PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 22:10 GMT, Monday, 10th Feb 2014, by Agrimoney.com
Evening markets: wheat feeds on bullish data, but corn sags

For wheat, a surprise in US data estimates produced an unsurprising result.

The US Department of Agriculture, in its Wasde report, cut its forecast for US stocks of the grain by 50m bushels to 608m bushels, more than the 5m-bushel downgrade expected.

'A little surprising'

The downgrade was attributed to higher export expectations, and a revision Darrell Holaday at Country Futures called "a little surprising given the overall pace" of US shipments so far 2013-14.

Still, what the USDA also did was cut its estimate for Argentine shipments in 2013-14 to 3.0m tonnes - the lowest in nearly 40 years.

This implies unfulfilled demand to importers such as Brazil which typically turn to Argentina for supplies, and are instead looking elsewhere in the Americas.

Indeed, the USDA cut its estimate for domestic stocks of hard red winter wheat, the type Argentina tends to export, more than soft red winter wheat.

Prices rise

Kansas City-traded hard red winter wheat for March gained 2.3% to $6.64 a bushel, the best finish for a spot contract in nigh on three months.

As a technical boost, this saw the contract close above its 50-day moving average for the first time in four months.

Chicago-traded soft red winter wheat for March gained 1.3% to $5.84 a bushel, remaining well short of its 50-day moving average, but adding a little extra confidence in its rally this month, which had looked to be fading in the last session.

As an extra help, US wheat exports for last week, as measured by cargo inspections, came in at 446,200 tonnes, as rise of 36% week on week.

However, Paris wheat for March managed only to hold its ground, closing at E194.75 a tonne, undermined somewhat by talk that FranceAgriMer will on Wednesday lower its estimate for French wheat exports.

Rising exports

For corn, a surprise US estimate revision a far larger-than-expected US stocks downgrade - producing a surprising result lower prices.

The USDA cut its estimate for US corn stocks as of the close of 2013-14 by 150m bushels to 1.48bn bushels, a far bigger downgrade than any analyst had expected.

The revision reflected a strong pace of US export so far in 2013-14.

And, indeed, weekly corn shipments rose 23% week on week to 695,000 tonnes, meaning the US has exported nearly twice as much of the grain so far this season as at the same time in 2012-13.

'Somewhat suspect'

However, had this already been factored in?

"The problem the corn and soybean markets have is that they rallied into these numbers and we are not likely to get more bullish numbers for this crop year," Mr Holaday said.

And are the estimates credible?

At RJ O'Brien, Richard Feltes termed strong hopes for US exports "somewhat suspect", given the potential for upset from China's rejections of cargos containing a GM variety unapproved in Beijing, and with USDA staff cautioning that no resolution looks imminent.

The US has "1.77m tonnes of unshipped corn sales to China with no vessels nominated thus far in February", he said.

'No numbers bullish'

For soybeans, the problem was not just that futures rose into the report, but that the Wasde did not lower the estimate for US stocks at the close 2013-14, as investors had expected.

"There were many important soybean numbers. None of them are considered bullish," Mr Holaday said.

In fact, looking abroad, the USDA also raised its estimate for the Brazilian crop by 1.0m tonnes to 90.0m tonnes, meaning extra competition on export markets.

"This negates ideas that the record crop was decreasing in size and opens the door for as much as 92m tonnes," he said, with forecasts for rains in dry areas of Brazil actually decreasing dryness concerns.

Prices ease

Still, the day was not all downbeat for the oilseed, with numbers on palm oil earlier viewed as bullish, in taking Malaysian stocks below forecasts, while US weekly soybean exports were strong too.

At 1.55m tonnes, they represented a 30% jump week on week, and were a multiple of the pace needed to meet even an upgraded USDA export forecast .

But any idea of a tighter soymeal market thanks to strong exports was dashed when the USDA cut its domestic consumption forecast to balance out a rise in its estimate for shipments.

Soymeal for March closed down 0.5% at $444.00 a short ton, and soybeans for March by 0.5% to $13.25 a bushel.

Mixed softs

Among soft commodities, two major negatives were the weaker Brazilian real and the increased hopes for rain relief in major coffee and cane growing regions of the country, which have been unduly dry.

The real dropped 1.2% against the dollar to stand at R$2.41 per $1, so reducing the value in greenback terms of assets, such as coffee and sugar, in which Brazil is a top players.

Still, with Brazilian coffee exports rising by some 200,000 bags to 2.7m bags last month according to Cecafe, indicating sustained demand at lower prices, there was some reason to underpin values.

Arabica coffee for March closed up 0.4% at 136.20 cents a pound.

And with ideas of a sugar deficit in 2014-15 fading for now, even if only to be replaced by concerns over the following season, raw sugar for March ended down 0.6% at 15.73 cents a pound.

Fall from six-month high

Cotton for March closed down 0.1% at 87.37 cents a pound in New York for March delivery.

The market had ridden out pretty well data from the weekend, when the National Cotton Council forecast a rise of 8% to 11.26m acres in US sowings of the fibre this year, enough to produce a crop of about 16.4m bales, up 24% year on year.

Indeed, it set a six-month high of 88.84 cents a pound earlier.

However, investors were disappointed when the Wasde failed to cut the estimate for US stocks at the close of 2013-14, as had been expected.

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