Soybeans sunk further on continued Midwest rains on Wednesday, while corn was lifted by a bearish crop report and Chinese rumours.
Rains did not disappoint across the Corn Belt. Richard Feltes, of RJ O’Brien noted that although the rains had been forecast, they “were, across the board, better than expected”.
“Across the vast majority of the Corn Belt, soil moisture will be favourable for the filling of the corn and soybean crops,” said MDA Weather Services.
Indian plantings
Indian soybean crop plantings have jumped to 12m hectares this season, an all-time high, compared to 11m hectares last season.
Last year Indian soybean production was 9.9m tonnes, and decent monsoon rain has raised hopes of good a good crop this season.
November soybeans closed down 0.9% at $9.03 ½ a bushel.
Yield warnings
Corn was lifted by an influential crop tour, which saw US corn yields at below the US’s high forecast.
The ProFarmer Crop tour participants estimated the Indiana Corn crop at 142.94 bushels per acre, compared to the USDA’s current estimate of 158.0 bushels per acres.
In Nebraska, tour participants saw yields at 165.16 bushels per acre, which compares to the USDA’s current estimate of 187 bushels per acres.
But better yields were seen in Illinois, which is the tours next destination.
Ethanol sinks
There was some bearish data on ethanol production from the US energy agency.
Stocks of the corn-based biofuel were seen up 32,000 barrels from last week, at 18.561m barrels, where analysts had expected a cut.
October ethanol in New York closed down 1.7% at $1.456 a gallon.
China support
Corn markets were also lifted by reports from wire service Reuters that China would maintain its corn price support for another year.
The comments, originating with analyst group Shanghai JC Intelligence, agreed that Chinese corn markets would have to yield to global pricing, but suggested the change to a more market oriented system would be made in 2017 or later.
Markets have been looking for a more immediate change to policies, with new crop Chinese corn trading well below the current price support levels.
Knock on effects
Joe Barker at CHS futures said “as is usually the case, the likely outcome is probably somewhere in the middle”.
“China will probably make some changes to the stockpiling program,” he said.
“They will probably try to restrict the imports of feed grains, in an effort increase the consumption of the domestic supply.”
Restrictions on corn substitutes, such as sorghum and barley, would have knock-on bearish effects on global corn markets.
September corn closed up 0.3% at $3.67 ¼ a bushel.
French record
Continued expectations of a record French crop sent Paris wheat to a three month low. December Paris wheat closed down 1.9% at $170.50 a tonne.
And National Australia Bank raised its forecast for the size of the Australian wheat harvest to 21.6m, while noting that timely rains could help the harvest reach 23m.
The bank raised its forecast on wetter-than-expected weather conditions.
But prices rose technical buying, and received a fillip from a late-session fall in the dollar.
September Chicago wheat closed up 0.5% at $4.96 ¼ a bushel.
Russian exports languish
Russian grain exports are continuing to languish due to a delayed harvest and uncertainty over the new wheat export levy introduced in July.
Russia’s grain exports are expected to decline to 3.2 million tonnes in August from 4.7 million tonnes a year earlier, agricultural consultancy SovEcon said.
But as the harvest shows rapid progress, and officials mull the removal of the tariff, there is every chance Russian wheat will find its way onto global markets in increasing volumes in coming months.
Brazilian weakness
Renewed weakness in the Brazilian real sunk sugar and coffee prices on Wednesday. The real fell 0.5% against the dollar.
Brazil is the world’s largest exporter of arabica coffee and sugar, and a weaker real means farmers will accept a lower dollar denominated price for their product.
“Traders remain worried about the Brazilian real and further weakness in the currency,” noted Jack Scoville of Price Futures.
December arabica settled down 3.1%, at 134.8 cents per pound.
Volumes were very high, as September contracts rolled ahead of first notice day on Friday.
Thomas Kujawa, Co-head of softs at Sucden Financial, noted the additional effect of demand fears on sugar.
“Generally the headlines are concerned and taken with the collapse over the last two sessions of the Chinese stock markets and the implication for economic growth in general and the perceived destruction in commodity demand,” he said.
October raw sugar finished down 1.3%, at 10.59 cents a pound.
