PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 20:03 GMT, Thursday, 8th May 2014, by Agrimoney.com
Evening markets: soy rediscovers its mojo. But coffee cools

Soybeans, which began the day in favour, entered late deals that way too, negotiating a couple of data points with a dexterity which had evaded them the previous week.

The strong Chinese import statistic for April - of 6.5m tonnes, up from 4.62m tonnes in March - which helped futures stage a rebound in early deals, continued to provide some support.

While the figure was in line with Chinese ministry of commerce estimates, "there was concern that imports would fall again from the March total, so the big increase is supportive," broker CHS Hedging said.

New York-based Jefferies Bache said: "April was another month of very large imports by China.

"China's soybean imports appear to have reached a record high for the month each month of this crop year except for March.

And although the start was revealed of Chinese auctions of soybeans from state stockpiles, with 300,000 tonnes up for sale next week, the announcement of the event, having been talked of previously, proved a bit of a "sell the rumour, buy the fact" trigger.

"While this is confirmation of rumours from yesterday, the tonnage is probably less than expected," CHS said.

'Exports up noticeably'

The day also revealed a bullish factor in an upgrade by Conab, the Brazilian crop bureau, to 86.57m tonnes, from 86.08m tonnes, in its forecast for the domestic soybean harvest.

Bullish, that is, in the sense that it was nowhere near the 89m-90m-tonne figure suggested by the Brazilian agriculture minister earlier in the week.

And the US Department of Agriculture had some data too, in terms of weekly US soybean export sales, which came in at 40,800 tonnes for 2013-14.

While that might not appear a cause celebre, it was "up noticeably from the previous week and 97% from the prior four-week average", the USDA said, and was supported by the announcement of 140,000 tonnes for 2014-15 delivery unveiled through the daily reporting system.

Report looms

For the fact is that the US needs net cancellations if exports are to come in at the 43.0m tonnes the USDA has forecast for 2013-14, with commitments for the season now at 44.6m tonnes.

Which brings us to Friday's Wasde, the USDA benchmark crop report, in which the estimate for US exports could be lowered, but that would come with implications, given the tightness of the country's balance sheet.

Indeed, nerves ahead of the Wasde were another reason for investors to buy, and take profits on short positions which have proved profitable so far this month.

Chart consideration

And that was before taking technical factors into consideration.

"July soybeans bounced off the 50-day moving average [on a continuous chart] late yesterday and that has prompted a round of fund technical buying in soybeans," Darrell Holaday at Country Futures said.

This time, the contract bounced off the 40-day moving average on its own chart to close at $14.69 a bushel in late deals, up 1.6%.

And as an extra fillip, soymeal export sales proved decent, at 75,000 tonnes.

"Meal sales remain above weekly pace needed to meet USDA exports and should keep floor under the beans today," Benson Quinn Commodities said.

Soymeal itself for July ended up 1.2% at $480.70 a short ton.

Rains ahead

Soybeans strength contrasted with a weaker day in wheat, in part thanks to the reduced tensions in Ukraine, stemming fears for an interruption to exports from a major grain shipping country, but also thanks to better chances for rain in the US southern Plains.

"Over next five days there will be two different weather systems that will bring significant rains/ storms to much of the Plains and all of the Midwest and the Delta," WxRisk.com said.

"The total rains for the next 5 days are 1-3 inches (25-75mm) over 80% of the western Corn Belt - Minnesota, Iowa, Wisconsin, Missouri ) into 70% of Wyoming, north east Colorado, South Dakota".

Parts of Kansas, Oklahoma and Texas in the southern Plains, as well as most of Louisiana Arkansas and all of the eastern Corn Belt will receive 1-2 inches, with 60% coverage.

Significantly too, "temperatures will run below normal over the Plains and into the western Corn Belt," the weather service said.

Not all good news

At least some of the drought-hit southern Plains crops look like getting refreshment, although MDA meteorologists cautioned that in south western areas "head and dryness continue to reduce yields", and that remains the likely situation heading into the end of next week.

The weather service was also a little cautious on another positive for wheat farmers, in that forecast has turned drier for the northern Plains, where wetness has prevented fieldwork.

"Cool temperatures will maintain slow germination" of seed, MDA said.

And this, coupled with the prospect of the Wasde, and in-line US export sales of 445,500 tonnes old crop and new combined, helped limit the damage to wheat futures.

'Magically appeared'

Chicago soft red winter wheat for July closed down 0.3% at $7.35 a bushel, while Kansas City hard red winter wheat, the type under threat from US southern Plains drought, actually managed a 0.1% gain to $8.42 a bushel for July.

Minneapolis hard red spring wheat for July eased a minimal 0.75 cents to $8.05 a bushel.

Paris wheat, which has underperformed of late, in part thanks to a strengthened euro, managed to hold at E207.25 a tonne for November, helped by a halt to the currency's rally, after Mario Draghi, head of the European Central Bank, indicated that monetary policy would be eased in June.

Weekly European exports were soft, at 130,000 tonnes, down from 448,000 tonnes and the lowest since July, although a tail-off was to be expected at the end of a strong season.

Still, Gleadell highlighted "improving crop prospects" for Europe this year, besides the fact that "increasing supplies of grain from this season's crop have 'magically' appeared onto the market".

London wheat for November eased 0.5% to £156.95 a tonne despite sterling easing from five-year highs hit earlier in the week against the dollar, close to $1.70:£1.

'Large disappointment'

The talk of US rain, while helpful for wheat farmers, was not quite so positive for corn growers, attempting spring plantings.

"The upturn in rains across much of the [Midwest] region through early next week will slow planting, especially in north western areas," MDA said.

That was one help to prices recovering from early losses, sustained after weekly US export sales came in at a dismal 161,300 tonnes old crop, "down 83% from the previous week and 77% from the prior four-week average,"  the USDA said

At Citigroup, Sterling Smith said: "Export sales were a large disappointment coming in much lower than expected and this took the market quickly into negative territory."

Ethanol support

Also slightly supportive was a cut of 270,000 tonnes, to 75.19m tonnes, in Conab's forecast for Brazilian corn production this year.

A strong US ethanol market helped too. Chicago's June contract extended its recovery, following data on Wednesday showing declines in US output and inventories, and closed up 4.6% at $2.155 a gallon.

And, with uncertainty over the Wasde ahead, corn itself closed up 0.5% at $5.16 a bushel for July delivery.

Marking time

Among soft commodities, raw sugar continued its rather aimless trading, ending down all of 0.02 cents at 17.24 cents a pound in New York for July delivery.

At Sucden Financial, Thomas Kujawa flagged potential uncertainty ahead of New York sugar week next week, while flagging the stasis stemming from the, prospective, El Nino weather pattern.

"There continues to be a drip drip release of news from the various weather/climate monitoring agencies/services with an increased risk of an El Nino year on the newswires, but this has had many sugar analysts lamenting it adds little to the production/consumptions statistics till 'something happens'," he said.

Commerzbank reminded that while "the crop year 2014-15 could show a market deficit for the first time in five years, there will be no real shortage on the market nonetheless.

"The record-high stock levels should prevent any major price leaps."

Coffee cools

But arabica coffee did find definite direction, downwards.

While Procafe reminded of its downbeat forecast for Brazil's drought-hit production, both this year and 2015, Commerzbank voiced more bearish comments on output prospects.

Furthermore, the early harvest results from Brazil's robusta have been decent, Cepea said although it is still early deals.

Arabica coffee for July dropped 2.7% to 195.50 cents a pound, just ahead of its 50-day moving average - below which the contract has not closed in nearly six months.

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