If there was going to be a day when grains staged a revival,
today looked a likely bet.
Tuesdays have a habit of producing trend reversals, Chicago traders
But selling in grains is so entrenched that Turnaround
Tuesday arrived in a weakened version, with only Chicago wheat showing gains,
and even then small ones.
It helped, for wheat,
that a fresh sign of demand emerged with Egypt's Gasc grain authority revealing
yet another tender.
The US Department of Agriculture has highlighted the
potential for rebounding purchases by Egypt, the top wheat importing country,
after a slump in 2012-13 prompted by economic difficulties.
"This year, the Egyptian economy and import potential
is expected to be supported by sizeable financial assistance pledged by Saudi
Arabia, United Arab Emirates, and Kuwait," the USDA said.
And with Gasc having unveiled six tenders since the start of
last month, albeit for one of which the order was cancelled, the USDA looks
bang on the money.
But will the USDA prove right in another forecast, that
Canada may take an unusually high profile in tenders by the likes of Egypt?
Usually, Canada's wheat would be too hard, and expensive,
for Egypt's needs. But Canada's harvest this year, while record in quantity, is
not so hot on quality, leading to ideas it will end up in atypical destinations.
One problem is logistical, with large crop volumes testing
Canada's logistics, with a transport squeeze an issue in the US too, for that
At Minneapolis-based Benson Quinn Commodities, Brian Henry
flagged that "the trade has made mention of capacity constraints at port due to
soybean and corn bookings, which is an issue that has been developing through
"Port capacity issues are limiting the aggressiveness of the
US wheat exporter."
Indeed, there is talk that the only reason that US wheat was
not offered in the last Gasc tender, last week, was because of a transport
squeeze, rather than anything to do with a shortage of grain or uncompetitive
"Although it now looks competitively priced, no US wheat was
offered, almost certainly because they could not be sure of being able to load
it in time," traders at a major European commodities house said.
And if US wheat cannot be shipped abroad, it needs a to find
a domestic consumer, one of the reasons for price pressure which has driven
futures in Chicago, Kansas City and Minneapolis to contract lows.
Other reasons for pressure include an improvement in weather
for winter crops.
"Concerns over possible winterkill in the US and the Black
Sea region have eased with current crop-friendly temperatures," Luke Mathews at
Commonwealth Bank of Australia said.
"In addition, Europe's Mars crop forecasting unit suggests
most crops across the bloc are in a favourable condition and will be
sufficiently hardened to withstand cold temperatures this winter."
Still, as of 09:45 UK time (03:45 Chicago time) wheat for
March edged 0.1% higher to $6.22 ½ a bushel in Chicago, looking for only its
second positive session in the last 10.
Investors in Kansas City were less upbeat, keeping the March
contract unchanged at $6.65 ½ a bushel, with Minneapolis spring wheat for March
also stationary, at $6.54 ¼ a bushel.
'Paints a bearish
It little helped that corn
remained under the cosh, static at $4.23 ¼ a bushel for March, with investors
nervous about calling time on concerns about China's rejection of US corn
imports on grounds of containing an unapproved (In Beijing) genetically modified
"Marketers remain concerned that China may continue to
reject GMO corn from the US," CHS Hedging said.
Sure, Tom Vilsack, the US agriculture secretary, is with a
team of industry leaders and US officials holding annual trade talks in Beijing
However, "it remains to be seen how long China would take to
respond to such prompting", one US broker said.
"Until then, the situation in China paints a bearish picture
for US corn."
Extra bearish pressure has come from an effort by some US
senators to remove the US ethanol mandate.
This time, soybeans
dropped too, although by a modest 0.3% to $13.33 ¾ a bushel for January
While dryness in Argentina is raising a little comment,
fears are not that large yet.
There is more concern, as CHS Hedging noted "among soybean
traders that China may cancel purchases out of the US and switch to South
Or will the epidemic of bird flu, of which another case was
reported in China over the weekend, return to the headlines to quell demand
expectations for meat, and thereby animal feed?
"The potential impact of bird flu on soybean demand is
unknown," CHS said.
higher than corn'
As a further reason to go cautious on buying soybeans, their
relation to corn prices is going off the scale.
The soybean: corn ratio, as far as the US is concerned, will
come into particular focus in the spring, as farmers finalise planting plans.
Still, already it is attracting comment, with November soybeans
worth nearly 2.6 times December corn, on 2014 basis, a historically elevated
"At such a high ratio, soybean profitability is higher than
corn in many areas and supports a large acreage swap to soybeans," one US
Already, of course, relatively high soybean prices are provoking
large South American soybean plantings, and expectations of a small sowings of
follow-on safrinha corn.
Among soft commodities, arabica
coffee started firm, adding 0.1% to 115.40 cents a pound for March delivery,
looking to recover more of a premium against robusta coffee, which dropped 1.0% to $1,750 a tonne in London for
Not that all observers are upbeat over coffee price
"Fundamentals of the arabica coffee market are still bearish
as we are still experiencing a global surplus of arabica coffee supplies, with
expectations of a large Brazilian crop and a recovery in Colombian output that
would further add to this global surplus of beans," Vanessa Tan at Phillip
"According to the National Coffee Growers' Federation,
Colombia's coffee output could continue to recover significantly as millions of
trees have yet to reach productive age."
for March fell 0.7% to 82.80 cents a pound in New York.
The decline was attributed to profit-taking after a fifth
consecutive gain in the last session, the longest winning streak since
Nonetheless, "tight warehouse stocks in the US are
supporting the current strength in ICE cotton futures", Luke Mathews at
Commonwealth Bank of Australia said.
Certified inventories have fallen to 57,533 bales, data late
on Monday showed, down from 58,093 bales the previous session.