MARKET DEVELOPMENT
AM Markets: Palm Leads Oilseeds Higher. But Grains Sluggish
AM Markets: Palm Leads Oilseeds Higher. But Grains Sluggish
21/09/2016 (AgriMoney.com) - Grain bulls have gained cause for hope this month, largely for two reasons.
The first is the idea that US corn yields, while large, will not be as hefty as the 174.4 bushels per acre that the US Department of Agriculture forecasts.
The second is that corn and soybean harvesting will be slowed by rains, easing the impact of harvest pressure on prices and, potentially, cutting quality too, if crop is stuck out for enough time in wet weather, which tends to encourage disease, and broader deterioration.
Unfortunately for the bulls, USDA data overnight failed to offer support to either cause.
'Best rating since 1994'
The USDA showed the corn harvest running at 9% complete, 3 points behind the average pace, but bang in line with last year.
While this year's pace "is a few points behind the five-year average, it is not disastrously so considering how soggy the US Midwest has been," said Tobin Gorey at Commonwealth Bank of Australia.
And the crop condition rating held at 74% in "good" or "excellent" condition, well ahead of the 68% a year ago, and the five-year average of 59%.
At broker CHS Hedging, Joe Lardy said: "Corn conditions continue to defy gravity. The current rating is tied for the best rating since 1994.
"Expectations are for the USDA to start dropping corn yields in upcoming reports but the crop conditions would argue against big cuts."
'Wetter than is ideal'
OK, more rain is in the Midwest forecast so.
"Conditions will remain wetter than is ideal this week," Mr Gorey said.
"But forecasters say growers should still be able to get in the fields between forecast rain events."
And as an extra negative for prices, sowings of full-season corn in southern Brazil have been going OK, with Michael Cordonnier at Soybean and Corn Advisor saying that "farmers in the state of Parana are taking advantage of the good planting conditions to accelerate planting".
'Good for corn'
At least demand ideas have been holding up, with continued comment of the USDA's announcement on Monday of the sale of 191,000 tonnes of US corn to Mexico, a deal termed a "rare treat" by CHS Hedging's Joe Lardy.
Furthermore, weekly data on actual exports, as measured by cargo inspections, were "good for corn", at 1.29m tonnes, a figure which "kept alive the streak of inspections above 1m tonnes at 16 weeks now", Mr Lardy said.
Benson Quinn Commodities said that "corn [export] inspections are 1.0m tonnes above last year's shipments just two weeks into the 2016-17 marketing year".
Corn futures for December continued their somewhat crab-like performance of the last session, gaining 0.1% to $3.37 ½ a bushel as of 09:00 UK time (03:00 Chicago time), but lacking the vim to break conclusively above their 50-day moving average, at a little under $3.38 a bushel.
The contract has not closed above its 50-day line in three months.
'Acreage will be down'
Wheat did a little better, but not much, given that the huge and poor-quality world harvest this year, is competing especially hard with corn through price for a place in feed rations.
December wheat futures gained 0.2% to $4.04 ¾ a bushel in Chicago, albeit enough headway to take the contract back above its 20-day moving average.
US winter wheat sowings, at 17% complete, are actually running 1 point ahead of the average pace, although sceptics might say that is because farmers have less to plant, with expectations of a further decline in seedings from already low levels – and potentially to the weakest in more than a century.
"Prices aren't offering much, if any, opportunity" for wheat in sowings programmes, Benson Quinn Commodities said.
"Hard red winter wheat acreage will be down. By how much remains to be seen. The current talk is down 5%."
'Critical to filling a tight pipeline'
It was left to soybeans to show a sharper pair of heels, rising 0.6% to $9.78 ¾ a bushel for November delivery, enough to break above its 40-day moving average.
And this despite the USDA report overnight showing US crop condition holding at a lofty 73% good or excellent, 10 points above the year-ago figure, while harvest progress, at 4% complete was in line with the typical 5%.
Prices in the oilseed gained support in part from continued concerns of a small carryout from 2015-16, making timely supplies from the newly-started harvest that much more imoortant.
Benson Quinn Commodities said that "16 days into the new marketing year and export inspections are running 212% ahead of last year at 1.9m tonnes versus 900,000 tonnes for same period last year.
"Rains in the coming seven days," or rather the lack of rains, "are critical to filling a tight pipeline in record export demand".
Palm up
The oilseeds complex also gained support from palm oil, which soared 2.2% to 2,701 ringgit a tonne in Kuala Lumpur for December delivery.
Earlier, the contract hit a five-month high of 2,725 ringgit a tonne.
While Malaysia's exports continue to lag August's strong pace - with shipments down 20% month on month as of September 20, according to cargo surveyor ITS – there remain concerns that El Nino-related dryness is causing a longer hangover on South East Asian palm oil production than had been thought.
Back in Chicago, rival vegetable oil soyoil for December soared 1.8% to 33.67 cents a pound.
The first is the idea that US corn yields, while large, will not be as hefty as the 174.4 bushels per acre that the US Department of Agriculture forecasts.
The second is that corn and soybean harvesting will be slowed by rains, easing the impact of harvest pressure on prices and, potentially, cutting quality too, if crop is stuck out for enough time in wet weather, which tends to encourage disease, and broader deterioration.
Unfortunately for the bulls, USDA data overnight failed to offer support to either cause.
'Best rating since 1994'
The USDA showed the corn harvest running at 9% complete, 3 points behind the average pace, but bang in line with last year.
While this year's pace "is a few points behind the five-year average, it is not disastrously so considering how soggy the US Midwest has been," said Tobin Gorey at Commonwealth Bank of Australia.
And the crop condition rating held at 74% in "good" or "excellent" condition, well ahead of the 68% a year ago, and the five-year average of 59%.
At broker CHS Hedging, Joe Lardy said: "Corn conditions continue to defy gravity. The current rating is tied for the best rating since 1994.
"Expectations are for the USDA to start dropping corn yields in upcoming reports but the crop conditions would argue against big cuts."
'Wetter than is ideal'
OK, more rain is in the Midwest forecast so.
"Conditions will remain wetter than is ideal this week," Mr Gorey said.
"But forecasters say growers should still be able to get in the fields between forecast rain events."
And as an extra negative for prices, sowings of full-season corn in southern Brazil have been going OK, with Michael Cordonnier at Soybean and Corn Advisor saying that "farmers in the state of Parana are taking advantage of the good planting conditions to accelerate planting".
'Good for corn'
At least demand ideas have been holding up, with continued comment of the USDA's announcement on Monday of the sale of 191,000 tonnes of US corn to Mexico, a deal termed a "rare treat" by CHS Hedging's Joe Lardy.
Furthermore, weekly data on actual exports, as measured by cargo inspections, were "good for corn", at 1.29m tonnes, a figure which "kept alive the streak of inspections above 1m tonnes at 16 weeks now", Mr Lardy said.
Benson Quinn Commodities said that "corn [export] inspections are 1.0m tonnes above last year's shipments just two weeks into the 2016-17 marketing year".
Corn futures for December continued their somewhat crab-like performance of the last session, gaining 0.1% to $3.37 ½ a bushel as of 09:00 UK time (03:00 Chicago time), but lacking the vim to break conclusively above their 50-day moving average, at a little under $3.38 a bushel.
The contract has not closed above its 50-day line in three months.
'Acreage will be down'
Wheat did a little better, but not much, given that the huge and poor-quality world harvest this year, is competing especially hard with corn through price for a place in feed rations.
December wheat futures gained 0.2% to $4.04 ¾ a bushel in Chicago, albeit enough headway to take the contract back above its 20-day moving average.
US winter wheat sowings, at 17% complete, are actually running 1 point ahead of the average pace, although sceptics might say that is because farmers have less to plant, with expectations of a further decline in seedings from already low levels – and potentially to the weakest in more than a century.
"Prices aren't offering much, if any, opportunity" for wheat in sowings programmes, Benson Quinn Commodities said.
"Hard red winter wheat acreage will be down. By how much remains to be seen. The current talk is down 5%."
'Critical to filling a tight pipeline'
It was left to soybeans to show a sharper pair of heels, rising 0.6% to $9.78 ¾ a bushel for November delivery, enough to break above its 40-day moving average.
And this despite the USDA report overnight showing US crop condition holding at a lofty 73% good or excellent, 10 points above the year-ago figure, while harvest progress, at 4% complete was in line with the typical 5%.
Prices in the oilseed gained support in part from continued concerns of a small carryout from 2015-16, making timely supplies from the newly-started harvest that much more imoortant.
Benson Quinn Commodities said that "16 days into the new marketing year and export inspections are running 212% ahead of last year at 1.9m tonnes versus 900,000 tonnes for same period last year.
"Rains in the coming seven days," or rather the lack of rains, "are critical to filling a tight pipeline in record export demand".
Palm up
The oilseeds complex also gained support from palm oil, which soared 2.2% to 2,701 ringgit a tonne in Kuala Lumpur for December delivery.
Earlier, the contract hit a five-month high of 2,725 ringgit a tonne.
While Malaysia's exports continue to lag August's strong pace - with shipments down 20% month on month as of September 20, according to cargo surveyor ITS – there remain concerns that El Nino-related dryness is causing a longer hangover on South East Asian palm oil production than had been thought.
Back in Chicago, rival vegetable oil soyoil for December soared 1.8% to 33.67 cents a pound.