Monday September 15, 2014

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U.S. corn up with farmers busy planting, not selling

Showers in U.S., Black Sea, Australia weigh on wheat

U.S. corn futures rose 1.8 per cent on Friday, reversing three days of declines on strong cash markets as farmers focused on planting their 2013 crop rather than selling in the cash market, traders and analysts said.

Soybeans rose for a second session, with the benchmark July contract reaching a two-month high on tight U.S. supplies and a firm cash market.

Wheat fell for a third day in a row on technical selling and crop-friendly rains in key wheat growing areas of the U.S., Australia and the Black Sea.

At the Chicago Board of Trade, July corn settled up 11-1/4 cents at $6.52-3/4 per bushel. July soybeans ended up 21 cents at $14.48-1/2 per bushel after reaching $14.50, the contract's highest level since March 12.

Cash markets have been strong, with farmers reluctant to sell the last of their 2012 corn and soybeans because planting delays have raised concern about prospects for the 2013 crop.

Weather in the U.S. Midwest improved this week and producers seized the opportunity to catch up with fieldwork.

"Farmers are busy in the fields and also they know planting is behind schedule and this could affect acreage or production, so they're in no hurry to sell since prices could go up," said Shawn McCambridge, analyst for Jefferies Bache in Chicago.

Cash basis bids for corn in the U.S. Midwest on Friday were surging at processors and ethanol plants amid strong profit margins, tight supplies and slow farmer sales, grain merchants said.

Mostly clear skies allowed U.S. farmers to gain ground in corn planting after the slowest start in decades.

"They probably got quite a lot done," said Andy Karst, meteorologist for World Weather Inc. "There were only scattered showers this week, so many were able to work between showers."

Some observers expect seedings to be 50 to 60 per cent complete by the end of this week, though that would still be a record slow pace for this point in the season.

As of Sunday, farmers had seeded 28 per cent of their intended corn acres, up from 12 per cent a week earlier but far behind the five-year average of 65 per cent, the U.S. Department of Agriculture (USDA) said in a weekly report.

USDA will update its weekly crop progress report on Monday afternoon.

Informa Economics, a private analytics firm, said planting delays probably prompted farmers in some areas, such as North Dakota and Minnesota, to switch from corn to soybeans.

In a note to clients on Friday, Informa projected U.S. 2013 corn plantings at 96.827 million acres, below the USDA's current estimate of 97.3 million. Informa forecast U.S. 2013 plantings at 78.286 million acres, above USDA's estimate for 77.1 million.

Soybean exports

Ongoing export sales help support soybean futures. USDA on Friday said private exporters reported sales of 120,000 tonnes of U.S. soybeans to China for 2013-14 delivery and 138,000 tonnes of U.S. soybeans to an unknown destination, including 18,000 tonnes for 2012-13.

China is the world's largest buyer of soybeans, and the country continues to buy from the United States rather than South America despite abundant supplies in the Southern Hemisphere. Shipping snarls at ports have helped limit sales of soybeans from Brazil, which is projected to surpass the United States as the world's largest soy producer this year.

Brazil's congress approved legislation on Thursday that opens state-owned ports to private investment and lifts restrictions on the building of private ports in a bid to eliminate serious bottlenecks strangling the country's export growth.

Wheat falls, bucking firm trend

The gains in corn and soy helped underpin wheat, but that market faltered as milder weather in the U.S. Midwest soft red winter wheat region boosted crop growth and development.

CBOT July wheat settled down 4-1/2 cents at $6.83-1/4 a bushel.

Showers in portions of the dry U.S. Plains hard red winter wheat region enhanced production prospects, while other global wheat regions also received beneficial rainfall.

"I think the big thing in wheat are the rains in the Black Sea region. It was getting very dry and these are timely rains for them," a trader said.

Additional pressure stemmed from a stronger dollar, which makes products priced in U.S. dollars more expensive for overseas buyers.

-- Sam Nelson
and
Julie Ingwersen report on ag commodity markets for Reuters in Chicago.


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