Headlines:

  • Cotton nudges higher, as investors await estimates of Harvey damage
    Cotton futures nudged higher, crossing back above 70 cents a pound, as investors awaited assessments of damage to the US crop from Hurricane Harvey, which has also raised concerns over wheat exports and beef production too. The US National Hurricane Centre cautioned that Harvey, while now downgraded to a Tropical Storm, would continue on Monday to dump “heavy rainfall” and “worsen the flood situation in south eastern Texas and Southwestern Louisiana”. This after the storm, billed the strongest to hit the US since 2004, had already dumped nearly 40 inches of rain on some parts of Texas, causing what state governor Greg Abbot termed “of the largest disasters America has ever faced”. With Texas the top grower of cotton, and besides the top beef-producing state, agricultural investor reaction has focused in particular on these two commodities, with New York cotton futures for December in the last session jumping 2.6% to 69.89 cents a pound. In morning deals on Tuesday, the contract added a further 0.8% to 70.38 cents a pound, crossing the psychologically-important 70 cents-a-pound mark, helped by worries over how much further harm will be done. “Hurricane Harvey is still keeping the agricultural markets on tenterhooks,” said Commerzbank.
  • Sugar futures tumble, despite jitters over hedge funds’ record bearish bet
    Sugar futures fell back from highs reached after weaker-than-expected Brazilian output data, defying nerves that a record hedge fund net short, built up in a big week for selling ags, might inject caution over sales. Raw sugar futures for October – which gained 2.0% in the last session, helped by industry data showing a pullback in production in Brazil’s key Centre South district – gave up early resilience to close down 0.4% at 13.82 cents a pound on Tuesday. Many investors had expected some retreat, viewing the gains of the last session as an overreaction, given the prospect still of a large world sugar production surplus in 2017-18. “In our view, the data can be better viewed as not as bad as it could have been – and not worth a 2% price gain,” said Tobin Gorey at Commonwealth Bank of Australia. A UK soft commodities trader told Agrimoney.com that the “gains in the last session did not look justified by the Unica data alone”, which showed Centre South sugar output in the first half of this month at 3.17m tonnes, down from 3.41m tonnes in the second half of July. The Unica statistics were, nonetheless, in line with analysts’ expectations, as measured by a poll by S&P Global Platts.

Summary:

Corn and Soybean markets were weak in trading once again. Corn was 2.75 lower across the board and Soybean ranged from 4.50 to 5.75 down. Wheat finally managed to post a positive day after revering earlier losses. It finished at the top of the day’s trading range. USDA report activity on today was mild. Private exporters reported export sales of 198,000 metric tons of Soybeans for delivery to China during the 2017-2018 marketing year along with 226,000 metric tons of Corn for delivery to Mexico during the 2017-2018 marketing year.

Corn futures have been under so much pressure that it is beginning to challenge last year’s lows. As Managed Money continues to load up on the short side of the market it appears that it will be very difficult for Corn or Soybean to find solid footing until either the end of September or the end of October. The current concern that has been making its rounds is that of potential frost damage. The crops are so large that producers and starting to worry that they might run out of time harvesting the projected record yields.