Soy bulls haven't quite lost the last morsel of support from
the Argentine rains story.
Sure, the outlook for the country has turned drier, boosting
hopes for soybean harvest progress,
and reducing concerns over flood damage to crops.
"Meteorologists say Argentina will continue to dry down over
the next 10 days or so, allowing fieldwork conditions to improve," said Tobin
Gorey at Commonwealth Bank of Australia.
But the slow start to harvest may still be having a knock on
impact on supplies of the soybean processing products, soyoil and soymeal, of
which Argentina is the top exporter.
"Argentina soybeans are not moving fast enough and we are
guessing the availability of soymeal out of Argentina is not as good as it
could be at this time of year," said Terry Reilly at Chicago broker Futures
"This was reflected in the Nopa figures on Monday," ie the
US industry data which showed US exports of soymeal last month at 1.06m short
tons – well above the 738,825 short tons shipped in February and the 779,100
short tons exported in March last year.
In the US Gulf ports, "soymeal basis has been slowly moving
higher", Mr Reilly noted.
Meal vs oil
And while Chicago soymeal futures have hardly been buoyant,
they at least managed some headway in early deals on Wednesday, adding 0.4% to
$313.30 a short ton for May delivery as of 08:10 UK time (02:10 Chicago time),
returning above their 20-day moving average.
That helped soybeans too, which for May gained 0.3% to $9.49
¼ a bushel, remaining above their 10-day moving average.
This despite the hindrance of a negative soyoil market, with
futures in the vegetable oil for May easing 0.2% to 31.09 cents a pound.
While Argentina's harvest hiccups may have stemmed soyoil
supplies, there are alternatives vegetable oil users can look at, including palm oil, which in Kuala Lumpur shed
0.4% to 2,464 ringgit a tonne, earlier setting an eight-month low of 2,452
ringgit a tonne.
As Oriental Pacific Futures noted, "production growth in the
world's top producers [Indonesia and Malaysia] of the tropical oil is forecast
to recover between now and the third quarter of the year, as the lingering
effects of a crop-damaging El Nino wear off".
The firmness in soy failed to rub off on fellow row crop corn, which eased 0.1% to $3.61 ¼ a
bushel for May delivery despite the rain-slowed start to the US sowing season.
As of Sunday, 3% of US corn was sown, compared with average
progress of 9% for the time of year.
And more rainfall is on its way.
"Showery conditions are still expected to interrupt field
work across the Midwest – and particularly the lower Midwest – for the next 10
days or so," CBA's Tobin Gorey said.
Still, "forecasters now say an important period of drier
weather is likely for the end of April/start of May," which is a more crucial
period for seedings completion.
Broker Benson Quinn Commodities said: "Getting the trade
worked up about being behind on planting progress might be asking a bit much in
the middle of April."
'Some dry pockets'
It didn't help that winter
wheat futures returned to the defensive too, easing 0.2% to $4.21 ¾ a
bushel in Chicago for May delivery, amid easing weather concerns in many areas.
Besides rain relief for US winter wheat, "recent
precipitation in portions of the Black Sea region should keep the bulk of that
crop on track for good yields," Benson Quinn Commodities said, although some
jitters do remain over European prospects.
"There are some dry pockets in western Europe. The situation
isn't critical, but better rains would be welcome in the next couple of weeks."
'Trade would have to
The one weather threat which has been capturing wheat
investors' imagination more in the last week or so is that of wetness in Canada
and the northern US delaying sowing of spring crop, and potentially
Benson Quinn Commodities highlighted investor focus on "the
slow pace of planting and damp, cool conditions through much of the northern
plains and western Canada.
"The six-to-10 day and eight-to-14 day forecasts offer
"The trade would have to respond to some extent if the
weather profile is forecast to extend into the middle of May."
Spring vs winter
At RJ O'Brien, Richard Feltes flagged the prospect too of a "likely
cut in 2017 Canadian hard red spring wheat acres" which will be issued on
Friday in a briefing from Statistics Canada.
Analysts expect an all-wheat sowings figure of 22.4m acres,
some 200,000 acres fewer than the Canadian farm ministry has forecast.
And spring wheat area in the US might come in short of official
Mr Feltes said he was "hearing more reports that the US Department
of Agriculture is likely overstating US hard red spring wheat acres in view of
intensifying lender pressure and a higher soybean crop insurance guarantee"
Minneapolis spring wheat futures for May were flat at $5.39 ¼
a bushel, but this did mean raising their premium to Chicago spring wheat
further, with the premium now back above its 50-day and 100-day moving