It is a big day for agricultural commodity data.
In fact, some statistics have already arrived, with the
Malaysian Palm Oil Board revealing the latest monthly balance sheet for palm oil in the second biggest
producing and exporting country.
Exports weakened sharply, down nearly 10%. But this decline
was in fact a little less severe than expected by investors.
But with production dropping significantly too, a seasonal factor,
inventories eased off, and by a little more than investors had expected, by
2.6% to 1.93m tonnes.
With separate data from cargo surveyor Intertek showing
Malaysian exports recovering this month, by 4.1% so far, the impact was to send
palm oil futures up 1.0% to 2,604 ringgit a tonne in Kuala Lumpur as of 09:45
UK time (03:45 Chicago time).
That helped soyoil,
the rival vegetable oil, post gains in Chicago too, adding 1.0% to 38.95 cents
a pound for March delivery.
But the ebullience failed to transfer too far into oilseeds,
with the soybean market itself
giving two other factors priority above influences from palm oil.
One is the prospect later of the US Department of
Agriculture's latest monthly Wasde report on world crop supply and demand,
which is expected to cut the estimate for US soybean stocks at the close of
The stocks number is expected to fall by only 7m bushels, to
143m bushels, that would be historically tight compared with consumption,
implying rocketing prices, although the prospect of a decent South American harvest
is expected to keep values in check.
The forecast for a downgrade in the stocks number reflects the
strong start to the season for US exports, with domestic consumption strong
"With good domestic crush margins, the USDA may have to
increase imports to keep the ending stocks number from declining too much," CHS
The extra imports, which to work imply relatively strong US
prices, could come in the form of processed product as well as raw soybeans
"We could also see some soybean and soymeal imports from Argentina because the margins are getting
close to pencilling an arbitrage profit," one US broker said.
As to whether Argentina will have much to export, that
depends in part on farmers' willingness to sell, given the hoarding that have
been undertaking to protect themselves against a falling peso.
They still have plenty of old-crop soybeans left on farm,
with estimates at 7m-11m tonnes.
As for the next harvest, this is expected to be downgraded
in the Wasde, but not by much, to a still-large 54.1m tonnes from 54.5m tonnes,
after a period of dryness turned to a spell of excess rains.
"Some minor flooding is possible in southeast Entre Rios and
northeast Buenos Aires this week," weather service MDA said.
"Elsewhere, weekend rains improved moisture in west central
Dry for now
More important currently is the Brazilian harvest now in
motion, freeing up supplies for world trade.
And this will see an upgrade in the Wasde, to 89.8m tonnes
from 89.0m tonnes.
However, is a dry spell putting such ideas at risk?
The second factor that is concerning investors as regards
soybeans is the threat to Brazil's production from the same hot and dry weather
pattern which has fuelled rises in coffee and sugar prices too.
In fact, "all of central and east central Brazil remains dry
and temperatures will run several degrees above normal over the next five days,"
weather service WxRisk.com said.
But is a change for the wetter on the way?
WxRisk.com said: "In Brazil the models are not in very good agreement"
over the six-to-10-day outlook.
"The operational European model keeps all of east central
Brazil dry. But the GFS has some showers and thunderstorms which drops 0.50-1.5
inches of rain over Parana and Sao Paulo.
"That being said it should be pointed out that the GFS
ensembles support the European drier scenario over east central Brazil."
Meanwhile, further west, in Mato Grosso, the top soybean producing
state, where farmers are trying to harvest, they will see more of the rains –
1-4 inches – which have delayed combines.
The impact on prices of the uncertainty, over weather and
Wasde, was to see March soybeans rise, but not by much, by 0.1% to $13.32 ¼ a
bushel, while soymeal for March dropped 0.1% to $445.80 a short ton.
Grains were not so reticent in their movements, especially March
oats, which extended their tumble of
the last session, when they set a fresh record high for Chicago, of $4.67 ¼ a
bushel, only to close down the exchange maximum of $0.20 a bushel.
On Monday, the March contract lost a further 2.0% to hit
$4.28 a bushel, with the decline fuelled by ideas that although supplies from
Canada are being disrupted by logistical hiccups, demand in the US may not be
as strong as had been thought.
One US broker flagged "rumours that an imported cargo of
oats in Texas was unable to find a bid" as undermining the market.
Among the big grains, wheat
dropped 0.5% to $5.74 ½ a bushel in Chicago for March delivery, hurt by some
improvement in prospects for US winter wheat seedlings, being protected from
frost by snows which have lifted soil moisture prospects too.
"Snow cover is protecting wheat from cold temperatures
across northern areas," MDA said.
The six-to-10-day outlook has trended warmer further south
"In the Central Plains mild temperatures will lower
winterkill threats," the weather service said.
Although Namex data revealed that Russia has bought some 600,000
tonnes of wheat so far this year through intervention buying, that has hardly
stopped the country picking up more export orders of late than some had
expected, nor supporting domestic prices much, which are being protected by a
Corn for March
fell 0.8% to $4.40 ¾ a bushel, as investors took profit on the grain's
surprisingly improved price performance this year.
The Wasde is actually expected to prove a little bullish for
the grain, in cutting the forecast for US stocks from humungus levels to just
large ones of 1.62bn bushels, still around double those at the close of
Still, there is some negative demand news around too, with
latest confirmed cases of porcine epidemic diarrhoea (PEDv) in the US rising
265 cases as of the start of the month to 2,962, in 23 states, although with
Iowa the epicentre, with 35% of reports.
This data followed on from statistics showing an
unexpectedly small US cattle herd.
'Continue to pressure prices'
Back among soft commodities, Datagro forecast a world sugar deficit of 1.6m tonnes in
2014-15, after a surplus of 2.62m tonnes in 2013-14, as reports continue to
trickle from the Dubai sugar conference.
Macquarie sees a deficit of 1.0m tonnes next season.
But with that still implying large sugar supplies, after
three seasons of surplus, and conference host Kingsman seeing a further surplus
in 2014-15, of 2.0m tonnes, the news was not enough to bolster prices.
"If realised, this surplus will continue to pressure global
sugar prices," Luke Mathews at Commonwealth Bank of Australia said.
Raw sugar for March was 1.3% lower at 15.52 cents a pound in