Will the US achieve negative soybean exports?
That is what buyers, at least, will be hoping for from
weekly export sales data due later.
They are forecast to show cancellations outnumbering new
trade last week by at least 100,000 tonnes, and potentially 300,000 tonnes, for
old crop supplies.
Another week of positive sales balance would only enhance
the conundrums surrounding the oilseed, of which the US has already sold, at
44.3m tonnes (1.63bn bushels), more than the 41.6m (1.53bn bushels), tonnes the
US Department of Agriculture has forecast for 2013-14, only a little over half
Cancellations need to average more than 100,000 tonnes a
week to ensure that forecast is met.
'Run out of beans'
"The trade needs to see a negative old crop number on sales,"
Kim Rugel at Benson Quinn Commodities said.
The alternative would imply a further tightening of US
stocks which are already on course to hit their lowest for decades, compared
with inventories, as of the end of the season.
The level of inventories will be brought into focus on March
31 with a US Department of Agriculture report on domestic crop stocks, as of
March 1, which may see them fall below the 1.0bn bushels recorded a year ago.
"Latest talk on the stocks report front has some suggesting
stocks could be as low as 950m-960m bushels," Ms Rugel said, noting the support
to prices as "the US looks to run out of beans before new crop supplies arrive".
'Tight US stocks'
A big influence on US exports is, of course, imports by
China, the top buyer, which is supposedly keen to cancel a stack of its orders
from the US, with lower price Brazilian supplies now on tap and a large backlog
of crop already apparently built up in ports.
In fact, advance orders from South America appear to be
taking the bulk of the cancellations, market rumour has it, with fresh talk on
Thursday of a top Chinese soybean buyer attempting to resell - potentially to the
US - six cargos bought from Brazil.
CHS Hedging said: "Tight US stocks have several Brazilian
cargoes of Chinese purchases being diverted to the US Gulf."
Two or three cargos were resold to the US over the weekend
at a heavy discount, the trade says.
That said, there is another rumour that China has raised its
import forecast for March to 5.25m tonnes from 3.49m tonnes.
Signals from China's Dalian futures exchange were mixed,
with soybeans themselves for September falling 0.7% to settle at 4,338 yuan a
tonne, a two month closing low.
But soymeal for
September soared 1.6% to a contract closing high of 3,331 yuan a tonne. That
might speak of wider crush margins, had not soyoil for September tumbled 1.4% to 6,898 yuan a tonne, in what
looks suspiciously like some sort of meal-oil spreading involvement.
In Chicago, soybeans made ground, but not much, extending this
week's gains by 0.3% to $14.35 ½ bushel
for May delivery as of 09:40 UK time (04:40 Chicago time).
Soymeal for May was up 0.7% at 465.10 a short ton, but
soyoil fell 0.2% to 42.00 cents a pound.
In Kuala Lumpur, rival vegetable oil palm oil eased too, by 0.1% to 2,775 ringgit a tonne, amid better
documented export news from China.
Zhang Liwei, director of oilseeds at state crop bureau China
National Grain & Oils Information Centre, forecast a fall to 6.3m tonnes,
from 6.6m tonnes, in China's palm oil imports in 2013-14, on an
Separately, Intertek reported a 12% drop in Malaysian palm
oil exports so far this month, compared with the first 20 days of February,
with rival cargo surveyor SGS also putting the decline at 12%.
Still, these figures are more encouraging than they look,
with Intertek and SGS having put the drop in the first half of March at 21%.
Certainly, grains couldn't keep up with even palm oil. Wheat's achievement of a 10-month
closing high in the last session in Chicago only encouraged profit-taking this
time, with the May contract easing 0.7% to $7.11 a bushel.
"The US wheat market continues to be buoyed by insatiable
fund buying, Ukraine concerns and worries about the US hard red winter wheat
crop," Luke Mathews at Commonwealth Bank of Australia said.
"Only time will tell if these worries are permanent, or
simply a short term phenomenon that is providing strong forward selling
In fact, there was not too much fresh news around on the
Ukraine or US hard red winter wheat, although it has to be said that the weather
outlook is hardly promising.
"Dry and windy weather in southern plains adds to trader's
concerns previously held by winterkill," CHS said.
Spring wheat sowings
Indeed, Kansas City-traded hard red winter wheat itself
eased a more modest 0.2% to $7.86 ½ a bushel.
Minneapolis-listed spring wheat for May dropped 0.6% to
$7.56 ¾ a bushel, feeling some pressure too from an estimate by Doane that US spring
wheat sowings will hit 13.5m acres, up some 1.9m acres year on year.
"That seems high. But factor in a shift away from corn as
you look north and west, and prevent plant acreage put back in production, and you
might be able to get there," Benson Quinn Commodities said.
US weekly wheat export sales, by the way, are forecast at 250,000-500,000
tonnes for old crop, and at 50,000-200,000 tonnes for new.
Of course, weather will have a big impact on spring sowings
too, of corn as well as wheat, with
cold temperatures as well as rainfall a factor.
Still, concerns for now over corn plantings remained low,
although they may receive a nudge approaching March 31, when the USDA releases
a prospective sowings report too, updating crop average forecasts.
There was some sense of continued disappointment at Taiwan's
rejection on Wednesday of offers of US corn to a tender.
"This could be the start of US corn losing its
competitiveness while importers wait for cheaper corn supplies from South
America," Vanessa Tan at Phillip Futures said.
Meanwhile, improved ethanol production, revealed in data on
Wednesday, continued to cause a somewhat mixed response.
While up 22,000 barrels a day at 891.000 barrels a day last
week, output is still below the level needed to meet the USDA's 2013-14 forecast
for the amount of corn used in making the biofuel.
"This was a slightly favourable report," one broker said.
"But the market knows that ethanol demand is capped by the
blending wall and any increase to the weekly number doesn't have the same
impact on price as an increase to the feed or export side of the demand table."
Corn for May dropped 0.7% to $4.84 ¼ a bushel.
Among soft commodities, profit-taking remained at large too,
with May arabica coffee falling 1.3%
to 183.05 cents a pound.
Technical signals are turning more negative, with the
contract closing the last session below its 20-day moving average for the first
time since January, while there has been a dearth of fresh bullish news on damage
from crops to Brazil's drought to persuade investors to stick around for more