Chicago traders were left wrong-footed, selling grains
heavily only to be forced into a swift u-turn, after a mildly bearish streak to
a long-awaited set of US crop data was trumped by more weather concerns.
US soybean inventories of the start of the month were, at
667m bushels, up 48m bushels, and above market expectations, the US Department
of Agriculture said.
Data for soybean sowings also signalled more generous
supplies than investors had pencilled in, with plantings pegged at 76.08m
acres, some 2.2m acres more than initially estimated.
Estimates for US corn plantings too were given a healthy
upgrade of 541,000 acres, to 95.86m acres – a combination of data which
initially sent prices of both crops into negative territory.
Down, and up
Indeed, the immediate market reaction was to send corn for
December, which had stood some 1% higher before the reports, plunging to $6.22
a bushel, 1.6% in the red.
November soybeans swapped a 1% gain for a 0.2% loss.
|US sowings data, change on March figure and (on market forecast)|
Corn: 96.405m acres, +541,000 acres, (+315,000 acres)
Soybeans: 78.060m acres, +2.178m acres, (+572,000 acres)
Wheat: 56.017m acres, +109,000 acres, (-662,000 acres)
Sources: USDA, Thomson Reuters
However, the prices rebounded strongly within five minutes
to send December corn back up to $6.55 a bushel – a 5% swing – with soybeans
posting a smaller gain, as attention swung to forecasts for hot and dry US
weather, and to a more upbeat interpretation of the data.
"The market moved 6-8 cents lower on corn in the first three seconds after the report and then shot up 15 cents higher on threatening weather," US Commodities said.
At PFB Best, Tim Hannagan said: "The weather traders came in and bought the break driving corn and beans 20-plus cents higher before settling back at midsession."
The price moves appear to bear out concerns that Chicago's
extended opening hours, which since this month has left them trading live when
major reports are released, would lead to large volatility, and losses for traders
caught on the wrong side of market swings.
The stocks reports have a particular history of proving
difficult to anticipate, provoking average prce movements of 9%, according to
'Depends where you were looking'
"You can understand how people initially sold into this. The
soybean stocks number was bearish. You could even say the corn stocks were bearish,"
Jerry Gidel at broker Rice Dairy said.
"It just depends on what number you were looking at at the
|US crop stocks data, change on year and (on market forecast)|
Corn: 3.149bn bushels, -521m bushels, (-25m bushels)
Soybeans: 668m bushels, +33m bushels, (+49m bushels)
Wheat: 743m bushels, +20m bushels, (-119m bushels)
Sources: USDA, Thomson Reuters
The more price positive data in the report included a
forecast that, even though corn sowings had proved higher, the area making it
through to harvest would come in at 88.85m acres, lower than initially expected.
Also, farmers turned less to spring wheat that had been thought, leaving total wheat seedings, at 56.02m acres, some 660,000 acres below market forecasts.