Glacier FarmMedia — High quality and quantity, as well as a lack of overseas demand, mostly affected grain and oilseed futures on the Chicago Board of Trade during the week ended Sept. 3.
The United States Department of Agriculture rated the country’s corn crop at 69 per cent good to excellent as of Aug. 31, down two points from the previous week and soybeans were down four points at 65 per cent. The spring wheat harvest advanced 19 points from the week before at 72 per cent, one point above the five-year average.
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U.S. grains: Corn slips from six-week high, soybeans down on China demand worries
U.S. corn futures fell from a six-week peak on Wednesday on profit-taking and technical selling after three sessions of gains as an expected record-large U.S. harvest weighed on the market.
December corn added 12 U.S. cents per bushel during the week to close at US$4.18/bu. on Sept. 3, while November soybeans lost 16 cents at US$10.3150/bu. December Chicago soft wheat declined 2.25 U.S. cents at US$5.22, while its Kansas City hard red wheat counterpart was down 2.75 cents at US$5.1025 and December Minneapolis spring wheat dropped 3.75 cents at US$5.73.
Scott Capinegro, a Chicago-based hedging specialist from AgMarket.net, said crop quality is a main determining factor of production estimates for private firms and the USDA. Even though there were slight declines for corn and soybeans last week, crop conditions are still pressuring prices.
“Crop ratings have come down, but they’re still at (multi-year) highs,” Capinegro said, adding that they’ll affect the USDA’s upcoming monthly supply/demand estimates on Sept. 12.
He said corn is projected at 188 bushels per acre, forcing it lower, but maybe not as much as people think.
He also said corn’s recent price movement is mirroring last year’s, reaching contract lows in August before starting a rally. In this year’s case, concerns over corn rust in some fields have caused a bump up in prices.
There doesn’t appear to be any such rally for soybeans in the near future. A high yield and a lack of Chinese demand for the U.S. crop has put soybean futures “in trouble”, Capinegro said.
“We’re losing sales to (China) every week that goes by now. If they say they have coverage for October and November, even if we started in late October into the month of November for shipment, it will still take 30 days … to send them off. The problem is Brazil at the end of December going into January will have new crop beans to sell to (China),” he said.
In the middle of the spring wheat harvest, contract lows are possible for wheat, Capinegro explained. This would make U.S. wheat more attractive in the global market, but there is stiff competition.
“We’re fighting Russia. With crude oil prices coming down, Russia still needs to try to export oil, export wheat and they’re trying to finance their war. So they’re undercutting everybody,” he said. “Russia is trying to cut a grain deal.”
Corn could become firmer over the next week or so due to strong foreign demand. However, Capinegro warned soybeans could fall.
“If we don’t hold this US$10.25 (per bushel) level and we don’t get any real progress in China talks, November beans could make new contract lows and we could be down to US$9.50 or even lower,” he said.
