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
Kansas City-traded hard red winter wheat for March gained
2.3% to $6.64 ¼ a bushel, the best finish for a spot contract in nigh on three
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 ¾ 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
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.
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
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.
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
"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.
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
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
Soymeal for March closed down 0.5% at $444.00 a short ton,
and soybeans for March by 0.5% to $13.25 ½ a bushel.
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
However, investors were disappointed when the Wasde failed
to cut the estimate for US stocks at the close of 2013-14, as had been