Asian share markets ignored last night's record high close
by Wall Street stocks, with equities dropping 0.3% in Tokyo and showing small
losses in the likes of Hong Kong and Shanghai too.
And agricultural commodities did too.
Back above 80
Cotton which as
an industrial commodity tends to move more in line with broader sentiment than
food crops, managed only a 0.1% gain to 80.41 cents a pound for March delivery.
Still, this solidified the fibre's place back above 80 cents
a pound, among its highest levels in more than a month.
And the rise defied news that China is clamping down further
on the practice by unscrupulous companies of selling cheap imported cotton into
a state stockpiling programme aimed at supporting domestic farmers.
(This is a generous subsidy programme, offering 20,400 yuan
($3,360) a tonne, equivalent to about 150 cents a pound. So generous, indeed,
that it is viewed as having put a floor under international cotton prices.)
On the bullish side, US cotton stocks are back on the
downswing, falling to 91,141 bales as of last night, down more than 3,000 bales
on the day.
Palm stocks rise
And upward movement was a struggle in Chicago too.
After all, for many agricultural commodities, there are big
price influences to come on a day which is a big one for data, so injecting an
air of uncertainty for now.
In fact, the slew of statistics has already begun for palm oil, with the Malaysian Palm Oil
Board revealing that Malaysian stock of the vegetable oil rose by 7.2% month on
month in November to 1.98m tonnes, as a decline in exports outpaced a seasonal
fall in production.
The inventory figure was, though, somewhat anticipated,
limiting to 0.4%, to 2,635 ringgit a tonne, the loss in Kuala Lumpur futures as
of 09:35 UK time (03:35 Chicago time).
For the big grains and oilseeds, the day brings crop
estimates from Conab, the ag bureau in Brazil, the top exporting country for soybeans, as well as of the likes of
arabica coffee and sugar.
It will also see the US Department of Agriculture's final
benchmark Wasde crop report of the year.
In fact, December Wasdes are not the most important of the
series, in failing to update US crop production figures.
But today's Wasde being keenly anticipated nonetheless for
estimates for South American production of corn and soybeans, and of US demand
of the two row crops plus wheat too.
If this year has been marked by record US corn production,
and a strong soybean harvest too, it is also notable for a pick-up in demand
now that supplies are more freely available.
'Can't afford to continue
This is particularly so in soybeans, for which the US has, three
months into 2013-14, sold 95% of the exports expected for the whole season.
"The expectation of soybean demand shifting to South America
hasn't happened to a degree the trade feels comfortable with, which has offered
enough technical support to trigger additional fund buying," Benson Quinn
Another broker said: "The point is we can't afford to continue
selling soybeans at this rate without higher price rationing coming into play.
"There is no doubt that the record amount of South American
acres should replenish world stocks, but it will take some time for production
and distribution to affect prices."
The Wasde is expected, in raising the estimate for US
exports, to reduce the figure for soybean stocks at the close of 2013-14 by 17m
bushels to 153m bushels.
Still, soybeans for January eased 0.2% to $13.41 ½ a bushel,
as some investors took the cautious option and took profits ahead of the
For corn, the
Wasde is expected to raise the US export estimate too, with more than 70% of
total shipments for 2013-14 already sold.
On actual exports, data on Monday showed US scorn shipments
last week at 40.2m bushels, well ahead of the 27.3m bushels a week need to meet
the USDA target.
Hence the expectation of a cut of 16m bushels in the
briefing in the estimate for US corn stocks at the close of 2013-14.
"Overall, a very small downward revision to US corn carryout
is expected, based on expectations for slightly stronger disposal," Luke
Mathews at Commonwealth Bank of Australia said.
Nonetheless, with stocks still expected to end the season at
a very comfortable 1.871bn bushels, the investors were not so keen to clamour
aboard with more long positions.
Quite the opposite.
Chicago's March lot fell 0.7% to $4.34 ¾ a bushel, although
that left it above its 20-day moving average, which the contract is enjoying
its longest spell above since August.
"On the technical front the market maintains a positive
outlook near term with the March contract still holding its 20-day moving average,"
Benson Quinn Commodities said.
'Prayers are needed'
For wheat, the
Wasde is expected to cut the US stocks forecast too for end 2013-14, by 25m
bushels to 540m bushels, after a decent first half of 2013-14 for exports.
However, the technical signals are not so good.
"Charts look good for soybeans, bottoming in corn, but
prayers are needed for wheat," Mike Mawdsley at Market 1 said.
CBA's Luke Mathews noted that "a break of the $6.50-a-bushel
support" for Chicago's March contract "would open up the possibility of more
significant losses toward the $6.00-a-bushel mark".
However, the grain actually did best of Chicago's big three
in early deals, easing a modest 0.1% to $6.50 a bushel for March, if only
lagging on the downside because of the technical floor at this level.
Furthermore, with prices having underperformed in recent
sessions, profit-taking on long positions looks less appealing.
And there are the worries of winterkill damage from the US
cold snap, and talk of Brazil returning to snap up fresh supplies, with two
cargoes of hard red winter wheat for February delivery purchased, according to
the rumour mill.
That said, US wheat faces extra competition, given the huge
harvest in Canada, from where Japan bought 111,173 tonnes of milling wheat on
Hard red winter wheat itself was 0.25 cents lower at $6.95 ¾
a bushel in Kansas City for March delivery.
The day will also deliver industry data on the cane harvest,
and sugar output, in Brazil's key
Centre South region, responsible for some 90% of domestic production, expected
to show a strong close to the crushing season.
"Brazil's Centre South crop is continuing to be harvested
and final crush numbers are now expected to approach 600m tonnes," Sucden
Estimates had been below 590m tonnes.
Investors were certainly taking no chances, taking raw sugar
futures for March down 0.2% to 16.51 cents a pound in New York.
Bullish sentiment was tempered somewhat by an Egyptian
purchase of 50,000 tonnes of raw sugar.