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IKAR in Mass Media

Morning markets: grains revive, helped by Russia, US hiccups

02 июля 2015 года

Tuesdays are, of course, by repute days when Chicago grain markets "turnaround".

And there was some justification from fundamentals for investors to reverse their price-negative of the last session, with US data overnight showing not such an upbeat view of the country's crops as had been expected.

The US corn crop was rated by the US Department of Agriculture at 73% in "good" or "excellent" condition, a strong figure but down 1 point week on week, when analysts had expected no decline.

For soybeans, the rating fell by 2 points to 67%, also a lower figure than investors had pencilled in, while sowings had reached 87%, 3 points behind the average.

For winter wheat, while the "good" or "excellent" rating stuck at 43%, as expected, there was an increase of 2 points to 22% in the proportion rated "poor" or "very poor".

'Too much rain'

The USDA report was, overall, "positive" for prices, said Richard Feltes at Chicago broker RJ O'Brien.

And it looked especially so given the prospect of further rainfall, which is at the heart of the decline in US crop ratings, with many areas receiving too much of what is generally seen as a good thing for developing crops, if not for ripening ones, as is the case with winter wheat.

"Across the Midwest, frequent rounds of rain will occur, boosting soil moisture, but too much rain may fall across the western Corn Belt," said Terry Reilly at Futures International.

"The western Corn Belt will still see localised flooding across parts of Kansas and Missouri into southern Illinois this week," he said, adding that "local amounts over the next seven days in these areas could top 4.00 inches".

Barge disruptions

And the impact of excess rain on ag markets extends beyond crop condition, with the inundations bringing heavy river flows and disrupting barge traffic on rivers taking grains from the Midwest to Gulf ports.

This has been reported as supporting the corn basis at the Gulf, with physical supplies a little harder to come by than would be ideal.

Not that all the news on corn is bullish, with Benson Quinn Commodities highlighting the "continued rumours" of Chinese cancellations of imports of cargos of US distillers grains.

There is talk of two cancellations last week, and a further six in the offing, amid a drive by China to focus domestic feed demand on its own, huge corn supplies.

Still, corn for July rose by 0.6% to $3.50 ј a bushel as of 08:30 UK time (02:30 Chicago time).

Higher oils

Soybeans for July rose a little more, by 0.7% to $9.44 a bushel, this time getting a pull from both processing products.

Soyoil for July fell 1.4% in the last session, back to its 200-day moving average, after industry data showed US inventories of the vegetable oil in May at 1.58bn pounds, up 137m pounds month on month, and well above forecasts of a figure of 1.40bn pounds.

However, the vegetable oil this time rose by 0.8% to 32.96 cents a pound, gaining support from rival palm oil, which added 0.9% to 2,287 ringgit a tonne in Kuala Lumpur, helped by the prospect of Indonesia next month introducing a levy on palm exports

Malaysian palm oil exports, meanwhile, are growing this month, up 5.8% month on month at the half way stage according to cargo surveyor ITS, with rival SGS putting the increase at 6.7%.

'Not good'

Back to soybeans themselves, and the heavy US rains are provoking ideas that farmers may not be able to plant all of the oilseed that they intended to.

"Rains have continued to slow planting across the US with heavy rains late last week and weekend stalling out any gains that were made in Kansas, Missouri and Nebraska," said Benson Quinn Commodities, musing that "rains forecast for Missouri this week" would offer support to futures, at least early on Tuesday.

Futures International's Terry Reilly said: "Heavy rain forecast for Missouri this week will not be good for planting progress.

"The US could see total planted acreage down from March intentions," ie from the number revealed in a benchmark USDA sowings report released in March.

Russian downgrade

As for wheat, the laggard of the last session, it gained 0.9% to $4.93 Ѕ a bushel for July, helped by some profit-taking on short positions, and the US crop progress report.

Besides the slight deterioration in the condition of the US winter crop, the report also showed the harvest remaining well behind the typical pace, at 11% complete compared with an average of 20%.

As an extra support, Ikar cut its forecast for the Russian wheat crop to 55m-59m tonnes, from 56m-60m tonnes, citing dry weather, and following a long succession of upgrades to harvest prospects.

In Sydney, however, wheat for January dropped a further Aus$5.50 to Aus$296.50 per tonne, as rains erode crop fears, for now at least.

"Australia's eastern grain system continues to look better moisture‑wise so we are likely to see more downward pressure on prices," said Tobin Gorey at Commonwealth Bank of Australia.

Furthermore, forecasters "are expecting useful, but by no means heavy, rainfall in the western gain regions from now into the weekend".

Cotton recovers

Among soft commodities, New York cotton for July rebounded 0.4% to 63.49 cents a pound, despite the USDA crop progress data showing a sharp improvement, of 5 points to 55%, in the proportion of the US crop rated good or excellent.

Still, "increased incidence of seedling disease is being reported across the mid-southern states," said Louis Rose at the Rose Report.

Furthermore, sowings, at 91%, remain behind the average pace of 96%.

Meanwhile, for China, the top cotton producing country, Mr Rose flagged a survey pegging sowings of the fibre down 20% year on year, compared with a USDA forecast of a drop of 16%.

Best-traded December cotton was up 0.5% at 63.92 cents a pound in New York.

Source: Agrimoney.com  |  #grain   |  Comments: 0   Views: 134

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