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PM markets: corn and soy markets brace for yield upgrades

Corn and soybean markets are steeling themselves for the next US crop report, due out in a week's time, which is expected to unveil an upgrade Ongoing jitters over the result of the US election, and today's Federal Reserve announcement, added to a cautious attitude in outside markets. Crude oil hit a more than one month low, after falling for four straight sessions, with Brent crude oil down 2.3% on the day at $47.04 a barrel in afternoon deals. In the end, the Federal Reserve bought few surprises, with interest rates unchanged, although comments seen as supportive of a rate rise in December were mildly supportive, weighing further on prices.

Yield upgrades

After markets closed on Tuesday, Broker FC Stone raised its estimates of US corn and soybean yields. Corn yields were seen at 175.3 bushels per acre, up from the 175.2 last month. Corn production was now seen at 15.226bn bushels Soybean yield hopes were pegged at 52.8 bushels per acre, up from 52.5 last month, leaving soybean production forecasts estimated at 4.386bn bushels.

Big US crops

"A big crop keeps looking bigger for corn and soybeans," said Paul Georgy at Allendale. "With the Fed interest rate announcement this afternoon, and the presidential election less than a week away, traders are approaching markets with a risk-off attitude," Mr Georgy said. And so it proved, as prices for both commodities came under pressure. 

Squeezed storage

"No sign of short covering as yet in soy market that was pummelled yesterday on approaching Nov crop report… ongoing favourable Brazil weather and general "risk-off" mentality of jittery investors ahead of Nov 8 election," said Richard Feltes. And the size of the harvest has put storage space under pressure, pressuring cash markets. "Lots of soybeans still piled around the upper-Midwest which are facing hefty storage charges," said Tregg Cronin, at Halo Commodities. January soybeans finished down 0.7%, at $9.76 ¾ a bushel.

Corn could be left in field

Mr Cronin noted the same pressure in corn. "Everyone also curious to see how the last 25% of corn harvest moves, and whether it has a suitable home," said. "Corn continues to be very heavy," agreed Darrell Holaday at Country Futures. "The industry continues to fear next week's report and the fact that the last leg of the corn harvest has become very hard work in terms of finding a place to put the crop," Mr Holaday said. "There are unconfirmed reports of producers contemplating leaving corn in the field to wait for storage to open up," he noted. December corn future finished down 0.6%, at $3.46 ¼ a bushel.

Soft wheat gains ground on high protein

Chicago wheat futures saw support on short-covering, as December wheat futures finished up 0.8%, at $4.17 ¾ a bushel. But poor export demand continues to weigh on higher-protein grades. "Hard red spring wheat export sales, after a strong start to 2016, have faltered in recent weeks," said Tobin Gorey, at CBA. "Perhaps price rises have cut‑off the demand for exports," he said. In Minneapolis December spring wheat futures finished down 0.4%, at $5.17 ½ a bushel. Kansas hard red winter wheat futures finished up 0.2%, at $4.14 ¾ a bushel.

New record highs for FCOJ

Frozen concentrate orange juice futures continue to break new record highs, supported by tight supplies in Brazil and Florida, the key exporting regions. "The market features little selling interest and ideas are that the supplies of oranges and frozen concentrate orange juice are not there for traders to buy," said Jack Scoville, at Price Futures Group. January frozen concentrate orange juice futures finished up 0.5%, at 224.70 cents a pound, having touched record highs of 227.50 cents a pound.

Technical support

Raw sugar futures initially continued to slide, as hedge funds sell out of their huge net-long position. But the market uncovered some strong technical support near 21.00 cents a pound, on the 100-day moving average. March raw sugar futures settled up 2.4%, at 21.7 cents a pound.

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