Have investors gone on holiday already?
Grain markets were hardly alive with volatility in early
deals on Friday, which some have predicted will be a quiet day, coming ahead of
a long weekend for the US, which celebrates Martin Luther King day on Monday.
And what movement there was was broadly downward.
The day "may bring some more profit-taking ahead of the long
US holiday weekend", Benson Quinn Commodities said, referring in particular to soybeans.
And the oilseed indeed eased 0.3% to $13.10 ½ a bushel in Chicago
for March delivery as of 09:30 UK time (03:30 Chicago time).
This despite another firm performance overnight by futures
on the Dalian exchange in China, the world's top soybean importing country.
The best-traded May contract edged 0.3% higher to 4,681 yuan
a tonne, its highest settlement in nearly eight months.
That said, soymeal's
winning run ran out of steam, with the bet-traded May contract easing 1 yuan to
3,379 yuan a tonne.
And it was easy to take a price-negative view of the South
American weather outlook which has been a big prop to soybeans' firmness.
'Better chance of
"Argentina's forecast for next week has a better chance of
rain in it," CHS Hedging said.
Another broker said that "dryness in Argentina may affect
yield potential before rain relief comes next week".
But overall, "the rain amounts are expected to be large
enough to replenish moisture levels and help yields.
"We do not see a significant reduction of yield potential in
Argentina at this time."
Longer term too, the outlook has improved, with less risk of
an El Nino event (although these can actually improve yield prospects for some
parts of South America in bringing extra rain).
"Sea surface temperature anomalies in the eastern equatorial
Pacific reverted to 0.1 degree Celsius above normal in the first half of
January, after averaging 0.6 degrees Celsius above normal in December," Anne
Frick at Jefferies Bache said.
Sure, demand side signals remain supportive to prices, with US
exports staying and the domestic crush strong too, as data earlier this week
"For old crop soybeans, which we consider through March, we
see no change in narrative that US is using too many beans too fast, on the
heels of accelerated US crush rates and brisk soybean inspections and sales,"
Richard Feltes at Chicago-based broker RJ O'Brien said.
'More likely to
And although there remain plentiful concerns that China is
poised to cancel a slew of purchases of US soybeans, there are other reasons
than potential, nay traditional, Brazilian logistical hiccups to think that
these might not occur.
"We would note that 2013 US soy quality is excellent, which
reduces the incentive for China and other soy buyers to switch out to typically
higher quality South American soybeans," Mr Feltes said.
"In the short term, the soy market is more likely to advance
Where actual Chinese import cancellations are impacting
investor sentiment is in corn, after
the rejections of some US cargoes on grounds of containing an unapproved GMO
The US Department of Agriculture on Thursday noted 170,000
tonnes of Chinese cancellations last week and a further 126,000 tonnes which
had been booked to "unknown destinations", assumed to be China, through the
daily reporting system.
"This exacerbates the situation," said Vanessa Tan at
Phillip Futures, adding that the rumpus "is likely to be extended further and
could lead to even more rejections.
China vs foreign
Comments from Ren Zhengxiao, chief of China's State Grain
Administration, did little to raise hopes of any curtailment of the
"The impact (from cheap imports) on domestic grain
production and market stability should not be underestimated," Mr Ren
said, noting that China's efforts to support farmers by raising domestic prices
had created premiums of some 300-500 yuan ($50-$83) per tonne compared with
foreign values of the likes of corn, rice and wheat.
Chicago corn for March made moves to enhance its discount by
easing 0.4% to $4.26 ¼ a bushel, still remaining just ahead of its 10-day
moving average, having given up the 50-day and 20-day lines gained a week ago.
'Buyers holding the
And wheat was
hardly on top form either, as India's MMTC state-run grain trader tendered for
120,000 tonnes of milling wheat, issuing a reminder of the country's growing
place in world export markets – with a potential 100m-tonne crop to harvest
Benson Quinn Commodities noted that, while US soft red
winter wheat was priced for an Egyptian tender this week at a cheap $265 a
tonne, Indian supplies are not too far away.
"Indian offers have traded between the low $270s a tonne to
mid $280s, with allowances to offer supplies as low as $260," the broker said.
"This simply indicates that global buyers of soft wheat are
still holding the cards."
'Potential for winterkill'
Still, there remains talk of additional sales of US hard red
winter wheat to Brazil.
And Mr Feltes flagged the "potential for winterkill" among
US winter wheat seedlings "on the next Arctic blast converging late month over the
Plains and the Midwest".
Wheat for March stood unchanged at $5.72 ¾ a bushel, looking
for its first week of gains in seven weeks.
That may depend in part, however, on Informa Economics estimates
due later on US acreage, although these will be more closely watched for statistics
on corn and soybeans.
The revival in corn prices a week ago had implied corn
returning to greater prominence in farmers' growing plans, but as the Federal
Reserve said this week, "Current prices for corn will not cover expected costs
for 2014 production, whereas soybean prices would.
"This may lead to increased soybean planting in the spring."
'Pace production increasing'
Among soft commodities, cocoa
dropped 0.8% to $2,732 a tonne in New York for March delivery after data
overnight showed the North American grind rising by 4.4% in the last quarter of
2013, below expectations for a first of at least 5%.
Raw sugar eased
0.01 cent to 15.44 cents a pound as traders reassessed the Indian production
data, showing a 21% drop to 8.55m tonnes in output so far this season, which
bolstered prices in the last session.
"The pace of the production is rapidly increasing, evidenced
by the fact that the year-to-date shortfall has narrowed from 29% to 21% in
just half a month," Luke Mathews at Commonwealth Bank of Australia said.
"Furthermore, the Indian government has approved plans to
subsidise 4m tonnes to raw sugar exports, a move which compounds the
comfortable global supply situation."