March may be starting to live up to form after all.
The month had, this year, looked to be breaking with its
record as a generally positive one for Chicago grain contracts, as soybean futures, for instance, in the last
session recorded their eighth successive negative close.
"From a seasonal standpoint, March isn't necessarily a bad
month for grains," said Tregg Cronin at Halo Commodity Company, noting that it
was the "second best month from a seasonal perspective for soybeans with an
average annualised return of 2.0%.
For corn, March has
been, historically, the "second strongest month of the year" too, with an "an
average annualised gain of 2.9%".
That said for wheat,
the month is not the best – although not the worst either.
"Over the last 30-years wheat has an average annualised loss
of -0.38%, although January, February, May, June and November are all worse
seasonally," Mr Cronin said.
But March was blessing grain bulls in early deals on
Thursday, when wheat actually proved the best performer of Chicago's big three,
rising 0.8% to $4.39 ¼ a bushel as of 08:15 UK time (03:15 Chicago time) to trade back above its
100-day moving average.
A big help to prices of all dollar-denominated contracts was the greenback itself, which eased
a touch further in early trading to less than 100.5 against a basket of
currencies, hitting its lowest level in a month.
This after a 1.2% tumble in the last session, which took the
currency below its 50-day and 100-day moving averages, despite - or perhaps
because of – the decision by the US Federal Reserve to raise US interest rates
by 0.25 points.
'Therein lies the
Agritel said that the resulting tumble in the dollar looked
down to "buy the rumour, sell the fact" trading.
At Commonwealth Bank of Australia, Tobin Gorey noted that
the Federal Reserve announcement of the rate rise "contained no surprises
though and therein lies the problem.
"Currency, and other, markets wanted the Fed to suggest the
US economy was doing so well that they needed to hurry their rate rises – but
The result has been that the "agri exporter currencies
gained on the sliding greenback", making shipments from the likes of Australia
and the European Union that much less competitive.
'A few people nervous'
As an extra help for wheat, worries remain over US winter
crop – not just the hard red winter wheat, being tested by dryness in the central
US Plains, but the [Chicago-traded] soft red winter wheat braving cold too.
Joe Lardy at CHS Hedging flagged "talk of wheat damage due
to cold temperatures.
"Freeze potential across the south east Plains has a few
While "it is estimated that less than 10% of the soft red
winter wheat crop is at risk", the talk comes at a time when US supplies are
competitive on the world market, as demonstrated by bids on Wednesday to a
tender by Egypt's Gasc authority, to which US soft white wheat was tendered as
low as $189.60 a tonne.
Hard red winter wheat was offered at $194.45 a tonne, cheaper
than the winning bids from France, Russia and Ukraine, at $195.00-197.70 a
tonne, which were favoured by their lower costs of shipping on top.
Gasc bought 420,000 tonnes in all, taking its total
purchases for the 2016-17 season well above 5.5m tonnes.
And the likes of Algeria, Jordan and the Philippines are in
the market too.
Richard Feltes at broker RJ O'Brien flagged a "flurry of
international wheat tenders" helping wheat prices, and indeed backing ideas
that the early-March drop in wheat values was merely a correction in a
recovering trend which started in early December.
'Margins in the red'
Fellow grain corn,
meanwhile, added 0.5% to $3.65 ¼ a bushel for May delivery, amid some continued
cheer at latest weekly ethanol data, on Wednesday, which showed a rise in US
output to 1.046m barrels per day, up 23,000 barrels week on week.
The figure also left output close to its record high of
1.061m barrels per day, set in January, and was accompanied by a drop in
inventories too, of 90,000 barrels to 22.766m.
Not that all is well with ethanol producers, with Benson Quinn
Commodities noting that output "margins remain in the red using Iowa prices".
CHS Hedging's Joe Lardy said that "margins are hovering
right around the break-even level at just $0.04-a-gallon positive".
'Really picked up'
Mr Lardy added: "I often get asked when will production cut
back with margins so poor?
"If you look at almost all of 2015, margins were very low
and we had good and relatively consistent production."
Furthermore, US exports of distillers' grains, or DDGs, a
byproduct of biofuel output used in feed, "have really picked up so we should
continue to see strong ethanol production numbers".
CBA's Tobin Gorey, meanwhile, flagged support to corn prices
from US exports, prospects for which are of course only supported by the easing
"A couple of large individual US corn sales were reported
this week. That has the market hopeful that lower prices have done the job and
improved US export demand."
Exports will be in focus later with weekly US export sales
data expected to come in for corn at 700,000-1.00m tonnes for this season, and
up to 200,000 tonnes for 2017-18.
Respective figures last time were 741,121 tonnes and 93,048
For wheat, US export sales are expected at 250,000-450,000 tonnes
for old crop and 25,000-200,000 tonnes for new, compared with figures last time
of 391,564 tonnes and 40,020 tonnes respectively.
For soybeans, US export
sales are forecast at 400,000-600,000 tonnes for old crop and up to 200,000 tonnes
for 2017-18, compared with 485,505 tonnes and 29,600 tonnes respectively last
And US soybeans have certainly been trying to win attention
through lower prices, which earlier in the week hit a five-month low of $9.92 a
Demand has been needed on a domestic as well as export
score, with industry data from Nopa on Wednesday showing the US crush in
Feburary at 142.7m bushels, well below expectations of 146.0m bushels.
"This was first month for the marketing year where monthly
crush did not exceed last year's pace," said Benson Quinn Commodities.
'Need to be at or
Further Nopa data showing a "build in soyoil stocks", despite the lower-than-expected crush, "was also
US soyoil inventories as of the end of last month stood at
1.77bn pounds 42m pounds above market expectations, besides the figure of
1.655bn pounds at the end of January.
Benson Quinn Commodities added: "Crush rates for balance of
year will need to be at or near record pace to reach forecast after the
disappointing February numbers."
Still, helped by the falling dollar and the rise in its ag
peers, soybean futures for May added 0.7% to $10.05 a bushel, regaining the psychologically-important
$10.00-a-bushel mark, and looking for their first winning session in nine.
Soyoil fared even better, jumping 1.0% for May delivery to
32.55 cents a pound, helped too by a 2.3% surge to 2,803 ringgit a tonne in
rival vegetable oil palm oil in
Besides the improvement in Malaysian exports, as Agrimoney.com
flagged on Wednesday, there is also talk doing the rounds that production is still
falling short of expectations too.
In New York, cotton
for May extended its recovery, adding 0.6% to 78.53 cents a pound.
This after a 0.3% gain overnight in cotton futures on the
Zhengzhou exchange in China, where auctions of huge stake stockpiles remain in
focus – particularly with a declining rate of take-up and prices, down to 72%
and 14,710 yuan a tonne on Wednesday.
CBA's Tobin Gorey said: "The slowdown in in reserve sale
rates this year makes us think China is now hitting up against a blend wall," –
ie the amount of high-quality imported cotton around to mix with the poor-quality
stuff said to being sold from the state stockpiles.