6th Sept 2012, by Agrimoney
Have estimates for the US soybean harvest passed their worst?
Ideas that the US Department of Agriculture might, in its next flagship monthly Wasde crop briefing on Monday, lift its estimate for the domestic soybean yield gained strength with estimates from FCStone.
The broker overnight pegged the crop at 2.739bn bushels, on a yield of 36.7 bushels per acre.
That was above current USDA Wasde figures of 2.692bn bushels for production and 36.1 bushels per acre for yield.
Improved condition
And it is not the only indicator that the USDA's current soybean yield figure might represent a low-water mark.
At broker Newedge, Dan Cekander flagged that the rating of the crop, as measured "good" or "excellent" in official weekly condition reports was, at 30%, 1 point higher than before the last Wasde which could herald an upgrade.
"I do not know if the USDA will raise its yield number, but it opens up the possibility," he said.
(For corn, the condition figure is one point lower than before the last Wasde, at 22%.)
Where are the exports?
As a further bandwagon for bears to jump on, there has been an absence in the soybean market this week – of US export sales, as (not) announced through the USDA's daily alert system.
In fact, the bigger talk on oilseed exports is of rumours of sales of Canadian canola to China, which drove prices of the rapeseed variant to a five-week closing high in Winnipeg on Wednesday, of Can$641.00 a tonne.
And this against a background of ideas that farmers are proving willing to sell off the combine at current prices, so freeing up supplies, if only temporarily, which marked the last session.
Furthermore, soybean technicals are weakening too, with Chicago futures seen overbought and due for a correction.
A 0.5% drop to $17.38 ½ a bushel in the November lot, as of 09:10 UK time (03:10 Chicago time) made the oilseed appear less overbought, but at the expense of some chart damage, with the contract falling below its 10-day moving average for the first time since mid-August.
Ukraine export curbs
It also allowed grains, laggards of late, to turn the tables on soybeans somewhat, especially wheat, looking for only its second gain in 11 trading sessions.
It was helped on its way, up 0.7% at $8.73 ½ a bushel for December delivery, by reports that Ukraine traders have agreed on a maximum for grain exports of 19.4m tonnes, comprising 12.4m tonnes of corn, 4.0m tonnes of wheat and 3.0m tonnes of barley.
This follows a strong start to 2012-13, raising ideas that the country may be set for a rapid deceleration in shipments, sending demand to other exporters, such as the US.
"Many have speculated that the country has exported 1.3m tonnes of wheat at this point in the marketing year," Brian Henry at Benson Quinn Commodities said.
At Market 1, Mike Mawdsley said: "Any news out of Russia or Ukraine limit exports would be bullish."
While Russia's deputy agriculture minister, Ilya Shestakov, on Thursday restated that Moscow will not be imposing export curbs, as he announced a meeting next month to discuss grains, there are ideas that the country has limited potential for further shipments anyway.
Another Egyptian tender
A further insight into wheat trade dynamics will be gained later, when Egypt, the world's top importer of the grain, announces the results of its latest tender, unveiled last night.
The tender, the latest in a rash from Egypt's Gasc state grain authority, is for delivery from "October 21-31 and/or November 1-10", according to contract specifications.
"It will be interesting to see who offers the November 1 -10 shipment period," Brian Henry said, amid ideas that supplies from Russia, which has scooped the lion's share of Egyptian orders so far in 2012-13, may be running dry by then.
Still, even as a sign of continued demand, the tender helped dispel the relatively downbeat mood among wheat investors, although even with today's bounce, Chicago's December contract remained under its 50-day moving average.
Yield forecasts
Wheat's resilience, even in the face of growing hopes for winter wheat sowings in the US and elsewhere, helped corn too overcome some of the negative influence from harvest pressure.
Furthermore, recent broker surveys have been more promising on the idea of further downgrades to the USDA corn yield estimate of 123.4 bushels per acre, and production of 10.779bn bushels.
FCStone pegged the yield at 121.4 bushels per acre, and harvest of 10.607bn bushels. Linn Group came in with figures of 119.9 bushels per acre and 9.954bn bushels.
Corn for December added 0.3% to $7.92 ¾ a bushel.
'Difficult to be bullish'
Still, for gains, New York raw sugar did best, soaring 1.2% to 19.24 cents a pound for October, helped by news of Indonesian stockpiling, and concerns that a drop in prices to a three-month low may have been an over-reaction, for now, given some production fears.
"The longer-term prospect of sugar is uncertain, with talks of India, world's largest consumer of sugar, facing the possibility of becoming a net importer of sugar in 2013-14 as drought-hit farmers replace cane with less water-intensive crops," Lynette Tan at Phillip Futures said.
At the opposite end of the spectrum, palm oil felt the weakness in oilseeds particularly deeply after respected analyst Dorab Mistry cautioned over the weight of Malaysian inventories on prices.
"It is difficult to be bullish on palm oil prices. These prices are shining on the reflected glory of soyoil," Mr Mistry told a conference in Singapore.
"Analysts have been talking about the compelling bullish outlook for palm oil as a result of its discount to soyoil.
"But we are on the threshold of winter," when palm oil demand is hit by its unsuitability for use in biodiesel in cold climates, "and there is only so much substitution that can be done."
Palm oil for November fell 2.5% to 2,915 ringgit a tonne in Kuala Lumpur.
Have estimates for the US soybean harvest passed their worst?
Ideas that the US Department of Agriculture might, in its next flagship monthly Wasde crop briefing on Monday, lift its estimate for the domestic soybean yield gained strength with estimates from FCStone.
The broker overnight pegged the crop at 2.739bn bushels, on a yield of 36.7 bushels per acre.
That was above current USDA Wasde figures of 2.692bn bushels for production and 36.1 bushels per acre for yield.
Improved condition
And it is not the only indicator that the USDA's current soybean yield figure might represent a low-water mark.
At broker Newedge, Dan Cekander flagged that the rating of the crop, as measured "good" or "excellent" in official weekly condition reports was, at 30%, 1 point higher than before the last Wasde which could herald an upgrade.
"I do not know if the USDA will raise its yield number, but it opens up the possibility," he said.
(For corn, the condition figure is one point lower than before the last Wasde, at 22%.)
Where are the exports?
As a further bandwagon for bears to jump on, there has been an absence in the soybean market this week – of US export sales, as (not) announced through the USDA's daily alert system.
In fact, the bigger talk on oilseed exports is of rumours of sales of Canadian canola to China, which drove prices of the rapeseed variant to a five-week closing high in Winnipeg on Wednesday, of Can$641.00 a tonne.
And this against a background of ideas that farmers are proving willing to sell off the combine at current prices, so freeing up supplies, if only temporarily, which marked the last session.
Furthermore, soybean technicals are weakening too, with Chicago futures seen overbought and due for a correction.
A 0.5% drop to $17.38 ½ a bushel in the November lot, as of 09:10 UK time (03:10 Chicago time) made the oilseed appear less overbought, but at the expense of some chart damage, with the contract falling below its 10-day moving average for the first time since mid-August.
Ukraine export curbs
It also allowed grains, laggards of late, to turn the tables on soybeans somewhat, especially wheat, looking for only its second gain in 11 trading sessions.
It was helped on its way, up 0.7% at $8.73 ½ a bushel for December delivery, by reports that Ukraine traders have agreed on a maximum for grain exports of 19.4m tonnes, comprising 12.4m tonnes of corn, 4.0m tonnes of wheat and 3.0m tonnes of barley.
This follows a strong start to 2012-13, raising ideas that the country may be set for a rapid deceleration in shipments, sending demand to other exporters, such as the US.
"Many have speculated that the country has exported 1.3m tonnes of wheat at this point in the marketing year," Brian Henry at Benson Quinn Commodities said.
At Market 1, Mike Mawdsley said: "Any news out of Russia or Ukraine limit exports would be bullish."
While Russia's deputy agriculture minister, Ilya Shestakov, on Thursday restated that Moscow will not be imposing export curbs, as he announced a meeting next month to discuss grains, there are ideas that the country has limited potential for further shipments anyway.
Another Egyptian tender
A further insight into wheat trade dynamics will be gained later, when Egypt, the world's top importer of the grain, announces the results of its latest tender, unveiled last night.
The tender, the latest in a rash from Egypt's Gasc state grain authority, is for delivery from "October 21-31 and/or November 1-10", according to contract specifications.
"It will be interesting to see who offers the November 1 -10 shipment period," Brian Henry said, amid ideas that supplies from Russia, which has scooped the lion's share of Egyptian orders so far in 2012-13, may be running dry by then.
Still, even as a sign of continued demand, the tender helped dispel the relatively downbeat mood among wheat investors, although even with today's bounce, Chicago's December contract remained under its 50-day moving average.
Yield forecasts
Wheat's resilience, even in the face of growing hopes for winter wheat sowings in the US and elsewhere, helped corn too overcome some of the negative influence from harvest pressure.
Furthermore, recent broker surveys have been more promising on the idea of further downgrades to the USDA corn yield estimate of 123.4 bushels per acre, and production of 10.779bn bushels.
FCStone pegged the yield at 121.4 bushels per acre, and harvest of 10.607bn bushels. Linn Group came in with figures of 119.9 bushels per acre and 9.954bn bushels.
Corn for December added 0.3% to $7.92 ¾ a bushel.
'Difficult to be bullish'
Still, for gains, New York raw sugar did best, soaring 1.2% to 19.24 cents a pound for October, helped by news of Indonesian stockpiling, and concerns that a drop in prices to a three-month low may have been an over-reaction, for now, given some production fears.
"The longer-term prospect of sugar is uncertain, with talks of India, world's largest consumer of sugar, facing the possibility of becoming a net importer of sugar in 2013-14 as drought-hit farmers replace cane with less water-intensive crops," Lynette Tan at Phillip Futures said.
At the opposite end of the spectrum, palm oil felt the weakness in oilseeds particularly deeply after respected analyst Dorab Mistry cautioned over the weight of Malaysian inventories on prices.
"It is difficult to be bullish on palm oil prices. These prices are shining on the reflected glory of soyoil," Mr Mistry told a conference in Singapore.
"Analysts have been talking about the compelling bullish outlook for palm oil as a result of its discount to soyoil.
"But we are on the threshold of winter," when palm oil demand is hit by its unsuitability for use in biodiesel in cold climates, "and there is only so much substitution that can be done."
Palm oil for November fell 2.5% to 2,915 ringgit a tonne in Kuala Lumpur.
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