Crop Concerns Fuel Minor Rally in Grain Futures
September 04 2015 - 11:54AM
Dow Jones News
By Jacob Bunge
CHICAGO--U.S. grain and oilseed futures were slightly higher
priced on Friday, supported by persistent doubts over the size of
impending harvests.
Price gains among corn, wheat and soybean contracts helped
reverse some of the heavy losses the markets sustained on Thursday
following another rosy report on crop yields. Still, corn futures
remained near Thursday's closing price, which was the lowest in
nearly a year.
Bargain-hunting buyers helped drive some of Friday's gains,
analysts said, as continued concern over the health of crops in
portions of the U.S. Farm Belt pushes back against forecasts from
the U.S. Department of Agriculture and private estimates that
foresee another bumper harvest.
"It's a standoff," said Kurt Koester, president of Iowa-based
grain brokerage AgriSource Inc., who said he has doubts about the
corn crop in places like Indiana that sustained heavy rain early in
the growing season.
Grain futures were "good old-fashioned oversold" heading into
Friday's trading session, Mr. Koester said, after a report from
Informa Economics pegged U.S. corn yields and production higher
than some observers thought reasonable.
December-dated corn futures, the most heavily traded contract at
the Chicago Board of Trade, were up 3/4 cent, or 0.2%, at $3.62 1/4
cent in midmorning trading on Friday. September corn contracts,
which expire on Sept. 15, were unchanged at $3.47 3/4 a bushel.
Earlier price gains were tempered by Friday's report on U.S.
employment that helped lift the U.S. dollar against other
currencies. A rising dollar can pressure grain prices, raising the
potential for U.S. crops to become less competitive in
international markets.
The strengthening dollar, along with the upbeat crop forecast,
helped drive wheat futures to close at their lowest level in more
than five years on Thursday in Chicago trading. But December-dated
wheat contracts rebounded on Friday, recently trading 1 1/4 cent
higher at $4.66 1/2 a bushel. The front-month September contract
was 3/4 cent, or 0.2%, higher at $4.57 1/4.
Trading was light ahead of the Labor Day holiday weekend in the
U.S.
The string of upbeat estimates on U.S. crop production has
affixed traders' attention on the USDA's September supply and
demand report due out on Sept. 11. The September crop report tends
to carry greater weight among traders given the nearness of harvest
for some big U.S. crops like corn. "It's easy to argue with an
August [USDA] yield estimate but much harder to argue with a
September yield estimate," said Dustin Johnson, risk manager and
strategist at EHedger, based in Clarendon Hills, Ill.
Soybean futures edged lower on Friday, pressured by continued
concern over the Chinese economy and the potential for a slowdown
there to sap demand for U.S. oilseeds, particularly among China's
growing meat industry, a major consumer of soybean meal for animal
feed.
"The key issue for bean and meal demand will be how the Chinese
economy affects their upward spiral of protein demand, mainly pork
and poultry," wrote analysts with INTL FCStone in a research note
Friday. "A slowdown in the rate of increase is almost a given."
November-dated soybean futures, the heaviest traded, were 2 1/2
cents, or 0.3%, lower at $8.67 a bushel. September-dated contracts
were 1 1/2 cents lower at $8.78 1/4 a bushel.
Write to Jacob Bunge at jacob.bunge@wsj.com
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(END) Dow Jones Newswires
September 04, 2015 11:39 ET (15:39 GMT)
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