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PM markets: surprise Chinese imports lift US corn futures
By William Clarke - Published 14/03/2017

Corn futures bounced back from a two-month low, supported by Chinese demand, while soybean futures extended losses, as energy markets slide.

"Tumbling crude oil prices continue to put pressure on oilseeds and wider commodity markets," said CRM AgriCommodities.

The sell-off in oil futures continues, with March Brent down 0.8% on the day as US markets closed, at $50.92 a barrel.

Crude oil prices are plummeting, down 9.0% in a week, under pressure from the very large US stocks and production figures.

And Saudi Arabia on Tuesday was reported to have lifted production back above 10m barrels, after railing at "free riders," non-Opec members who are benefiting from Opec supply discipline.

Good South American prospects

And there was little support from other quarters, as a survey by broker Allendale suggested even bigger than expected US sowings.

"There is a lack of fresh news," said Ridge Erdmann at CHS Hedging.

"South American weather looks both favorable for harvest progress and crop development for the remaining soybean crop," Mr Erdman said.

May soybean futures settled down 0.7%, at $9.99 a bushel, having reached five-month lows of $9.92 a bushel.

China buys big in corn

Reports from traders suggest that at least three cargoes of US corn, totalling about 195,000 tonnes, for shipment from the West Coast.

This would be the largest one-time purchase of US corn by China since 2013.

And some rumours have ranged even higher, up to 500,000 tonnes.

China is still holding massive corn reserves, but as Agrimony has reported, supplies of high quality corn are still tight.

South American corn coming to market soon

Darrell Holaday, at Country Futures, said the news as an "interesting development", but added he was "not sure it is a long-term signal".

"There will be a lot of corn available in South America in the next 4 months."

But there was more export support, as the US Department of Agriculture reported the sales of 120,000 tonnes of US corn to Mexico for delivery in 2017-18.

May corn futures settled up 0.4%, at $3.62 a bushel.

Dryness fears still in place over Plains

May Chicago wheat futures edged higher, as markets continue to watch the US Plains.

"Very limited precipitation and warm temperatures in the Plains have allowed moisture supplies to decline rapidly," said Don Keeney, at MDA Weather Services.

"A few showers should return to the region in the 6-10 day period, with some improvements expected mainly in central and eastern Nebraska, eastern Kansas, and eastern Oklahoma," Mr Keeney said.

"Showers are also expected in west central areas, but amounts there will likely be too light to significantly improve conditions," he said.

"The region will need a significant upturn in showers in April to prevent notable stress on wheat as it emerges from dormancy," Mr Keeney said. "However, our outlook for April remains rather dry."

May Chicago wheat futures finished up 0.1%, at $4.30 a bushel.

Cocoa futures bounce higher

Technical selling, and ideas that poor quality will slow port arrivals, helped cocoa futures extend the rally of the previous session.

Reuters reports that cocoa exporters in Cote D'Ivoire expect the pace of port arrivals to halve from next week, and to remain at a low level until May or June, due to recent dry weather.

"Both New York and London are showing signs that a bottom has been made and that prices can move higher in the short term," said Jack Scoville, at Price Futures Group.

"Demand has been weak, but might start to improve soon as prices for Cocoa and products have turned much lower," he said.

May New York cocoa futures settled up 2.0%, at $2,058 a tonne.

Battle over 18 cent mark

Sucden Financial said that in the global sugar season starting in October 2017-18 the sugar market could see a 1-2m tonne surplus, after two years of deficit.

But prices remain moribund, after a significant sell-off broke momentum last week.  

"The market is engaged in the 'battle of 18 cents,' with momentum investors appearing to have decided to sell sugar," said Tobin Gorey at Commonwealth Bank of Australia.

May raw sugar futures settled down 0.1%, at 18.16 cents a pound.

Chinese cotton quality in question

May cotton futures moved higher, after an auction of Chinese stocks attracted little buying interest, with only 76% sold.

After Monday's auction sold similar levels, Mr Gorey said that buying might be low due to the low quality of stocks offered.

"We've long been suspicious of the quality of China's cotton reserve," Mr Gorey said.

"We had though expected that it wouldn't be until later in the year that the quality factor started to slow the release of stocks onto the market."

May cotton futures finished up 0.4%, at 77.15 cents a pound.

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