If some headline price falls, in the likes of cotton and
corn, stole the market headlines on Tuesday, declines were not compulsory.
Indeed, even within ag classes there were splits, with
Chicago soyoil, for instance,
recovering early losses to close up 0.2% at 35.19 cents a pound for December
delivery, and defying a dip in values of soybeans themselves.
The gain reflected a downgrade of more than 300m pounds, to
1.76bn pounds, in the forecast for US inventories of the vegetable oil at the
close of 2017-18, reflecting in part a
reduced idea of stocks heading into the crop year, but also the knock-on effect
of US levies on imports of Argentine and Indonesian biodiesel.
(Biodiesel is made from vegetable oils such as soyoil.)
More expensive oils
The USDA flagged the prospect of "higher use" in the US of
soyoil for biodiesel production to support domestic supplies, "reflecting
recently-imposed duties for imported biodiesel from Argentina and Indonesia".
The forecast for consumption of soyoil in US biodiesel plants
was raised by 550m pounds to 7.00m pounds.
And this when vegetable oil markets were already firm,
helped by Monday's lower-than-expected Malaysian palm oil inventory data.
Paris futures in rapeseed
(an oil-heavy oilseed) closed up 0.7% at E363.50 a tonne for November delivery,
helped too by the return in the euro below $1.20 (so reinvigorating the
competitiveness of eurozone exports) and a cut by the USDA in its forecast for
world output of the oilseed (including canola) in 2017-18 too
The downgrade of 550,000 tonnes to 70.59m tonnes was down to
a cut in hopes for the Canadian canola crop, thanks to a lower acreage figure.
Paris wheat made
gains too, nudging 0.3% higher to E159.50 a tonne for December delivery, gain
helped by the softer euro, but also by the recovery in Chicago prices, which
actually gathered strength later on.
Chicago wheat for December closed up 1.7% at $4.42 a bushel
as it freed itself from the downward pull of corn futures (which themselves pared losses to end down 1.7% at
$3.51 ½ a bushel for December delivery) to trade on their own modestly enhanced
merits in the Wasde.
The report trimmed the estimate for world wheat stocks a
little more than investors had expected, although it has to be said that
supplies are far from tight.
Meanwhile, in New York, arabica
coffee futures for December jumped 2.4% to 135.05 cents a pound, their best
close in nearly a month, and breaking above their 100-day moving average.
Besides the continued weakness in Brazilian coffee exports –
which look like falling year on year this month too, despite an industry
forecast of a 20% jump in volumes from August – the country's 2018 crop
prospects are coming under increasing scrutiny, thanks to the return of dry
In Brazil, "moisture will continue to decline in central and
northern areas," said MDA, with this region including the main coffee-producing
state of Minas Gerais (also the top grower of first0crop corn).
And this matter when coffee plants are blossoming, and
require follow-up rains for fertilized flowers to set fruit.
'Not able to
At US broker Price Futures, Jack Scoville said that while
Brazilian coffee flowering has got "off to a very good start", helped by earlier
rains, "coffee areas are dry again.
"Some producers are worried that the rains came too early
and created premature flowering," with blossoms potentially dropping and
curbing yield potential.
"There is also talk that the trees are old and not able to
withstand stress and that lower production should be expected no matter what
In the London market for
robusta coffee - for which dryness worries are not so acute in major Brazilian
growing areas, and for which supply hopes are being underpinned by Vietnam - November
futures added a more modest 0.9% to $1,969 a tonne.
"Prospects for the upcoming Vietnamese crop seem positive,"
the International Coffee Organization said, Vietnam being the top robusta
Sugar defies output
However, New York raw
sugar for October dropped 1.5% to 14.07 cents a pound, defying apparently
bullish data from industry group Unica showing the production in Brazil's
Centre South region in the second half of last month well below expectations.
Commentators had expected the data to show Centre South sugar
output during the period at 2.82m tonnes, according to a survey by S&P
In fact, the figure came in at 2.54m tonnes (down 20% on
output in the first half of August, and a little lower year on year too).
The drop reflected a weaker-than-expected volume of cane
crushed and, at 46.95%, a smaller proportion of the crop diverted to cane than
the 48.13% figure forecast.
However, one worry for sugar bulls is the proximity of so-called
ethanol parity, pegged at about 14.30 cents a pound, which would appear to
offer some kind of ceiling for prices.
Heading too high would risk turning mills back towards
making more sugar than ethanol, and lift further expectations for the world
output surplus in 2017-18.