A second successive big data day for agricultural commodity
investors offered less in the way of price support.
It was not just Thursday's early statistics on palm oil, showing a surprise rise in
Malaysian inventories, and cocoa,
unveiling tepid growth in European grindings which disappointed investors.
Conab, the Brazilian crop agency, followed up by nudging
higher forecast for the domestic soybean
crop, by 640,000 tonnes to 86.1m tonnes, and corn production, by 280,000 tonnes to 75.46m tonnes.
And, in its first estimate, Conab pegged this year's
Brazilian wheat crop, sowings for
which have just begun, at a record 6.7m tonnes.
Brazil's wheat crop has a high profile in markets given that
the country is a structural importer, and largely from the US, now Argentine
farmers have ditched the grain because of the dent to prices caused by export controls.
Marketing year low
Then there were weekly US export data to factor in, which
were tepid for corn at just over 700,000 tonnes old crop and new combined, at
the bottom end of market expectations.
Soybean export sales, at a combined 290,000 tonnes, weren't
much to write home about, although they at least remained positive for old
crop, underlining supply tightness.
Wheat's, at less than 400,000 tonnes were dismal, including
a marketing-year low of 41,800 tonnes for old crop.
And all this besides the negative influences from Chinese trade
statistics, which showed exports down 16.6% year on year in March, and imports 11.3%
'Negative to the soybean
The trade data found an extra resonance in fresh talk of Chinese
defaults on import orders of Brazilian and US soybeans, said to total more than
500,000 tonnes, and with a value of $300m.
"The Chinese news continues to be the fundamental news that
is negative to the soybean complex," Darrell Holaday at Country Futures said.
"Reportedly, there are most cargoes being washed out of by Chinese
companies that have bought Brazilian cargoes of soybeans.
"This is additional to the reportedly 10-12 cargoes that are
either in the US or headed to the US from Brazil," sold on by Chinese buyers,
apparently at a significant headline loss.
Such talk only fuelled ideas that the US Department of
Agriculture was overoptimistic, in Wednesday's Wasde report, in leaving its
estimate for Chinese soybean imports in 2013-14 unchanged at a record 69m
"China news on prospects for slowing soy imports, soy
cancellations, negative crush margins and letters of credit issues are collectively
negative, and reinforcing the view that the USDA is overstating 2013-14 soybean
imports by 2m-3m tonnes," said Richard Feltes at Chicago broker RJ O'Brien.
Indeed, Chicago soybeans for May closed down 1.0% at $14.82 ¼
a bushel, although the new crop November lot proved more resilient in closing
down only 0.2% to $12.25 ½ a bushel.
There have actually been rumours of Chinese importers buying
US soybeans for 2014-15 delivery, while news on Argentina's rain hit crop is
developing some bullish newsflow.
"According to the Santa Fé Board of Trade, an estimated
247,105 acres of soybeans are at risk of loss because of the conditions created
by large rains over the last 45 days," CHS Hedging noted.
And rains are due to return to the province, and Entre Rios,
after dryness into the weekend.
"A notable upturn in showers again later next week will slow
harvesting again, especially in central and eastern crop areas," weather service
Weather was a negative for wheat too, with some rains due for southern Plains winter wheat
areas which need it.
And how. The proportion of Kansas, the top US winter wheat
state, in "severe", or worse, drought nudged higher by 0.7 points to 65.6% in
the week to Tuesday, while in Oklahoma, the proportion rose 2.0 points to 52.6%.
Still, "overnight models are in good agreement" that eastern
Colorado, most of Nebraska, central Kansas and central Oklahoma "will see rains
of up to 0.75 inches this weekend", with the eastern one-third of Oklahoma ad
north east Texas getting up to 1.25 inches, WxRisk.com said.
That said, south west Kansas, and the Oklahoma and Texas
panhandle "will see no rain", and dryness looks like returning in the six-to-10
day outlook the weather service added.
'Potential for fund
selling is real'
Nonetheless, the broad interpretation of the weather outlook
was that it was negative for wheat prices.
"There is certainly disagreement among the models, but there
is more moisture in all of the models than there was two days ago," Darrell Holaday
at Country Futures said.
Rains ahead may mean that the dry
areas for hard red winter wheat, as grown in the southern Plains, "may shrink
to 40%", RJ O'Brien's Mr Feltes said.
Furthermore, "all three wheat markets", Chicago, Kansas City
and Minneapolis, "are fighting weak technical structure and the potential for
additional fund selling is real," Benson Quinn Commodities said.
Minneapolis spring wheat actually led the decline, falling 1.6%
to $7.01 a bushel for May delivery, the weakest close for a spot contract in
more than a month, with Kansas City hard red winter wheat for May ending down 1.5% at $7.22 ½ a bushel.
red winter wheat for May dropped 1.0% to $6.62 ¼ a bushel, having led the
decline in the last session, and falling this time temporarily below its
200-day moving average for the first time in a month.
It was little help to grains either that rumours emerged
that the buying spree caused by the Ukraine crisis may have a hangover, if it means
extra supplies to sell ahead.
"There is significant thought within the industry that the
Black Sea crisis caused some importers to double book as they were concerned
about getting their Black Sea supplies," Mr Holaday said.
"At this point there has been no impact on grain movement in
that area. That could change, but if it does not the market may have to deal
with some corn and wheat cancellations down the road."
In fact, there was talk of export disruptions regarding
Egypt, with two wheat cargoes it has purchased said to be stuck at a Russian
port, although that is apparently down to credit issues regarding the buyer,
rather than logistical hang-ups.
'Increased moisture supporting
Corn was also
affected by the negative China talk, with doubts too whether the country will
import the 5.0m tonnes that the USDA forecast in Wednesday's Wasde.
Still, the outlook for US rains was viewed as more price
positive, in potentially hampering fieldwork for plantings which is, if not yet
running late, at least now look like proving average at best.
"The increased moisture is supporting corn on the price
breaks," Mr Holaday said.
Indeed, May corn managed to hold on to $5 a bushel, ending
down 0.4% at $5.01 ¼ a bushel, just above its 10-day moving average, having fallen
earlier to $4.94 a bushel.
Cocoa, cotton fall
Among soft commodities, cocoa
fell after data showed Europe's cocoa grind up 0.4% in the first quarter of the
year, well below expectations of a rise of 3%.
Still, losses were limited by ideas that the muted increase
was down to more processing being done in cocoa producing countries, such as
Ivory Coast and Indonesia, rather than to soft European demand.
Cocoa for July ended down 0.9% at £1,869 a tonne in London,
while New York's May contract fell 1.4% to $2,970 a tonne.
Cotton for July fell
1.2% to 90.29 cents a pound in New York after weekly US export sales showed a
net reduction, of 10,900 running bales, for the first time since June 2012.
Coffee, sugar gain
But raw sugar for
May added 0.2% to 17.08 cents a pound in New York, as investors shrugged off an
upbeat estimate by Conab for Brazil's cane harvest this year, despite drought, with
the bureau having a reputation for being conservative in its outlook.
for May soared 2.1% to 206.10 cents a pound, a two-year high for a spot
contract, helped by an estimate from the
Abic coffee industry association that Brazil's output will fall to 47m bags
this year, following drought, and with continued dryness raising further