(Agrimoney) – Soybean futures resumed their slide on Friday, a fall of nearly 5% over the week, thanks to an improving weather outlook and the continued reverberations of Wednesday’s startling US government yield forecasts.
“The market had a dead cat bounce yesterday and is back to report selling going into the weekend,” said US Commodities.
Midwest rains
Soybeans came under pressure as weather prospects turned wetter across the US Midwest.
Forecaster Kyle Tapley told Reuters that the next 10 days would bring moisture the US Midwest.
“Over the next 10 days, I think we will see the northern and northwestern portions of the Midwest get the heaviest amounts,” he said.
Stormy weather.
“Stormy wet weather is predicted in the upcoming week along with hotter Midwest temperatures,” said forecaster Gail Martell, noting that “heavy rainfall would be promoted by a newly energized Southwest monsoon”.
“Heavy soaking rains would be highly beneficial, especially east of the Mississippi River where conditions have been dry for 3 weeks,” she added.
Fresh data
Monday will bring fresh data from the US Department of Agriculture, in the form of a new crop report.
Given the apparent disparity between the strong soybean yields forecast in the USDA’s world agriculture supply and estimates on Wednesday, and the comparatively poor crop ratings shown in last Monday’s crop report, the next release is likely to be closely observed.
Richard Feltes of RJ O’Brien noted that there is trade scepticism about Wednesday’s row crop yield forecasts, which “trade believes are overstated”.
There will also be US soy crush data from NOPA, which will give more clues to the state of demand.
Chinese fears
Soybeans have also been bearing the brunt of worries over the state of the Chinese economy.
China is the world’s largest importer of soybeans, devalued its currency three times this week, ostensibly as part of a transition to a more market-driven exchange rate.
The move was seen as bearish across the commodity spectrum.
The US dollar found its feet toward the end of the week, rising against a basket of currencies on Thursday and Friday, after a 6-day loosing streak.
A stronger greenback is bearish for dollar-denominated commodity prices.
US soybean spot-prices also moved downward, as processors bought equipment offline in order to prepare for a start of the soybean harvest.
September soybean futures closed down 1.2% at $9.38 ½ a bushel, while new crop November futures closed down $9.16 ½ a bushel.
But corn kept its head above water, just, as the September contract closed up 0.1% at $3.64 a bushel.
Bargain buying
Meanwhile wheat has found some strength on bargain buying and short covering.
“Wheat futures have been higher despite world values continuing to work lower,” said Darrell Holday of Country futures.
“The market is oversold and there is significant interest in buying wheat and selling soybeans,” he added.
September Chicago wheat closed up 0.6% at $5.06 ½ a bushel.
Bumper French crop
French crop forecaster FranceAgriMer raised its forecast for the size of the soft wheat harvest to 40.4m tonnes, from the 37.9m tonnes forecast in July.
Consensus is growing around a record French harvest, but this latest estimate comes in above even previous bumper forecasts.
Paris Matif wheat closed down 0.9% at E176.00 a tonne.
Brazilian concerns
Concerns over Brazilian supplies helped arabica coffee futures reach a three-month high on Friday.
Brazilian exporter Terra Forte released a report that estimated carry-over stocks at just 4.66m bags, the lowest level since 1999.
And Jack Scoville of Price Futures noted further worries for future crops.
“There is now some talk that Brazil production next year could be even lower than this year,” he said.
December Arabica coffee settled up 0.4%, at 141.15 cents a pound, while September robusta coffee closed 0.5%, at $1,713 a tonne.
Indian supplies
Cotton rose again, to reach the highest close in a month.
Commerzbank noted a potential glut in India, saying “according to the Cotton Association of India, Indian cotton stocks could total 7.39 million bales by the end of October, which would be 25% up on last year”.
“At the same time, this would constitute the highest stock level since records began.”
However as only US cotton is currently deliverable on New York contracts, the effects were muted.
December New York cotton settled up 0.4% at 65.95 cents a pound.
