PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 19:51 GMT, Wednesday, 15th Mar 2017, by William Clarke
PM markets: 'competitive' US wheat prices rise

A spate of bargain buying lifted grain futures - apart from soybeans, which came under pressure from smaller-than-expected US processing demand.

Richard Feltes, at broker RJ O'Brien, suggested that the market was seeing a "technical bounce on short covering", also noting a stronger Chinese currency, and a flurry of international wheat tenders.

"Markets are bouncing this morning off oversold technicals and a weaker US dollar," said Kim Rugel at Benson Quinn Commodities.

The dollar was down 0.7% as Chicago markets closed, despite a widely-anticipated hike to US interest rates late in the session.

Disappointing US soy crush figures

But US crushing data took the wind of the soybean market's sails.

According to trade body Nopa, its US members crushed only 142.3m bushels, 3.3m bushels below analyst expectations. This marks a decline of 2.3% compared to the same time a year ago.

US soyoil stocks were reported up 115m pounds, to 1.77bn pounds.

Terry Reilly, at Futures International, said the report was "bearish for soybeans and soyoil".

A long way to go

"The lower-than-expected crush is a negative because in order to reach the 1.940bn crush level for the crop year projected by USDA… we need to see monthly crush rates above year ago levels," said Darrell Holaday, at Country Futures.

"We have discussed several times that the poor basis levels for soymeal in the western Midwest distort the crush margins that many feel are in the market," Mr Holaday said.

"This weak basis has finally weighed on the overall crush pace."

South American harvest still weighing

And the size of the South American crop continues to weigh on market sentiment, as it has for weeks.

"A large crop and favourable weather continues to worry traders about how large the South American will actually be," CHS Hedging said.

May soybean futures settled down 0.2% on the previous session's close, at $9.97 ¼ a bushel, but failed to break the multi-month lows of the previous session.

Cheap US wheat

US wheat was the cheapest on offer in a wheat tender by Gasc, the Egyptian state grain buyer.

True, the realtively high cost of shipping still puts US supplies at a significant disadvantage to Black Sea supplies in the Egyptian market, but the tender still underlines how competitive US wheat is globally, particularly after an uptick in Russian prices.

May Chicago wheat futures settled up 1.2%, at $4.35 ¾ a bushel, but failed to break back above the 100-day moving average, after falling below it on Monday.

Ethanol output rises, but stocks fall

Crude oil futures bounced back, after the latest weekly data from the US Energy Information showed a tighter-than-expected market in the US.

The EIA data was less supportive for ethanol production, with output up 23,000 barrels from last week, to 1.05m barrels a day. 

"Ethanol production has now been over 1 million barrels for 20 straight weeks," noted CHS Hedging.

But ethanol stock were down 90,000 barrels, to 22.77m barrels, reflecting brisk demand.

There were no new US corn export sales announced on Wednesday, despite the reported big Chinese purchases in the previous session.

Still, May corn futures finished up 0.4%, at $3.63 ½ a bushel.

Off-season

Arabica coffee futures fell, as Rabobank forecast a relatively mild fall-off in Brazilian production, as good conditions limit a cyclical decline.

Brazil will harvest 36.7m bags of arabica in the 2017-18 crop year, down from 42.0m bags in 2016-17, Rabobank said.

May arabica futures settled down 0.3%, at 140.90 cents a pound.

May robusta coffee futures settled up 0.5%, at $2,180 a tonne.

China buys big in cotton

Cotton futures rallied, helped by news of big Chinese purchases.

Chinese cotton imports rose 146% in February compared the same period last year, to 138,100 tonnes, the China Cotton Association said.

The fact these imports came ahead of the latest Chinese attempt to draw down its cotton stockpiles suggests that local faith in the quality of Chinese-held cotton may be low.

July cotton finished up 1.2%, at 79.12 cents a pound.

Cocoa rally takes a breather

Cocoa futures trimmed the rapid rally of previous two sessions, as speculative buyers take a breather, after hitting a five-week high early in session.

Concerns over quality remain, however, with Reuters suggesting that local grinders are rejecting up to half of beans due to high acidity levels.

May New York cocoa futures settled down 0.5%, at $2,048 a tonne, after reaching highs of $2,079.

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