Yet again, grain markets are rewarding farmers' patience.
Growers who held-off the clamour of calls into early 2014
that they must sell or risk prices below $4 a bushel have found their obstinacy
rewarded, with prices nudging $5 a bushel on Monday, for the first time since
The major driver for the latest move in prices were
quarterly grain stocks data, and estimates for US plantings, unveiled by the US
Department of Agriculture.
But these reports were not the only shot that corn had in
its locker, with weekly US export data coming in at 1.33m tonnes, a figure that
CHS Hedging termed "way above expectations".
Furthermore, the quarterly report on the US hog herd released
late on Friday showed numbers, while down 2.9% year on year, well in excess of
market expectations, indicating that perhaps porcine epidemic diahorrea virus
(PEDv) is not doing as much damage as had been feared.
Whatever, it means more porcine mouths to feed than
investors had banked on.
Still, the big positive to prices was the USDA data showing
that domestic stocks of corn as of March 1, at 7.01bn bushels, were more than
90m bushels smaller than investors had though, and a forecast that sowings will
be 1m acres below market expectations.
The figures were "double-barrel bullish for corn", Richard
Feltes at RJ O'Brien said.
Sure, corn sowings have a habit of ending up higher than
estimated in March, but "gains in last three years averaged only 250,000 acres",
What the data does mean is that, with less margin for error,
the "corn market will be more sensitive to 2014 growing season adversity" – a
factor already relevant with the cold soil temperatures boding ill for early
It was also evident that the data had caught investors, in
Chicago speak, "leaning the wrong way", with futures showing losses of more
than 3% ahead of the report.
Indeed, month-ends, and especially quarter-ends, are often
associated with price falls in agricultural commodities as funds close
positions and take profits to pay bonuses or clients.
Chicago's May contract ended at $5.02 a bushel, actually the
best close for a spot contract since late August, a gain of 2.0% and, in chart
terms, showing a potential buy signal in trading outside the range of the
previous session but ending (firmly) higher.
The new crop December contract did even better, jumping 2.3%
to $4.98 1/4 a bushel, closing its discount to the May lot to less than 4 cents.
Signally, the day also did significant damage to the new
crop soybean:corn price ratio,
viewed as an indicator of the market signal being sent to farmers in their
choice between the two crops in spring sowings programmes.
The below-expectation corn sowings figure of 91.7m acres was
complemented by an above-expectation soybean planting estimate, of a record 81.5m
acres, an obvious negative for prices of the oilseed.
So, with high soybean sowings looking already in the bag,
the market felt confident in lowering the price incentive a bit.
New crop November soybeans closed down 0.3% at $11.87 1/4 a
The soybean: corn ratio actually ended up down 2.5% on the
day at 2.38:1, still in soybean-encouraging territory, but well below the levels
approaching 2.5 it reached late last year.
And it was not the only spread being monitored, with price
ratios within the soy complex a factor too, given a March 1 stocks figure of
992m bushels which was in line with expectations.
And soymeal for May
was hardly discouraging for old crop soybean futures in rising 2.3% to $479.30
a short ton, signalling strong demand for the feed ingredient.
"Old crop soybeans continue to get a solid bid," Darrell
Holaday said, adding that "the acreage number has prompted a large amount of old
crop/new crop spreading in soybeans and that is driving the old crop higher."
Mr Feltes said that there was "nothing in today's report to
resolve old crop soybean tightness".
Soybeans for May gained 1.9% to $14.64 a bushel, a six-month
closing high for a spot contract.
'In poor agreement'
The row crops certainly left wheat, the market leader in grains for much of this quarter, in the
shade, with some talk of rains for the southern Plains, where dryness is
threatening winter wheat seedlings.
Mr Feltes highlighted forecasts showing a "wetter outlook
for US hard red winter wheat [areas], although confidence is low given mixed
model signals, especially for late this week".
US Commodities said that the GFS and EU forecast models "are
in poor agreement beyond the next 5-6 days".
And indeed MDA cautioned that "significant dryness will continue
in the central and south western Plains wheat areas".
Further north, "cool temperatures… will maintain low soil
temperatures and will keep wheat growth there very slow", the weather service
The USDA sowings and stocks data were pretty mixed, with stocks
a little higher than forecast, but plantings below expectations, especially for
Still, there were some other factors for bulls to rely on,
besides strength in corn, with worries ticking higher over some weather
problems in the European Union and Ukraine, even as rains ease fears over
drought in eastern Australia as sowings loom.
German rainfall has averaged 49% below average in past six
months, according to World Ag Weather.
And Ukraine suffered cold weather over the weekend at a time
of thin snow cover, although Commodity Weather Group said that "it is unlikely
that any wheat in those areas are far enough along with jointing to see
outright freeze loss.
That said, "it is not a good thing in already
drought-stressed areas, as the burn back to vegetative growth will just make it
even a little more difficult to see crop improvement", the weather service
said, adding that "there will be several more nights this week that reach
similar [temperature] levels".
Wheat for May ended up 0.3% at $6.97 1/4 a bushel in Chicago,
with Minneapolis-traded spring wheat for May doing better, closing up 0.4% at
$7.42 3/4 a bushel, encouraged by the plantings estimates.
Paris wheat eased 1.0% to E209.75 a tonne despite the
Germany dryness, closing before Chicago wheat, the world benchmark, enjoyed its
Latest condition data on French wheat is certainly not so
discouraging, with 75% rated good or excellent by FranceAgriMer on Friday, flat
week on week, and only 1 point below the year-ago level.
Among soft commodities, cotton
fell 0.2% at 93.52 cents a pound in New York, recovering most of early losses
on end-of-month profit-taking.
The new crop December contract ended up 0.1% at 80.0 cents a
The firmer finishes followed the USDA plantings report,
which showed sowings expected at 11.10m acres, up 7% year on year but below
expectations of many in the market.
Rains for Brazil?
Cotton certainly did better than arabica coffee, which fell
1.5% to 177.90 cents a pound in New York for May delivery, if up more than 60%
for the quarter.
The decline came amid forecasts for some rain in the main
Brazilian coffee growing state of Minas Gerais, with MDA saying that the front,
also to hit Mato Grosso and Goais, southern Parana and Santa Catarina, could
bring falls of up to 2.5 inches, or more than 60mm.
According to Somar, average precipitation this week in Brazil
coffee areas will be some 5-15mm, after a March which has continued the dry
Many areas of Minas Gerais received less than half normal
rainfall this month.
The prospect of Brazil rains, which Somar said would hit
cane areas this week too, did few favours for sugar bulls either.
Raw sugar for May closed down 1.2% at 17.77 cents a pound in