PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 20:07 GMT, Wednesday, 12th Apr 2017, by William Clarke
PM markets: grain futures bounce, as traders 'buy the fact'

Grain futures continued to bounce back from an ostensibly bearish data release on the previous session.

The US Department of Agriculture's monthly world agriculture supply and demand report showed world grain markets even baggier than expected.

"USDA once again confirmed more than ample world supplies of corn, wheat and soybeans raising carryouts to fresh record levels," said Kim Rugel, at Benson Quinn Commodities.

"Yet markets this morning are steady to higher on 'sell the rumour, buy the fact,' oversold technicals and shifting in focus to weather," Ms Rugel said.

Is there any more bearish news to come?

One reason for the bounce back may be simply an idea that there is now no more bearish news to come.

Massive stocks for all grains are a long-accepted fact, and even after the upgrade last week, USDA estimates for the Brazilian soybean harvest undershoot expectations for the trade.

"The trade knows we have large and getting larger stocks of corn and soybeans after seeing USDA reports," said Paul Georgy, at Allendale.

"Traders now are asking, what additional bearish news is left to throw at us?"

Argentine rain worries

And markets continue to weigh up the recent heavy rain in Argentina, and what damage could have been done.

"Concerns are growing over wet conditions in Argentina, some analysts expecting a reduction in the Argentine crop," said Steve Wagner at CHS Hedging.

"In Argentina, heavy rains have delayed harvest activity and even with dry forecast for week ahead harvest activity will be slow to resume," said Ms Rugel.

The Argentine soybean belt is currently drying out, but there are concerns that rains could return, before the harvest is finished.  

Farmer hoarding in response to low prices

"Lack of farmer selling in both US and South America is offering support to the oversold soybean market," Ms Rugel noted.

"Many farmers have indicated that they will continue to be relatively slow sellers of their remaining crop in the hope of improved prices going forward," reported analyst Dr Michael Cordonnier.

"Nationwide, Brazilian farmers have sold 45% of their anticipated soybean production compared to 60% sold last year at this time," Dr Cordonnier said.

May soybean futures finished up 0.9%, at $9.47 a bushel.

May corn futures finished up 0.7%, at $3.69 a bushel, back above the 100-day moving average.

Tight EU market

Wheat markets also rose, as data continues to show tight market in Europe, after the small crop of last summer.

France AgriMer, the French government crop agency, cut their estimate for 2016-17 ending stocks, down 400,000 from last month.

And EU customs data showed soft wheat exports out of bloc continuing to lag behind last year's pace at 18.8m tonnes, compared to 23.0m tonnes at the same time a year ago.

May Paris wheat futures finished up 1.4%, at E164.50 a tonne.

In Chicago, May wheat futures finished unchanged on the day, at $4.33 a bushel.

Sugar prices ease

Raw sugar edged lower, as the Brazilian harvest ramps up.

Sugar production in Brazil's centre-south sugar output rose to 270,000 tonnes in the second half of March, up from 73,000 tonnes in the previous fortnight, as mills open up for the season.

May raw sugar finished down 0.1%, at 16.7 cents a pound.

Sluggish chocolate demand

And cocoa futures tumbled, on ideas of disappointing demand.

True, European grinding rose by 1.1% for the first three months of the year, in-line with expectations.

But chocolate maker Barry Callebaut estimated that the global chocolate market shrunk by 2.1%  in the six months to February.

July New York cocoa finished down 1.1%, at $1,967 a tonne.

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