It wasn't a banner day for risk assets, with the profit-taking
pressure evident earlier dogging many markets.
That included commodities,
which lost 0.3% overall, as measured by the CRB index.
And investors had extra reason to sell corn and, especially, soybeans,
with concerns waning about the Brazilian logistical hiccups which have dogged
"There seems to be a little more calmness regarding soybean
supplies getting out of Brazil," Darrell Holaday at Country Futures said.
"It may be the calm before the storm, but there is less
panic feel regarding those supplies in today's market."
'Where is China?'
Not that the day was without its talk of loading delays at Brazil's
"Brazil continues to grapple with loading delays impacting
its soybean export program, with a 56-day wait time being reported at its key
port of Paranagua," Jaime Nolan Miralles, at FCStone, said.
But maybe, even if after delays, boats are actually getting
out in numbers sufficient to meet buyers' appetites.
Certainly, a silence from the US Department of Agriculture on
major export orders from the US, which has been mopping up trade switched from
Brazil, spoke volumes.
"Without fresh demand reports under daily reporting from
USDA over the past week, and once again today, the market lacks a headline to
entice bulls to buy at these levels," Benson Quinn Commodities said.
At RJ O'Brien, Richard Feltes said: "Soybeans were pressured
by the lack of any new export demand, as evidence by the eroding export basis
at the US Gulf and Pacific North West ports."
"Where is China?" Mr Feltes asked, a reference to the world's
top soybean importer, which was viewed by USDA staff as increasing soybean exports in 2013-14, but not as much as had been expected, and with Brazil
forecast to take more orders than America.
Sowings estimates up
As an extra setback, there were reports that Chinese hog
prices have fallen below breakeven levels due to oversupply, a factor prompting
talk of government stockpiling of pork to prop up prices (but of course not the
best news for prospects of it freeing up fresh obstacles to imports).
Such as talk "is bearish soybean and soymeal demand and is
weighing on the soybeans", Benson Quinn Commodities said.
Furthermore, in the latest sign that soybeans are already
winning the acreage battle against corn,
and so maybe justifying a cooldown in prices, Informa Economics rowed back on
talk of huge US corn plantings.
Soybean plantings could hit "80-ish" million acres, rather
than Informa's current estimate of 78.8m acres, the consultancy's chief
executive, Bruce Scherr, said.
Soybeans for May closed down 1.5% at $14.47 a bushel in
Not that corn
found too much succour in Informa ideas that US sowings could fall to 95m
acres, from the consultancy's current figure of 99.3m acres.
But then, with South American logistical fears on the slide,
it felt pressure too from the region's harvest, which is making headway too,
reaching about 15% in Argentina and more in Brazil.
Furthermore, weekly ethanol data surprised investors by
showing a decline in ethanol production, by 8,000 barrels a day to 797,000
barrels a day, despite apparently increasing margins and strong demand,
according to Linn Group.
'May have jumped the
At Country Futures, Darrell Holaday said: "The market may
have jumped the gun in the assumption that ethanol margins have improved enough
to boost production.
"What we feel that most forget is the strong basis levels
that plants are forced to pay to get corn supplies."
As an extra setback, farmers' resolve to hold out for higher
prices appears to be cracking at these levels, raising the amount of fresh
supplies reaching the market, and doing it bit to crack the cash market
"Merchandisers reported a second day of brisk US corn farm
sales yesterday," RJ O'Brien's Mr Feltes said.
Chicago corn for May fell 0.6% to $7.14 ¼ a bushel.
In such circumstances, fellow grain wheat might have been expected to have fallen too.
But it didn't, in fact rising 0.9% to $7.10 a bushel in
Chicago, for the May contract.
In the grain's favour is that its cheapness – it remains at
an, atypical, discount to corn – is believed to be encouraged US livestock
feeders to substitute wheat for corn, a factor helped by reduced rail rates for
taking soft red winter wheat from the Midwest to southern meat producers.
Furthermore, it remains competitive on export markets, at a
time when Iraq has issued a tender for 50,000 tonnes of wheat, but likely to be
far more, and Iran is attempting to secure the purchase of 110,000 tonnes of US
There was bearish news too, with rains having improved the
condition of US winter crops, and more rains due for the northern Plains.
Furthermore, in Europe, the German Farm Co-operatives
Association estimated the domestic wheat harvest this year at 23.5m tonnes, a rise
of 5.4%, after benign autumn sowing conditions and winter weather.
Still, it was European contracts which felt the pressure,
with Paris wheat for May adding a modest 0.2% to E233.00 a tonne, and London
wheat for May dropping 0.9% to £196.75 a tonne, the contract's lowest finish in
(But then the UK is a large buyer of hard wheat from
Germany, meaning its domestic values are affected by the prospect of a large German
crop and cheaper imports.)
And Chicago wheat had the sizeable support of having been at
the end of short wheat/ long corn or soybean spreads, which now being unwound,
as evident in the row crops' prices.#
Among New York soft commodities, cotton was among the few winners of a soft-performing bunch,
gaining further support from ideas of a squeeze on supplies outside of China,
which has its own massive inventories.
The May contract closed up 1.5% at 88.61 cents a pound, a
fresh 10-month closing high, a feat matched by the July lot, which added 1.6%
to 89.55 cents a pound.
Indeed, it was the premium of the July contract over the new
crop December lot, up 0.7% at 87.51 cents a pound, which caught the eye of Dr
John Robinson, cotton marketing specialist at Texas A&M University.
The price pattern offers "a disincentive against storing
cotton into the next marketing year", he said.
"This may reflect expectations of a shortage of available
cotton in the summer as mills scramble for available supplies outside of