If the new month, new money idea looked only selectively applied to ags in the last session, any impact was down to a trickle in early deals on Wednesday.
The Bcom ag subindex stood down 0.5% in early deals, reversing gains of the last session, as sellers took charge.
Palm vs soy
Not that all markets felt the pinch, with palm oil extending its headway, adding 1.4% in Kuala Lumpur to stand at 2,825 ringgit a tonne as of 10:30 UK time (04:30 Chicago time), and earlier setting a fresh near-seven-month high of 2,843 ringgit a tonne.
Further gains in Dalian palm oil futures were helpful, with the January contract adding 0.3% to 5,866 yuan a tonne, to take gains over the past week to 5.9%, spurring ideas that Chinese demand for the vegetable oil has not been sated yet by some post-peak-pandemic stockpiling.
Palm is also seen as having some catching up to do after recent underperformance against rival vegetable oils, which has improved its competitiveness.
Oil World said that “the recent widening of the price discounts of palm oil vis-a-vis soyoil and sun oil is seen stimulating a shift in purchases in favour of palm oil”.
Soyoil itself was up a more modest 0.6% at 33.07 cents a pound in Chicago for December delivery.
‘Some positive signs’
In New York, cotton was a gainer too, adding 0.4% to 65.68 cents a pound for December delivery, staying just ahead of their 10-day moving average.
“There are some positive signs to feel optimistic about - spinning mills in Vietnam, Bangladesh and India were up to 75% capacity in July, for example,” the International Cotton Advisory Committee said, if flagging too the hefty extent of world cotton inventories.
Tobin Gorey at Commonwealth Bank of Australia said that cotton price “gains keep the market’s positive momentum alive.
“But that buying is yet to exhaust the hefty seam of selling that emerges when the New York December [contract] nears 65.5 cents a pound.”
‘China is buying’
However, the default direction was lower, including in wheat, which fell by 0.7% to $5.60 a bushel in Chicago for December, giving back some of its gains in the last session, which were attributed to factors including dry weather in the US Plains, Australia and Argentina, and start-of-month fund buying.
There was also talk of Chinese interest in US supplies, as there always seems to be these days when Chicago prices gain. Ie, which is cause, and which effect?
Still, the rumours this time had some granularity, according to Mike Zuzolo at Global Commodity Analytics, who noted talk “that China is buying out of the Pacific North West.
“China was seeking around four, maybe five, cargos of US hard red winter wheat.”
‘Pick-up in export interest’
That appears more likely than the ideas of China buying [Chicago-traded] soft red winter wheat, which were also alive in the last session, with the country a far bigger buyer of US hard red winter wheat, or HRW, than SRW.
It is a bigger buyer of high protein spring wheat too, which for December gained 0.5% to $5.49 a bushel in Minneapolis, bucking the softness in winter wheats.
Kansas City HRW stood down 0.7% at $4.82 ¼ a bushel for December delivery.
Also preventing wheat losing all ground lost in the last session was talk of strength in Baltic and/or Black Sea prices, which Steve Freed at ADM Investor Services said was “linked to a lack of farmer selling and a pick-up in Black Sea export interest”.
Ukraine price strength
Nor is strength in Black Sea values limited to wheat.
Agritel reported that for sunflowers and soybeans, Ukraine prices “are at levels never seen before” at the start of harvest, a period which usually sees pressure on values.
“This is the case for prices in both hryvnia and dollar.”
“As is the case on the Ukrainian corn market today, these price levels reflect strong demand on the import side for both sunflower oil and soymeal.”
Ukraine’s corn prices are also “supported by the current water deficit” in the country.
‘Key support for prices’
In fact, Ukraine values have continued to rise after gaining $6-8 per tonne last week, said consultancy APK-Inform, which pegs the crop at 35.1m tonnes, shrunk 8% year on year by drought.
"Key support for prices was provided by ... a possible decrease in the production of this crop in Ukraine,” and weakening hopes for harvest in the neighbouring European Union too, said the consultancy, pegging prices at $179-185 per tonne FOB Black Sea.
Still, while Ukraine is a notable competitor on the world corn market, US corn prices fell by 0.7% to $3.55 ½ a bushel, as measured by Chicago’s December contract.
Terry Reilly at Futures International flagged “overbought conditions” in the market, and a knock to the grain’s technical credentials too after it failed on Monday in an attempt to break above its 200-day moving average.
‘Dry weather, fierce winds’
On the fundamental side, CHS Hedging said it was “hearing yield estimates for this year’s US corn harvest from 175.0-180.0 bushels per acre.”
That is below the USDA’s current forecast of 181.8 bushels per acre.
“What started out as a great year for corn, has turned over a new leaf from the extended periods of hot/dry weather conditions and the fierce winds that moved across Iowa.”
However, substantial yield loss has already been factored in in the grain’s recovery from a mid-August low of $3.20 a bushel, December basis.
‘Soybeans will not trade above $10.00’
Soybean futures too found selling, shedding 0.6% to $9.49 a bushel for November delivery, amid ideas that maybe the recent run in prices had done enough in terms of allowing for reduced US yield expectations and resilient Chinese import interest.
John Walsh at Walsh Trading said that, even though latest official condition ratings of the US crop fell by 3 points week on week in terms of the proportion seen as “good” or “excellent”, “the average is still 2 points below the current” figure.
“The main point of this is that the bean yield while not increasing, may not be declining as much as the market has dialled in.
“It is my thought that beans will not trade above $10.00 per bushel.”