Monday, August 22, 2016

Ag Commodities: Hedge Funds Resume Selling As ProFarmer Crop Yield Tour Begins

Last Chg
Corn 342-0-1-6
Soybeans 1005-2+0-6
Wheat 440-4-4-2

A twofer from Agrimoney:

Hedge funds resume selling in ags, led by corn, cotton, hogs

Hedge funds returned to a bearish bias on ags – although not by much, as improved sentiment towards cocoa and wheat prices offset some of the impact of data-fuelled sales in corn and cotton.
Managed money, a proxy for speculators, cut its net long position in futures and options in the top 13 US-traded agricultural commodities, from cotton to cattle, by 8,255 contracts in the week to last Tuesday, according to data from the Commodity Futures Trading Commission regulator.
It was the eighth time in nine weeks that hedge funds have cut their net long - the extent to which long positions, which profit when values rise, exceed short bets, which benefit when prices fall.
However, it was a relatively small decline, in terms of the bearish swing in positions over the nine weeks, during which the net long has fallen by 590,000 contracts, to a little over 367,000 lots.
'Precariously perched'
The CFTC data for the latest week did show a marked drop in the net long in cotton, of nearly 12,000 contracts, the biggest sell-off in seven months.
The shift was encouraged by the boost to supplies from an extension to China's state auction programme, and to a surprise US Department of Agriculture upgrade to its forecast for this year's domestic crop.
"Improved West Texas and Indian rainfall - highly favourable for production - were coupled with a confirmed extension to the Chinese reserve auction," said Rabobank.
And the sell-down, which came amid a marked drop in futures prices, may not be over yet, given that speculators retain, at 66,977 lots, a relatively large net long position, Tobin Gorey at Commonwealth Bank of Australia said....

AM markets: corn recoils awaiting US crop tour 'buzz'

How grain markets move this week will likely depend on the outcome of a Midwest dance which goes like this.
Walk 35 paces into the field, measure off 30 feet, record row width and count ears, and sample the fifth, eighth and 11th ears.
The outcome of this ritual - repeated over some 1,400 fields during the annual ProFarmer crop tour of Illinois, Indiana, Iowa, Minnesota, Nebraska, Ohio and South Dakota – will give a US corn yield estimate viewed as one of the more accurate insights into what the harvest will actually produce.
(The same goes for soybeans too.)
And it is this which looks like grabbing the headlines this week in the Chicago grain market, and thereby having a big impact on world prices too.
'Social media will be buzzing'
"Social media will be buzzing with pictures and stories about what is really out there," said Joe Lardy at CHS Hedging.
And the tour comes at a particularly apposite time, amid some scepticism over the US Department of Agriculture estimate 10 days ago of a huge 175.1-bushels-per-acre domestic crop – an upgrade of 7.1 bushels per acre from its previous estimate, and a result which would be the biggest on record.
(There has been some, but a lot less, scepticism over an upgrade of 2.2 bushels per acre to a record 48.9 bushels per acre in the USDA's soybean yield estimate.)
Mr Lardy said: "The big question to answer is, 'are the ear weights really that high?'
"The tour should have more influence than normal as the market tries to see if record yields in corn and soybeans are justified."
'Increasingly important issue'

Indeed, some crop worries have surfaced, one being that dryness may have had a bigger impact on the crop than the market has factored in (or, at least, had until the recovery in prices last week)...
Here's ProFarmer's Tour kickoff page

And from AgWeb, their interactive map page:
Crop Tour

The Pro Farmer Midwest Crop Tour’s primary goal is to provide the industry with accurate growing season information about likely corn and soybean yields at the state and regional levels during the upcoming harvest season.

Crop Tour’s data-gathering methods are disciplined and produce consistent results. The Tour’s crop scouts — especially the new ones — receive formal instruction before the Tour and training from Tour veterans along the way.

Results from the Tour have a big impact on Pro FarmerNewsletter’s annual crop production estimate released at week’s end. But observations gathered during the Tour can be just as important as the data itself.

“We pull enough samples to provide us with accurate data for a large geographic area. Crop Tour does not attempt to predict actual yields for individual fields or even a county, but we do want to have a good handle on likely yields for each of the seven states we survey,” says Pro Farmer Editorial Director Chip Flory.

Each day's samples and observations are shared to the public at evening meetings.

For the schedule and more information, check out ProFarmer's Crop Tour page.