PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 20:37 GMT, Thursday, 5th Dec 2013, by Agrimoney.com
Evening markets: weak US exports sink wheat. Corn eases too

If there was one thing that wheat bulls did not need, it was a poor number for weekly US export sales of the grain.

But they got one anyway.

The US sold 229,200 tonnes of wheat in the week to last Thursday, the lowest number of 2013-14, by a margin, and well below expectations of a figure of at least 350,000 tonnes.

There was scope for investors to be charitable, with last week including the Thanksgiving holiday, and so expected to prove a little light on business.

But after upgrades to Australia's crop on Tuesday and Canada's on Wednesday, well, charity did not stretch too far, leaving Chicago's March contract with a close of $6.52 a bushel matching the lot's lowest ever finish, and representing drop of 1.4% on the day.

FAO upgrade

It little helped that the United Nations Food and Agriculture Organization upgraded its estimate for the world harvest above 710m tonnes, a record, and apparently an estimate formed before the Australian and Canadian upgrades, implying it is open to a further rise.

While Minneapolis spring wheat for March did a little better than its Chicago peer, falling 1.1% to $6.85 a bushel, that still represented the contract's lowest finish on record, and only came after a steep drop in the last session on the Canadian data.

Canada's wheat crop is, in the main, spring sown.

Paris wheat for January fell by a relatively modest 0.6% to E211.75 a tonne, given some support by solid European Union exports, at 572,000 tonnes for the week.

Indeed, the figure trounced the 369,400 tonnes that the US actually exported last week.

Chinese rejections

Wheat's fall put a bit of pressure on corn too, the two being rivals in feed rations.

But corn was also, still, under the microscope after the Chinese rejection of cargoes of US imports on grounds that they contain an unapproved genetically modified variety, Syngenta's MIR 162.

That may actually mean delays, rather than cancellations.

"There is talk that the Chinese will look to delay future shipments from the US under the idea that the GMO trait in question would be approved for Chinese feed channels," Benson Quinn Commodities said.

At broker RJ O'Brien, Richard Feltes said: "I hear reports that Chinese corn buyers are trying to delay US corn shipments in hopes that MIR 162 will be approved early next year."

Ethanol powers ahead

Still, concerns were allayed somewhat when the US Department of Agriculture unveiled weekly US corn export sales of 593,600 tonnes, within the range of market expectations, and including 362,600 tonnes sold to China.

Furthermore, ethanol futures soared again, adding 1.3% to $1.885 a gallon for January delivery, the highest close for a spot contract in three months, and implying wider margins for biofuel plants when corn prices are near three-year lows.

The January contract is up 11% so far this month (ie, in the last four sessions).

Chicago corn fell, but not by as much as wheat, ending down 0.7% at $4.33 a bushel for March delivery.

That was at least enough to stay above the contract's 10-day and 20-day moving averages, key technical pointers.

'End of the buying frenzy'

Nor could soybeans manage gains, despite some decent weekly US export sales, of 805,000 tonnes, well within the range of expectations, and a further 110,000 tonnes announced to China through the USDA's daily alerts system.

The problem was that this order was for 2014-15.

And China, the top soybean importer, featured little on the weekly data, with San, Mexico and the Netherlands leading the pack of buyers.

"The soy complex senses the end of the Chinese soy-buying frenzy [of US supplies for 2013-14] with only 6,500 tonnes of old crop US soybeans sold to China in the most recent reporting week," RJ O'Brien's Richard Feltes said.

'Favourable for soybeans'

Furthermore, planting conditions remain benign for South American sowings.

In Brazil, where the forecast is for dry conditions "with a few light showers on Saturday and heavier amounts on Sunday", the outlook is "favourable for soybeans as planting finishes up", US Commodities said.

In Argentina too, "conditions are favourable for soybean development and planting".

Argentine threat

Meanwhile, Argentina may prove a tougher competitor on export markets for now, with talk that Argentina may temporarily reduce its soy export taxes to encourage growers to sell rather than store as a hedge against inflation.

(Extra sales of course mean extra taxes for the government.)

Argentine farmers are holding 11.5m tonnes of soybeans, according to newspaper Cronista Commercial.

Soybeans for January edged down 0.1% to $13.28 a bushel.

Colombia coffee revival

Among soft commodities, robusta coffee fell 0.7% to $1,686 a tonne in London, for January delivery, pressed by ideas that the squeeze on supplies which is supporting values may prove temporary.

Furthermore, its arabica peer tumbled 2.2% to 106.00 cents a pound in New York for March delivery on fresh evidence of the revival in Colombia's output, as trees mature that were planted in a programme to increase the spread of rust-resistant varieties.

Colombia harvested 1.1m bags of arabica beans last month, up 45% year on year, according to the National Coffee Growers' Federation.

Sugar's losing streak ends

Cotton for March eased 0.3% to 78.85 cents a pound in New York.

Weekly US export sales, at 248,640 running bales of old crop and 18,040 running bales for 2014-15, were OK, but the USDA bureau in Beijing threw a downer at the market by estimating China's imports this season at a relatively low 2.2m tonnes (10.1m bales).

However, New York raw sugar rose only 0.01 cents, but an increase to 16.69 cents a pound for March delivery, after an 11-session losing streak.

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