For corn bulls to really turn the screw, and build on the grain's
newly-regained premium over wheat, was always going to require a bit of help
from the news flow.
They got it, in part from confirmation that Chicago's
expiring March contract had, on the first day of its two-week expiry process,
indeed seen no deliveries.
That highlighted that US producers were finding better prices
on the cash market, if they were selling at all, with closed barn doors seen
behind corn's elevated basis.
"Basis levels are now $0.40-0.50 a bushel over March corn
futures in the west and $0.60-0.70 a bushel over the May in the east," US
Commodities said, noting "tight old crop supplies".
The second barrel to aim at the bears was weekly export sales
which, at more than 500,000 tonnes, represented the best in three months, and
far ahead of market expectations.
This was against a backdrop of the typical month-end
position closing - at the end of a February when investors have put on a stack
of short positions in expectation of data showing a huge US corn crop this year
(which the market got last week with the first US Department of Agriculture
forecasts for 2013-14.)
Speculators' gross short position in Chicago corn futures
and options rose more than 60%, above 150,000 in the three weeks to February 19
(the latest data available), the highest since June 2010.
Chicago corn for March rose 1.4% to $7.19 ½ a bushel, enough
to build its, atypical, premium over wheat to more than 11 cents a bushel.
For that matter, March corn raised a little its atypical premium
over better-traded May corn contract too, which ended up 1.2% at $7.03 ½ a
This growing so-called bull spread is seen as a sign of a tight
market, encouraging farmers to sell crop now rather than hold on for better
And it was not that wheat
was under the cosh, adding 0.5% to $7.07 ¾ a bushel for March delivery, and
0.4% to $7.14 ½ a bushel for May.
Indeed, it got a particular boost itself when deliveries
against the expiring March lot turned up at 119 contracts, below market
expectations, some of which ranged above 1,000 lots.
"The lack of deliveries in the corn and soybeans, along with
generally lighter-than-expected deliveries against the wheat, in the March
contracts has really hit home with the grain market as it simply communicates
how tight cash supplies are near the delivery point," Darrell Holaday at
Country Futures said.
The trouble was the weekly export data which, at some 525,000
tonnes, were not bad, but failed to live up to the forecasts of many observers.
did better, backed by weekly US export sales which, at 1.17m tonnes old crop
and new combined, exceeded market expectations.
Furthermore, the US Department of Agriculture, through its
daily alerts system, announced a further 123,000 tonnes of US soybeans sold to
China, of new crop.
Zero deliveries against Chicago's March contract were
another boost, as was a late downgrade late in the day by the Buenos Aires
grains exchange to its estimate for the Argentine harvest.
The exchange - cutting its forecast by 1.5m tonnes to 48.5m
tonnes, well below the US Department of Agriculture forecast of 53.0m tonnes – cautioned
over lasting damage to crops from the dry spell from late December to a couple
of weeks ago.
In central Argentina, "the vast majority of crops are currently
passing stages of grain-filling, with limited possibilities to compensate for
the losses suffered" from earlier in the season, when moisture stress caused
plants to shed nascent pods.
(South America will also be the focus on Friday when Informa
Economics updates its world production
Meal vs oil
Chicago soybeans for March closed up 1.1% at $14.74 ¼ a
bushel, increasing its own bull spread, with the May lot ending up 0.9% at $14.52
½ a bushel.
But then, with queues seen long for getting crop out of
Brazil, buyers wanting crop certainty may have little choice but to turn to the
The fortunes of soybeans, and soymeal, which closed up 1.5% at $436.00 a tonne for March delivery,
contrasted with that of soyoil, the
other major soybean crushing product, which dropped 0.9% to 48.82 cents a pound
But then March soyoil suffered heavy deliveries, of more
than 2,900 contracts, besides seeing rival vegetable oil crude palm oil fall
for a seventh successive day in Kuala Lumpur, where it ended down 0.5% at
23,396 ringgit a tonne.
'Very good margins'
"The reality is that demand for soybeans and soymeal both
domestically and internationally are very strong," Mr Holaday said, noting "very
good" crush margins.
"Crushers are crushing at a very aggressive rate to take
advantage of the those margins and fulfil the soymeal demand.
"That has left a large supply of soyoil on hand."
Rapeseed, as an
oil-heavy oilseed, also enjoyed lesser fortunes than soybean, closing up 0.4%
at E468.75 a tonne in Paris, for May delivery.
Cotton rebound continues
Returning to US export data, and New York cotton futures got a boost from the sale
of 233,000 running bales of the fibre last week, including some, 30,000 running
bales, to the key market of China.
Coming in a period when prices were already relatively high,
well above 80 cents a pound, the data tempted investors to try buyers out with
New York's May contract rose 1.1% to 85.29 cents a pound,
its best close in nine months.
New York raw sugar set a two-year low only to recover later
on amid ideas that Brazil is to ditch a tax which would improve the appeal to
mills of converting cane into ethanol rather than the sweetener.
"Eyes are on Brazil's ethanol policy and specifically on
when it will abolish the so-called PIS/Confins tax," Nick Penney at Sucden Financial
"This would make ethanol more attractive to produce and
could reduce the overhang in sugar production."
The March contract rose 3.0% to close at 18.38 cents a
pound, having earlier fallen to 17.61 cents a pound, the lowest price for a
front contract since August 2010.
The better-traded May lot added 1.7% to 18.39 cents a pound.