Data said "up". But China and, to some extent, the weather said
"down", and won the argument in grain markets on Friday.
Sure, investors might have expected row crop prices to put
in a strong finish to the week, after the US Department of Agriculture on
Wednesday cut its estimate for domestic corn stocks by more than traders had
expected, and downgraded soybean supplies to an all-time low.
But the weather forecasts proved downbeat (depending on who
you listen too), suggesting a drier outlook for the Midwest for now, so
hastening fieldwork and reducing the chance of the slow start to the region's
spring corn sowing season leading to
a delayed finish.
"Weather leans negative [for prices] with largely open
Midwest weather through Sunday," said Richard Feltes at RJ O'Brien.
At Country Futures, Darrell Holday said that while the GFS
weather model is "still pointing to a major system, the midday run pushed the
brunt of the moisture into Kansas, Oklahoma and Texas", winter wheat country, which needs the moisture.
'Problems in China'
And as an extra support for bears, the market remained fixed
too on talk of cancellations by China of soybean
orders, and the rejection of US corn imports over claims of contamination with
a genetically modified variety unapproved by Beijing.
"The soy complex is struggling following reports that three
Chinese crushers have defaulted on purchases of 500,000 tonnes of Brazilian
beans," Benson Quinn Commodities said.
Mr Holaday said: "The problems in China continue to come to
the forefront as they are causing some significant financial losses.
"One firm has reportedly taken a $4m hit on a four-cargo [soybean]
agreement that has been washed out of as they are now trying to dump those
cargoes into other markets."
Warning on funds
And this when speculators have a large net long position in
"Funds have not really begun to dump their long position,
but that could happen if July soybeans trade below $14.30 a bushel," a drop
which "would turn the soybean chart very negative", Mr Holaday said.
In fact, soybeans for July closed down 1.3% at $14.47 ¼ a
bushel, while the May contract shed 1.3% to $14.63 a bushel.
New crop November soybeans fell 0.9% to $12.14 ¾ a bushel, at
least offered some support by the USDA announcement of the sale of 330,000
tonnes of US new crop supplies to an "unknown" import country.
The products fell too, with May soyoil losing 0.9% to 42.10 cents a pound, and soymeal 1.4% to $427.90 a short ton, dropping below its 10-day
That helped take the soybean
crush margin higher for a third day, if from a low level, and by a minimal
0.25 cents to 40.5 cents a bushel basis May.
Elsewhere in the oilseeds complex, Paris rapeseed moved the opposite way to
Chicago soybeans, with old crop outperforming in rising 0.4% to E417.00 a tonne
for May delivery, while the November contract shed 0.8% to E367.25 a tonne.
French growers group FOP pegged France's 2014 rapeseed crop
at 5.0m-5.2m tonnes, well above last year's 4.4m-tonne harvest.
Back in corn, there
was talk that China had rejected far more of the grain than the figures suggested
by official data.
"Sources say rejected amounts could be well over 1.4m
tonnes, versus the 900,000-tonne figure previously issued," CHS Hedging said,
reporting National Grain and Feed Association findings.
"Grain companies are projected to have lost $427m on
shipments redirected for reduced prices."
Cargill this week blamed losses on cargos rejected by China as
the trading giant unveiled a sharp drop in earnings.
With the pressure from weather forecasts too, corn for May
closed down 0.6% at $4.98 ½ a bushel.
Rains on the Plains?
It has to be said at this point that not all meteorologists
are in agreement on rain being pushed into the southern Plains hard red winter wheat country.
MDA, for instance, forecast that rainfall in the south
western Plains would prove "rather light" over the next few days, "which will
maintain significant stress there on wheat".
In the six-to-10-day outlook too, "rain amounts in the south
western Plains should remain too light to significantly reduce dryness there".
However, the south eastern Plains will see some "improvements".
Still, investors were hardly in buying mood, with corn
lower, and US wheat being shown up as relatively expensive in results of tender
by Egypt's Gasc grain authority.
As an extra setback, Ukraine featured among the buyers.
Indeed, Gasc bought all 230,000 tonnes from the Black Sea, dispelling ideas
over the threat to shipments posed by Ukraine unrest.
Wheat for May closed down 0.3% at $6.60 ¼ a bushel in Chicago,
not far above its 200-day moving average, and by 0.6% at $7.18 ¼ a bushel for
the Kansas City May hard red winter wheat contract.
Rain cools coffee
Among soft commodities, reversals were the order of the day,
with arabica coffee ending a strong week on a weak note, closing down 2.3% at 203.55
cents a pound for July on forecasts for rain in central eastern Brazil, where
drought has raised big concerns over both the 2014 and 2015 harvests.
Some 2.7mm could fall in southern Minas Gerais, Brazil's top
coffee-growing state, Somar said, terming this potentially sufficient to half
further crop losses, if too late to repair much damage already done.
In fact the rains could prove a negative in disrupting a
harvest which, thanks to the drought, has already stated in some areas, rather
than in May as is usual.
"Heavy rainfall is likely in the next few days to delay the
harvest that is just getting under way in Brazil, Commerzbank said, if sounding
a bearish note too in terms of demand.
"The much higher prices this year are likely to see global
coffee consumption fall noticeably, which should reduce the market deficit.
"Even if the momentum in the short term points to a further
increase in prices, we expect to see prices of below 200 cents per pound again
in the medium term."
Raw sugar, also grown in central Brazil, fell too, by 1.6%
to 16.80 cents a pound for May, with Australia's Tropical Cyclone Ita doing
little to support prices, being seen as making landfall too far north to cause
real damage to cane.
But cocoa revived
as traders continued to shrug off Thursday's weak European grind data, which
was attributed to a shift in processing to cocoa-producing countries, such as
Indonesia and Ivory Coast, rather than to unexpectedly weak demand.
Cocoa for July ended up 0.7% at $2,999 a tonne in New York,
and by 0.8% at £1,884 a tonne in London.
New York cotton
rebounded too, adding 0.2% to 90.45 cents a pound for July delivery.