The new month brought distress calls for grain bulls, as two
of the main props to values crumbled, bringing heady price falls.
Indeed, instead of bringing new money into agricultural
commodities, as month beginnings have a reputation for doing, the start of May
witnessed a significant sell-off by funds.
"Profit-taking dominates the trade today," CHS Hedging said.
It is easy to see why when one major price support, the poor
conditions which have been delaying US corn sowings, was undermined by forecasts of drier and warmer
"Drier weather is returning to the central and southern
Midwest, and will continue there through mid next week, which will allow
planting to improve considerably," MDA said.
"Drier and less cool weather by next week should allow for
better planting progress."
At broker RJ O'Brien, Richard Feltes said the Midwest would
see "only two more days of cool temps before weekend warming that will continue
"US planting delays will be limited to Minnesota, the Dakotas,
Strong export data
That more than stole the thunder from some decent weekly US
export sales data for corn, at 937,900 tonnes for this season.
That was "up 52% from the previous week and 35% from the
prior four-week average", the US Department of Agriculture said.
Actual exports were a strong 1.22m tonnes, albeit a figure
well below the previous week's number.
Still, corn futures for July closed down 2.3% at $5.07 a
bushel, closing back below its 10- and 20-day moving averages.
New crop December corn tumbled 1.9% to end at $4.99 ½ a bushel,
surrendering the psychologically important $5.00-a-bushel mark as well as its
own 10- and 20-day moving average lines.
'Export sales were
even more, hurt by some erosion in ideas of tightness in US supplies.
Export sales proved negative, ie cancellations exceeded new
orders by 16,400 tonnes, the weakest performance of 2013-14, albeit showing the
direction that trade needs to take to meet USDA estimates.
(The USDA has forecast the US shipping 43.0m tonnes of
soybeans in the year to the end of August, less than the 44.59m tonnes the
country is currently committed too.)
While export sales were positive for 2014-15, at 78,900 tonnes
they were hardly bumper.
"Soybean export sales were poor," Darrell Holaday at Country
Import estimates on
Indeed, ideas are now mounting of extra US imports, another
way, besides reducing export commitments, of balancing the country's tight
New York-based Jefferies Bache said that when the USDA next
week unveils its latest Wasde crop report, the department "could add 5m bushels
to US imports, increasing them to 70m bushels" for 2013-14.
Allendale said that "trade is now estimating 85m bushel of soybeans
could be imported in US", noting talk of two cargoes imported in New Orleans, one
cargo each en route to Mobile, Alabama, Norfolk, Virginia and Wilmington, North
Carolina "and another three cargoes showed up in the Brazilian export line up".
RJ O'Brien's Richard Feltes flagged talk that the Wasde "may
be forced to up 2013-14 US soy imports to 95m bushels".
'Caught the market completely
Furthermore, there was a negative signal in terms of
deliveries against Chicago soy complex contracts, a sign that futures markets
may be a more attractive place to sell than the cash market.
Archer Daniels Midland delivered a total of 19 contracts of soymeal against the expiring May contract.
"That caught the market completely off-guard as for a long
time everyone has watched big gains in the soymeal cash and futures," Country Futures'
Darrell Holaday said.
"The delivery overnight hinted at a crack in the soymeal
cash market and the sell-off began in the soybean complex."
It undermined the positive of decent soymeal export sales
last week, of 140,900 tonnes for 2013-14.
And there were 2,336 contracts delivered too against soyoil, the other main soy processing
July soymeal plunged 3.4 to $476.70 a short ton, while July
soyoil dropped 2.3% to 41.16 cents a pound, ending below its 75-day moving
average for the first time since mid-February, and surrendering its 200-day
moving average too.
Soybeans themselves for July tumbled 3.4% to $14.61 a bushel,
back below 10- and 20-day moving averages.
'Critical two weeks
Nor could wheat,
the bulls' champion of late thanks to concerns over drought-hit US winter
wheat, extend its winning run to eight sessions.
Not that concerns over US winter wheat are waning, with the Wheat
Quality Council's Kansas crop tour producing results worse than investors had
Indeed, the average yield in the top US wheat-growing state
was, after the close of markets, put at 33.2 bushels per acre, below the five-year
average finding of 41.8 bushels per acre and the actual result last year of
38.0 bushels per acre.
And there is "still a critical two weeks ahead for this crop",
Mr Holaday said.
Indeed, MDA said that, while conditions were improving for
corn, "significant dryness will continue to stress wheat in the west central
and south western Plains", with cold temperatures remaining a, small, threat
"Much warmer temperatures next week will accelerate wheat
growth, but will also exacerbate the dryness," the weather service said.
Still, US weekly export sales were soft, at 214,900 tonnes
for old crop, "down 37% from the previous week and 25% from the prior four-week
average", the USDA said.
And for 2014-15, export sales were a modest 13,800 tonnes.
As a further negative for prices, forecasts look better for
Europe, where dryness concerns were beginning to emerge in the eastern UK grain belt, besides in central European countries such as Germany and Poland, and
further east in Ukraine.
"Strong upper air disturbance dropping out of the UK will
bring significant rains to Germany and Italy this weekend," David Tolleris at
"This system will bring significant rain to all south eastern
Europe as well as most of the Ukraine and central Russia."
It will also "bring significant rains to England, northern
France, Germany and Poland."
Hard red winter wheat, the type most threatened by US
drought, dropped 1.0% to $8.04 ¾ a bushel for July delivery, albeit a slow
enough decline to raise significantly its premium – nearly to $1 a bushel -
over Chicago soft red winter wheat, the world benchmark.
Chicago wheat for July ended down 2.0% at $7.07 ¼ a bushel.
It should be noted that the price closes came before Egypt's
Gasc, the top wheat buyer, surprised many investors by unveiling a fresh tender,
with ideas that the authority had enough stashed away for now.
Soft commodities broadly a little better, although cocoa dropped 1.9% to $2,922 a tonne in
New York for July delivery, having hit $2,910 a tonne earlier, the lowest for a
nearest-but-one contract in nigh on two months.
The bean was undermined by lingering ideas that the Ivory
Coast mid-crop will beat forecasts, allowing traders to ignore for now the
rising risk of an El Nino, which often causes undue dryness in West Africa.
There has been talk of speculators getting twitchy too over
their net long position, which remains large, at some 65,000 lots as of Tuesday
last week, the latest data available.
for July closed down 0.8% at 204.15 cents a pound in New York.
"Arabica is congesting above the 200.00 cents-a-pound level
as there is little fresh news at the moment to perk up the market," said
Sterling Smith at Citigroup.
"The May Day holiday will stretch into a long weekend for
many people and this will keep market activity subdued for the balance of the
At Price Futures, Jack Scoville also said that "little
coffee will be offered for the rest of this week due to the May Day holiday
Still, on the bearish side, "rains are appearing in Central
America that should trigger a new round of flowers and also will help cherries
as they start to appear for the coming crop", he added.
'Little in the way of
Raw sugar for
July ended up 0.5% at 17.80 cents a pound on its first day as the spot
The USDA attaché in New Delhi helped by pegging Indian exports this season at 1.8m tonnes, 200,000 tonnes below the USDA's official
estimate, besides foreseeing a drop to 1.5m tonnes next season.
Mr Scoville noted that futures had been getting support from
"forecasts for cool weather in Brazil this week", besides from ideas of "little
in the way of producer selling interest".