26th Jul 2012, by Agrimoney
The bulls who wrestled back control of grains and oilseeds futures in the last session lost much oof it again on Thursday, as some supply fears turned down a notch, while the issue of which users are willing to buy at these elevated prices rose.
The US weather forecast took a turn for the wetter, at least, that from the official Climate Prediction Center did.
In the six-to-10 day outlook, the CPC "shows Minnesota, Wisconsin, eastern Illinois, Michigan, Indiana, Ohio, Kentucky, eastern Tennessee, all of North Carolina, Virginia, Maryland, Delaware and southern Pennsylvania in above-normal rainfall, while the western Corn Belt is in near-normal rainfall", WxRisk.com said.
And it is much the same in the eight-to-14 day outlook too.
Wetter weather offers some hope to drought-ravaged crops, especially to soybeans, which are only now going through their sensitive developmental phase of pollination.
Mike Mawdsley at Market 1 said: "Rains are expected to fall - we have heard that before- but it is getting into the 13th hour for corn."
'Still overpriced'
Meanwhile, for wheat the later order by Iraq last night of 150,000 tonnes of Russian wheat was seen as easing some of the concerns over Russian supplies – not just that the country has grain to export, amid a disappointing harvest, but is willing to do so.
Luke Mathews at Commonwealth Bank of Australia said: "Rumours circulated that Russia may impose a grain export ban, yet there have been no concrete announcements.
"While restrictions are a possibility, we think the odds are significantly less than in 2010 because production this year is higher."
Furthermore, the order highlighted the lack of competitiveness of US supplies at current levels.
To repeat a comment from FCStone's Mike O'Dea made on Wednesday: "This morning French wheat would deliver into the US Gulf at approximately $330 per tonne and US FOB offers are in the $340-per-tonne area."
"US wheat is still overpriced," even before the last session's rally. "Watch export sales closely on Thursday."
'Possible cancellations'
Indeed, many traders are. After weeks of being ignored, amid the weather rally, the US Department of Agriculture's weekly crop export sales data are retaking an elevated place in investors' consciousness.
Sure, analyst have come up with a reasonably bright scenario, of wheat sales potentially matching the 589,200 tonnes last time, and corn improving to 250,000-350,000 tonnes, from 180,700 tonnes.
For soybeans, the estimate is 350,000-550,000 tonnes, in line with the 407,600 tonnes last time.
"We would expect the fundamental trade will be watching closely for possible cancellations or any slowdown in sales to measure whether [price increases] managed to slow up demand," Jon Michalscheck at Benson Quinn Commodities said.
There has been plenty of talk, after all, of Chinese buyers ditching corn and soybean orders.
CBA's Luke Mathews said, of wheat: "Debate continues as to whether current prices are high enough for demand rationing. For Jordan at least, who cancelled another import tender, prices are too high."
'Demand reported slow'
Lynette Tan at Phillip Futures said: "As the end of marketing years for the respective crops nears, markets are now turning their attention to the overall long-term demand and supply," rather than just US yield losses.
And "demand for corn in the cash market is reported to be slow".
Which may not be so surprising when US users such as Smithfield are finding corn cheaper to import from Brazil, at costs suggested at $290 a tonne plus $30-40-a-tonne freight, compared with a US Gulf price of $345 a tonne.
Meanwhile, ethanol data on Wednesday showed US output of the corn-derived biofuel dropping below 800,000 barrels a day last week for the first time since records began two weeks ago.
Mixed bag
In fact, corn had recovered earlier losses to stand 0.4% higher at $7.91 ½ a bushel as of 09:00 UK time, (03:00 Chicago time) for December delivery, with the September lot edging 0.2% higher to $7.96 ¼ a bushel.
However, wheat for September was 0.4% lower at $8.99 ¼ a bushel.
And soybeans dropped back 1.1% to $15.96 ¾ a bushel for November and by 0.8% to $16.80 ½ a bushel for the August contract.
Elsewhere in the oilseeds complex, this depressed Kuala Lumpur palm oil too, which dropped 0.5% to 2,936 ringgit a tonne.
'Awaiting news'
Among soft commodities, raw sugar fell back 1.2% to 23.30 cents a pound for October delivery, although there some doubts as to how
"Price movements are mainly from speculative" trading, Ms Tan said.
"Traders are awaiting more sugar news out of India before initiating any price action."
Certainly, any looking at China may have been a little unnerved, with prices on the Zhengzhou exchange dropping 2.2% to 5,409 yuan a tonne for January delivery.
Meanwhile, cane growers in Mexico, a big supplier of sugar to the US, forecast national 2012-13 sugar output of 5.5m tonnes, up from 5.05m tonnes in 2011-12.
New York cotton fared better, rising 0.9% to 70.13 cents a pound for December delivery, in line with broadly better macro-market mood, which saw shares rise 0.9% in Tokyo, 0.7% in Seoul and 0.8% in Singapore.
The bulls who wrestled back control of grains and oilseeds futures in the last session lost much oof it again on Thursday, as some supply fears turned down a notch, while the issue of which users are willing to buy at these elevated prices rose.
The US weather forecast took a turn for the wetter, at least, that from the official Climate Prediction Center did.
In the six-to-10 day outlook, the CPC "shows Minnesota, Wisconsin, eastern Illinois, Michigan, Indiana, Ohio, Kentucky, eastern Tennessee, all of North Carolina, Virginia, Maryland, Delaware and southern Pennsylvania in above-normal rainfall, while the western Corn Belt is in near-normal rainfall", WxRisk.com said.
And it is much the same in the eight-to-14 day outlook too.
Wetter weather offers some hope to drought-ravaged crops, especially to soybeans, which are only now going through their sensitive developmental phase of pollination.
Mike Mawdsley at Market 1 said: "Rains are expected to fall - we have heard that before- but it is getting into the 13th hour for corn."
'Still overpriced'
Meanwhile, for wheat the later order by Iraq last night of 150,000 tonnes of Russian wheat was seen as easing some of the concerns over Russian supplies – not just that the country has grain to export, amid a disappointing harvest, but is willing to do so.
Luke Mathews at Commonwealth Bank of Australia said: "Rumours circulated that Russia may impose a grain export ban, yet there have been no concrete announcements.
"While restrictions are a possibility, we think the odds are significantly less than in 2010 because production this year is higher."
Furthermore, the order highlighted the lack of competitiveness of US supplies at current levels.
To repeat a comment from FCStone's Mike O'Dea made on Wednesday: "This morning French wheat would deliver into the US Gulf at approximately $330 per tonne and US FOB offers are in the $340-per-tonne area."
"US wheat is still overpriced," even before the last session's rally. "Watch export sales closely on Thursday."
'Possible cancellations'
Indeed, many traders are. After weeks of being ignored, amid the weather rally, the US Department of Agriculture's weekly crop export sales data are retaking an elevated place in investors' consciousness.
Sure, analyst have come up with a reasonably bright scenario, of wheat sales potentially matching the 589,200 tonnes last time, and corn improving to 250,000-350,000 tonnes, from 180,700 tonnes.
For soybeans, the estimate is 350,000-550,000 tonnes, in line with the 407,600 tonnes last time.
"We would expect the fundamental trade will be watching closely for possible cancellations or any slowdown in sales to measure whether [price increases] managed to slow up demand," Jon Michalscheck at Benson Quinn Commodities said.
There has been plenty of talk, after all, of Chinese buyers ditching corn and soybean orders.
CBA's Luke Mathews said, of wheat: "Debate continues as to whether current prices are high enough for demand rationing. For Jordan at least, who cancelled another import tender, prices are too high."
'Demand reported slow'
Lynette Tan at Phillip Futures said: "As the end of marketing years for the respective crops nears, markets are now turning their attention to the overall long-term demand and supply," rather than just US yield losses.
And "demand for corn in the cash market is reported to be slow".
Which may not be so surprising when US users such as Smithfield are finding corn cheaper to import from Brazil, at costs suggested at $290 a tonne plus $30-40-a-tonne freight, compared with a US Gulf price of $345 a tonne.
Meanwhile, ethanol data on Wednesday showed US output of the corn-derived biofuel dropping below 800,000 barrels a day last week for the first time since records began two weeks ago.
Mixed bag
In fact, corn had recovered earlier losses to stand 0.4% higher at $7.91 ½ a bushel as of 09:00 UK time, (03:00 Chicago time) for December delivery, with the September lot edging 0.2% higher to $7.96 ¼ a bushel.
However, wheat for September was 0.4% lower at $8.99 ¼ a bushel.
And soybeans dropped back 1.1% to $15.96 ¾ a bushel for November and by 0.8% to $16.80 ½ a bushel for the August contract.
Elsewhere in the oilseeds complex, this depressed Kuala Lumpur palm oil too, which dropped 0.5% to 2,936 ringgit a tonne.
'Awaiting news'
Among soft commodities, raw sugar fell back 1.2% to 23.30 cents a pound for October delivery, although there some doubts as to how
"Price movements are mainly from speculative" trading, Ms Tan said.
"Traders are awaiting more sugar news out of India before initiating any price action."
Certainly, any looking at China may have been a little unnerved, with prices on the Zhengzhou exchange dropping 2.2% to 5,409 yuan a tonne for January delivery.
Meanwhile, cane growers in Mexico, a big supplier of sugar to the US, forecast national 2012-13 sugar output of 5.5m tonnes, up from 5.05m tonnes in 2011-12.
New York cotton fared better, rising 0.9% to 70.13 cents a pound for December delivery, in line with broadly better macro-market mood, which saw shares rise 0.9% in Tokyo, 0.7% in Seoul and 0.8% in Singapore.
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