The week's slew of agricultural commodity data did not end
with the US Wasde crop report.
Thursday has already brought two key reports, neither of
which were helpful for bulls, and there are more statistics to come too.
The European Cocoa Associations revealed that European cocoa grindings for the
January-to-March period were, at 340,735 tonnes, up just 0.4% year on year, a
far smaller increase than the 3% or so that investors had been looking for.
Cocoa for May stood 1.1% lower at £1,861 a tonne in opening
deals in London.
And in palm oil, the Malaysian Palm Oil Board revealed a
surprise 1.9% rise in Malaysian inventories of the vegetable oil last month,
rather than the decline that traders had forecast.
The rise reflected a jump in output of 17.3%, nearly twice
that which investors had expected, if in line with rumours earlier in the week
that a producers' association was thinking of a high number.
It was hardly supportive for prices, although Kuala Lumpur palm
oil for July had stemmed losses to just 0.2% as of 09:20 UK time (03:20 Chicago
time), taking it to 2,607 ringgit a tonne.
Weighing on soy
That in turn added to the downward trend elsewhere in the
oilseed complex in Chicago soybeans evident
late in the last session.
Although the US Department of Agriculture's Wasde report was
viewed as bullish for soybeans - in cutting the estimate for domestic stocks at
the close of 2013-14 to 135m bushels, matching the lowest on record compared
with use – futures jumped eight-month highs only to lose most of their gains by
The retreat was blamed largely on profit-taking, which affected
Early on Thursday, Chicago soyoil for May shed 0.7% to 42.60 cents a pound, weighed by rival
vegetable oil palm oil, while soybeans themselves for May were 0.5% down at $14.87
¾ a bushel.
Not that this is all that was going against the oilseed,
with Benson Quinn Commodities noting that the market is "overbought", adding
that "fears of weaker cash markets also favour lower trade".
And there were some questions over some of the Wasde
estimates, notably over the USDA's decision to stock by a Chinese soybean
import number of 69m tonnes.
"Is that too high?" CHS Hedging asked, with many traders
forecasting a number nearer 67m tonnes.
Such concerns were only underlined by a report that Chinese buyers
have defaulted on at least 500,000 tonnes of Brazilian and US soybean orders, worth
The resilience, or not, of Chinese orders overshadowed the corn market too, provoking questions over
the USDA's 125m-bushel upgrade in the Wasde to its forecast for US exports of
the grain in 2013-14.
"The implication may be that USDA expects all corn to be
shipped to China that has been sold to them," CHS Hedging said.
This despite the series of rejections of US corn cargos on
grounds of containing a genetically modified variety, Syngenta's MIR 162, as
yet unapproved by Beijing.
"Is MIR162 approval on deck? Stay tuned," CHS said.
Chicago corn for May fell 0.8% to $4.98 ¼ a bushel, and back
below its 10-day moving average.
'Don't short wheat'
That was actually more than wheat, which extended its losses of the last session by only a
further 0.3%, falling to $6.67 ¼ a bushel for May delivery.
Certainly, the Wasde was downbeat, in raising the estimate
for world stocks by 2.9m tonnes, while the weather outlook has turned a little
wetter for the drought-hit US southern Plains winter wheat belt.
But Benson Quinn Commodities also highlighted "concerns
about a drier weather pattern in the European Union, which extends to portions
of Ukraine, are growing.
"The 6-to-10 day model runs indicate below-normal precipitation
for key regions of the EU, Ukraine, southern Russia and China."
Furthermore, Richard Feltes at RJ O'Brien cautioned that
spring rallies in Chicago, July, futures "of 50 cents a bushel or more are
common, thus I advise against shorting wheat.
Although the late development of the US crop, caused by the
harsh and long winter, "should minimise the risk" to seedlings from a late
spring frost, "the lowest rated US winter wheat crop nationally in 12 years
will keep bears sidelined until more is known about the spring hard red winter
wheat moisture pattern".
Still, there is yet more data to come, in part in the form
of US weekly export sales data, expected to come in at 250,000-375,000 tonnes
for old crop wheat, and 150,000-300,000 tonnes for new crop.
For corn, sales of 700,000-900,000 tonnes are forecast for
2013-14, and up to 200,000 tonnes for next season.
For soybeans, traders expect old crop sales of up to 150,000
tonnes, and new crop volumes of 100,000-300,000 tonnes.
Furthermore, Brazil's Conab bureau will unveil updated
estimates for domestic crops, with corn and soybean estimates likely to be
particularly closely watched.