(Agrimoney) – Corn led grain prices down today, after US data showed conditions were better than expected, with drier weather expected for the US Midwest.
Corn prices rose on Monday ahead of a US government crop report which was expected to show the proportion of the corn crop in good or excellent condition down 1 percentage point.
But the report, released after the market closed, saw the proportion of corn in good-or-excellent condition was unchanged, at 68%, 1 percentage point above the 5-year average despite weeks of rains in the Midwest.
“Better conditions”
And with drier weather now headed for region, this suggests yields may be higher than previously thought.
Corn futures, as well as soybeans, have been rallying off ample Midwest rains, and dry weather promises to dry out some of the worst affected areas.
US Commodities said that “Warm and dry weather ahead will help saturated soils of Indiana, Ohio, and Illinois”.
Brian Henry of Benson Quinn Commodities said “weather forecasts hint at potential for better conditions through the Eastern corn belt, but are never void of additional moisture.
“Time has run out”
But the dryness may come too late for some corn crops.
Mike Toohill, agronomist with Diversified Services, reported from a crop tour of Illinois, where the proportion of good or excellent was down 5 percentage points from last week, at 56%.
He noted “time has run out for most of the Illinois soggy rooted corn to color up and grow tall and lush enough to support a decent sized ear” meaning that the benefits from dry weather to come are limited.
Illinois the US’ second largest corn and soy growing state.
Forecaster Gail Martell noted that “widely divergent conditions are being reported in Midwest corn, worst where historic flooding has developed, and best in the drier areas.
Ms Martell noted further rains headed for the upper Midwest, even as other regions turned drier.
September corn finished down 2.9% at $4.28 ¼ a bushel, a session low.
Midwestern dynamics
Monday’s crop report bought a 1 percentage point downgrade to soybean condition, to 62% good or average, in line with market expectations.
But with soybeans benefiting from the same supportive Midwestern weather dynamics as corn, August soybeans were down $10.33 ½ a tonne.
November soybeans were down $10.25 a tonne.
And the rains have left a great deal of soy so far unplanted, with Missouri plantings only 80% complete, with 1.2m acres to go.
Iran deal
News of nuclear deal between Iran and the west bought the prospect of an imminent end to sanctions, which has the potential to increase exports of Iran’s huge oil reserves.
This is bearish for commodities in general, as cheaper oil helps producer margins, and pressures the commodity complex lower.
Soyoil, which compete with mineral oil as a fuel source, was down with August soyoil ending down 1.2% at 32.40 cents a pound.
Russian sales
Wheat prices also came under pressure from news of fresh Russian and Romanian wheat sales to Egypt, at under $200 a tonne, underlining the competitiveness of the global wheat market.
Meanwhile the US crop report showed spring wheat ratings up 1% to 71% good or excellent, while the winter wheat harvest is 65% complete, 10 percentage points up on last week, although still lagging an average of 68% at this point in the year.
September Chicago wheat closed down 0.8% at $571 a bushel.
Kansas wheat came under further harvest pressure, closing down 1.3% at $5.60 a tonne.
European grind
Cocoa hit a new 4-year high on Tuesday, after European demand data bucked analysts’ expectations.
Data on European cocoa grind, a proxy for consumer demand, showed it up 0.6% over the last three months, confounding expectations of a fall in demand due to higher prices.
September New York cocoa finished up 2.0%, at $3,370 a tonne, breaking through the previous 2014 high to reach its highest level since 2011.
September London cocoa finished up 1.3%, at £2,234 a tonne.
Brazilian rains
Sugar futures rose again, as concern about the progress cane flowering in Brazil helped prices.
October New York sugar finished up 0.6%, at 12.64 cents a pound.
Commenting on Monday’s rally, Nick Penny, senior trader at Sucden Financial said “we remain sceptical on this rally but would allow that the technical picture is becoming more favourable for the bulls, at least short term.”
“The low volume and low liquidity at times suggests to us that many are also still unconvinced,” he added.
Coffee was also up, benefiting from some early strength in the Brazilian real, although this ebbed later in the day.
September arabica closed up 2.0%, at $1.32 a pound.
September robusta closed up 0.2%, at $1,742 a tonne.
