China-US relations took an uptick, after the latest talks.
The US trade representative described negotiations held in Washington on September 19-20 as “productive”, while China’s Ministry of Commerce termed the talks “constructive”.
That helped instil a firm feeling in early deals in ag markets, which had suffered particularly at the close of last week on news that Chinese officials had cancelled a visit to Montana and Nebraska farms, which had been taken as a negative sign.
Soybean futures - sensitive to US-China relations, given the oilseed is usually a large US export to China – gained 0.9% to $8.91 a bushel in Chicago for November as of 10:00 UK time (04:00 Chicago time), climbing back above 50-day and 100-day moving averages.
The oilseed is too getting support from concerns over the dryness-hampered start to Brazil’s soybean sowing season, although it remains early days yet.
“Brazilian farmers are anxiously watching the weather forecasts to see when they might receive enough rainfall to start planting their 2019-20 soybean crop,” said Dr Michael Cordonnier at Soybean and Corn Advisor.
Although the mandated sowings window has opened in most states, Goias being an exception, “Mother Nature has not co-operated with adequate soil moisture”.
While it is too early to be worrying about soybean yield loss, delayed plantings and a knock-on delayed harvest “could delay the start of [Brazil’s] soybean exports early next year, which could open the door to more soybean exports from the US”, he said.
Furthermore, the matter as implications for corn too, given that safrinha corn crops are seeded on land cleared by the soybean harvest early in the calendar year.
“A delay in the soybean planting would delay the subsequent planting of the safrinha corn crop, which could have a negative impact on the corn yields.”
The weather outlook for Brazil does show some rainfall, but more is needed.
This week, “rains in northern areas will ease dryness but rains need to continue as planting gets underway. Dryness to build in southern areas,” said Maxar.
China import decline
Corn futures gained too, although not as much, adding 0.3% to $3.72 a bushel for December delivery, although failing to crack a chart ceiling which seems to be forming at around $3.75 a bushel.
The grain lacks the same exposure as soybeans to the China import market, and so to Washington-Beijing relations.
In fact, the US Department of Agriculture’s Beijing bureau last week issued a downbeat forecast for Chinese corn imports in 2019-20, while earlier on Monday, Chinese corn imports for last month came in at 230,000 tonnes, down 29% year on year.
(Elsewhere among feed grains, China’s sorghum imports soared 394% to 280,000 tonnes, tallying with ideas of some return of business to the US.)
‘Harvest and quality concerns’
Wheat futures continued to show a spread of performance, with Minneapolis spring wheat for December adding 1.3% to $5.31 a bushel for December delivery, amid continued worries over the wetness-delayed harvests in the northern US and Canada.
Martinson Ag Risk Management noted “harvest and quality concerns in the northern Plains” after heavy rains “not only slowed down harvest but also resulted in declining quality”.
Benson Quinn Commodities said ahead of the weekend that it looks like “spring wheat harvest in North Dakota has about 25% to go. Canada closer to 50%.”
And the weekend did bring rains to the Dakotas, with North Dakota of course by far the biggest US spring wheat growing state.
In the Prairies, “weekend rains were near expectations, with heavy rains across southern Manitoba with a few light showers across northern Saskatchewan,” Maxar said.
This when Commodity Futures Trading Commission data on Friday showed hedge funds having increased their net short in Minneapolis spring wheat futures in the week to last Tuesday, by 266 contracts to a historically elevated 23,071 lots.
This has spurred the potential for short-covering support to prices.
‘Reluctant to plant’
Kansas City hard red winter wheat futures for December gained 0.6% to $4.10 a bushel, gaining support from their higher protein Minneapolis peer, and also corn, with which the grain has been locked in an unusually strong price war for feed use.
Furthermore, there remain some worries over dryness hampering sowings in the southern Plains, and too of farmers not bothering at all thanks to weak prices.
Martinson Ag Risk Management said plantings are “advancing slowly as producers are reluctant to plant wheat at current prices”.
Managed money retains a historically sizeable net short in Kansas City wheat too, of 37,571 lots.
Chicago soft red winter wheat for December eased by 0.1% to $4.84 ¼ a bushel, by contrast, seeing some of its unusual strength compared with its higher protein peers disappear.
Minneapolis wheat for December has more than doubled its premium over its Chicago peer over the past week.
The Chicago-Kansas City spread has narrowed by a more sedate 6.9%.