20th Jul 2012, by Agrimoney
Wheat followed the script on Friday, making a negative start.
Fridays often bring price falls in weather markets, as investors take profits ahead of a weekend when they will be unable to trade, at a time when every forecast counts.
But corn and soybeans remained in an upswing, as an official forecast on Thursday that dry US conditions are set to last next month, and potentially into the autumn, eased concerns that a round of limited Midwest rains might be the harbinger of something more substantial.
"Scattered rains in the Midwest US were of little help to douse fears of the worst drought in 56 years," Lynette Tan at Phillip Futures said.
"Government forecasters said the probability of no relief is high, and there is no reason to believe the situation will improve."
Shorter-term, weather prospects are hardly reassuring either.
"After the cold front pushes through the north east and eastern Corn Belt on Friday and Saturday, the intense heat over the Plains and western Corn Belt will begin to push back into the eastern Corn Belt July 21 and spread slowly east towards the east coast by July 26-27," WxRisk.com said.
Rain deadline
In theory, the weather picture looks particularly worrying for soybeans, which still have some potential for revival, given that their sensitive pod-filling period is later than corn's vulnerable pollination time, which is largely past.
US corn has already been largely written off as a poor lot.
"If stress is relieved by late July, it is possible that later-planted soybeans might set more pods and produce more yield than those planted in April," University of Illinois crop sciences professor Emerson Nafziger said.
However, he added that "while we remain more optimistic about soybean prospects than about corn, soybean yield potential is beginning to decline as time goes on without enough water to keep plants functioning well".
One impact of the lack of rain, for instance, has been less expansive plants, "which in wider rows means that plants are unable to join canopies across the rows," meaning a "reduced ability to intercept sunlight, which will lower yield potential".
'$20 a bushel'
And that has spurred talk of elevated prices.
"Weather is the market driver and has soybeans as the upside leader," Benson Quinn Commodities said.
"Until a real change in pattern is realised, the role of the market will be to ration demand and encourage South American planting, with planting season beginning in late September in Brazil and late October in Argentina."
The rebound in spreads in the last session "implies more upside with some technical traders now targeting at $20 a bushel".
Soybeans for August inched towards the target, adding 1.0% to $17.51 ¾ a bushel as of 09:00 UK time (03:00) Chicago time, and indeed setting a fresh record earlier for a spot contract of $17.54 a bushel.
November soybeans were 0.9% higher at $16.67 ½ a bushel.
China rumours ease
However, it was new crop corn which was the better performer, gaining 1.5% to $7.89 ¼ a bushel as the speculation over Chinese sell-ons of import orders, which undermined values in the last session, dissipated.
(Corn prices on the Dalian exchange itself were little changed, easing 0.1% to 19,460 yuan a tonne for January.)
The September lot added 0.5% to $8.11 ½ a bushel, but has failed yet to breach the record of $8.16 ¾ a bushel reached in the last session.
'Story of its own'
Still, that was better than wheat, which eased 0.6% to $9.29 ¾ a bushel for September, although that had a bullish interpretation too, in pointing to a crop showing greater independence from corn, which it has followed for a large part of the year.
"The wheat market reeks of heavy fund participation and a commodity that is building a supportive story of its own," Brian Henry at Benson Quinn Commodities said, after the grain's particular gains in Chicago in the last session, spurred by fund purchases of an estimated 7,000 lots.
"The support typically spilling over from the corn market seems to be taking a backseat to global production concerns."
Indeed, wheat trading "was reminiscent" of that which, in previous years, has preceded government export curbs.
"Regarding Russia and Ukraine there has been some of that talk, but at this point the trade just has to be aware that it can happen."
Battle for 2013 acres
Soft commodities found headway difficult, on a day which had a slight risk-off feel, with the safe haven of dollar edging a little higher, and shares losing ground, by 1.4% in Tokyo, 0.6% in Singapore and 0.2% in Sydney.
Still, the weak Indian monsoon offered some support to cotton and sugar, both crops of which the country is a big producer.
For cotton, "the late Indian monsoon and difficult growing conditions in the US this season have raised the prospect for crop downgrades", Luke Mathews at Commonwealth Bank of Australia said.
There is a 2013 battle for acres effect supporting the fibre too, which edged 0.1% higher to 72.63 cents a pound in New York.
"Surging prices for corn/soybeans means cotton planted area next year may fall significantly.
"These production concerns will continue to support prices, despite the bleak global economic outlook."
Brazilian queue
Raw sugar was unchanged at 23.25 cents a pound for October delivery.
"Speculation that Indian officials may have a change in heart on sugar exports, given the weak monsoon, remains supportive for global prices," Mr Mathews said.
Phillip Futures' Lynette Tan added: "The line up of ships waiting to load sugar in largest producer and exporter Brazil now stands at 87, higher than 81 last week, further fuelling fears of a short-term supply shock in sugar."
Wheat followed the script on Friday, making a negative start.
Fridays often bring price falls in weather markets, as investors take profits ahead of a weekend when they will be unable to trade, at a time when every forecast counts.
But corn and soybeans remained in an upswing, as an official forecast on Thursday that dry US conditions are set to last next month, and potentially into the autumn, eased concerns that a round of limited Midwest rains might be the harbinger of something more substantial.
"Scattered rains in the Midwest US were of little help to douse fears of the worst drought in 56 years," Lynette Tan at Phillip Futures said.
"Government forecasters said the probability of no relief is high, and there is no reason to believe the situation will improve."
Shorter-term, weather prospects are hardly reassuring either.
"After the cold front pushes through the north east and eastern Corn Belt on Friday and Saturday, the intense heat over the Plains and western Corn Belt will begin to push back into the eastern Corn Belt July 21 and spread slowly east towards the east coast by July 26-27," WxRisk.com said.
Rain deadline
In theory, the weather picture looks particularly worrying for soybeans, which still have some potential for revival, given that their sensitive pod-filling period is later than corn's vulnerable pollination time, which is largely past.
US corn has already been largely written off as a poor lot.
"If stress is relieved by late July, it is possible that later-planted soybeans might set more pods and produce more yield than those planted in April," University of Illinois crop sciences professor Emerson Nafziger said.
However, he added that "while we remain more optimistic about soybean prospects than about corn, soybean yield potential is beginning to decline as time goes on without enough water to keep plants functioning well".
One impact of the lack of rain, for instance, has been less expansive plants, "which in wider rows means that plants are unable to join canopies across the rows," meaning a "reduced ability to intercept sunlight, which will lower yield potential".
'$20 a bushel'
And that has spurred talk of elevated prices.
"Weather is the market driver and has soybeans as the upside leader," Benson Quinn Commodities said.
"Until a real change in pattern is realised, the role of the market will be to ration demand and encourage South American planting, with planting season beginning in late September in Brazil and late October in Argentina."
The rebound in spreads in the last session "implies more upside with some technical traders now targeting at $20 a bushel".
Soybeans for August inched towards the target, adding 1.0% to $17.51 ¾ a bushel as of 09:00 UK time (03:00) Chicago time, and indeed setting a fresh record earlier for a spot contract of $17.54 a bushel.
November soybeans were 0.9% higher at $16.67 ½ a bushel.
China rumours ease
However, it was new crop corn which was the better performer, gaining 1.5% to $7.89 ¼ a bushel as the speculation over Chinese sell-ons of import orders, which undermined values in the last session, dissipated.
(Corn prices on the Dalian exchange itself were little changed, easing 0.1% to 19,460 yuan a tonne for January.)
The September lot added 0.5% to $8.11 ½ a bushel, but has failed yet to breach the record of $8.16 ¾ a bushel reached in the last session.
'Story of its own'
Still, that was better than wheat, which eased 0.6% to $9.29 ¾ a bushel for September, although that had a bullish interpretation too, in pointing to a crop showing greater independence from corn, which it has followed for a large part of the year.
"The wheat market reeks of heavy fund participation and a commodity that is building a supportive story of its own," Brian Henry at Benson Quinn Commodities said, after the grain's particular gains in Chicago in the last session, spurred by fund purchases of an estimated 7,000 lots.
"The support typically spilling over from the corn market seems to be taking a backseat to global production concerns."
Indeed, wheat trading "was reminiscent" of that which, in previous years, has preceded government export curbs.
"Regarding Russia and Ukraine there has been some of that talk, but at this point the trade just has to be aware that it can happen."
Battle for 2013 acres
Soft commodities found headway difficult, on a day which had a slight risk-off feel, with the safe haven of dollar edging a little higher, and shares losing ground, by 1.4% in Tokyo, 0.6% in Singapore and 0.2% in Sydney.
Still, the weak Indian monsoon offered some support to cotton and sugar, both crops of which the country is a big producer.
For cotton, "the late Indian monsoon and difficult growing conditions in the US this season have raised the prospect for crop downgrades", Luke Mathews at Commonwealth Bank of Australia said.
There is a 2013 battle for acres effect supporting the fibre too, which edged 0.1% higher to 72.63 cents a pound in New York.
"Surging prices for corn/soybeans means cotton planted area next year may fall significantly.
"These production concerns will continue to support prices, despite the bleak global economic outlook."
Brazilian queue
Raw sugar was unchanged at 23.25 cents a pound for October delivery.
"Speculation that Indian officials may have a change in heart on sugar exports, given the weak monsoon, remains supportive for global prices," Mr Mathews said.
Phillip Futures' Lynette Tan added: "The line up of ships waiting to load sugar in largest producer and exporter Brazil now stands at 87, higher than 81 last week, further fuelling fears of a short-term supply shock in sugar."
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