Dry weather fears revive corn, soy prices

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Publish time: 15th July, 2013      Source: www.cnchemicals.com
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July 15, 2013

   

   

Dry weather fears revive corn, soy prices

   

   

   

As weather fears turned up a notch, US corn and soy prices recovered from a late-morning sell-off in Chicago, offsetting relief for consumers at raised estimates for US inventories.

   

   

Soy futures initially dropped some 1% after the USDA, in its much-watched World Agricultural Supply and Demand Estimates (WASDE) crop report, raised its estimate for domestic soy stocks at the close of 2013-14 by 30 million bushels (82,000 tonnes) to 295 million bushels (8.04 million tonnes). The upgrade reflected a higher figure for sowings, as revealed by an official plantings report two weeks, with the estimate for yield left unchanged at 44.5 bushels/acre.

   

   

For Chicago corn futures, the immediate market reaction was a drop of 2% after the WASDE surprised investors by making a small rise to US stocks of the grain at the close of 2013-14 too, rather than the downgrade of some 50 million bushels that analysts had expected.

   

   

The figure reflected the higher-than-expected figure for US corn sowings, of 94.1 million acres, unveiled by the June plantings report and an unchanged yield figure, although the USDA did make a larger allowance for abandonment, reflecting greater sowings in higher-risk states such as Texas.

   

   

Furthermore, the USDA trimmed its forecast for US corn usage of 2013 crops, both in exports, as "tight supplies of corn in early September are expected to limit early-season shipments", and in livestock feed.

   

   

Livestock consumption of 2013 crop will recover strongly, but by 50 million bushels fewer than previously expected thanks to the late harvest delaying the release of supplies. The revisions were deemed "very neutral" by Steve Kahler, chief operating officer at Teucrium Trading who, while noting the corn and stocks upgrades, flagged that investors were taking the data as possessing some element for leeway.

   

   

"I think the USDA is taking wait-and-see attitude for now over any change to its yield forecasts, given a corn crop that is developing two weeks later than normal, maybe three week, thanks to the late planting season," Kahler said.

   


However, prices were helped to a late revival by a turn less clement in the US weather outlook. November soy stood 0.3% up at US$12.88 ? a bushel in late deals in Chicago, with December corn adding 0.5% to US$5.24/bushel.