US farmers have not done nearly as well on corn sowings as
There had been big ideas over the amount of corn that
growers would have in the ground as of Sunday, a figure released in the US Department
of Agriculture's weekly Crop Progress report overnight.
Allendale, for instance, had noted that "trade is expecting
as much as 15% planted versus 18% average".
However, the figure as it turned out was only 6% completed.
(The average was actually 14%.)
The disappointing data helped set in train something of a Turnaround
Tuesday feel in Chicago, where traders believe that the second session of the
week often reverses a strong trend in the first.
(And Monday saw sharp losses.)
Not that the revival in Chicago prices was huge.
After all, it is still early days for plantings, and US
farmers last year showed they can sow a huge area of corn, some 40m acres, in
one week if push comes to shove.
Richard Feltes at RJ O'Brien said: "The corn market won't
get excited about the corn situation unless delays persist beyond the Monday
May 5 update," with some viewing May 1 as a key sowing deadline, after which
yield potential falls, although other commentators use mid-May.
'Planting window is
Indeed, Mr Feltes urged investors to "recall that the US
corn yield last year of 158.8 bushels per acre was achieved despite majority of
corn crop being planted late May, and slightly below normal June-July and
Besides, the weather outlook has improved.
"Weather forecasts suggest fair planting weather for the
next few days," CHS Hedging said, if noting that "rains should move through
according to the 5 to 10 day weather forecast", helping crop already in the
ground, but potentially slowing seedings.
At Iowa-based broker Market 1, Mike Mawdsley said: "The planting
window is opening and progress is getting done. Farmers are ready to roll."
Corn for July
rebounded 0.6% to $4.96 ¾ a bushel.
After all, demand remains decent, with US exports last week
coming in at 1.60m tonnes, well above the pace of 930,000 tonnes or so needed
to meet USDA expectations for the full 2013-14.
The price rise helped fellow grain wheat recover a little ground too, adding 0.4% to $6.70 ¾ a bushel
for May delivery and 0.5% to $6.78 ¾ a bushel for July as of 09:50 UK time
(03:50 Chicago time).
The resilience was helped by USDA data showing no
improvement in the condition of the US winter wheat crop either, rated at 34% "good"
or "excellent", although this was less of a surprise than the corn sowings
Furthermore, there is some talk of funds turning less
positive on agricultural commodities, and raw materials in general, fuelled by news
that Barclays planning to exit large parts of its metals, agricultural and
Barclays, one of the world's biggest commodities traders, is
planning to exit large parts of its metals, agricultural and energy business in
a move expected to be announced this week.
"Fund activity was
extremely negative on Monday which could have something to do with the Barclays'
announcement about exiting its commodities business," one broker said.
"This is a growing trend among major banks with Morgan
Stanley and JP Morgan Chase also making similar restructures," deterred by growing
regulation in the sector.
"If nothing else, it may scare some larger funds to take
profits in fear that other large players will exit longs."
Technically too, with signs fading, Benson Quinn Commodities
cautioned investors to "expect fund involvement to favour the downside".
Contracts are now
trading below 10-day and 20-day moving averages, and after failing to match in
last week's rally their mid-March highs, another negative signal.
gains were modest too.
The USDA crop progress report is not, yet, a factor directly
for the oilseed, although tardy corn sowings would imply some area being
switched to soybeans, which can be later seeded.
However, talk of soft Chinese demand remains a drag.
"We are still hearing reports that China is trying to cancel
Brazilian beans and maybe even resell them for US import," one broker said,
although at least the decline in Dalian soybeans for September was, at 0.4% to
4,354 yuan a tonne, slower than in the last session, when the drop was 1.1%.
CHS also noted talk "that Argentina sold soymeal into the US, cheap".
Chicago soybeans for July gained 0.4% to $14.92 ½ a bushel.
Palm oil jumps
Soymeal itself for July was 0.4% higher at $478.20 a short
ton besides the Argentina talk, while soyoil
managed only a 0.1% gain to 43.30 cents a pound despite a strong performance by
rival vegetable oil palm oil, which
soared 1.4% to 2,680 ringgit a tonne in Kuala Lumpur.
Palm oil received support from hopes for Malaysian exports,
despite cargo surveyor data showing a decline in shipments in the first 20 days
of April, pegged at 5.9% by Intertek and 6.0% by SGS.
"Investors look upon the Ramadan and Eid festivals to
support the recovery in exports," Chee Tat at Phillip Futures said.
Furthermore, "the softening Malaysian ringgit against the
greenback has also helped to boost some overseas purchases.
"With the exchange rate in favour to overseas buyers,
external demand for the ringgit-denominated palm oil is likely to increase,
hence resulting in a price rally."