PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 21:10 GMT, Thursday, 13th Feb 2014, by Agrimoney.com
Evening markets: soybean prices bounce on export data relief

Grain markets braced for more cancellations by China of orders of US soybeans.

After all, the 272,000 announced on Wednesday was less than half the amount rumoured to have been ditched, and with plenty more order notes viewed as heading for the waste bin as lower-priced Brazil ramps up its harvest.

But there was no fresh announcement by the US Department of Agriculture, through its daily alerts system, of cancellations.

In fact, the USDA, in a weekly export sales briefing, announced 320,700 tonnes of new soybean sales to China, albeit including the ditching of 116,900 tonnes of orders.

And the US shipped 1.08m tonnes of the oilseed to China too, meaning that much less at risk of cancellation.

'Sales were positive'

Had Chinese buyers taken heed of the kind of ideas espoused by Bunge, of Brazilian logistical difficulties ahead?

Certainly, "old crop soybean sales were positive," Benson Quinn Commodities, even though on the face of it, at 173,600 tonnes, they were well below expectations.

There was some further more bearish news with talk that the wall Argentine farmers have, effectively, erected against selling crops, keeping them as a hedge against inflation, may be beginning to crack.

Market watchers in the country said that farmers more than tripled grains and soybean sales to exporters last week, amid ideas that the decline in the Argentine peso may be past its worst, for now, and that lower soybean prices, as Brazil's exports ramp up, may be a bigger threat.

Sowings forecast

And then there were the dismal US soymeal export sales, at 19,000 tonnes, a marketing year low.

However, as a boost to soy, the USDA, in a much-watched Baseline report on long-term crop projections, forecast that domestic soybean plantings will show only a small increase this year, to 78.0m tonnes.

That is below many expectations of 80m acres or more, and not quite enough to take the record after all.

And, elsewhere in the oilseeds complex, palm oil achieved its highest close of the year in Kuala Lumpur, up 0.8% at 2,656 ringgit a tonne, helped by ideas that the dryness which has hurt South American soybean crops may boost demand for the vegetable oil as an alternative to soyoil.

'Very heavy, major rains'

As for the South American weather itself, WxRisk.com noted that latest weather models keep "very heavy, major rains over all western, south western and south eastern Brazil over the next 10 days", good for crops still in development, but not so positive for harvesting.

Indeed, in Mato Grosso, the top soybean producing state, where harvest is in full swing as well as Goais and Mato Grosso do Sul rains will reach 1-4 inches, the weather service said.

And the six-to-10 day outlook has "much heavier rains with higher coverage 2 -6 inches over the same area", but also spreading more into Parana and sugar cane and coffee growing states of Sao Paulo and Minas Gerais.

Soybeans for March closed up 1.6% at $13.44 a bushel, a five-month high for the contract, and rewarding Agrimoney.com's somewhat bullish call on the oilseed.

Soymeal for March ended up 2.1% at $454.00 a short ton, with one eye on the US industry crush data out on Tuesday.

'Established a bullish trend'

Wheat gained too, boosted by weekly export sales data of 597,000 tonnes of old crop, but 30,000 tonnes for 2014-15, which defied some jitters earlier of dip in demand.

"Net sales of 597,000 tonnes for delivery during the 2013-14 marketing year were down 7% from the previous week, but up 12% from the prior four-week average," the USDA said.

Some found upbeat signals in technical too, with CHS Hedging said that "the Chicago wheat market has established a bullish trend towards $6.00 a bushel".

In fact, the March contract, as in the last session, touched its 50-day moving average only to retreat, but still ended up 1.4% at $5.95 a bushel.

Europe lags

Paris wheat gained 0.4% to E196.50 a tonne, feeling some pullback from the stronger euro, which harmed the competitiveness of European exports.

And, indeed, EU export data were down this week, at 315,000 tonnes, the lowest since around Christmas, and down more than one-half week on week.

Bulls gained some reassurance from a Strategie Grains upgrade to its forecast for EU exports, if for next season, and a 2.7m-tonne cut in its estimate for stocks at the close of 2013-14.

London wheat for May fell 0.3% to 153.00 a tonne, still feeling pressure from Wednesday's bumper UK grain import data.

'Fears of ice gorging'

Back in Chicago, corn remained somewhat in limbo, underpinned by the USDA's lower-than-expected stocks forecast released on Monday, but weighed by ideas of large farmer selling at higher levels.

Weekly US export sales were strong, at 1.27m tonnes old crop and a further 71,000 tonnes for 2014-15, above market expectations, and supporting the strong export forecast behind the USDA inventory downgrade.

Also on the bullish side of the ledger were ideas that the warmer US temperatures may not free up logistics just yet.

"Warmer weather is expected to thaw ice and make river logistics worse before better," CHS said.

"Boat tow companies are considering pulling barges off the Illinois and Mississippi rivers due to fears of ice gorging."

'Getting more aggressive'

And then there is the decent demand for corn from ethanol manufacturers.

"Expect long lines at the ethanol plant. Ethanol ending stocks are historically low and with excellent margins, the plants have room to increase grind rates going forward," CHS said.

However, At RJ O'Brien, Richard Feltes cautioned that Ukraine, the growing force in corn exports, was "getting more aggressive on offers".

Corn for March ended 0.1% higher at $4.40 a bushel.

Coffee retreat

Among soft commodities, the Brazilian forecast is not ideal for coffee, with some weather models believing the much-needed rain will not reach the key state of Minas Gerais for now, according to WxRisk.com.

Furthermore, as an extra boost for softs, such as coffee, in which Brazil is a big force the real appreciated 1.3% against the dollar, lifting the value of beans in greenback terms.

And Goldman Sachs upgraded its forecast for coffee prices.

That said, to levels below the futures curve.

Besides, there are some meteorologists standing by expectations of solid rain, prompting May arabica coffee to end down 0.8% at 141.95 cents a pound in New York, despite a warning from Cooxupe, the world's biggest coffee co-operative, that the dry spell had cost 30% of production from the area where it operates.

That had been expected to reap 10m bags of coffee this year.

'Oversupplied situation'

Raw sugar for March fell 0.9% to 15.66 cents a pound in New York, feeling more pressure from ideas of ample world supplies.

"We are still in an oversupplied situation as regards physicals, and if India is able to export quickly, their hedging will certainly come in to take advantage of current prices in raw sugar," Sucden Financial said.

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