So just how realistic was the cut to the official estimate
for US corn supplies, which sent
prices soaring in the last session?
The US Department of Agriculture, which on Friday cut its
estimate for domestic corn stocks at the end of 2013-14 by 161m bushels to 1.63bn
bushels, had two decent reasons for the downgrade.
The harvest last year had been smaller than had been
thought, and consumption bigger than expected too in the autumn, to judge by
stocks data as of December 1.
Indeed, factoring out ethanol production and exports, it
implied feed use at a record high 2.4bn bushels for the preceding three months.
'A little hefty'
However, as so often after key US ag data, some scepticism
Had use really been that big, or was the feed use estimate
in fact exaggerated by one-off restocking after a 2012-13 which, after all, was
notable for its tight corn supplies, and high prices?
The implied feed use number "seems a little hefty given the overall
cattle supplies", Darrell Holaday at Country Futures said.
"But many times feed use coming off of a very short crop
year is a function of filling inventories in the first quarter and has really
not actually been fed - in other words filling a pipeline that was very low."
Investors' willingness to chase the market higher was also undermined
by caution by Goldman Sachs, which raised its forecast for Chicago corn prices,
but to levels beneath the futures curve.
(That said, Morgan Stanley, one of the few commentators to
predict correctly the USDA downgrade to its 2013 US corn production forecast, took
a less downbeat line.)
And US weekly exports, as measured by cargo inspections,
weren't great, at 20.9m bushels.
"Corn posted a bit less than expected," CHS Hedging said.
Corn for March added 0.4% to $4.34 ½ a bushel, gained which
paled against the 5% headway in the last session, if enough to keep the
contract above its 10-day, 20-day and 50-day moving averages, the latter of
which it has now closed over twice since August.
'Came in good'
For soybeans, the
US weekly export data were altogether more impressive, at 59.4m bushels.
"Weekly export inspections came in good this morning for
soybeans," CHS said.
And, as an extra fillip, 43.6m bushels of that went to
China, the top importer, whose appetite for US soybeans has been questioned on
The first is whether China will start rejecting soybean
cargoes, as it has corn; and the second, the potential that buyers will switch
to South American supplies, now that the Brazilian harvest is ramping up.
However, the Chinese export figure was "always positive
because every bushel actually inspected for export cannot be cancelled",
Country Futures' Mr Holaday said.
"Sales can be cancelled, but loaded ships are not cancelled."
Besides this, the USDA revealed the sale of 140,000 tonnes
of soybeans to an unknown importer for 2013-14, while soymeal had a strong session, soaring 2.0% to $421.90 a short ton
for March delivery.
And technically, "the March soybean contract has established
trade above the 200-day moving average, which could attract buying," Benson
Quinn Commodities noted.
In fact, the March soybean contract added 1.2% to close at $12.94
½ a bushel, retaking its 10-day, 50-day and 75-day moving averages too.
outperformed corn, adding 0.8% to $5.73 ½ a bushel in Chicago for March
delivery, boosted by its own solid export news.
Besides the Egyptian order of 55,000 tonnes over the weekend,
US export inspections came in at 25.2m bushels, nearly twice the figure the
That helped overcome some of the bearish news around, with Argentina
raising its estimate for the domestic wheat crop by 200,000 tonnes to 9.2m
tonnes, and approving 1.5m tonnes for export.
Also, Goldman Sachs downgraded its forecast for Chicago wheat
prices, following Friday's downbeat USDA numbers.
Among soft commodities, Goldman also upgraded its estimate
for cocoa prices, citing forecast for successive
seasons of world production shortfall.
However, the bank's forecast remained below the futures
curve, a reflection of the stronger-than-expected start to producer deliveries
in Ivory Coast, the top cocoa-producing country.
Cocoa for March closed unchanged at $2,712 a tonne in New
York, but did add 0.6% to £1,744 a tonne in London for March.
Traders are also positioning ahead of European cocoa grind
data, on Wednesday, expected to show a rise of about 5% for the October-to-December
Raw sugar for
March added 0.2% to 15.60 cents a pound in New York.
The world sugar production surplus "is not as big as it
appeared to be at this time last year," Marex Spectron noted.
"The world producton trend looks as if it is heading down, while
world consumption continues to grow," the broker said.
"And now there is a further reasons for thinking that the
flat price decline should stop – the market has gone into a fairly steep
contago," meaning the market is paying investors to hold stocks.