PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 09:34 GMT, Wednesday, 26th Mar 2014, by Agrimoney.com
Morning markets: cotton prices rise again. But grains freeze

China's corn imports, or rather the rejection of cargos of US supplies, are back in the headlines.

It was revealed on Tuesday that China had turned away more imports from the US, over claims of contamination with a Syngenta genetically modified variety, Viptera, unapproved in Beijing.

That took the total rejections for 2013-14 to 908,800 tonnes.

And this time Syngenta is not taking the issue lying down, even as its Viptera GM corn is, more than four years after submission for approval, up for consideration by China's biosafety committee potentially this week. (The next potential review is in June.)

'Global trade issue at play'

"There's unquestionably a global trade issue at play here relating to contracts and prices," said David Morgan, Syngenta's regional director of North America, tagging onto a theme raised by the US Department of Agriculture.

USDA China chair Fred Gale said last week that "China has found its debate over imports of GMO farm products "to be a convenient tool to use to try and protect the Chinese market".

After all, the country's corn users have large state inventories to rely on.

And there are other exporters, beyond the US, to look to as well, with some talk that Chinese importers are waiting to pounce on Ukraine, should a move by other buyers to switch to origins deemed less risky prompt a drop in prices.

"Chinese buyers are thought to be waiting for the government to sell state reserves or for cheap corn to become available from Ukraine," CHS Hedging said.

Planting hold-ups

That corn futures for May rose 0.2% to $4.87 a bushel in Chicago as of 09:30 UK time (4:30 Chicago time) reflects in part some support from US weather, with cold temperatures, a hangover from the fierce winter, lowering hopes of an easy spring sowing period.

Indeed, while only limited USDA data on sowings progress so far, in the South, is available, as of Sunday, Texan farmers had completed only 20% of corn plantings, less than half the average of 43% by then.

In Georgia, the figure was 18%, below an average of 29%.

Still, the new crop December corn contract was stationary at $4.86 a bushel, grappling with its 200-day moving average at that level.

"December corn is once again finding a hard time trading above the 200-day moving average," one broker noted.

Data ahead

Another factor in play is the prospect on Monday of two key USDA reports, on planting areas for this year's spring crop, and on quarterly grain stocks as of March 1.

These reports are often viewed with some trepidation anyway, in potentially causes of large market movements, but preparing for the stocks report looks particularly difficult this time, given the huge range of market estimates for the inventory figures.

The spread of forecasts, at 724m bushels for corn, 163m bushels for soybeans and 225m bushels for wheat, is "whopping", Richard Feltes at RJ O'Brien said, noting a reluctance in the last session for prices to move too far.

It was "a quiet trading session overall more typical of 'watch and wait' mode ahead of a major crop report", he said, and a mood reflected on Wednesday too.

'Place to be happy'

At Market 1, Mike Mawdsley noted that May corn's nine-day moving average has barely budged this week, a factor which "tells me futures have found a place to be happy for the time being.

"The chart tells the story - stuck until we get more news, bullish or bearish."

In fact, what headway corn did make on Wednesday was likely more down, as it has been of late, to movements in wheat, which added 0.3% to $7.10 a bushel for May on concerns over the impact of dryness on the southern Plains winter wheat crop.

The GFS weather model "hints at better rain totals in many of these regions in early April, while the other forecasts offer chances, but typically very light totals," Brian Henry at Benson Quinn Commodities said.

However, while "any moisture would be welcome, there is little confidence in seeing a general soaking rain that helps a portion of the region," he said, noting also the forecast "combination of above-average temperatures and the potential for high winds into the weekend".

'Negative for weeks'

As for soybeans, they fell, but without much conviction, given the lack of evidence yet of the realisation of much-feared cancellations by China of orders of US imports.

"China cancelation/resell talk still dominates the market, but the lack of cancellations of US soybean sales under daily reporting is being viewed supportive on price breaks," Benson Quinn Commodities said.

Not that China's soy processing sector is in good health, with CHS noting talk "of Chinese crushers having difficulty opening letters of credit for Brazilian soybeans until the beans are ready to sail.

"Their crush margins have been negative for weeks."

Falling prices

In fact, soybean prices on China's Dalian market suffered a bit of a setback, falling 0.4% to 4,324 yuan a tonne for the best-traded September contract.

Elsewhere in the oilseeds sector, palm oil fell too, by 0.6% to 2,694 ringgit a tonne, on course for what would be its first close below 2,700 ringgit a tonne for more than a month.

The outlook for Malaysian palm oil exports "may be subdued by concerns over China's economic slowdown and effects of a Malaysian export tax hike in April", Chee Tat at Phillip Futures noted.

Chicago soybeans for May eased 0.1% to $14.26 a bushel.

El Nino worries

Among soft commodities, raw sugar for May rose back above 17 cents a pound in New York, adding 0.3% to 17.02 cents a pound, helped by concerns of what an El Nino weather pattern could mean for production of the sweetener.

"The previous dry weather conditions in Brazil, world's largest cane grower, had already weighed on prospects of sugar output this year," Phillip Futures said.

"An El Nino event would further worsen production as El Nino generally results in more-than-usual rainfall in South America."

But profit-taking dented arabica coffee prices, sending New York's May contract 0.9% lower to 173.70 cents a pound.

Cotton rises again

Cotton, meanwhile, gained a further 0.7% to 94.80 cents a pound for May, earning hitting a two year high of 94.98 cents a pound.

The fibre has been boosted by data in the last session showing cotton ginnings at 12.87m bales this season, below the harvest estimate of 13.19m bales, and suggesting that US cotton stocks will end 2013-14 even thinner than had been thought, potentially at a 23-year low of 2.5m bales.

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