China is not the only buyer.
Sure, the waning hopes of an imminent breakthrough in China-US trade talks are dealing a blow to demand hopes for US crops.
But the US is selling ag exports nonetheless, an insight into the pace of which will be revealed later with export sales data for last week.
Will the statistics be positive for, say, cotton, now trading around their lowest in a month in New York? (Although it has to be said that the latest slide in prices, in the last session, on the lack of progress in China-US negotiations, came too late to effect data to be released later.)
In fact, “US cotton is competitively priced”, said Louis Rose at Rose Commodity Group.
The bad news is that the US Department of Agriculture US export sales data for cotton for last week may nonetheless “be lower versus for the week ending November 7 as there is no indication that China will again prove to have been a significant taker of US cotton.
“Still, we expect sales to be well ahead of the average weekly pace required to match the USDA’s 16.5m-bale export projection” for the whole of 2019-20 (which ends in July).
In the state of Georgia, Ron Lee at McCleskey Cotton said that it had, until this week’s fall in prices, “looked like merchants were willing to pay around 68.00-69.00 cents a pound flat price for high grading cotton in our area”.
New York March cotton contract stood down 0.2% at 64.17 cents a pound as of 10:00 UK time (04:00 Chicago time), although recovering somewhat after an early sally below its 50-day moving average, at 64.06 cents a pound, encountered buying.
‘Games of chicken’
Supportive to prices was a USDA attache report out overnight pegging the Indian cotton crop at 29.70m bales, 800,000 bales below the official USDA forecast, with the shortfall attributed to “late southwest monsoon rains that impacted the standing crop in the state of Madhya Pradesh which was affected by floods.
“The western part of Madhya Pradesh which is the primary cotton growing region reported large excess rains 61 percent above normal” as measured by the 50-year average.
Separately, Mr Lee cautioned that some cotton price volatility may lie ahead thanks to the expiry of the December lot, which hits first notice day on Friday.
“I guess there could a few games of ‘chicken’ once December goes into delivery,” Mr Lee said, while noting “one or more merchants continuing to certificate cotton, indicating a propensity to deliver even in the face of full carry”.
As for grains, Mr Lee assessed that “prices have slowly but surely been sinking under the weight of harvest and lack of any [China-US] trade progress”.
And certainly Chicago soybean futures struggled in early deals, feeling pressure still from the lack of China-US headway.
“Another delay serves to bolster scepticism that there will ever be deal,” said Tobin Gorey at Commonwealth Bank of Australia.
Pressure on prices may also be coming from an uptick, at last, in selling by farmers of their crops, now that so much of it is harvested in the US, and seeded in Brazil, improving supply confidence.
“The improvement in US weather allowed for a good amount of producer selling prompted a heavy crush trade” on Wednesday, Terry Reilly at Futures International said.
Chicago soybean futures for January stood unchanged at $9.05 a bushel, although movement later may depend on US export sales data for last week, expected to come in at 800,000-1.40m tonnes.
That compares with 1.25m tonnes last time.
Signally, the vegetable oil complex has gone into reverse, undermined by profit-taking on strong gains so far this week/month on worries over a squeeze in supplies of palm oil in particular.
Kuala Lumpur palm oil stood down 0.5% at 2,673 ringgit a tonne, albeit only after earlier setting a fresh two-year high of 2,709 ringgit a tonne
This despite a further gain in Chinese Dalian palm oil for January, which settled up 0.5% at 5,598 yuan a tonne.
In Chicago, rival soyoil stood down 0.6% at 31.01 cents a pound,
‘Values are competitive’
Among grains, wheat reversed too, at least in Chicago, where the March soft red winter wheat contract stood down 0.6% at $5.15 ½ a bushel.
US export sales for last week are expected at 200,000-500,000 tonnes, so at least matching the 238,620 tonnes the previous week.
Benson Quinn Commodities noted talk that US wheat export “values are competitive into export channels”.
However, the broker also said that “Russian traders are looking to be more aggressive in upcoming tenders, which should offer resistance” to price upside.
Chicago’s slip back allowed Minneapolis spring wheat to eliminate - just - its, highly unusual, discount, with the March contract adding 0.1% to $5.15 ¾ a bushel.
Corn futures for December, still the best-traded lot, managed a 0.1% gain too, to $3.67 ¼ a bushel.
ADM Investor Services noted some investor expectations that the USDA will in its January Wasde cut its estimate for the ongoing harvest.
“This is a different weather year, but the largest decline in the corn yield from November [Wasde] to January has been 2 bushels per acre,” the broker said.
“Some feel that this year the drop could be 1 bushel per acre,” although that “may not be enough to offset potential drop in demand or drop end stocks enough to rally prices”.
‘Sudden increase in exports’
Meanwhile, at Agrivisor, Karl Setzer said that “one topic that is gaining attention as corn harvest progresses is the quality of the crop, mainly test weight.
“Many regions of the Corn Belt are reporting lower than average test weights on corn this year. Some are claiming test weight is falling below 50 pounds per bushel.
“As a result, some terminals and processors are not only docking corn, but rejecting it if test weight is not high enough.”
One knock-on effect on demand is that “we could be seeing a sudden increase in exports as buyers want to secure as much old crop as possible before this corn makes it into the supply line.
“This is not uncommon in years with suspect quality.”
US corn export sales for last week are estimated at 400,000-900,000 tonnes, compared with 581,568 tonnes the previous week.