29th Oct 2012, by Agrimoney
For crop investors, Hurricane Sandy left more of a mark in Chicago than New York.
OK, it was the threat to the Big Apple and its financial district which grabbed the headlines, as the storm became the first weather event in 27 years, since Hurricane Gloria in 1985, to close the New York stock market for a full day.
(And looks like closing the market on Tuesday too.)
But from an agricultural commodity investor's perspective, it was in Chicago that the storm was felt most, fuelling a 2.3% slump in November soybeans contract to close at $15.27 ¼ a bushel.
The better-traded January soybean lot shed 2.2% to $15.29 ¾ a bushel.
'Ominous weather'
OK, much of that was blamed on better forecasts for the South American areas trying to plant the oilseed.
Richard Feltes at RJ O'Brien, for instance, flagged "improved precipitation prospects across northern Brazil", where dryness has been an issue.
But such a forecast was far from universal.
Broker Doane flagged "ominous weather in South America", with Argentina getting "relentless rain" and Brazil "turning too dry in corn and soybean areas".
Gail Martell at Martell Crop Projections noted that "Mato Grosso has been unusually hot and dry in October", thanks a delayed rainy season, leaving temperatures to rise to 100 degrees Fahrenheit.
And "the forecast continues hot and dry" for the state, Brazil's top soybean grower, and Goias, Mato Grosso do Sul, Minas Gerais and Sao Paulo - if looking wetter for Parana and Rio Grande do Sul.
'Get me out' selling
Indeed, it was Hurricane Sandy which may have been a major player, in forcing liquidation by funds unable to trade in other markets, and needing to raise cash somehow or other.
"The pressure in the soybean complex could be coming from hedge funds that are liquidating because they feel they will not be able to trade equities until probably Wednesday," Darrell Holaday at Country Futures said.
RJ O'Brien's Richard Feltes flagged "'get me out' selling by east coast fund longs ahead of Sandy".
After all, speculators still had a net long position of 172,000 lots in Chicago soybeans as of last Tuesday, latest regulatory data showed.
And open interest in November soybeans remained unusually large, at more than 80,000 lots as of Friday, given the imminence of first notice day, the start of the expiry process, when contracts take on physical liabilities, meaning financial investors tend to quit well in advance.
Soybeans vs corn
In fact, the large open interest stoked ideas that soybeans may be in for some deliveries against contracts after all, of some 100-500 lots, a negative for prices in signalling that the futures market is a better place to sell than other options, such as the cash market.
Furthermore, there is talk of spreading between corn and soybeans, in terms of long bets on the grain balanced against short bets in the oilseed.
Not that all was negative for the oilseed, with weekly US export data last week firm, at 63.4m bushels, as measured by cargo inspections.
"There are also thoughts in the market today that China has purchased four-to-five cargoes of US soybeans today on the price break," Darrell Holaday noted, rumours which tied in with talk that the Chinese crop had fallen below 10m tonnes, more than 2m tonnes below the US Department of Agriculture estimate.
Will soybeans' losses hold when markets return to their normal state of play?
Export revival?
Corn fared better, being on the buying side of the spreads with soybeans, and with pressure from the US harvest easing, with less than 10% yet to complete, traders believe.
Furthermore, there are growing ideas that US corn exports could pick up, as rival supplies from South America run low.
"Brazil corn is now $0.25 cents a bushel cheaper versus US corn," US Commodities said.
"A month ago they were $1.00 a bushel cheaper. The export base on corn is slow but should pick up in the spring as South America supplies again dwindle."
Furthermore, weekly US export data showed shipments of 15.5m bushels, a figure which while half the levels of a year before, were at least above the 10.4m bushels the week before.
Corn for December edged 0.25 cents higher to $7.37 a bushel.
Export setback
Wheat, however, fared less well on the US export front, which shipments dropped below 10,000 bushels, half the levels of a year before and down from 16.5m bushels the week before.
That put dampeners on ideas that US wheat might be growing in competitiveness, while thoughts that Hurricane Sandy rain could ease dryness besetting some winter wheat crops also weighing on prices.
SovEcon talked up the Russian winter wheat crop too, saying the higher prices enabled by Moscow's decision to eschew an export ban had boosted growers' financial firepower for spending on inputs.
December wheat fell 0.6% to $8.58 a bushel in Chicago.
In Europe, where Germany sold 50,000 tonnes of wheat to Iran, Paris's November contract closed 0.5% lower at E263.00 a tonne. London's January contract fell the sale to £211.00 a tonne.
Coffee perks up
In New York, cotton felt some positive force from Hurricane Sandy, which in raising the threat of damage to some northern growing areas allowed New York's (electronically-traded) December contract to close up 0.3% at 72.61 cents a pound.
And arabica coffee had a flyer, closing up 2.5% at 161.65 cents a pound for December delivery.
Sandy was seen causing heavy damage to the Cuban crop, although this is a small affair by world standards.
A bigger influence on prices was speculators taking a second glance at their positioning, after regulatory data showed their net short topping 16,000 contracts, a historically high level, and posing questions about how much more hedge fund selling pressure there is out there.
Also supporting prices was a warning that the dryness in northern Brazil causing concerns over soybean sowings has cut coffee hopes too, in the state of Bahia, with fears that yield losses this year could be repeated next year too.
For crop investors, Hurricane Sandy left more of a mark in Chicago than New York.
OK, it was the threat to the Big Apple and its financial district which grabbed the headlines, as the storm became the first weather event in 27 years, since Hurricane Gloria in 1985, to close the New York stock market for a full day.
(And looks like closing the market on Tuesday too.)
But from an agricultural commodity investor's perspective, it was in Chicago that the storm was felt most, fuelling a 2.3% slump in November soybeans contract to close at $15.27 ¼ a bushel.
The better-traded January soybean lot shed 2.2% to $15.29 ¾ a bushel.
'Ominous weather'
OK, much of that was blamed on better forecasts for the South American areas trying to plant the oilseed.
Richard Feltes at RJ O'Brien, for instance, flagged "improved precipitation prospects across northern Brazil", where dryness has been an issue.
But such a forecast was far from universal.
Broker Doane flagged "ominous weather in South America", with Argentina getting "relentless rain" and Brazil "turning too dry in corn and soybean areas".
Gail Martell at Martell Crop Projections noted that "Mato Grosso has been unusually hot and dry in October", thanks a delayed rainy season, leaving temperatures to rise to 100 degrees Fahrenheit.
And "the forecast continues hot and dry" for the state, Brazil's top soybean grower, and Goias, Mato Grosso do Sul, Minas Gerais and Sao Paulo - if looking wetter for Parana and Rio Grande do Sul.
'Get me out' selling
Indeed, it was Hurricane Sandy which may have been a major player, in forcing liquidation by funds unable to trade in other markets, and needing to raise cash somehow or other.
"The pressure in the soybean complex could be coming from hedge funds that are liquidating because they feel they will not be able to trade equities until probably Wednesday," Darrell Holaday at Country Futures said.
RJ O'Brien's Richard Feltes flagged "'get me out' selling by east coast fund longs ahead of Sandy".
After all, speculators still had a net long position of 172,000 lots in Chicago soybeans as of last Tuesday, latest regulatory data showed.
And open interest in November soybeans remained unusually large, at more than 80,000 lots as of Friday, given the imminence of first notice day, the start of the expiry process, when contracts take on physical liabilities, meaning financial investors tend to quit well in advance.
Soybeans vs corn
In fact, the large open interest stoked ideas that soybeans may be in for some deliveries against contracts after all, of some 100-500 lots, a negative for prices in signalling that the futures market is a better place to sell than other options, such as the cash market.
Furthermore, there is talk of spreading between corn and soybeans, in terms of long bets on the grain balanced against short bets in the oilseed.
Not that all was negative for the oilseed, with weekly US export data last week firm, at 63.4m bushels, as measured by cargo inspections.
"There are also thoughts in the market today that China has purchased four-to-five cargoes of US soybeans today on the price break," Darrell Holaday noted, rumours which tied in with talk that the Chinese crop had fallen below 10m tonnes, more than 2m tonnes below the US Department of Agriculture estimate.
Will soybeans' losses hold when markets return to their normal state of play?
Export revival?
Corn fared better, being on the buying side of the spreads with soybeans, and with pressure from the US harvest easing, with less than 10% yet to complete, traders believe.
Furthermore, there are growing ideas that US corn exports could pick up, as rival supplies from South America run low.
"Brazil corn is now $0.25 cents a bushel cheaper versus US corn," US Commodities said.
"A month ago they were $1.00 a bushel cheaper. The export base on corn is slow but should pick up in the spring as South America supplies again dwindle."
Furthermore, weekly US export data showed shipments of 15.5m bushels, a figure which while half the levels of a year before, were at least above the 10.4m bushels the week before.
Corn for December edged 0.25 cents higher to $7.37 a bushel.
Export setback
Wheat, however, fared less well on the US export front, which shipments dropped below 10,000 bushels, half the levels of a year before and down from 16.5m bushels the week before.
That put dampeners on ideas that US wheat might be growing in competitiveness, while thoughts that Hurricane Sandy rain could ease dryness besetting some winter wheat crops also weighing on prices.
SovEcon talked up the Russian winter wheat crop too, saying the higher prices enabled by Moscow's decision to eschew an export ban had boosted growers' financial firepower for spending on inputs.
December wheat fell 0.6% to $8.58 a bushel in Chicago.
In Europe, where Germany sold 50,000 tonnes of wheat to Iran, Paris's November contract closed 0.5% lower at E263.00 a tonne. London's January contract fell the sale to £211.00 a tonne.
Coffee perks up
In New York, cotton felt some positive force from Hurricane Sandy, which in raising the threat of damage to some northern growing areas allowed New York's (electronically-traded) December contract to close up 0.3% at 72.61 cents a pound.
And arabica coffee had a flyer, closing up 2.5% at 161.65 cents a pound for December delivery.
Sandy was seen causing heavy damage to the Cuban crop, although this is a small affair by world standards.
A bigger influence on prices was speculators taking a second glance at their positioning, after regulatory data showed their net short topping 16,000 contracts, a historically high level, and posing questions about how much more hedge fund selling pressure there is out there.
Also supporting prices was a warning that the dryness in northern Brazil causing concerns over soybean sowings has cut coffee hopes too, in the state of Bahia, with fears that yield losses this year could be repeated next year too.
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