Headlines:

  • ‘One-two punch’ floors grain futures. But coffee, sugar soar
    The early retreat in grain markets extended into a rout as improved US weather forecasts added to the reason to withdraw risk premium from prices, following larger-than-expected supply data unveiled in the latest WASDE report. Investors late to put in long positions were “scrambling for the exits, as traders contemplate possibility that usual growing season weather rally has come and gone,” according to broker firm. The Midwest weather outlook “leans negative [for production] with less severe heat next week, and for shorter duration, while areas laboring under short moisture fade from 20-25% to 10-15% over next 10 days”. “The combination of unexpected rains in the western reaches of the Corn Belt this week along with a lack of bullish surprise in yesterday’s USDA reports seem to be combining to give the ag markets a one-two punch.”
  • Strategie Grains cuts EU wheat harvest hopes – again
    The European Union wheat harvest, the world’s biggest, received its second downgrade in two days, thanks to dryness in France and Spain, as Strategie Grains lowered its forecast, again. Paris-based Strategie Grains cut by 900,000 tonnes to 140.7m tonnes its estimate for the EU soft wheat harvest – reducing it to within 5m tonnes of last year’s result, when production was undermined by ill-timed rains in France. The downgrade followed cuts of 1.1m tonnes to the harvest estimate in both April and May reports. And it left the group’s estimate of the total EU wheat crop, including durum, at 149.3m tonnes – a rise of just 3.3m tonnes year on year.

Summary:

Pressure from yesterday’s USDA Supply and Demand briefing continued to mount today after improved crop weather forecasts sent Corn, Soybean Wheat futures on frenzied sell-off today. Additionally, today’s USDA Weekly Export Sales Report showed that the most recent exports for Corn, Soybeans and Wheat were all in line with trade estimates expectations. Corn came in at 440,700 metric tons (MT), Soybean came in at 683,000 MT and Wheat at 357,700 MT. Beans futures was down almost 50 cents when the closing bell rang losing 4.5% on the day. Wheat was not far behind percentage wise with a loss of 4.25% or 22.75 cents. Corn round out the day with a 3.8% drop close to 15 cents at settlement.

On the trade front, a delegation of commodity importers from China signed agreements today to buy 12.53 million metric tons US Soybean. According to the US Soybean Export Council, the deal is 2nd largest deal between the US and China.