OK, the default move for commodities was upwards on
Investors were in ebullient mood, pushing the S&P 500
share index close to record highs, while the dollar fell back 0.4%, a decline attributed
to prof-taking, and which made dollar-denominated exports that much more
The CRB commodities index added 0.5%
Corn vs cotton
But cotton and wheat, especially, got a helping hand
from data showing US exports last week were already firm.
Cotton's, at 187,600 running bales for old crop, were viewed
as respectable, supporting ideas of a tightening US stocks running into the close
of 2012-13, and helping New York's May contract jumped 2.5% to 90.86 cents a
pound, the best close for a spot contract in very nearly a year.
The new crop December lot added 1.2% to 88.54 cents a pound,
improving cotton's case for reconsideration in farmers' sowing plans, having early
in the year, at lower values, looking set for its lowest US plantings in 30
"We are starting to see some corn acres taken out of planting plans and go to cotton in the US
South," Keith Brown, at US cotton broker Keith Brown & Co, told
Corn vs wheat
Wheat's weekly export
sales hit 888,000 tonnes for old crop and nearly 200,000 tonnes for new, the USDA
said making it, combined, the best result since February 2011.
And this when there is plenty of talk already of buyers opting
for the grain instead of corn.
"Export interest in wheat is steadily increasing as world
buyers look for alternatives to replace higher-priced corn in their feed
rations," Darrell Holaday at Country Futures said.
At Allendale, Steve Georgy noted "rumours circulating that
Mexico," a huge corn importer, "bought wheat from the US instead of corn due to
the price difference".
That switch is true in the US as well, where Mr Holaday picked
up on talk "of Argentine corn cancellations into the south eastern US feed
markets in favour of cheaper domestic wheat", whose case has been improved by
cheap rail freight from the Midwest to the South.
Mr Georgy said: "We are still hearing that some ethanol
plants are still considering wheat instead of corn."
He added that the impact of all this news could potentially
have extra impact on wheat prices given the large short position that speculators
hold, which they may be tempted to cover as price rise, fuelling further gains.
"The funds are short wheat and could come out of those positions
and give the wheat a short-term lift in price," he said.
Wheat for May closed up 2.1% at $7.24 ¾ a bushel in Chicago,
rising for a sixth successive session.
'Internal basis may
That should not give the impression that all the news in
wheat is bullish for Chicago contracts.
Europe remains a competitor in export markets, with data
showing it cleared 476,000 tonnes of the grain for shipment this week, taking
the total so far in 2012-13 to 14.2m tonnes – compared with 9.8m tonnes a year
France is also rumoured to have picked up an import order
from Syria, usually a buyer of Black Sea supplies.
And Jaime Nolan Miralles at FCStone picked up on talk of "a
small shipment of 12.5% protein wheat for April being moved in Costanzia at E239
a tonne FOB.
"This perhaps suggesting that internal basis may weaken
under a dearth of farmer selling, with spring fieldwork costs the driver."
But, that was an issue more for European contracts, which at
least got some support from government signals that Russia will buy wheat to
replenish domestic stockpiles over the summer, so limiting the country's entry
onto export markets early in 2013-14.
Furthermore, Strategie Grains trimmed, again, hopes for the European Union soft wheat crop, citing in particular the UK's woes.
Paris wheat for May gained 0.7% to E234.50 a tonne, while
London wheat for May rebounded 0.9% from a seven-month low to end at £198.50 a
'Demand baton' passed
Chicago wheat's gains were enough to take it back to its
typical place at a premium to corn,
which for May gained 0.9% to $7.16 ½ a bushel.
Corn's own export sales were OK, at 282,300 tonnes old crop,
a vast improvement on the net cancellations a week before, if still below
levels needed to meet USDA forecasts for 2012-13.
But as RJ O'Brien Richard Feltes said, the "demand baton" appears
to be switching to wheat, "which may play a greater role in relieving
chronically-tight old-crop corn supply than previously imagined".
Signally, sales for 2013-14 corn were strong, at 371,000
tonnes, and new-crop corn for December closed up 0.8% at $5.59 ¼ a bushel, giving
up on its trick for much of this year of lagging old-crop contracts.
But then, with farmers increasingly seen as avoiding huge
plantings of the grain, and switching back to soybeans and cotton….
themselves dropped 0.2% to $12.59 ¾ a bushel in Chicago, easing further, to
2.25, the soybean: corn ratio which is viewed as key in helping determine which
crop farmers will prioritise in sowing plans, after having taken a lead in the early
The best-traded, old-crop May soybean lot lost 0.8% to
$14.35 ½ a bushel.
Weekly US soybean export sales, at 783,700 tonnes old crop
and new combined, were a little below market expectations, if hardly pallid.
And there was, yet again, no fresh business revealed trough
the USDA's daily alerts system, fuelling concerns of the US losing its grip to
South America, as should already have happened if Brazil's logistics were not so
'Window of opportunity
There is still plenty of talk of China cancelling orders of
Brazilian soybeans, because of delays in supplies.
But business now seems to be going to neighbouring Argentina,
rather than the US.
"Talk of China trying to cancel Brazilian bean purchases in
favour of Argentine beans to avoid wait times had Brazilian premiums softer,
and signals that the window of opportunity for US beans to work into China is
quickly closing," Benson Quinn Commodities said.
US Commodities said: "Brazil loadings have been slow and
Argentina soybeans are now available."