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Soy futures hit 2-month low, corn falls, on Brazil crop upgrades

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.

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.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.

‘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”.

For corn, meanwhile, the USDA raised its harvest forecast by 5.0m tonnes to 91.5m tonnes, again exceeding market expectations, although falling short of the 97.5m tonnes expected by Conab.The department also cited “above-average vegetation health”, as shown by analysis of satellite imagery.

“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.

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”.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.

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 – http://www.agrimoney.com/news/soy-futures-hit-2-month-low-corn-falls-on-brazil-crop-upgrades–10524.html)

Soy futures hit 2-month low, corn falls, on Brazil crop upgrades Reviewed by on . 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 expectati 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 expectati Rating: 0
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