20:44 GMT, Friday, 19th Aug 2016, by William Clarke
…
Consolidation was the name of the day, as traders closed out positions for the end of the week.
Corn and wheat rallied on short covering, while in soybeans, where traders are long, prices fell.
Jim Sullivan, at Leese Trading Group, told Agrimony “as we approach the end of the week, we see profit taken by the speculative bulls”.
Soybean futures fell by 1.0%, to finish at 10.04 Ѕ a bushel.
Karen Braun is a Reuters market analyst. Views expressed are her own.
CHICAGO, Aug 19 (Reuters) – Although last Friday’s soybean supply and demand report from the U.S. Department of Agriculture delivered a bearish feel to the market, there were quite a few bullish components lurking within.
USDA projected record U.S. soybean yields for this year’s harvest, offsetting a massive demand-based decrease in domestic old-crop carryout of 95 million bushels.
As a result, new-crop carryout for the world’s No. 2 soybean supplier rose by 40 million bushels despite demand increases for the 2016/17 marketing year. Traders still interpreted the overall news as bearish, since soybean futures contracts fell to end the week.
Traders said they expect the production forecast to cap rallies in the soybean market. (Full Story) This may be true in the short term, but it would not take much for the supply situation to tighten back up.
Based on recent trends, strong demand, and favorable weather for the current soybean crop, both supply and demand are likely to increase for U.S. soybeans in the upcoming marketing year.
But whichever one wins out will determine the direction of the soybean market, which is very sensitive to shifts in both supply and demand. So the latest figures from USDA are no cause for complacency.
DEMAND IS NOT GOING AWAY
Global soybean demand is stronger than ever and is still on the rise. Over the past couple of years, USDA has had the habit of increasing both exports and crush throughout the marketing year in response to the increasing demand (http://reut.rs/2bBIIVw).
Soybean exports and crush projections for the 2016/17 marketing year, which does not begin until Sept. 1, have increased by 3 percent and 1 percent, respectively, since the initial estimates were released in May.
Ending stocks have had the opposite trend. Although forecasts for the 2014/15 and 2015/16 carryout had at times topped 450 million bushels, both years ultimately fell far short of that at 191 million and 255 million bushels, respectively. Note that the latter figure is still subject to adjustment (http://reut.rs/2bBID4a).
Soybean use is already far outpacing long-term expectations, making the ceiling difficult to identify. Exports and crush are well ahead of USDA’s latest annual 10-year forecast, which is released each February.
U.S. soybean exports are annihilating these long-term projections. The latest estimate for the new marketing year, 1.95 billion bushels, is not even reached within USDA’s 10-year forecast period. The last season in the series, 2025/26, has 1.925 billion bushels slated in.
For the same marketing year, crush in 2015/16 is currently forecast 10 million bushels ahead of the February projection and 2016/17 crush is 30 million bushels ahead. The 1.94 billion bushels of soybeans expected to be crushed in the 2016/17 season were USDA’s target for the 2018/19 season.
With no evidence that the world’s appetite for soybeans and soybean meal is going away, U.S. exports and crush seem unlikely to fall below the current expectations and in fact are very good candidates for a continued increase.
In addition to the longer-term demand trends, short-term demand is holding its own. So far in August, daily soybean sales announcements to China and unknown destinations have been made on 11 separate days. For reference, there were only six such days in all of August 2015.
YIELD HAS CONTROL
Soybean yields are in the driver’s seat as they completely washed out the massive month-on-month drop in old-crop carryout. The market had expected an increase in both yields and carryout for 2016/17, but not to such a large degree in either one.
USDA’s soybean yield of 48.9 bushels per acre tops last year’s record (48 bushels per acre), the average pre-report analyst estimate (47.5 bushels per acre), and USDA’s initial 2016/17 trend yield (46.7 bushels per acre).
Such a high yield is not at all hard to believe. Not only are crop conditions the best since 2004, but the weather has been very supportive and will likely continue this way, at least in the near-term.
A couple of good, soaking rains are key for higher soybean yields, especially during August, the most critical month for pod setting and filling. Over the past week, ample rain showers blanketed the Midwest, including parched areas in the Eastern belt, and the forecast for next week holds moderate temperatures with scattered rainfall.
A higher realized yield at the end of the harvest is also likely based on USDA’s recent trend of underestimating final soybean yields in August. This has been the case for the past five years, showing that USDA certainly has not had a bias of being too high early on (http://reut.rs/2batdTJ).
However, the soybean balance sheet is highly sensitive to even the slightest tweaks in yield. If this year’s yield were to evenly match last year’s record of 48 bushels per acre, carryout would be slashed by 25 percent. And this makes the highly dubious assumption of no further increases to demand (http://reut.rs/2bpLelk).
Another factor on the supply side that is subject to change is planted/harvested area. In the past two seasons, final soybean area came in lower than what had been expected during late summer. This year’s soybean-friendly economics may quash that trend, but it is something that cannot be ruled out.
CLARITY COMES IN OCTOBER
Even though the 2016/17 U.S. soybean crop should be completely harvested in about three months, the associated balance sheet will not be “finalized” until October 2017. But the 2015/16 situation will become clearer in October, and this will set the tone for the new marketing year.
With the soybean marketing year ending on Aug. 31, the necessary pieces of information do not all become available until about a month afterward and are therefore not reflected until the October supply and demand report.
In early October, final trade data from the U.S. Census Bureau as well as crush data from USDA’s Fats and Oils report will be available to adjust both old-crop exports and crushing accordingly. USDA’s Sept. 30 quarterly grain stocks report will inform on the latest supply situation.
With this updated information, the market will be able to settle on 2015/16’s carryout, which has been relatively volatile to the downside over the past few months. This will set the starting point for the 2016/17 soybean balance sheet.
But with more than a year to go until the final picture of 2016/17 U.S. soybeans emerges, what we are talking about today may be something entirely different from what we are talking about a year from now.
CHICAGO, Aug 17 (Reuters) – U.S. soybean futures rose to their highest in nearly four weeks on Wednesday on strong demand from China, the world’s top buyer of the oilseed, traders said.
Corn and wheat futures posted mild gains on a round of short-covering. It was corn’s fourth positive close in a row.
“We had some short-covering, got a little bit of a technical bounce,” said Karl Setzer, market analyst at MaxYield Cooperative. “A lot of little things added up.”
A global glut of wheat and expectations for a record corn harvest in the United States quelled buying in the grains. The upcoming U.S. soybean harvest also has been forecast as the biggest on record, but a recent spate of export activity underpinned the market.
The U.S. Agriculture Department said on Wednesday morning that private exporters reported the sale of 381,000 tonnes of soybeans to China for delivery during the 2016/17 marketing year.
The USDA also said that exporters reported the sale of 129,000 tonnes of soybeans to unknown destinations, correcting an Aug. 4 announcement that said corn was the commodity sold in the deal.
“Soybeans are providing at least a little lift to the grain market today, with concerns over a big crop muted by strong demand,” Bryce Knorr, senior grain market analyst at Farm Futures, said in a note.
Chicago Board of Trade soybean futures for November delivery SX6 were up 8-3/4 cents at $10.16 a bushel. Prices peaked at $10.17-1/4 a bushel, the highest since July 21.
“There is market talk that U.S. soybean shipments to China in August will reach a hefty 1.8 million tonnes, which along with big shipments from Argentina and Brazil, could bring shipments to China in August to a massive 5 million tonnes,” a European trader said. “China’s economic slowdown is not braking soybean imports.”
Spillover strength from a 1.7 percent gain in soyoil futures BOv1, which have rallied to a four-month high on the back of surging palm oil prices, lent additional support to soybeans. Soyoil futures have risen for six straight sessions.
CBOT September soft red winter wheat WU6 was up 2-1/2 cents at $4.26 a bushel. Higher-protein K.C. hard red winter wheat KWv1 and MGEX spring wheat 1MWEc1 posted bigger increases.
CBOT December corn futures CZ6 were 2-1/2 cents higher at $3.39-3/4 a bushel. Corn hit its highest since Aug. 1 and closed just below its session peak of $3.40 a bushel.
Adds comment, updates prices
MANILA, Aug 15 (Reuters) – U.S. soybean futures climbed more than 1 percent on Monday, recovering from losses in the previous session after the U.S. Department of Agriculture projected a record harvest, with demand from top market China seen staying strong.
Corn and wheat tracked the gains in soybeans, helping corn bounce back after falling to its weakest since 2014.
In its monthly outlook, the USDA on Friday pegged the corn crop at 15.153 billion bushels, based on an average yield of 175.1 bushels per acre, while the soybean harvest was seen at 4.060 billion bushels, with yields expected to average 48.9 bushels per acre. Both topped the high end of market expectations.
Good weather for crop development during July across broad swaths of the U.S. Midwest, the key growing area for corn and soybeans, allowed crops to mature with relatively little stress.
While global soybean supply is high, particularly in the United States, “demand from China is looking pretty favourable,” said Phin Ziebell, agribusiness economist at National Australia Bank.
“Having said that, supply looks very good. It’d be hard to see any upside for prices in the medium term,” he said.
The most-traded soybeans contract on the Chicago Board of Trade Sv1 rose 1.3 percent to $9.94-3/4 per bushel by 0244 GMT. It fell as much as 2.2 percent to $9.62-1/2 on Friday.
Chicago corn Cv1 was up 0.8 percent at $3.35-3/4 a bushel. The contract touched $3.22-1/2 on Friday, its lowest since October 2014.
Corn recovered to close firmer on Friday, which some analysts attribute to firm demand for the grain as animal feed going forward.
“Global feed demand is growing strongly, so perhaps the market is realising that the scale of supply required for ‘comfort’ will also need to be higher,” Commonwealth Bank of Australia analyst Tobin Gorey said in a note.
Chicago wheat Wv1 climbed 0.7 percent to $4.25–1/2 per bushel.
16:10 UK, 11th Aug 2016, by Agrimoney.com
Grain prices will rally from their seasonal summer lows, but the size of global supplies will leave markets trading sideways by the end of the year, ABN Amro said.
The bank maintained its price forecasts, despite the recent sell-off, with a rally expected by the end of the summer period.
But there is “still more than enough” supply around, ABN said.
Summer sell-off
Grain markets saw a broad sell-off from their June peak leaving wheat, corn, and soybean futures in Chicago all down 20%.
“Traders evidently have little faith in a strong price recovery in the near future and there was widespread profit-taking before the start of the holiday period,” said ABN.
The June grain market rally was driven by global weather worries, including potential dryness in the US Midwest and heavy rain in Europe.
“Now that the impact of these weather events appears to have been limited, prices are starting to go down again,” ABN said.
And ABN said that “unrest” in the market caused by La Nina threats was easing, as crops are now sufficiently advanced that any impact from an event “will not be too severe”.
Wheat to rally, up to a point
ABN forecast Chicago wheat prices to hit $5.00 a bushel by the end of the year. December Chicago wheat futures are currently trading at $4.37 a bushel.
But the bank noted the continued global wheat surplus, with production forecast to once again outstrip demand this year.
“After the summer period, prices are expected to pick up again due to the seasonal effect, but will then settle into a sideways trend,” ABN said.
Ample corn stocks
Corn futures were forecast to rise to $4.15 a bushel, compared to December futures currently trading at $3.31 a bushel.
“Corn, like wheat, is amply available,” ABN said.
“As noted, previous fears that weather damage might dampen output in the upcoming season proved unfounded so that the crop forecasts have been revised up.”
ABN said that the expected output will exceed consumption so that, after a brief revival at the end of the summer period, corn prices are also expected to move sideways in the rest of 2016.
Good soybean supplies
Soybean futures were forecast for modest gains, finishing the year at $10.50 a bushel. The January contract is currently trading at $9.84 a bushel.
But soybeans are in a stronger position that other grains, as global demand remains strong.
“Soybean production is set to break all records in the coming season,” ABN said, noting that the USDA forecast for global production is up some 4% year on year, at 325m tonnes.
“This increase, however, is insufficient to meet the growing demand,” ABN said, with consumption seen at a record 328m tonnes, driven by “persistently high Chinese demand”.
SYDNEY, Aug 12 (Reuters) – U.S. soybeans rose on Friday as strong export demand pushed the oilseed towards a weekly gain of nearly 1.5 percent.
Corn was unchanged, set to finish the week down about 1 percent. Wheat was set to close the week nearly flat.
The most active soybean futures on the Chicago Board Of Trade Sv1 rose 0.36 percent to $9.87-1/2 a bushel after closing up 0.18 percent on Thursday.
Soybeans have posted gains in four of the last five sessions, pushing the oilseed up nearly 1.5 percent for the week and recouping some of the nearly 3 percent loss from last week.
Soybeans continue to rally on the recent strong demand for U.S. exports, with the U.S. Department of Agriculture (USDA) reporting overseas sales totalling more than 3 million tonnes in the week to Aug. 4, topping analysts’ expectations.
While soybeans continues to draw support from the exports, market direction will depend on the outcome of the USDA supply and demand report later in the session, analysts said.
“China keeps on taking U.S. soybeans, that is why prices are moving upwards,” said Phin Ziebell, an agribusiness economist at National Australia Bank.
Analysts surveyed by Reuters expect the government to raise its soybean yield estimates, but increased export demand for soybeans could prompt the USDA to trim its ending stocks forecasts.
The most active corn futures Cv1 was unchanged at $3.31-3/4 a bushel after closing down 0.4 percent on Thursday.
Corn is down nearly 1 percent for the week, the second consecutive weekly fall after losing more than 2 percent last week.
The USDA is expected to raise its estimate for corn yields.
The most active wheat futures Wv1 was unchanged at $4.16-1/4 a bushel after closing down 1.3 percent on Thursday.
Wheat is little changed for the week after posting gains of more than 2 percent last week.
USDA reported weekly export sales of U.S. wheat above 600,000 tonnes, a five-week high that topped trade expectations.
Wheat traders will be watching on Friday for revisions to the USDA’s world outlook in light of poor harvests in western Europe and bumper crops in the Black Sea region.
SYDNEY, Aug 11 (Reuters) – U.S. soybeans edged higher on Thursday, but gains were curbed as forecasts for favourable weather across the U.S. Midwest stoked the outlook for supply.
Corn inched up, while wheat extended two-day gains to nearly 1.5 percent.
The most active soybean futures on the Chicago Board of Trade Sv1 rose 0.46 percent to $9.86-3/4 a bushel, having closed down 0.58 percent on Wednesday.
But analysts said gains may prove short-lived as rains are expected across the largest growing region in the United States for the rest of the week, and also due to preparations for a widely watched U.S. government report on Friday.
“We expect there was also some pressure from the usual reshuffling as investors unwind positions in the lead up to the (U.S. Department of Agriculture) report,” said Tobin Gorey, director of agricultural strategy, Commonwealth Bank of Australia.
Soybeans had risen for five consecutive session prior to Wednesday, drawing support from strong export demand for U.S. supplies.
The USDA through its daily reporting system confirmed sales of U.S. soybeans in each of the previous 10 trading sessions, although no new soy sales were reported on Wednesday.
The most active corn futures Cv1 rose 0.23 percent to $3.33-3/4 a bushel, having gained 0.15 percent in the previous session.
Most analysts surveyed by Reuters expect the USDA to raise its forecast of the U.S. 2016/17 corn yield from its current figure of 168.0 bushels per acre.
The most active wheat futures Wv1 climbed 0.24 percent to $4.22-3/4 a bushel, having closed up 1.1 percent on Wednesday.
CHICAGO, Aug 8 (Reuters) – The U.S. Department of Agriculture (USDA) will likely show decreased condition ratings for the U.S. corn crop, mostly due to seasonal factors and as some portions of the Midwestern growing region were suffering from dry conditions, a Reuters poll of 10 analysts showed on Monday.
Soybean crop ratings, on average, were expected to be unchanged while the spring wheat harvest likely advanced at a normal rate, the analysts said.
USDA in its weekly crop progress and conditions report due at 3 p.m. CDT (2000 GMT) is expected to estimate corn ratings at 75 percent good to excellent, down one percentage point from a week ago, according to analysts’ average estimates. US/CORUS/SOY
Soybean ratings were seen at 72 percent good to excellent, steady after posting a one-percentage-point rise in the previous week.
Crop conditions for corn typically decline at this time of year as the earliest-planted fields reach maturity. Condition ratings for both corn and soybeans are historically high, and it was rare for conditions to improve during some of the hottest days of the summer, the analysts said.
The spring wheat harvest was estimated at 28 percent complete, up from 10 percent last week. The harvest also was 28 percent finished during the same week in 2015. US/WHE
All figures below in percent:
| Category | Average | Range | Prior week |
| Corn condition * | 75 | 74-76 | 76 |
| Soybean condition * | 72 | 70-73 | 72 |
| Spring wheat harvest | 28 | 21-37 | 10 |
| * Good/excellent |
19:49 GMT, Thursday, 4th Aug 2016, by William Clarke
Soybean futures kept their heads above water, just about, thanks to good US exports, but heavy world supplies weighed on corn futures, which seven-year lows, under pressure from the heavy US crop prospects.
The US Department of Agriculture announced the sale of 252,000 tonnes of soybeans to China, and 129,000 tonnes of corn to unknown destinations.
“Another lovely round of daily reporting,” said Kim Rugel at Benson Quinn Commodities, noting “thoughts of strong export demand due to multi-year low prices offering support”.
Exports beat expectations
US soybean export sales came in at 542,200 tonnes for the current marketing year, compared to analyst forecasts of 300,000 to 600,000 tonnes.
This brings in total soybean commitments for 2015-16 at 107.3% of the USDA’s forecast.
And sales for the new marketing year were toward the top end of expectations, at 1.13m tonnes, with analyst expectations ranging between 800,000 and 1.20m tonnes.
This was the biggest new crop sale so far this year.
New crop soybean product sales also beat expectations, with 19,000 tonnes of soyoil, and 140,500 tonnes of soymeal, booked for export.
Range bound trade
But despite the good export demand, soybean markets are struggling to rally, with the risk of rising soybean yields.
Richard Feltes, at RJ O’Brien, asked “are markets settling into a range trade ahead of crop report or merely taking a breather before going lower?”
“With tight cash markets, positive Aug soybean seasonal and the torrid pace of soybean export sales-we lean toward more range trade,” Mr Feltes.
But he warned that “confirmation of another record high US soy yield would certainly inflict more pain on the remaining soybean managed fund longs”.
November soybean futures finished unchanged on the day, at 9.56 ѕ a bushel.
Strong export sales
“Corn export sales were good this week,” said Joe Lardy, at CHS Hedging.
2015-16 sales came in at 331,1000 tonnes, toward the low end of expectations, but new crop corn sales were a hefty 896,300 tonnes, ahead of analyst expectations of 500,000 to 700,000 tonnes.
This is the biggest new crop sale of so far this year.
Beneficial rain
But the market remains under heavy pressure, from US crop prospects.
“The market is most focused on rainfall in the eastern Corn Belt,” said Darrell Holaday, at Country Futures.
“Rain in the next 2-4 days would be beneficial to a few dry areas in those states and would really finish much of the state that is in very good condition,” Mr Holaday said.
“There is plenty of rain in the forecast for the Plains and the central and western Midwest,” he added.
Good corn prospects
“Prospects in Midwest corn are favourable, a result of wet summer weather,” said forecaster Gail Martell, also noting the good condition of corn, as revealed in the latest set of USDA crop ratings.
“Corn pollination has reached 91% complete,” Ms Martell said. “This points to a very favourable crop in the making.”
“The corn yield outlook was boosted by recurring strong showers in July,” she noted, with “85% of the Midwest receiving above average rainfall”.
December corn futures finished down 1.3%, at $3.31 a bushel, the lowest finish for the second-month contract since 2009.
Wheat sales miss expectations
Wheat futures fell, under pressure from heavy world supplies and some disappointing US exports sales.
Wheat export sales came in below expectations, at 326,500 tonnes, where analysts projected sales of 350,000-650,000 tonnes.
September Chicago wheat futures finished down 1.7%, at $4.03 ј a bushel.
Brazilian real rallies…
Arabica and sugar futures rallied late in the session, thanks to a rally in currency of Brazil, the top exporter of both commodities.
The Brazilian real was up 0.9% against the greenback in afternoon trading, at 3.3065 to a dollar.
Aside from two sessions in late June, this is the strongest the real has been since July 2015.
The strength in the real was driven by the news that the Bank of England cut its interest rates, for the first time in seven years, and would extend quantitative easing.
…lending support to arabica and sugar
The prospect of a wave of looser monetary policy across the developed world weighed on bond yields there.
The move sent speculators flooding into higher-yield environments such as Brazil.
The strength in the real was supportive for coffee and sugar futures, as it reduces real-denominated returns for Brazilian growers, discouraging production and exports.
September arabica KCc1 settled up 1.2%, at 142.10 cents a pound.
October raw sugar futures settled up 3.5%, at 19.7 cents a pound.
Technical buying
Cotton futures surged on technical buying, helped by strong US export sales.
The USDA announced net cotton sales of 226,700 bales of cotton for the 2016-2017 marketing year.
December cotton futures broke out of their previous trading range, triggering fund buying.
The December contract settled up 2.1%, at 75.82 cents a pound, its highest level since June 2014.
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.
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