News

Loading content, please wait.. loading..
Soy futures hit 2-month low, corn falls, on Brazil crop upgrades 15/03/2017 11:26
Soy futures hit 2-month low, corn falls, on Brazil crop upgrades

Soybean futures hit a two-month low, with corn prices falling too, after US officials raised their estimate for both crops to levels well above market expectations - although wheat markets escaped the worst of the sell-down.

Soybean futures for May touched $10.06 ½ a bushel in Chicago a drop of 1.5% on the day, and taking above 7% the contract's decline from it January high.

Corn futures for May dropped 1.3% to $3.67 ½ a bushel, within an ace of setting a one-month low.

The declines followed bigger-than-expected upgrades by the US Department of Agriculture to its estimates for Brazil's production of both crops in 2016-17, with the estimate for the soybean harvest hiked by 4.0m tonnes to 108.0m tonnes.

This exceeded an upgraded estimate of 107.6m tonnes released earlier by Conab, Brazil's official crop bureau, besides the figure of 106.0m tonnes expected by the market, according to an investor poll.

US vs Brazilian  exports

The prospect of enhanced competition from Brazil - and Paraguay too - in export markets also prompted the USDA to cut its forecast for the US's own soybean exports this season, by 25m bushel to 2.03bn bushels.

Wasde revisions to 2016-17 soybean estimates, change on previous and (on market forecast)

Argentine output: 55.5m tonnes, unchanged, (+300,000 tonnes)

Brazilian output: 108.0m tonnes, +4.0m tonnes, (+2.05m tonnes)

World stocks: 82.82m tonnes, +2.44m tonnes, (+1.30m tonnes)

US stocks: 435m bushels, +15m bushels, (+17m bushels)

Sources: USDA, Agrimoney, Reuters

The revisions came despite increased expectations for demand by China, the top buyer, whose imports were seen hitting a record 87.0m tonnes this season, 1.0m tonnes more than previously expected.

The USDA raised estimate for US stocks for domestic stocks at the close of 2016-17, in September, by 15m bushels - again, an upgrade the market had not expected.

'Favourable weather'

The USDA, in its monthly Wasde report on world crop supply and demand, said that Brazil's soybean crop, which is currently being harvested, "has benefited from favourable weather with ample rainfall throughout the growing season, raising the prospects for record yields".

Wasde revisions to 2016-17 corn estimates, change on previous and (on market forecast)

Argentine output: 36.5m tonnes, +1.0m tonnes, (+1.04m tonnes)

Brazilian output: 91.5m tonnes, +5.0m tonnes, (+3.72m tonnes)

World stocks: 220.68m tonnes, +3.12m tonnes, (+2.17m tonnes)

US stocks: 2.32bn bushels, unchanged, (+30m bushels)

Sources: USDA, Agrimoney, Reuters

The department also cited "above-average vegetation health", as shown by analysis of satellite imagery.

 

For corn, meanwhile, the USDA raised its Brazil harvest forecast by 5.0m tonnes to 91.5m tonnes, again exceeding market expectations, besides the 89.0m-tonne result expected by Conab.

"First-crop yields are estimated up from last month based on favourable weather and higher-than-expected yields reported during harvest."

Meanwhile, for the second, or safrinha corn crop, which is sown as a follow-on crop after the soybean harvest, "planting is proceeding at an aggressive pace", the USDA said in the Wasde.

Seedings progress has been "buoyed by favourable planting conditions and a rapid soybean harvest to make way for second-crop corn".

Wheat's resilience fails

For wheat, the USDA also raised global production expectations, this time citing bumper harvests in Australia, for which the output estimate was upgraded by 2.0m tonnes to 35.0m tonnes, and Argentina, which was seen as having reaped a 16.0m-tonne crop, 1.0m tonnes more than previously thought.

Wasde revisions to 2016-17 wheat estimates, change on previous and (on market forecast)

World stocks: 249.94m tonnes, +1.33m tonnes, (+1.32m tonnes)

US stocks: 1.129bn bushels, -10m bushels, (-6m bushels)

Sources: USDA, Agrimoney, Reuters

However, the impact on the estimate for stocks at the close of this season was softened by an increase to expectations for world demand too.

 

The estimate for Indian imports was lifted by 1.8m tonnes to a 10-year high of 5.5m tonnes, "based on large purchases of wheat after elimination of the import tariff policy in December".

Chicago wheat futures for May initially held in positive territory after the Wasde, before being dragged lower to $4.44 ¼ a bushel an hour after the report was released.

Source: 9 March 2017; Agrimoney.com

This material was not prepared by or on behalf of Glencore Grain and is provided as an information service only. It should not be construed as an endorsement of any associated organisation, product or service nor construed as the opinion of Glencore Grain. Although care has been taken to provide suitable material from the source of the material, no guarantee can be given about the suitability, completeness or accuracy of any of the material. Glencore Grain does not accept any responsibility for the content of the material.



Loading... Please wait