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IKAR in Mass Media

PM markets: row crop futures start the month with a whimper

02 августа 2016 года

Soybean and corn futures slumped, thanks to a benign US weather outlook, at a time when funds are holding heft long positions in soybeans, and an unfriendly macroeconomic outlook.

Rain is expected to limit heat damage over the next five days in the US Midwest.

"Weather expectations and lower crude oil prices are providing the selling attitude," said Paul Georgy, at Allendale.

Energy markets plummet

Oil prices extended their losses, amid ongoing concerns about market oversupply.

An industry survey pointed to record-high output from Opec countries last month, with the number of active oil rigs in the US also increasing.

Brent crude futures were down 3.2%, at $4.21.16 a barrel, in late deals, although they had not taken out the three-month-lows of the previous session.

Export support

True, there was some support from export demand as the US Department of Agriculture announced the sale of 391,000 tonnes of soybeans to unknown destinations.

But the size of the speculative net-long in soybeans is raising fears of fund liquidation.

The commitment of traders report released by the Commodity Futures Trading Commission on Friday showed soybean hedge funds cutting their net long by 16,003 lots over the week to last Tuesday.

This was less than markets were expecting, and still leaves the size of the soybean long at a historically elevated position.

A large speculative long is bearish for prices, as it suggests that there is only limited gas in the tank for futures rallies, while it leaves plenty of room for liquidation.

Fund-long weighs

"The relatively favourable forecasts and the lack of evidence of the funds liquidating net long positions in soybeans are offering resistance to the row crop markets," said Brian Henry, at Benson Quinn Commodities.

"Row crop markets retreat on a larger than expected managed fund soy long (which has likely swelled more since last Tuesday), expectation for only nominal (if any) decline in row crop ratings, and 5-day Midwest rain coverage of 65%," said Richard Feltes, at RJ O'Brien.

November soybean futures finished down 3.8%, at $9.61 Ѕ a bushel.

December corn futures finished at $3.34 Ѕ a bushel, the weakest close for the contract so far, and down 2.3% on the day.

Massive wheat short

Wheat markets got some support from the size of the speculative net-short position, which grew over the week to last Tuesday.

"This should be an uncomfortable level to be short at decade lows [for prices], regardless of the fundamental picture," broker Benson Quinn Commodities said.

Ag advisory group Water Street Solutions said that funds' "huge short position" in wheat could offer support to prices, and help them "grind higher over the next few months".

French crop prospects fall

Ideas of the European wheat crop continue fall, after extensive rain damage, particularly in northern France.

French consultancy ODA forecast the French soft wheat crop at 28.2m tonnes, down from 41m tonnes last year.

The low crop in Europe is boosting Russian prices.

Russian agricultural consultancy Ikar saw Black Sea prices for Russian wheat at $164 a tonne, up $2.50 a tonne from last week.

And SovEcon saw wheat prices in the Black Sea area at $164.5 per tonne, up $1.50.

December wheat futures in Paris were unchanged on the day, at E169.50 a tonne.

But falling row crop prices weighed on wheat prices in the states, as September Chicago wheat futures finished down 0.6%, at $4.06 a bushel, its weakest close since 2010.

China, Texas fuel cotton markets

Cotton futures put in their strongest close in two year's helped by US weather worries.

Commerzbank noted "increasing concerns about weather conditions in important US cultivation areas".

"The bank noted that "impetus has also come from China in recent weeks," with "robust demand at auctions for goods from state-owned warehouses" raising hopes for an import boom once the stockpiles have been exhausts.

But Commerzbank warned that "it is doubtful whether prices can maintain this level in the short term".

"On the one hand, more favourable weather forecasts may lead to a rapid correction," the bank said.

"On the other hand, the price divergence from artificial fibres, which makes cotton less competitive, is widening."

December cotton futures finished up 0.3%, at 74.22 cents a pound, the strongest close since 2010, although below some of the session highs last month.

Cocoa surges on fund buying

The CFTC data showed hedge funds trimming their net long position in cocoa at the fastest rate in six months.

The news proved bullish for cocoa futures, leaving more room for buying.

September New York cocoa surged back from the five-month low of the previous session, to settle up 3.2%, at $2,926 a tonne, after rising as high as $2,952.

http://www.agrimoney.com/

Source: Agrimoney.com  |  #grain   |  Comments: 0   Views: 75

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