Month ends are, by repute, times when agricultural
commodities suffer extra selling pressure, as funds tidy up positions to
release cash for paying clients, and so on.
Month beginnings then see cash coming back into markets.
However, the start of February appeared to have come early
in Kuala Lumpur, where palm oil
soared 3% at one point, gapping higher on its chart, and hitting its highest
levels in three months.
Part of the rise was attributed to the broader oilseed
concerns, over the dryness in Argentina which is prompting analysts to cut
hopes for soybean, and corn, crops there (if raising them for
"Dryness in parts of Argentina, the world's number-three
exporter of soybeans, has raised supply concerns and pushed up prices,
potentially turning buyers to palm oil, now trading at a discount of more than
$300 a tonne [to soyoil]," Ker Chung Yang at Phillip Futures said.
However, there was also some good, or rather less poor, news
on the Malaysian export front, when cargo surveyor Intertek estimated shipments
down 7% for the month, at 1.46m tonnes.
Updates earlier in the month had shown a steeper rate of
decline, seen for instance at 14.1% as of January 25.
With this following news earlier in the week that Indonesia
is to raise to 9% for February, from 7.5% this month, its export tax on crude
palm oil, and the scene was indeed set for higher prices.
Kuala Lumpur's benchmark April contract stood at 2,556 ringgit
a tonne at 09:35 UK time (03:35 Chicago time), a gain of 1.8% on the day,
having touched 2,593 ringgit a tonne earlier, its highest since October.
The vegetable oil has now rebounded by 16% from a three-year
low reached on December 13.
But the soybean complex found headway more difficult, as the
end of month indeed encouraged a touch of profit-taking on prices which for soybeans themselves closed the last
session at a six-week high.
Not that the weather concerns, over Argentine dryness, and the
rains hampering central Brazilian harvest and logistics, have gone away.
Weather models show "light precipitation over 60% of central
eastern northern Argentina" heading into early next week, weather service WxRisk.com
"But over the five-day period, the rainfall amounts are
under 25mm, which is not a lot a rain given how dry it's been there."
'Stays completely dry'
Looking further ahead, at the six-to-10 day outlook, weather
models "are in pretty good agreement as well," WxRisk.com said.
"All of Argentina stays completely dry on both weather
models, as does Rio Grande do Sul and most of Paraguay.
"There is 25mm of rain over Parana," in southern Brazil.
"But far away the heaviest rains continued across western and
southern Mato Grosso, Mato Grosso do Sul, southern Goias, Sao Paulo and southern
Minas Gerais. Here the coverage remains 70% and the rainfall amounts quite impressive
However, one factor counting against soybeans is a technical
one, with Chicago's March contract closing just below its 100-day moving
average in the last session, as well as the 50% retracement mark from its
That, a key point for followers of Fibonacci analysis is at
$14.79 a bushel (with the 100-day moving average currently at $14.78 a bushel).
Chicago soybeans for March crossed above these points in
early deals, only to fall back below, to stand at $14.73 ½ a bushel, a decline
of 0.4% on the day.
Soyoil received some
support from rival vegetable oil palm oil, with its decline limited to 0.1%,
leaving it at 52.54 cents a pound for March delivery.
'Expect to see
Chicago corn for
March did the heavy lifting in the last session, when it ended above its
100-day moving average for the first time since October.
And this despite dismal weekly US ethanol production figures,
down to 770,000 barrels a day, the lowest on records going back to 2010,
appearing to show rationing by corn high prices is taking place.
"The pace of production over the past three weeks is now
trending below what is required to meet the US Department of Agriculture's
projection of 4.5bn bushels of corn for ethanol," said Brian Henry at Benson
He added that "we should expect to see depressed production
for the foreseeable future as recently announced plant closures go into effect
"Production margins are improving as production declines but
are still running in the red."
However, not all agree, with Linn Group, for instance,
foreseeing an upward trend in US ethanol output from here.
Still, corn, which is seen more susceptible to heat and
dryness than soybeans (witness the crops' respective fates in the US last
summer), has also being taking the brunt of downgrades to Argentine crops.
Some forecasters have estimates as low as 22m tonnes, well
below the 28.0m tonnes that the USDA has pencilled in.
And, with funds buying 10,000 lots in the last session, that
gave investors some heart in this one, enough to lift March corn by 0.1% to
$7.40 ¾ a bushel.
'Not as precarious'
As ever of late, wheat
lagged its fellow grain, weighed by a global balance sheet that remains relatively
Joyce Liu at Phillip Futures said: "Like soybean and corn,
wheat is also experiencing global supply worries," notably over dryness
besetting US winter wheat.
"But from a stocks-to-use perspective, the wheat situation
is not as precarious as soybean and corn. Hence we expect wheat to rise less
than corn and soybeans this week."
At Commonwealth Bank of Australia, Luke Mathews clocked a
statement from India's farm ministry that the 2013 crop will match last year's
record 94m tonnes, "resulting in ongoing overflowing stockpiles and strong
exportable supplies for the season ahead".
In fact, it is India from where South Korea's Major Feedmill
Group purchased 110,000 tonnes of wheat, traders said on Thursday.
That countered some of the support by a purchase of 78,670
tonnes of US milling wheat by the Taiwan Flour Millers' Association.
March wheat eased 0.2% to $7.85 ¾ a bushel in Chicago.
Still, the big news on shipments may come later, when the
USDA unveils weekly US export sales data, expected at 400,000-550,000 tonnes
For corn, sales are expected at 150,000-400,000 tonnes, and
for soybeans at 600,000-900,000 tonnes
US export data will also be closely watched for cotton, although many investors were
not hanging around for the figures, and banked some of their recent gains on
New York's March lot fell 0.6% to 82.45 cents a pound.
New York raw sugar
gave back some of its gains of the last session too, standing down 0.4% at
18.64 cents a pound.
CBA's Luke Mathews said: "We believe global sugar supplies
will still remain comfortable in 2013 and medium-term price pressure will
"Bouts of short covering throughout 2012 saw prices push up
to the 200-day moving average before the existing downtrend was resumed - the
current 200-day moving average is at 20.23 cents a pound."