Soybean futures started
the year with a whimper, with no sign of weather disruptions in South America,
but corn futures got a boost as traders unwound their short-corn/long-soy positions.
"Funds are currently buying grains reducing their short
positions whilst selling some of the long positions held on soybeans/ and meal,"
said CRM AgriCommodities.
"South American weather will continue to be a major focus,"
said CHS Hedging.
Rains are good across most of Argentina and Brazil, although
in the former there are actually ideas that it could be getting to wet, after
weeks of dryness worries.
"South American weather and production will be the main
drivers the next 2-3 months in the ramp up to US spring planting," said Tregg
Cronin, at Halo Commodities.
"Nothing has changed about the narrative with soybeans as
strong US demand is watching the clock until South American supplies become available,
but as of yet there is no weather problem of consequence in the southern hemisphere,"
Weather in South America continues to be mostly benign after
heavy rainfall fell in places in "Argentina, causing some localized flooding."
There was a touch more pressure on soybeans, as the
Argentine government announced plans to draw down the export tax on soybeans.
The government will its soybean export tax by 0.5 percentage
points every month for two years, starting in January 2018.
This will leave the tariff down 12 percentage points, at 18%,
by the end of 2019, with tariffs on soybeans and soyoil being reduced at the
"Farmers in Argentina had hoped for a quicker reduction in
the soybean export tax, but they had to settle on a compromise," said analyst Dr
In fact, Dr Cordonnier suggested that the move could
actually hold back supply
"Farmers in Argentina will start to harvest their 2016-17
soybean crop in March and it is entirely possible the lower export taxes
starting in January of 2018 could convince farmers to hold some of their
soybeans until the tax starts declining," Dr Cordonnier said.
Still, Richard Feltes, at RJ O'Brien, said the move was "viewed
as slightly negative".
Fears of trade spat
Donald Trump, the US president-elect, named Robert Lighthizer
as his chief trade negotiator.
Mr Lighthizer, a veteran trade lawyer, is a long term critic
of China, which he has accused of failing to meet its commitment to the World
His selection has raised fears of a US trade dispute with China,
which could hurt soybean shipments, and hence US prices.
And the news from across the Pacific was also warning, as
China teased a devaluation of its tightly controlled currency, which is already
near 8-year lows.
March soybean futures finished down 0.8%, at $9.96 ¼ a
The unwinding of short-corn/long-soy positions, which has
been a feature of the markets in recent sessions, is being helped by the relatively
high price of autumn soybean futures, compared to corn.
Mr Cronin said the ratio was "still arguing for more soybean
acres," which means less soil going to corn.
March corn futures finished up 1.1%, at $3.55 ¾ a bushel.
March Chicago wheat
futures finished down 0.2%, at $4.07 ¼ a bushel.
Sugar futures soar
Raw sugar futures
got off to a scorching start, helped by the news that the Indian harvest is
coming to an early close due to a widespread cane shortage.
25 mills in Maharashtra, India's top sugar-producing state,
have already shuttered for the year, due to cane problems, the Indian Sugar
Mills Association said in a statement.
And many more are likely to shut before the end of February,
the association said, compared to a usual season which runs until April.
"Should the pace of production decline further, it may put
further pressure on the Indian government to reduce the 40% import duty
currently in force," said Nick Penney, at Sucden Financial.
There was also support from the news that a Chinese state auction
only sold 92,000 tonnes of sugar, compared to the 300,000 drawdown expected.
March raw sugar futures in New York finished the day up
5.1%, at 20.51 cents a pound, after reaching as high as 20.55 cents a pound.