It's a big few days for agricultural commodity data.
Today will bring the US Department of Agriculture's monthly
Wasde crop report, giving fresh supply and demand estimates for world grains,
cotton and oilseeds and domestic meat and dairy.
On Wednesday, Conab, the Brazilian crop bureau, releases its
latest estimates for domestic grains and oilseed crops - whose fate is being
closely watched given setbacks in harvesting in some areas, besides the typical
logistical hiccups, are viewed as part of the strength behind US soybean
"With South America's persistent production issues as well
as harvest delays, it shifts the focus to US soybeans in this period of time
when the focus should be on South American soybeans," Vanessa Tan at Phillip
Palm oil data
The first round of data has already been.
Actually, for markets as a whole there were some key data
over the weekend in terms of Chinese trade data, broadly viewed as negative in
showing exports down 18.1%, year on year, last month in dollar terms.
This apparent evidence of a not overly healthy Chinese
economy sent shares down 2.9% in Shanghai, with Hong Kong stocks down 1.8% and Tokyo
shares closing down 1.0%.
But for palm oil investors
specifically, there has already been some statistics with the Malaysia Palm Oil
Board estimating domestic inventories of the vegetable oil falling to 1.66m
tonnes last month, down 14.3% from January.
That was viewed as a bullish figure, in coming in below the
1.76m tonnes that investors had expected, and with the data showing in
particularly a poor showing for production, underlying concerns over prospects
for supplies given the dry weather testing plantations in Indonesia and
Palm oil for May stood up 0.7% at 2,905 ringgit a tonne as
of 09:30 UK time (04:30 Chicago time, remember clocks went forward in the US at
the weekend), having earlier hit 2,910 ringgit a tonne for the first time since
Dalian soybeans tumble
That was some help to prices of rival vegetable oil soyoil, which gained 0.4% to 44.51
cents a pound in Chicago for May delivery.
This was, technically, unexpected, given that the contract
in the last session recorded an outside day (ie trading beyond the range of the
previous session) but closed lower, viewed as a negative chart signal.
Still, reversal was a bit of a theme, with soybeans themselves for May standing
down 0.5% at $14.50 ½ a bushel, little helped by sharp drop in prices in China,
the top importing country, where Dalian soybeans for September, the best-traded
contract, settled down 2.3% at 4,367 remninbi a tonne.
China imported 4.81m tonnes of soybeans last month, down 18.6%
month on month, the Chinese trade data showed.
Indeed, Chicago markets have been alive with rumours of
Chinese crushers having trouble swallowing what soybeans they have already
ordered, with talk of backlogs at pots.
And this when, in Chicago, speculators have built up a large
net long position in soybean futures and options already, of 208,000 contracts,
the biggest since September 2012, and offering plenty of scope for profit-taking
at prices amongst their highest since July.
The temptation was further enhanced by the prospect later of
the Wasde, expected to show a small downgrade in the US stocks estimate - but
with plenty of uncertainty about how the balance sheet will be made up, and at
a crucial time given the tightness of US supplies.
Indeed, one factor mitigating against a tumble in prices is
a reluctance among US producers to sell at these elevated prices, unlike in corn.
"Producers continue to offer diminishing supplies into this
rally," Brian Henry at Benson Quinn Commodities said.
"Despite being overbought, old crop soybean futures continue
to gain support from the prospects of tighter old crop supplies, while the
technical structure of the market remains supportive."
CHS Hedging noted, as another supportive factor, that "it
still doesn't pencil to bring soybeans or meal into the US from South America,
keeping our balance sheets tight".
Phillip Futures' Vanessa Tan said that unless rival
exporting countries in South America were able to "get supplies to the overseas
market effectively, we remain bullish on US soybeans as the focus on US
soybeans will continue tapping on the tightening US supplies".
On grains, there is less reason for thinking of worryingly
tight supplies, in the US or elsewhere.
Not that sentiment is bad, as shown by the increase by hedge
funds in their net long in Chicago corn futures and options by 71,000 contracts
in a week to 158,000 lots, the highest in nearly a year.
"We expect prices to continue being supported by robust
export demand and ongoing turmoil in the Black Sea region as it does not seem
like the tensions between Ukraine and Russia will be ending anytime soon," Ms
Still, Luke Mathews at Commonwealth Bank of Australia
flagged talk that "farmer selling has reportedly increased sharply over the
past week in response to the firmer prices on offer.
"This, in turn, has contributed to weakening US basis
And, with the uncertainty prompted by the Wasde later, Chicago
corn for May eased 1.4% to $4.82 ¼ a bushel.
'Back in the market'
Wheat posted a
similar decline, dropping 1.0% to $6.47 ¾ a bushel in Chicago for May delivery,
undermined by Wasde uncertainty, and no apparent rise in Ukraine export
Indeed, there is talk now that farmers, rather than holding
off sales with the hryvnia weakening, may be accelerating them to exploit what
decline there has been and raise cash for spring plantings.
"Farmers are back in the market and are currently selling
their production before the sowing period starts," Agritel said.
As an extra pressure, Canada has acted to boost its grain
exports, demand that Canadian Pacific Railway and Canadian National Railway increase
the volumes carried each week over a period of four weeks to move 1m tonnes of
grain each week, or face a penalties of up to Can$100,000 a day.
Indeed, oats, for
which Canada's logistical problems have caused a particular rise in prices,
given US needs for imports, extended a decline on Monday, dropping 5.8% to
$4.20 ½ a bushel for May.