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Morning markets: soy, coffee, sugar futures maintain appeal

Some of the news stemming from China was negative for financial markets.

Chinese price data for new homes was deemed disappointing in showing growth of "only" 9.6% in the top 70 cities in the year to January, down from 9.9% in December and the first slowdown in a year.

Shanghai shares fell 1.8%, with Hong Kong stocks down 0.8% and Tokyo shares closing 0.2% easier.

Dalian prices

However, the influence from agricultural commodity markets was not so downbeat, for soybeans at least, of which China is the top importer.

There have been concerns for Chinese crush margins, which have fallen from levels of 150 yuan per tonne of soybeans in October to negative levels, depending on who you listen to.

But soybeans for September, the best-traded contract, managed a 0.6% rise to settle at 4,534 yuan a tonne on Monday on China's Dalian exchange

Soymeal for September gained 0.6% to settle at 3,263 yuan a tonne, while soyoil, the other main soybean crushing product, nudged up 2 yuan to 6,856 yuan a tonne.

'Will slow harvesting'

This was not the only Chinese positive for soybean prices.

There has, still, not been the wave of cancellations of Chinese orders of US soybeans, in favour of switching to lower priced South American supplies, that many investors have expected.

Every week without significant cancellations means more actual exports to China, and exacerbates the squeeze in US supplies.

And the South American weather outlook is not ideal, if thanks to too much rain rather than too little.

"Shower activity in Parana and Mato Grosso do Sul will slow harvesting," weather service MDA, said, if adding that the precipitation will "favour conditions" for safrinha corn, which is sown on land vacated by the soybean harvest.

Chart support

Meanwhile, the oilseed is also getting support from a lower-than-expected estimate by US Department of Agriculture officials for US soybean sowings this year, of 79.5m acres, even if many traders believe this is an underestimate.

And from a chart perspective, Chicago futures are being supported by their entrance into a chart gap, on the continuous chart, created by a slump in prices in September.

Technical investors say that markets, like nature, abhor a vacuum, and seek to fill in chart gaps, with this one starting at $14.31 a bushel, going down to $13.75 a bushel for the spot contract.

Soybeans for March were 1.0% higher at $13.84 a bushel as of 09:35 Uk time (03:35 Chicago time), some $0.16 a bushel from a contract high, set in September 2012, while the better-traded May contract gained 0.9% to $13.72 a bushel.

'Price looks rather high'

They gained support from soymeal too, which added 1.2% to $445.50 a short ton in Chicago for May delivery.

"The best explanation for soybean strength is the fact that soymeal buyers of the world are caught short and Argentina is still taking it's time moving product," one US broker said.

Growers in Argentina, the top soymeal and soyoil exporter, are hoard crops as dollar denominated hedges against a falling peso.

The broker added: "We still believe soybean acres will gain more than USDA believes due to the price incentive.

"Between the higher acres in the US and record large South American crop the November soybean price looks rather high."

Mixed reports

But once again, soybeans outperformed grains, including corn, for which the USDA sowings estimate of 92.0m acres has, while seen by many investors as low, been not greeted with the same level of bullish surprise as for soybeans.

"Expected acres of 92m and yields of 165.3 bushels per acre are certainly price bearish if realised," CHS Hedging said.

Nor was there quite such support from export data, with weekly statistics on Friday showing US sales of 691,000 tonnes, decent by below some expectations.

There was some bullish news in that US data late on Friday showed the number of animals on feedlots above market expectations, with marketings last month below forecasts and placements up 9% year on year, thrice the increase investors had expected.

"From a feed grain demand perspective, the cattle on feed report was friendly," Ben Bradbury at Benson Quinn Commodities said.

Still, corn for May eased 0.3% to $4.57 a bushel, with some talk of long soybean-short corn spreading too, and Ukraine political stability easing concerns over shipments from the top exporter of the grain outside the Americas.

Wheat falls

With Ukraine a major wheat shipper too, the appointment of an interim president, Olexander Turchynov, and a unity government weighed on prices of that grain too, which fell 0.7% to $6.05 a bushel for March.

The May wheat contract eased 0.5% to $6.02 a bushel in Chicago.

But there also appears a renewed willingness to sell, evident in the final stages of the last session too.

'Significantly more bearish'

"Spring wheat futures hit a major sell-off in the last hour or so of trading - profit taking was mentioned as the culprit," CHS Hedging said.

Benson Quinn Commodities noted that "sellers hit the market in force over the last half hour, pushing all three markets into new daily lows in the close.

"This leaves the technical set-up significantly more bearish on the daily/weekly charts."

In fact, Minneapolis spring wheat for May lost a further 0.3% to $6.48 a bushel, while Kansas City-traded hard red winter wheat dropped 0.6% to $6.71 a bushel.

The cold threat to US winter wheat seedlings from fresh cold weather has not increased over the weekend.

"Snow cover is beginning to rebuild across northern Kansas and Nebraska," MDA said, noting snow falls of up to six inches over the weekend.

Softs firm

As for soft commodities, a continued forecast for below-average rainfall in some eastern parts of Brazil got coffee off to a strong start.

New York's May arabica coffee contract soared 3.7% to 175.75 cents a pound, within 2 cents of last week's 16-month high, for a nearest-but-one contact.

Raw sugar for May gained 0.8% to 17.21 cents a pound, earlier hitting a two-month high of 17.28 cents a pound to stand above its 200-day moving average for the first time in four months.

Evening markets: profit taking saps grains. But sugar soars
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