The news out of China, one of the world's biggest
agricultural commodity importers, was mixed, at best.
The HSBC flash manufacturing purchasing managers' index for China
came in at 50.3 for August, down from 51.7 last month.
The data "suggest that the economic recovery is still
continuing but its momentum has slowed again," said Qu Hongbin, HSBC's chief
"Growth will likely stay on a relatively subdued path."
in Shanghai by some 0.4%, and by 0.8% in Hong Kong, after a four-day winning
streak that had taken stocks to a four-year high, while the South Korean Kospi
index dropped 1.6%.
There was Chinese customs data too, some of which the market
has got wind of before, for instance the 3.9% rise, year on year, in imports
last month of soybeans - of which the country is by far the top buyer
- to 7.47m tonnes.
Imports so far this year have grown by 20% to 41.7m tonnes.
Corn imports last
month rose 18.8% - but to a lowly 86,369 tonnes nonetheless, with data for rapeseed
actually more impressive, up 77% at 426,184 tonnes.
Barley purchases soared
366% to 763,535 tonnes, taking the total for 2014 to 3.19m tonnes, a rise of
167% year on year.
Less impressive were palm
oil imports, down 3.9% at 468,844 tonnes, taking the 2014 total into
decline, albeit of only 0.1% to 3.33m tonnes.
slumped 44% to 280,000 tonnes. That said, month on month, volumes more than
tripled, giving more colour to reports this week that Chinese authorities are
placing pressure on buyers to prioritise use of huge domestic stocks.
Raw sugar futures for October rose 0.9% to 15.84 cents a
pound in New York as of 09:45 UK time (03:45 Chicago time),
Returning to soybeans, the data certainly did not impress
Chinese investors, who sent the January contract on the Dalian exchange down 0.7%
to 4,497 yuan a tonne, a sixth successive day of decline.
However, the oilseed in Chicago fared significantly better,
adding 0.7% to $10.45 ½ a bushel for the best-traded November lot recovering from
a contract closing low to the last session.
And this despite further strong news from the ProFarmer crop
tour of the Midwest, which pegged the average soybean pod count in Iowa, the
top producing state, at 1,091.34-1,224.96 per square yard (ie 3 feet by 3 feet), up from
802.98-1,101.49 last year.
In Illinois, another top producing state, the pod count was 1,299.17
per square yard, above last year's tour finding of 1,115.97.
Kim Rugel at Benson Quinn Commodities said that "47.0
bushels per acre is now seen as potential soybean yield versus pre-USDA August Wasde
report expectations nearer 46.0 bushels per acre".
(The Wasde actually put the yield at 46.4 bushels per acre.)
CHS Hedging added: "Weather remains near ideal with warm/wet
conditions through the weekend across the Midwest. Sounds like the perfect
recipe for making a soybean crop."
However, the strong US cash market, spurred by the tight
supplies left over from the 2013 harvest, continues to attract attention.
At Chicago-based Futures International, Terry Reilly noted
that yesterday, while one Midwest processor lowered bids for soybeans by $0.50
per bushel, "some others increased bids by $0.05-0.75.
"Bottom line - soybean inventories are tight, especially
across the eastern Corn Belt."
Cash vs futures
Still, even though the near-term September futures contract
has been relatively strong, "basis levels continue to advance faster than the
board does for spot soybeans," CHS said.
The September contract's problem may be that it has only
until September 12 to run, limiting its liquidity (although an imbalance could,
of course, spell position-covering spikes ahead).
"Open interest in the September futures contract is about at
the end of its life," Ms Rugel said.
That said, the September contract added 1.0% to $11.31 a
'We look for a rally'
There is also something of a precedent for a little seasonal
firmness in the November soybean futures contract.
"We expect November soybean prices to rally into September
before declining into a new low in October," said Anne Frick at Jefferies,
terming this "a very common price pattern".
The analysis is based on separating out years when the
November soybean contract notched up an August low below its July low, which
was in turn beneath the June low.
These years "usually saw a bounce" in November soybeans "from
an August low into late August or, commonly, September".
Besides, "there are probably also concerns about early frost
after such a cool growing season.
"We look for a rally over the next two to four weeks."
'Inventories are scarce'
Soybeans were helped by strong performance of products, with
soymeal for September adding 1.5% to
$408.80 a short ton, helping the December contract gain 0.7% to $346.50 a short
Soymeal is subject to some of the same short-term supply
squeeze fears as soybeans – despite the soft price of distillers' grains (a
corn-based rival as a high protein feed ingredient)
soymeal inventories are also scarce," Mr Reilly said.
And even soyoil
rose this time by 0.6% to 33.43 cents a pound for December, with its relatively
low value in the soy product mix attracting attention as a potential buy.
Futures in rival vegetable oil palm oil remained shaky, standing down 2 ringgit at 2,047 ringgit a tonne in Kuala Lumpur, although at
least failing – yet – to set a fresh multi-year, intraday low for the first
time in six sessions.
Corn gained some
strength from the performance of soybeans too, again despite strong ProFarmer
The Iowa yield was pegged at 177.48-180.90 bushels per acre,
compared with a finding of 160.12-175.65 bushels per acre last year.
For Illinois, the yield was estimated at a record 196.96 bushels
per acre, above the 170.48 bushels per acre pencilled in by last year's tour.
Still, there does remain a frost threat to corn, which also
has a seasonal tendency to see rises in futures prices at this time of year –
ahead of a fall into harvest.
December corn added 0.5% to $3.69 ½ a bushel.
Wheat gained too, with concerns over the volumes of milling
wheat available from Ukraine, even though ideas of export curbs, which boosted
prices on Tuesday, may have been overplayed.
"Ukraine may be looking at a wheat crop with only 40%
milling quality versus a normal 50%," CHS Hedging said.
Benson Quinn Commodities said: "Don't discount the idea that
Ukraine has a higher of percentage of poorer quality wheat than prior years.
"There has been talk that 40ish% of the Ukraine wheat crop
made an exportable milling quality spec compared to the customary 50-55%."
And there remain concerns over the quality of US crop too,
particularly the spring wheat crop currently in the early stages of being harvested,
but beset by dampness which is slowing progress (if helpful for
autumn-harvested crops at an earlier stage of development).
Benson Quinn said: "The vomo matter merits attention," referring
to vomitoxin, a toxic fungal residue which can render wheat unfit even for feed,
although the broker added that "we need to see the wheat harvest expand into a
few more areas to get a better read".
CHS said that "spring wheat quality concerns build as we
wait for dryer weather before harvest can really begin."
Spring wheat for September added 0.5% to $6.13 a bushel in
Minneapolis, feeling some pressure from the harvest to offset the boost from
quality fears, which would reduce the amount of grain deliverable against
Chicago soft red winter wheat for September gained 0.6% to
$5.42 ½ a bushel.
Still, Kansas City hard red winter wheat, an alternative to
hard red spring in some uses, performed better, adding 0.8% to $6.23 ½ a bushel
Indeed, the contract has outperformed since Agrimoney.com last
week highlighted its period of underperformance which had driven it to a
discount against its Minneapolis peer.
Kansas City wheat has since regained a premium of some 10
cents a bushel against Minneapolis wheat.
The spread vs Chicago wheat has grown even more, by some 12
cents a bushel.
The day is, though, yet young, and has a couple of big sets
of data to get through.
One will come from Canada, and Statistics Canada's revised
estimates for domestic crop production.
StatsCan is expected to raise to 28.5m tonnes, from 27.74m
tonnes, its estimate for all-wheat output, and nudge higher by 50,000 tonnes to
14.5m tonnes the estimate for the canola harvest.
Then there are US weekly export sales data, expected at 350,000-500,000
tonnes for wheat, a little improvement on the 338,718 tonnes last time.
For corn, export sales are forecast at 0-150,000 tonnes for
old crop, and 650,000-850,000 tonnes for 2014-15. (The new crop reading last
time was 787,843 tonnes.)
For soybeans, export sales are forecast at 0-100,000 tonnes
for old crop, and 850,000-1.05m tonnes for 2014-15. (The new crop reading last
time was 1.08m tonnes.)