Has US wheat become
the subject of export order cancellations too?
It emerged that one of the reasons that it fell in the last session,
besides some talk of rain ahead for dry US winter wheat seedlings, and for Australia,
was of Nigeria and Brazil ditching orders of US wheat, potentially in favour of
"Wheat was lower after rumours floated about Brazil
purchasing Ukrainian wheat and cancelling US orders," one US broker noted.
"Corn was lower following wheat," the broker said, if adding
that "these rumours are not confirmed and may just be 'headline chasing' during
'Their actions will
They sure touched a raw nerve, with Chinese cancellations of
soybean orders from the Brazil and
the US remaining rumoured, if with confirmation hard to come by.
And Chinese corn
import reversals remain a live subject too, with Cofco cautioning that the
country may import less than 3m tonnes of corn in 2013-14, well below the US
Department of Agriculture estimate of 5m tonnes.
China has rejected a series of cargoes of US corn on grounds
of containing a genetically modified variety unapproved by Beijing, a factor
which prompted Fred Gale, China chair for the US Department of Agriculture, to
warn Chinese buyers may in future pay a premium on orders.
"The Chinese are going to have to learn that their
actions will have consequences," Mr Gale said.
"Sellers are going to have to add a risk premium if China is
going to be a risky customer."
'Doesn't make sense'
Still, wheat futures held their ground on Friday as talk of
its export cancellations came further under the microscope, and was seen as,
for Brazil especially, unlikely.
A switch by Brazilian buyers from the US to Ukraine "doesn't
make a whole ton of sense", said Jonathan Watters at Benson Quinn Commodities.
"Unless something has changed very recently, Brazil
regulations don't allow for imports out of the Black Sea."
Besides Brazilian import order commitments from the US still
on the books are "minimal". Data on Thursday showed Brazil having 230,000
tonnes of import orders for 2013-14 as yet unfulfilled, up on the 152,000
tonnes a year ago, but a fraction of the 3.68m tonnes shipped already.
'Doesn't pack a punch'
The rumour of Nigerian cancellations "makes a bit more
sense, and it could be possible that other Latin American countries have
started to favour the Black Sea given the recent price moves", Mr Watters said.
And he was somewhat cautious too on the forecasts for US
rain relief. Precipitation forecast in the 11-to-15 day outlook "is too far out
to get people too worked up".
Sure, official US meteorologists on Thursday, in a spring
weather outlook, forecast that "drought improvement is likely" in some major
wheat producing areas, including "western and central sections of Nebraska and
Kansas, central Oklahoma", where dryness has been a real worry to the market.
"But again this is the type of thing that doesn't pack a
punch without much rain in the forecast," Mr Watters said.
Not that all the weather talk is going bulls' way.
In Australia, the Bureau of Meteorology is forecasting
25mm-150mm of rain over the coming week across inland New South Wales and
Queensland, states where a dearth of rain has raised concerns over forthcoming winter
"Importantly the best falls are slated for the driest
regions from northern New South Wales to central Queensland," Luke Mathews at
Commonwealth Bank of Australia said.
Mr Mathews also flagged Thursday's upgrade by Strategie Grains
to its forecast for the European Union harvest too, if only by a meagre 200,000
tonnes to 137.7m tonnes.
"The news supports the view that world wheat crop conditions
outside of the US Great Plains are currently strong," Mr Mathews said.
Chicago wheat for May gained, if by a modest 0.1%, to reach
$7.04 ¾ a bushel as of 09:45 UK time (04:45 Chicago time).
The grain, and other dollar-denominated
commodities, also gained from a slight reversal in the dollar, as markets
reassessed ideas that comments from Janet Yellen, the new chair of the Federal
Reserves, on Wednesday implied that the US may raise interest rates sooner than
had been thought.
Thinking prevailed on Friday that too much had been read
into Ms Yellen's comments. Shares
gained 1.2% in Hong Kong, 0.8% in Sydney and 2.7% in Shanghai. (Tokyo markets
A weaker dollar makes dollar-denominated assets more
affordable to buyers in other currencies.
showed a small gain of 0.1% to $4.78 ¾ a bushel in Chicago for May delivery, if
lacking direction, although this will change in 10 days' time, of course, when
the US Department of Agriculture unveils two important reports – on prospective
grain plantings and on quarterly grain inventories, as of March 1.
CHS Hedging flagged a trend of "profit taking, as traders
prepared for the plantings report".
Still, whatever figure the report comes out with looks like
being the subject of some challenge, with weather potentially hampering early
seedings and driving farmers to later planted crops such as soybeans.
Vanessa Tan at Phillip Futures flagged NOAA comments that "there
were likely to be planting delays in the northern regions of the Midwest due to
a slow thaw following frozen soils as a result of the harsh winter".
Indeed, soybeans themselves were hardly on the best of form,
falling 1.3% to $14.15 ½ a bushel for May delivery, undermined by continued chatter
of Chinese buyers cancelling orders.
The USDA estimate that China will import 69m tonnes in
2013-14 is being increasingly challenged, with FCStone's Li Xiaoyne apparently
forecasting a 67m tonne figure.
In fact, China's February imports were strong, at 4.81m
tonnes, official data on Friday showed, up 66% year on year and easily a record
for the month.
China's palm oil
imports were up too, by 34% year on year to 566,000 tonnes.
But with talk of rains in dryness-hit South East Asian
producing regions, and concerns over a rise in Malaysia's export tax next month
too, the vegetable oil fell 1.1% to 2,742 ringgit a tonne in Kuala Lumpur.