- Argentine dryness worries revive to lift soybean, corn futures
While share markets struggled for direction on Tuesday, grain futures knew exactly where they were heading – upwards, helped by the return of weather worries. Soybean futures for March stood up 1.4% at $9.83 ½ a bushel in late deals in Chicago, jumping back above 50-day and 200-day moving averages, as investors fretted over the boost that dryness-beset crops will actually receive from looming rains in Argentina. “Upcoming Argentine rains are viewed as a brief respite in an otherwise ongoing dry weather pattern,” said Richard Feltes at Chicago-based broker RJ O’Brien. Benson Quinn Commodities said that “the trade is recognizing the system, as advertised, isn’t a drought buster. “Warm/dry conditions are expected to follow the weekend event.” Soymeal futures stood up 1.4% at $331.50 a short ton, although soybean oil (of which Argentina is, like soybean meal, the top exporter) fared even better, adding 1.8% to 33.09 cents a pound.
- US officials cut hopes for Brazil corn crop, amid debate on safrinha prospects
US officials cut their forecast for Brazilian corn production, amid a mounting debate over prospects for ongoing sowings of the safrinha crop – although ideas are easing of a shift from the grain to cotton. The US Department of Agriculture’s Brasilia bureau slashed to 92.0m tonnes its forecast for Brazil’s total corn output in 2017-18, representing a 6.0m-tonne decline year on year. The downgraded figure is also 3.0m tonnes below the USDA’s official forecast – which is up for revision on Thursday with the publication of the monthly WASDE report on world crop supply and demand, a key event of the grain market calendar. Investors have forecast a downgrade in the Brazil crop output figure of a more modest 1.7m tonnes, to 93.3m tonnes, according to a Bloomberg poll, although the range of forecasts does range widely.
After big drops yesterday Corn, Wheat and Beans all posted big gains on the day. For Corn, Private US exporters reported 120k metric tons of Corn sold to Japan and 105k metric tons of Corn sold to unknown destinations for the 2017-18 marketing year. Concern that China may stop accepting US Sorghum imports in the future may cause producers to steer away from Sorghum and grow more Corn or Soybean acres next year instead. Weather forecasts that shows insufficient rain in Argentina helped Beans rebound today to a 16.75 to 17.25 cents gain. Beans had been down 5-7 trading days and as we mentioned yesterday was due for a reversal. Short covering was potentially a factor in the Wheat rally today. Concern over dry conditions in the US Southern plains has resurfaced leading to 6.50 t0 6.75 cents advance.