Headlines:
- Drop in grain, palm oil values ends rising food price trend
A slide in grain values close to nine-year lows, and a palm oil market reversal, brought an end to a rebound in food prices, according to the United Nations, which flagged “lackluster” demand in dairy too. Food prices fell by 0.8% last month, after five months of gains in which prices had recovered 9.3%, the UN food agency, the Food and Agriculture Organization, said. The July decline, which took prices 1.4% below year-ago levels, reflected in part a 2.8% retreat in vegetable oil value, led by a drop in palm oil prices to a five-month low. “Regular rainfall underpinned a seasonal recovery in production in South East Asia, whilst global import demand remained subdued,” the FAO said. Kuala Lumpur palm oil futures hit a nine-month low of 2,186 ringgit a tonne in July, although they have gained sharply this week, touching 2,451 ringgit a tonne on Thursday, helped by ideas of lingering damage to South East Asian output from El Nino-induced dryness. The US Department of Agriculture’s Jakarta bureau this week forecast 2016-17 output in Indonesia, the world’s top producer, at 33.5m tonnes, 1.5m tonnes below the USDA’s official estimate. - Weekly jobless claims came in at 269,000 compared to a consensus estimate of 265,000
- Money inflows into commodities were seen at $2.4 billion in July compared to $5.5 billion in June, according to a Barclays report. The bank said, “every month this year has seen inflows to commodity investments overall, but July was the weakest.” The group estimates a year to date investment figure of $51 billion
Summary:
Corn export sales were on firm ground. The old crop figures were near the low end of trade expectations and new crop figures crushed expectations. Combined they exceeded expectations. Beans were solid for both crop years coming in near the top end of trade expectations for each year. The new crop numbers were the best showing for the crop year. Wheat was a big disappointment reporting its 2nd lowest export sales figure of the year to date and below trade expectations.
The price action for Corn and Beans was mixed today. An hour before the regular session open the markets were up then they declined for the 1st hour of trading. After that hour they advanced until about noon eastern only to fall again through the balance of the day. Beans closed down marginally. September was off by ¾ of a cent and the November contract closed down ¼ of a cent. September Corn was off 4.50 cents and December lost 4.25 cents. Wheat was up in the overnight session but topped in the pre-market and never recovered. September Wheat lost 6.75 cents on the day.
In our newsletter both this week and last week we suggested that Crude Oil could bottom this week and the last two days of trading are looking pretty good. December Crude was up over a $1 on the day and is still trading near the top of the day’s range at the time of this market wrap writing.
