Grain futures tumbled, after the US government revealed crops in excellent conditions.
Corn and soybeans have been trading a weather market, with every shift in the long term forecast sparking swinging volatility.
Traders have been jumpy about some hot dry weather forecast for the US Midwest, with temperatures expected to rise above 100 degrees Fahrenheit.
Volatility ‘wearing thin’?
But the strong condition of corn and soybean crops lessens the chance of yields taking a hit, and rains have improved soil moisture across much of the row crop belt, which will also protect crops.
Tregg Cronin, at Halo Commodities, suggested the markets are overacting to the swings in weather prospects.
“The erratic nature of prices the last 7-10 days… is wearing thin on many traders as it can be argued the fundamentals of our markets are not changing enough with each model run to warrant the price swings we’ve seen,” Mr Cronin said.
High crop ratings
“Grain markets are lower as US Department of Agriculture’s weekly crop progress report continues to show a great crop,” said Paul Georgy.
Richard Feltes, at RJ O’Brien, saw a comination of “high mid-summer row crop ratings, last week’s extraordinary volatility, slower Chinese soybean buying pace… pushing ag traders to the sidelines.
Mr Feltes noted a weaker macro-environment, thanks to a stronger dollar and falling broad commodity prices.
The CRB core commodities index was down 1.1% as Chicago markets closed, while the US dollar was up 0.5%, at a four-month high, against a basket of currencies, weighing on dollar denominated commodities.
Good corn condition
US corn conditions were better than expected.
The crop was 76% good or excellent, unchanged from last week, where analysts were expecting a 1 point reduction in quality. This is far above the five year average, of 62% good or excellent at this point.
“Only once in the past 51 years when crop conditions were this good did the crop end up less than trend line yield,” noted Steve Wagner, at CHS Hedging.
Crucially, the US corn crop is 56% in the silking stage, compared to 24% last week.
The more of the crop that has completed silking by the time the hottest weather hits, the less the effect on yields is likely to be.
In other news, China sold 15,516 tonnes of corn from its state inventories, from the 2012 and 2013 harvest.
December corn futures fell 3.6%, to finish at $3.48 ½ a bushel.
US soybeans crop ratings were unchanged from last week, at 71% good or excellent, in line with analyst expectations, and 11 points ahead of the five year average at this time in the year.
November soybean futures finished down 3.3%, at $10.27 ¾ a bushel.
The heavy US harvest, and spillover pressure from corn, pushed wheat prices down.
US wheat ratings showed spring wheat at 69% good or excellent, down 1 point from last week, and in line with analyst expectations.
Analysts were expecting the rating to be 69%. Winter wheat was reported 76% harvested.
September Chicago wheat futures finished down 2.4%, at $4.18 a bushel.
September spring wheat futures in Minneapolis finished down 2.0%, at $4.90 a bushel.
German crop to fall
French consultancy Agritel saw the German wheat crop down 1.9% year on year, at 26.0m tonnes.
The weaker euro also supported prices, falling 0.5% against the dollar.
But pressure from Chicago markets weighed on the Paris wheat price, with December futures finishing down 0.3%, at E164.00 a tonne.
Frost fears ease
Coffee futures fell back, after spiking over the previous session following an unexpected frost in Brazil’s arabica region.
“The concerns over what damage there might have been are for the present rather muted, as it would seem that the frosts were scattered rather than widespread and with the intensity of these incidences of frost likewise questioned by many within the Brazil coffee farming communities,” said I & M Smith.
The coffee trader flagged up the fact that “most of the Brazil coffee districts have recently been in receipt of unseasonal spells of winter rains”.
This, means that “mild frosts would be less damaging than what they would be for dry trees,” the trader said.
September arabica closed down 1.9%, at 146.55 cents a pound.
September robusta settled down 0.1%, at $1,812 a tonne.
No fresh bullish news for sugar
Sugar futures edged down, in a market with little bullish news to feed the rally.
“The news seems to be getting stale and bulls need something new to push prices higher again,” said Jack Scoville, at Price Futures group.
“The Indian and Thai situation appears to be improving,” Mr Scoville noted.
“It seems we will be drifting lower in the short term,” said Thomas Kujawa, at Sucden Financial.
October raw sugar settled down 0.1%, at 19.36 cents a pound.
(Source – http://www.agrimoney.com/marketreport/pm-markets-strong-crop-ratings-send-grain-markets-tumbling–3690.html)