For once, China had some bullish news to offer the soybean market.
Ok, not all of the news was supportive, with the National
Grain and Oil Trade Centre unveiling the auction of 300,000 tonnes of the
oilseed from China's state reserves next week.
Still, that had already been anticipated by the market, and
the 300,000 tonnes in itself is not a huge amount, compared with China's huge
"Chatter about Chinese bean auctions involving sizeable
tonnages fuelled the bears on Wednesday," US broker CHS Hedging said.
The devil may depend on the detail of the pricing, which has
yet to be announced.
What official customs data showed was soybean imports of
6.5m tonnes last month.
OK, that was in line with the estimate earlier this week
from the Ministry of Commerce, downgrading its figure from an earlier 6.9m
But it was well received by the market, being the best
figure so far this year, up 64% year on year, and up from 4.62m tonnes in
March, besides beating expectations of many analysts.
"There are worries in the market that China is undergoing a
slowdown that could curb demand for soybeans in the world's largest importer of
soybeans," said Vanessa Tan at Phillip Futures.
"This was evident in estimates of China's soybeans imports
falling for the third consecutive month.
"But China's soybeans imports actually posted an increase,"
she said, adding that the data has "helped to prop up Chicago soybean prices as
the market has previously thought that China's soybeans demand will slow down."
Certainly, soybeans for July managed a bounce in Chicago,
not a huge one, but of 0.4% to $14.52 a bushel as of 10:00 UK time (04:00 Chicago
Prices rose on China's Dalian exchange too, even though
large imports by the top purchasing country would imply richer supplies there.
There, the September contract added 0.4% to 4,384 yuan a
China's imports have been especially under scrutiny ahead of
the US Department of Agriculture's monthly Wasde crop report, on Friday, which
some feel may bring a downgrade to the 69m-tonne estimate for the country's purchases
The Wasde is also expected to trim the estimate for domestic
stocks as of the end of 2013-14 by 1m bushels to a tight 134m bushels, while
forecasting a recovery in inventories next season to 200m bushels.
Still, there is some data before then to concern investors,
with the USDA later today unveiling weekly export sales, expected to come in at
zero for old crop soybeans – of which the US has also already sold more than it
is forecast to actually ship in 2013-14.
For new crop, shipments are expected at 100,000-300,000 tonnes.
And then there are the statistics due later from Conab, the
Brazilian crop bureau, which had been expected to be a bit of a formality before
the country's agriculture minister pegged the domestic soybean crop at 89m-90m
Conab's current estimates is 86.1m tonnes.
'Sharp fall in prices
Soybeans' performance, for once, put them well ahead of wheat, which suffered a bit of profit-taking,
with no fresh news on damage to the US hard red winter wheat crop in the drought-hit
And what is emerging from Ukraine, the other main prop to
prices thanks to the threat of political crisis spilling over into exports and
lower production this year, is more hopeful of accord, with Russian president
Vladimir Putin urging pro-Russia groups in eastern Ukraine to postpone a referendum
"That said, the main factor driving US wheat markets higher
in recent weeks has been the ongoing decline in US hard red winter wheat crop
conditions," said Luke Mathews at Commonwealth Bank of Australia.
"So a sharp fall in prices, based solely on the Ukraine
situation, is unlikely."
At Phillip Futures, Vanessa Tan forecast that Chicago wheat will
"continue experiencing upside".
'Excellent planting prospects'
At Benson Quinn Commodities, Brian Henry assessed the recent
price action in wheat markets, including a late recovery in the last session,
as "evidence of a trade willing to take profits, but hesitant to establish new
"However, Wednesday's price action did hint towards technical
In fact, there was a little bit of a negative fundamentally for
markets in terms of rains in Western Australia, boosting growing conditions for
the top Australian grain growing state, which is showing itself an increasing
force in export markets.
And this after rain in eastern Australia too.
CBA's Luke Mathews noted "excellent planting prospects for
most of the Australian grain belt", if noting that "strengthening predictions
for El Nino to develop continue to worry some participants", with the weather
pattern typically causing eastern Australian dryness.
Chicago soft red winter wheat for July fell 0.9% to $7.31 ¼ a
bushel, while Kansas City hard red winter wheat, the type under threat from US
southern Plains drought, eased 0.6% to $8.36 ½ a bushel.
Minneapolis hard red spring wheat, for which wet weather in
the northern US is a threat, fell 0.7% to $8.01 a bushel.
More on North American spring wheat prospects will be known
later with the first crop progress data of the year from the major Canadian
growing province of Saskatchewan.
As for US export sales data, this is expected at 100,000-300,000
tonnes for old crop wheat, and 200,000-300,000 tonnes for 2014-15.
In fact, corn
managed to narrow a bit its discount against wheat, with wet weather returning
to the Midwest to interrupt US sowings.
On Wednesday, "planting continued for many, while rain
knocked a few out when spotty thundershowers erupted in parts of the Corn Belt,"
CHS Hedging noted.
Despite the rains, "we should see much improved progress
numbers on Monday", said Sterling Smith at Citigroup, referring to the weekly sowings
update figure to be released by the USDA, which this week rated seedings 29%
"Planters are rolling in the heart of the Corn Belt, and
although rains are expected to move in late in the week, the trade is
optimistic that Monday's crop progress report could show corn planting near 60%
complete," Benson Quinn Commodities said.
Nonetheless, corn for July added a modest 0.1% to $5.14 ½ a
bushel, although the new crop December contact underperformed, down 0.2% at
$5.08 ¾ a bushel.
Among soft commodities, raw
sugar made a weak start, easing 0.4%
to 17.20 cents a pound in New York for July delivery, as the market digested
some fresh numbers.
Thai's OCSB authority pegged domestic sugar output in 2013-14
at a record 11.3m tonnes, off 103.7m tonnes of cane, with 8.8m tonnes of the
sweetener available for export.
But the board forecast a production decline in 2014-15 to
10.2m tonnes of the sweetener, from 102m tonnes of cane, implying a far lower sugar
And the China Sugar Association said that Chinese sugar
output rose 2.7% year on year to 13.25m tonnes in the October-to-April period, while
sales slumped 22% to 5.96m tonnes.
Still, despite the rising sugar supplies, Zhengzhou futures
for September added 0.2% to 4,731 yuan a tonne.