Some US government workers are on an extra long, long
weekend after blizzards forced the closure of federal offices in Washington on
Tuesday, following Monday's Martin Luther King Day holiday.
Soybean bulls might wish US markets were still closed too.
One of their big fears of recent weeks, that Chinese buyers
of US soybeans have begun cancelling orders and switching to South American
supplies instead, is beginning to be realised.
At least, that was the market talk.
Richard Feltes at Chicago-based broker RJ O'Brien, among
others, clocked "rumours, unconfirmed, of China switching soy cargoes from the
US to Brazil".
The selling was compounded by ideas that the early Brazilian
harvest is going well, with RJ O'Brien's Brazilian team reported "excellent"
early yield results, in some cases "exceeding expectations".
Furthermore, the Argentine weather picture took a turn for
the more benign too, after excessive heat.
"Argentina, the world's third largest exporter of corn and soybeans,
received better-than-expected coverage over the long weekend with lower
temperatures and more rain is on the way," CHS Hedging said.
Darrell Holaday at Country Futures said: "Rain in Argentina
that was broader than expected and had slightly larger amounts than expected
has led to the selling" in soybeans.
"The models also pointing to a little more rain tonight and
another system Thursday and Friday."
In fact, the news was not all so bearish.
Already, heat has "likely trimmed a couple of million tonnes
off the Argentine production number", Mr Holaday said.
While Celeres raised its estimate for Brazil's newly-started
soybean harvest to 89.9m tonnes, rival consultancy AgRural cut its forecast to
88.8m tonnes, below the US Department of Agriculture figure of 89.0m tonnes.
And weekly US export data came in firm too, at 56.5m bushels
for last week, as measured by cargo inspections, not far below the 59.4m
bushels the week before, and not enough in itself to promote anything in the way
of bearish sentiment.
'Hard to rally'
However, investors know that "the window for dealing a death
blow to the South American soy crop is closing rapidly", Mr Feltes said.
Mr Holaday said: "Seasonally we are approaching a time in
which it will be hard to rally the soybean complex in the face of the South
American crop that will be record large."
Soybeans for March closed down 2.7% at $12.80 ½ a bushel, the
weakest close for a spot contract in two months, and taking the March lot
itself down through 10-day, 20-day, 50-day, 75-day and 100-day moving averages.
It helped little that soymeal,
of which Argentina is the top exporter, slumped 4.1% to $416.50 a short ton for
'Area of chart
Indeed, soybeans might have fared worse were it not for a
rise in soyoil, the other main
product from processing the oilseed, which gained 0.9% to 38.10 cents a pound
in Chicago for March delivery.
Soyoil was helped by rare strength in rival vegetable oil palm oil, which added 0.3% to close at
2587 ringgit a tonne in Kuala Lumpur.
Furthermore, while soyoil prices "remain in a pronounced
downtrend," they "are now in an area of chart support as they approach 36 cents",
Anne Frick, senior oilseed analyst at Jefferies Bache, said.
"Ultimately prices may not trade lower than 34.50 cents, if
The weakness in soybeans themselves spread to rapeseed, which ended down 0.6% at
E359.00 a tonne in Paris for February delivery, with the contract adding its
10-day moving average to the chart lines it closed below.
somewhat escaped the selling, despite the fact that Argentine rains would
appear to bode well for the country's production of the yellow grain too.
Furthermore, Safras pegged Brazil's corn crop at 75.8m
tonnes, well above the US Department of Agriculture's guess of 70.0m tonnes.
The Safras forecast included a figure of 47.4m tonnes for
the safrinha harvest, implying farmers will not after all switch en masse to
growing soybeans or cotton as a second crop, on land vacated by the ongoing,
main soybean harvest.
Still, US weekly corn exports were improved, at 29.8m
bushels last week, from 20.9m bushels the week before.
And the soybean selling created some buying pressure on corn
as investors closed long soybean/ short corn trades.
"We are seeing some support from the unwinding of
soybean/corn spread trades," Mr Holaday said.
Chicago corn for
March ended up 0.2% at $4.25 a bushel.
That was better than wheat,
which shed 0.2% to $5.62 ¼ a bushel in Chicago for March, the lowest finish for
a spot contract since July 2010.
But then weekly US wheat exports were not so impressive, at
15.6m bushels, down 10.0m bushels week on week.
Australian wheat emerged as the cheapest offered to an Iraqi
tender, undercutting supplies from Canada and the US.
And the latest US cold snap is not expected to bring much in
the way of damage to winter seedlings.
'Snow cover building'
"Snow cover continues to build across northern and eastern
Illinois, central and northern Indiana, Minnesota and Ohio, which will help
protect wheat there from winterkill, as much colder conditions return to the
region over the next few days," weather service MDA said.
While some "spotty" winterkill will be possible in parts of
Illinois, Iowa, Missouri, Kansas and Nebraska, "no widespread losses are expected".
Paris wheat for March added 0.8% to E192.25 a tonne, but
only after falling on Monday, when US markets were closed, and helped by news
of an Algerian tender, in which French wheat has a strong success rate.
Among soft commodities, cotton
managed comprehensively to shrug off news of a change to China's farm support
policy, discussed earlier, which has been responsible for supporting domestic
and world prices.
A 14.4% rise to 608,606 tonnes in China's cotton imports
last month, albeit largely from India, helped counter gloom, coming at the end
of a year when buy-ins fell 19.2% overall to 4.15m tonnes.
Furthermore, the National Bureau of Statistics came in with
a downbeat estimate of China's 2013 cotton harvest, at 6.31m tonnes, down 7.7%
year on year on its data, and below a China Cotton Association figure of 6.77m
Cotton for March closed up 1.6% at a five-month closing high of 88.13 cents a pound in
However, arabica coffee
cooled in New York, ending down 0.8% at 116.20 cents a pound for March
delivery, undermined by expectations of rains returning to Brazilian
coffee-growing regions to support yields.
Indeed, the Cepea research institute took a more upbeat view
of Brazil's production hopes this year than many other observers.
Furthermore, Anacafe forecast a 12.7% bounce to 3.45m tonnes
in Guatemalan coffee exports in 2013-14, as the country recovers from the
outbreak of the rust fungus which has devastated plantations in other Central
American countries too.