian feed grain importers turned to India for corn and soymeal purchases when South American supply was low. But the South Asian nation has been absent from the international market for the past few years amid growing local consumption.

The shipping disruptions follow on top of unseasonal downpours in April hitting the soy crop in Argentina, the world’s biggest exporter of soymeal, while drought cut corn output in Brazil, the No.2 producer of that grain.

GRAINS-Corn eases for 2nd day on improved US weather, wheat at 2-wk low

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  • Corn, soybeans ease as rains bring relief to Midwest crops
  • Wheat hits two-week low on pressure from U.S. harvest

Adds details, quotes

By Naveen Thukral

SINGAPORE, June 16 (Reuters) – Chicago corn futures slid for a second session on Thursday while soybeans lost more ground as much-needed rains across the U.S. Midwest boosted the outlook for crops.

Wheat dropped to a two-week low on pressure from the rapidly advancing harvest of the U.S. winter crop.

Chicago Board of Trade’s most-active corn contract Cv1 fell 0.8 percent to $4.25-3/4 a bushel by 0130 GMT while soybeans Sv1 gave up 0.6 percent to $11.48-3/4 a bushel.

Wheat Wv1 lost 0.4 percent to $4.75-3/4 a bushel after hitting a low of $4.75-1/4 a bushel, weakest since June 2.

Showers across the U.S corn belt have this week brought relief to areas where soil moisture has been waning in the heat, and more rain is expected this weekend.

“Rain fell across much of the Midwest, Delta and Southeast yesterday,” said Tobin Gorey, director of agricultural strategy at Commonwealth Bank of Australia.

“Meteorologists have also tempered their forecasts for remainder of the June – now expected to be less harsh than previously advertised.”

Forecasts are for a return to high temperatures this weekend and into next week, although there is also a high chance of precipitation.

Higher demand for U.S. soybean products amid lower South American output kept a floor under the soybean market. The National Oilseed Processors Association in a monthly report said its members crushed 152.8 million bushels of soybeans in May, more than analysts expected and the most on record for the month.

Wheat is being anchored by good yields in early U.S. harvesting and a backdrop of hefty global supplies.

Russian wheat export prices rose further last week on concerns that recent rains could hit crop quality.

Black Sea prices for Russian wheat with 12.5 percent protein content were at $184 a tonne on a free-on-board basis at the end of last week, up $4 from a week earlier, Russian agricultural consultancy IKAR said in a note.

Commodity funds were net sellers of Chicago Board of Trade corn, soybean and wheat futures contracts on Wednesday.

Trade estimates of fund selling in corn ranged from 9,000 to 14,000 contracts, and in wheat from 3,500 to 6,000 contracts. Funds were seen as net sellers of 8,000 soybean contracts.

PM markets: corn rally continues, as traders watch the skies

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Corn continues to be the winner in the grain complex, as the market keeps an uneasy eye on the medium and long term forecasts, which suggest hot dry weather is on its way to the US Midwest.

“US weather is still being viewed bullish as temperatures continue to run above normal in the 6 to 10 day forecast,” said Paul Georgy, at Allendale.

“Near-term, rains do move through the cornbelt, however, moisture then looks to become more sporadic,” said.

“The next couple days will be about watching rainfall returns before the heat comes back late in the weekend,” said Tregg Cronin, at Halo Commodities.

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