WINNIPEG, August 23 (CNS) – The potential for a storm in the Gulf of Mexico to bring rain to parts of the US Midwest has caught the attention of the grain and oilseed markets.
“If it turns farther north and hits some of the dry spots in Indiana, Ohio and Illinois that would be a little bit of a game-changer,” said Rich Feltes of R.J. O’Brien & Associates LLC in Chicago.
The National Hurricane Centre expects Tropical Storm Harvey to make landfall before the weekend. At this point, it looks to strike parts of Texas and Louisiana.
During the week ended August 23, corn trended downward, losing 10 and a half cents to hit US$3.42 a bushel in the September contract.
“I think the (crop condition) ratings on Monday will be stable to higher,” said Feltes. “Which confirms to the market that USDA is not likely to bring September corn yields down.”
Feltes says there are some bearish factors facing the corn market. In addition to weather, large supplies of Russia wheat are starting to pressure North American grains.
“The Russian wheat glut is killing the market and serving as an undertow on corn,” he explained.
He expects corn to trend lower in September, when the market typically puts in its lows.
“I think that we are heading to an area that is US$3.40 (per bushel) low, or US$3.25 low,” he said.
The November soybean contract gained 13.25 US cents on the week to hit US$9.35 a bushel.
Feltes says demand from China is helping support soybeans along with expectations that US soybean acres will decline next year.
Bean oil was also sent higher after the United States government declared that biodiesel exports from Argentina and Indonesia would be hit with countervailing duties.
Feltes adds there also seems to be a great deal of interest from hedge funds for soybeans at the US$9.50 mark.
On the flip side, temperatures in the Midwest have been cooler as of late and scattered rains have helped relieve some of the heat stress that impacted the crop earlier this summer.