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Evening markets: Sliding US export sales data unseat grains rally

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Well that didn’t last long.

 

After soaring limit-up in the last session, on lower-than-expected US sowings estimates, spot corn and soybean futures couldn’t even manage positive closes on Thursday.

 

Chicago corn futures for May dropped by 0.8% to $5.59 ¾ a bushel, and May soybean futures slumped by 2.4% to $14.02 a bushel, ending back marginally below their 40-day moving average, and extending a bout of soybean underperformance discussed earlier.

 

Chicago wheat for May ended down 1.1% at $6.11 a bushel.

 

Dollar dips

This despite some positive external market signals, in terms of a 0.3% decline in the dollar, so boosting the affordability of dollar-denominated assets.

 

Shares were upbeat too, with the S&P 500 index rising 1.0% to top 4,000 points for the first time – although whether that was all a positive for ags.

 

Certainly, one reason given for the stockmarket strength was a focus on rising Covid-19 cases, a trend which promises further government support and helps many tech companies, for instance - the Nasdaq index outperformed – but could spell demand tests for some ags.

 

In New York, arabica coffee, one ag exposed to demand via its consumption largely in bars and restaurants, closed down 1.5% at 121.60 cents a pound for May. Soyoil, used to a great extent in making biodiesel, ended 0.9% lower at 52.42 cents a pound in Chicago for May.

 

‘Trade was shocked’

Still, there was more to the decline in ags than that.

 

One idea was that grains felt pressure from scepticism over the plantings data which sent them soaring on Wednesday.

 

Certainly, “trade was shocked by the low acreage estimates, especially on soybeans,” as Karl Setzer at AgriVisor said, noting the supply implications.

 

“Given the less-than-expected soybean acres, even with a trend yield this year we will likely not be able to satisfy projected demand.”

 

However, he added that “this report has raised several questions, as total acreage was 3m less than what was expected.

 

“Given current futures and favourable weather conditions it seems unlikely that farmers will not plant as many acres as possible.”

 

And weather, by the way, does look promising for now, with Maxar saying that “dry weather is expected across most of the central US through the weekend, along with warmer temperatures, which should allow early corn planting to make good progress across the south central US”.

 

New vs old crop

But that explanation was not totally watertight.

 

Even if old crop contracts did decline, many new crop ones managed gains, doing their best to buy a few extra acres in sowings plans.

 

November soybean futures added 0.6% to $12.63 ¾ a bushel, closing their discount to the May lot to a 2021 low, while December corn futures added 1.5% to $4.84 ½ a bushel.

 

‘On the light side’

 

Some said that many investors were reluctant to buy, and indeed keen to take profits, ahead of a three-day weekend, with the US and many other countries celebrating a Good Friday holiday.

It looked like soft US export sales data for last week had a role to play too.

 

“US export sales for the soybean complex came in on the light side for all three commodities,” ie including soymeal and soyoil too, said Terry Reilly at Futures International, adding that “export sales for wheat and corn were at the low end of expectations”.

 

Actual exports for soybeans, at 460,892 tonnes, were poor too, the lowest in eight months, albeit for a time of year when shipments are seasonally weakening, deferring to growing South American supplies.

 

Wheat export sales, at 250,091 tonnes, set a four-week low, and actual exports, at 268,663 tonnes, were the second lowest of 2021.

 

‘Raises more fears’

Also stoking caution was fresh talk of African swine fever damage to the Chinese hog herd, with Mr Reilly noting one report that the latest wave “has wiped out 20% of the northern region’s breeding herd.

 

“This raises more fears regarding the impact of losses going forward in other regions of the country,” and by extension provokes concern over feed demand.

 

Interestingly, in China Dalian corn futures for May closed up only 0.6% overnight, at 2,640 yuan a tonne, despite the encouragement provided by the limit-up finish by its Chicago peer.

 

More reassuringly for bulls, soybeans added 2.0% to 5,818 yuan a tonne, and feed ingredient soymeal itself for May 2.9% to 3,382 yuan a tonne.

 

Cotton frays

Taking particular exception at US export sales data was cotton, which in New York tumbled by 3.6% to 77.95 cents a pound for May, falling with a vengeance back below its 100-day moving average line.

 

The was the lowest close of 2021 for a spot contract.

 

This after the USDA showed US upland cotton export sales last week at 78,377 running bales, the weakest figure of the season.

 

And this when there had been some anticipation of a decent number, as Agrimoney noted earlier.

 

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