Investors turned less choosy in their exits.
The recent change in the dial to reflationary thinking, which has encouraged selling in the likes of bonds, turned on Thursday all the way to plain sell.
A range of assets, from shares to crude oil to gold, saw price falls.
Record Brazilian prices
Sure, some agricultural commodities did manage to resist the liquidation, with New York arabica coffee for May closing up 2.0% at 140.05 cents a pound, a three-year closing high for a nearest-but-one contract, amid continued worries over Brazil’s dryness-threatened crop.
Cepea reported Brazilian arabica prices as of Wednesday at R$725.02 per bag, up 10.1% for this month, and a record high in local currency terms, despite the elevated prices encouraging sales.
“A satisfactory volume of business was closed at the end of last week and at the beginning of this one in the physical and future markets, mainly for the highest quality coffees,” the research institute noted.
That said, trading volumes were “limited by the high percentage of coffee already sold in previous months and by the expectations of producers of even higher prices this year, due to lower domestic production”.
‘Can extend this recovery’
Cocoa, meanwhile, for May gained 2.1% in New York to $2,608 a tonne, to take to 9.1% its gains over the past week.
“In the space of 1.5 weeks, cocoa has seen a downside breakout [turn] to a potential upside breakout of its December/February consolidation zone,” said ADM Investor Services.
“As the market focus shifts towards a stronger demand outlook, cocoa can extend this recovery move.”
London May cocoa closed up 2.2% at £1,749 a tonne, up 7.1% week on week.
‘Created a landslide’
However, the Bcom ag subindex overall stood down 1.1% in late deals, as data in grains especially gave jittery investors extra cause to sell.
US export sales for last week, old crop, came in at marketing year lows of 167,700 tonnes for wheat and 453,300 tonnes for corn, and for soybeans at 167,902 tonnes, were the second lowest of 2020-21.
“Poor US USDA export sales created a landslide in all major Chicago agriculture commodities,” said Terry Reilly at Futures International.
“Much-less-than-expected soybean complex sale commitments and product shipments quickly turned around the three futures markets” in the soy complex, he said, while terming the corn figure “poor”.
‘South American offers are cheaper’
“Today’s sales are a reminder that South American offers are cheaper,” said Benson Quinn Commodities, adding too that the report “highlights the effects of expensive ocean freight”, which have cut US competitiveness to some destinations.
(Separately, the European Commission raised its forecast for European Union soft wheat exports by 1.0m tonnes to 27.0m tonnes.)
What made the data extra disappointing was, as Karl Setzer at AgriVisor noted, report overnight “of China showing more interest in US offers from the Pacific North West”.
Instead, the data appeared to tally with ideas that while “the past several months the US has been the primary supplier of soybeans to the global market… this is starting to change with the South American harvest and those suppliers are now the main sources, especially Brazil”.
‘Brazil shipped a lot of soybeans’
Indeed, Terry Reilly at Futures International reported “chatter Brazil shipped a lot of soybeans in recent days.
“We know they have the capacity to export at least 1.5m tonnes over a three-day period.”
In short, the export data backed ideas that high prices were indeed working in terms of rationing demand for US supplies.
“It appears rationing is likely going to affect US soybean exports before domestic crush.” Mr Reilly said.
Chicago soybean futures for May shed 1.8% to $14.07 ¼ a bushel,
Even soyoil lost its way this time, closing down 0.7% at 49.67 cents a pound for May, and surrendering the 50.00 cents-a-pound mark after only one session closed above it.
“With new contract highs hit this week in canola, soybeans, and soybean oil nearby futures, some traders were taking money off the table today,” Mr Reilly said.
Indeed, Winnipeg canola suffered particularly heavy profit-taking, in sympathy with its US peers, tumbling by 3.9% to Can$735.20 per tonne, getting on for Can$50 per tonne below the last session’s intraday record high for a nearest-but-one contract.
Back in Chicago, corn futures for May ended down 1.3% at $5.49 ¾ a bushel, although at least managed a recovery from their intraday low of $5.41 a bushel, when prices were down 2.9%.
South American weather outlooks offered some support, with Brazilian raims hampering safrinha corn sowings while in Argentina “dry weather is expected across most of Argentina through the weekend, along with some hotter temperatures,” said Maxar.
“The hotter and drier weather will lead to declines in soil moisture across Argentina, increasing stress.”
‘Should benefit wheat’
And Chicago wheat futures for May closed down 1.4% at $6.75 ¾ a bushel, also undermined by USDA export sales data, as well as some other estimate changes too.
The International Grains Council raised b 5m tonnes its forecast for world wheat output in 2020-21, on improved estimates for harvests in Australia, Kazakhstan and Russia.
And prospects for Australia in 2021-22 are starting off promising too, in terms of rains to get winter crops off to a good start.
“Australia’s weather bureau sees a wetter-than-usual autumn with La Nina conditions sticking around,” Mr Reilly said.
“They plant around April so this should benefit wheat fieldwork progress.”