Has the increase in US position limits for some commodities spurred a positive price response already?
Certainly, on Monday, the first day of raised limits in the likes of corn, soybean and wheat futures prices rose despite a range of weather factors ranged against bulls.
These included rainfall in Argentina, which “is expected to become widespread” early this week, and “should ease dryness concerns” for corn and soybeans, Maxar said, seeing helpful precipitation too for the likes of Chinese, European Union and Black Sea wheat (and rapeseed).
Meanwhile, in the US southern Plains, “additional showers through midweek will continue to improve soil moisture for wheat” too.
‘Weather leans bearish’
“Weather leans bearish” for prices, said Richard Feltes at RJ O’Brien - although there were some less helpful forecasts from production perspective.
“Dryness worries remain in the northern Plains, south western Plains and far south Texas where more rain must fall soon,” said Steve Freed at ADM Investor Services.
CHS Hedging noted that for US wheat “the next threat for the market to consider is the forecast for a return to cold temperatures”.
Whatever, helped by funds doubling up or not, grain futures ended higher, including Chicago corn which added 1.9% to $5.49 ½ a bushel for May – bouncing earlier off its 50-day moving average, and ending above its 40-day line.
Chicago soft red winter wheat for May gained 1.0% to $6.45 a bushel, for its first winning session in four.
Kansas City hard red winter wheat for May, as grown in the southern Plains, ended up 0.5% at $6.06 ¾ a bushel – and this was one contract not covered by the extra fund provision.
The “recovery suggests [Plains rains] had been discounted already in last week’s sell-off”, CHS Hedging said.
Also supportive were some decent US export data for last week, as drawn from cargo inspections.
For wheat, shipments reached 683,492 tonnes, up 200,000 tonnes week on week, and ahead of the range of forecasts of 300,000-500,000 tonnes.
The figure, led by shipments to the Philippines and South Korea, saw the rate of exports so far in 2020-21 reach 19.28m tonnes, catching up a bit on the 19.74m tonnes recorded as of the same period of last season.
(The USDA pegs Us full-season exports at 26.81m tonnes for 2020-21, up from 26.28m tonnes in 2019-20.)
For corn, shipments of 2.20m tonnes far exceeded expectations of a figure in the range of 1.20m-1.90m tonnes, besides being up more than 500,000 tonnes week on week.
Some commentators, such as Futures International, have expected a pick-up as the US’s soybean export pace goes into seasonal decline, now Brazil’s harvest is in full flow, freeing up extra US logistical space for corn.
US corn exports, at 29.96m tonnes, are up from 16.02m tonnes at the same time of last year, with the USDA forecasting total-season shipments (ending in August) at 66.04m tonnes, up from 45.17m tonnes for 2019-20.
Japan and China were top destinations last week.
Soybean exports, at 518,789 tonnes, were within the range of forecasts of 350,000-650,000 tonnes, if down from 595,000 tonnes the previous week, reflecting the seasonal trend.
Still, the soybean market had more surprising data to deal with, in terms of US crush data for last month from industry group Nopa which, at 155.158m bushels, came in well below the February record figure of 168.610m bushels that investors had expected.
In fact, it was the lowest reading for any month since September 2019, and down from 184.654m bushels in January, and 166.288m bushels in February last year.
Soybean investors in fact did not take the data too badly, coming after all for a month in which US industry was hampered by cold which set records in some areas.
Soybean futures for May ended up 0.4% at $14.19 ½ a bushel, helped by soymeal, which for May rebounded by 1.7% to $407.40 a short ton – closing back above its 100-day moving average, which it closed below in the last session for the first time in seven months.
The Nopa data showed US soymeal exports, at 837,815 tons, rising year on year, by 9.8%, despite the 6.7% fall in the crush from February 2020.
However, soyoil futures, for once, underperformed, shedding 0.5% to 55.09 cents a pound for May.
One investor told Agrimoney that US soyoil stocks, at 1.757bn pounds, were below the 1.839bn-pound figure that investors had expected, but not by as much as the crush shortfall might suggest.
Grains’ performance meant that they turned the tables on soft commodities, which outperformed for much of last week, with New York cotton for May ending down 1.0% at 86.72 cents a pound.
Rains in west Texas, a key cotton growing region, were seen as fuelling the decline, as was some firmness in the US dollar.
The dollar was particularly strong against the Brazilian real, which shed 1.6%, undermining values of arabica coffee, which ended down 0.7% at 132.10 cents a pound.
Raw sugar for May eased by 0.1% to 16.12 cents a pound.