News
15.09.2009
U.S. harvest moves toward jumbo crops
The trend in U.S. grain markets in coming days will be dominated by the advancing harvests of what the government estimated on Friday will be a record-large soybean crop and a near-record corn crop. Those billions of bushels will keep a restraining weight on any strong rallies for now, analysts say.
But prices have also already factored in a lot of the new supplies — grain that comes as a relief for world consumers — and markets may keep largely within recent ranges unless there is a big change in the weather for the Midwest crop belt. So far, September in the U.S. Corn Belt has featured warm, sunny days — perfect for ripening corn and soy. But both are still about two to three weeks behind normal due to a cool, wet spring and summer and remain vulnerable to a September freeze.
“Any indication that the longer-term maps are clear of any freezing temperatures or show a switch to freezing temperatures” will drive prices down or up this month, said Brian Basting with Advance Trading, a Bloomington, Illinois, brokerage and farm advisory service.
The latest forecasts look mostly clear for the belt through midweek with balmy temperatures with highs from the mid 70s to low 80s-degrees Fahrenheit — ideal “finishing” weather for row crops from Ohio to Nebraska.
“The threat of any damaging cold weather continues to be pushed further and further away. It looks less and less likely for any damaging freeze in September,” DTN Meteorlogix agricultural meteorologist Mike Palmerino said on Friday.
Good weather usually makes big crops bigger, traders say. In its latest crop report on Friday, the U.S. Department of Agriculture agreed. It raised its forecast for the American corn crop to 12.954 billion bushels, the second-largest in history, and with an average yield of 161.9 bu/acre — a record high. USDA also put the soybean crop at a record high 3.245 billion bushels, reflecting an average yield of 42.3 bu/acre. But after those numbers the grain trade is now thinking the yield could get even bigger — corn to 165 bu/acre and beans perhaps to 44 bu/acre — provided there is no early frost.
SPREADS TO ADJUST? As much as the bin-busting harvests in the offing weigh on prices, the market structure of the Chicago Board of Trade grains will also play into coming price moves. September futures contracts expire at midday on Monday, Sept. 14. Over the summer months, commodity funds built up a hefty net long position in soybeans given demand for U.S. soybeans by China that has shrunk supplies to the lowest level in 32 years. By contrast, funds sold wheat and corn during the summer on the outlook for ample U.S. and global supplies for both.
On Friday, U.S. soybean futures fell nearly 3 percent and the benchmark November contract — the main harvest delivery — at the Chicago Board of Trade dipped below $9 a bushel for the first time since July as USDA confirmed the record crop. The benchmark November soybean contract settled down 23-1/2 cents at $9.03 per bushel.
“The crop size does look good. It’s a record high and we’re looking at an increasing carry-over,” said Anne Frick, an oilseed analyst with Prudential Bache Commodities. “I still think there are a few things around the edges though that are bullish in addition to the obviously very strong exports. USDA is pretty much estimating that South America will use up all of its soybeans … and they dropped their crop estimate for China.”
CBOT corn turned higher late Friday, rebounding from an oversold condition. A drop in USDA’s forecasts for China’s corn crop and end-season stocks next year spurred speculators. Corn for December delivery ended up 4-1/2 cents at $3.19-3/4.
Wheat prices bounced on Friday after the front CBOT wheat contract fell to its lowest level since April 2007 — pressured by a global supply glut. September wheat settled up 9 cents at $4.41-3/4 after touching a contract low at $4.25-1/4.
But prices have also already factored in a lot of the new supplies — grain that comes as a relief for world consumers — and markets may keep largely within recent ranges unless there is a big change in the weather for the Midwest crop belt. So far, September in the U.S. Corn Belt has featured warm, sunny days — perfect for ripening corn and soy. But both are still about two to three weeks behind normal due to a cool, wet spring and summer and remain vulnerable to a September freeze.
“Any indication that the longer-term maps are clear of any freezing temperatures or show a switch to freezing temperatures” will drive prices down or up this month, said Brian Basting with Advance Trading, a Bloomington, Illinois, brokerage and farm advisory service.
The latest forecasts look mostly clear for the belt through midweek with balmy temperatures with highs from the mid 70s to low 80s-degrees Fahrenheit — ideal “finishing” weather for row crops from Ohio to Nebraska.
“The threat of any damaging cold weather continues to be pushed further and further away. It looks less and less likely for any damaging freeze in September,” DTN Meteorlogix agricultural meteorologist Mike Palmerino said on Friday.
Good weather usually makes big crops bigger, traders say. In its latest crop report on Friday, the U.S. Department of Agriculture agreed. It raised its forecast for the American corn crop to 12.954 billion bushels, the second-largest in history, and with an average yield of 161.9 bu/acre — a record high. USDA also put the soybean crop at a record high 3.245 billion bushels, reflecting an average yield of 42.3 bu/acre. But after those numbers the grain trade is now thinking the yield could get even bigger — corn to 165 bu/acre and beans perhaps to 44 bu/acre — provided there is no early frost.
SPREADS TO ADJUST? As much as the bin-busting harvests in the offing weigh on prices, the market structure of the Chicago Board of Trade grains will also play into coming price moves. September futures contracts expire at midday on Monday, Sept. 14. Over the summer months, commodity funds built up a hefty net long position in soybeans given demand for U.S. soybeans by China that has shrunk supplies to the lowest level in 32 years. By contrast, funds sold wheat and corn during the summer on the outlook for ample U.S. and global supplies for both.
On Friday, U.S. soybean futures fell nearly 3 percent and the benchmark November contract — the main harvest delivery — at the Chicago Board of Trade dipped below $9 a bushel for the first time since July as USDA confirmed the record crop. The benchmark November soybean contract settled down 23-1/2 cents at $9.03 per bushel.
“The crop size does look good. It’s a record high and we’re looking at an increasing carry-over,” said Anne Frick, an oilseed analyst with Prudential Bache Commodities. “I still think there are a few things around the edges though that are bullish in addition to the obviously very strong exports. USDA is pretty much estimating that South America will use up all of its soybeans … and they dropped their crop estimate for China.”
CBOT corn turned higher late Friday, rebounding from an oversold condition. A drop in USDA’s forecasts for China’s corn crop and end-season stocks next year spurred speculators. Corn for December delivery ended up 4-1/2 cents at $3.19-3/4.
Wheat prices bounced on Friday after the front CBOT wheat contract fell to its lowest level since April 2007 — pressured by a global supply glut. September wheat settled up 9 cents at $4.41-3/4 after touching a contract low at $4.25-1/4.
Reuters
