On another day, Argentina’s announcement that it had suspended registration of agricultural exports until further notice might have sent Chicago futures soaring.
The move is being seen as heralding the implementation of higher, and maybe substantially higher, export taxes, to boost the country’s coffers at a time when it is in recession, and facting restructuring on about $100bn of sovereign debt.
Benson Quinn Commodities flagged “expectation is this signals a steep increase in export tariffs to come”.
And, after all, Argentina is the top exporter of soymeal and soyoil, and a substantial seller of corn, soybeans and wheat too.
Soymeal futures did manage notable gains, with the Chicago May lot closing up 1.8% at $298.30 a short ton.
“Soymeal price recovered from recent lows helped by Argentine export tax news,” said CRM AgriCommodities.
And Chicago soybean futures at least managed a positive close, adding 0.3% to $8.92 a bushel for May.
“The Argentine government is expected to increase export taxes on soybeans, which would most likely cause Argentine farmers to hold onto their soybeans after harvest,” CHS Hedging said.
‘Even more competitive’
However, such gains were not universal, with one twist in the Argentina tax tale that duties on some ags could actually be revised downward.
“With corn taxes possibly decreasing by 2%, this could make Argentine corn even more competitive in the global market,” CHS Hedging said.
Corn futures for May closed down 0.6% at $3.70 ½ a bushel.
Chicago soft red winter wheat for May also settled lower, if by a more modest 0.3% at $5.35 ¾ a bushel.
Ag bulls, as has been the theme of late, continued to face the headwind of coronavirus worries.
There were evident too in either further losses in many other risk assets, with Brent crude trading a further 2.9% down at $53.36 a barrel in late deals, or at least massive volatility.
Wall Street’s Dow Jones industrial share average, for instance, traded from 1.6% up to 0.7% down, before standing 0.2% lower in late deals.
In grains, “managed funds continue to trim their wheat long while adding to shorts in the soy complex and corn,” said Richard Feltes at RJ O’Brien, with the prospect March Chicago contracts reaching first notice day on Friday, ie the start of the expiry process, only enhancing fund activity.
‘Market finally woke up’
“The market finally woke to first notice day,” said Benson Quinn Commodities, noting a huge increase in trading volumes in the March-May corn spread – to about the same as in the previous three sessions combined.
Not that the spread changed, ending where is started with the May lot holding a $0.04-a-bushel premium.
That was not the case in wheat, in which the March lot drilled home its advantage even as first notice day neared, building its premium by $0.02 to a six-month high of $0.04 ¼ a bushel over the session.
“The Chicago wheat spread continues to trade inverted on lack of quality in deliverable stocks,” of the grain, Benson Quinn Commodities said.
By contrast, in Kansas City hard red winter wheat and Minneapolis spring wheat markets, a more typical front-contract discount reigns.
Palm oil vs rapeseed
Back to the idea of fund selling in the soy complex and, while that did not appear so conclusive in soymeal and soybeans, soyoil did end down 0.5% at 29.45 cents a pound for May delivery, a five-month closing low.
Rival palm oil again set a negative lead, in ending down 0.8% at 2,419 ringgit a tonne in Kuala Lumpur, undermined by worries over imports by India, as well as coronavirus-hit China.
Furthermore, gasoil plunged 3.5%, and at one point hit its lowest since July 2017, a negative for ags such as palm oil used in making biodiesel.
For once, though, Paris rapeseed (an oil-heavy oilseed) did not follow palm oil, but closed up 0.3% at E392.00 a tonne for May, for its first winning session in six.
“Rapeseed was supported as Indian refiners lobbied the government to ban imports of palm oil,” CRM AgriCommodities said.
Cotton vs coffee
Among soft commodities, cotton, as an industrial ag, extended its decline, closing down 1.3% at 65.47 cents a pound in New York for May, the lot’s weakest finish in nearly three months.
However, arabica coffee for May added 1.2%, to 109.75 cents per pound, helped by the fact that this is one ag in which funds have been extending short bets, offering the chance for profits on closing of (at least older) short bets as month-end approaches.