3rd May 2013, by Agrimoney
Agricultural commodities found headway harder to come by on Friday, even as many other risk assets gained, boosted by positive US jobs data.
US non-farm payrolls increased by a bigger-than-expected 165,000 in April, and there were also upward revisions totalling 114,000 for data for the preceding two months.
The jobless rate fell to 7.5%, the lowest since December 2008.
Shares, for instance, took succour in that, standing 0.9% higher in Wall Street in late deals, after gaining 0.9% in London and 2.0% in Frankfurt.
Brent crude added 1.2% to get back over $104 a barrel.
'No significant system'
But for corn, more than worries over macroeconomic or fuel prices were the concerns over whether the skies will clear for Midwest farmers, allowing them to catch up on corn plantings.
As ever, there were a number of interpretations of the outlook.
"The next week is not completely dry, but there is no significant system until the May 21-23 time period," Darrell Holaday at Country Futures said.
"The lack of drying as the current system meanders east south east at a slow pace is probably the biggest concern, as the longer it hangs on with clouds the narrower the gap to create another planting window."
'Open planting window'
Benson Quinn Commodities also took a broadly optimistic approacjh, saying that once the current low "moves out of the central Midwest over the weekend, warmer and drier weather is expected to set in for most of the Midwest into late next week.
"Planting should progress rapidly once soil conditions improve. There should be a nice 4-6 day window next week for planting to advance in central Midwest and being in the northern plains ahead of the next system.
US Commodities said: "An open planting window will begin Monday/Tuesday for the next six days. This should push seedings to 35% by May 15."
Not that this is a huge rate of completion, of course, by the mid-May period when plantings are late enough to attract yield penalties.
'Major rain event'
However, David Tolleris at WxRisk.com took a more downbeat view, saying that the latest run of the GFS model "has turned back towards the European model solution, and now shows a major rain event for all the Delta and the entire Midwest - including the western Corn Belt and the eastern Corn Belt for the period of May 9-11
"In this case with regard to this next event for the Midwest the European model has been far more consistent," he said, adding that "I think the weather models will hold over the weekend".
Still, other investors were not so sure.
"There is a risk that Sunday night weather updates are less threatening, that will keep end-of-week buying muted," Richard Feltes at RJ O'Brien said.
He added: "Even though upcoming weather is sub-optimal, it looks better than the weather extremes that have buffeted the plains and Midwest this week."
New crop, old crop gap
Many investors decided to take profit rather than bank all on the weather rally continuing, and December corn fell 1.0% to $5.53 ½ a bushel in Chicago, still up 6.7% for the week thanks to the worse-than-expected conditions, including snow across many states, which have slowed plantings this week.
Old crop July corn eased 0.1% to $6.61 ¼ a bushel, still gaining some support from the idea that even if 2013 yields are not reduced by the poor weather, the harvest is at least likely to be delayed, meaning more reliance on thin old crop supplies.
And there was a little bit of that kind of thinking in a strong performance by soybeans too, especially as demand is continuing strong, raising concerns over the availability of crop to cover paper promises.
Are the beans there?
"The story is the same. Strong cash bids by soybean processors who continue to make export sales of soymeal like they have it," Country Futures' Darrell Holaday said.
"The reality is the margins are good if they can get the soybeans bought, but that is the problem."
Old crop July soybeans added 1.1% to $13.87 ¼ a bushel in Chicago, gaining support too by the earlier positive close of the oilseed on the Dalian exchange in China, whose market is being especially closely watched, given the bird flu epidemic and potential damage to the poultry industry and feed demand.
New crop November soybeans added 1.4% to $12.21 ¼ a bushel, helped by the performance of old crop besides a touch of profit-taking, with the contract have suffered from long corn, short soybean spreads.
Thin inventories
Soybeans also received support from its fellow oilseed, canola, after Canada revealed stocks well below market estimates as of the end of March, at their lowest for the time of year since 2005.
That said, canola itself managed a gain of a modest 0.2% to Can$601.40 a tonne in Winnipeg, doing better in Paris, where the August rapeseed contract added 0.7% to E433.25 a tonne.
In wheat too, Canadian stocks were below expectations, also playing to the idea of the extended gap between old crop and new crop supplies caused by cold weather, delayed plantings and therefore likely a delayed harvest.
Minneapolis spring wheat, a proxy for Canadian wheat, certainly did better than winter wheat contracts, but still lost 0.8% to $8.18 a bushel.
As US Wheat Associates noted, even if there is a poor harvest this year, "with carry-in stocks expected to be just more than 5.0m tonnes, buyers can be assured there will be sufficient supplies of high protein, strong gluten US hard red spring wheat available".
'Possible Gasc tender'
Winter wheats fell in part on prospects for rain for the dry southern Plains (depending which commentator you listen to).
Furthermore, while Informa Economics did cut its estimate for the US hard red winter wheat crop, after the wheat tour results from the likes of Kansas and Colorado, the downgrade, to 798m bushels, left its still above that of many other forecasts, such as Lanworth.
Demand hopes have taken a hit too, with the non-appearance of Egypt's Gasc grain authority, which had been rumoured to launch its first tender in months this week, but was deemed to have been scared away by the price rally.
In fact, investors will nonetheless "watch for a possible Gasc tender through the weekend, with more definition being afforded to the market should they indeed tender", FCStone said.
Still, for now Kansas hard red winter wheat for July dropped 1.6% to $7.78 ½ a bushel, still up 3.7% for the week, while Chicago soft red winter wheat for July fell 1.2% to $7.21 a bushel, up 4.1% for the week.
Flat cocoa
Among soft commodities, cocoa appeared to be taking more notice of more cautious price outlooks, the latest from Macquarie.
Cocoa for July set a four-month high of $2,437 a tonne in New York, but fell back to close at $2,416 a tonne, up just 0.1% on the day.
London cocoa for July eased 0.2% to £1,567 a tonne.
But New York arabica coffee for July added 1.0% to 140.90 cents a pound, amid ideas that Brazil will, despite delaying a decision, settle on a rise in support prices which will underpin values.
Agricultural commodities found headway harder to come by on Friday, even as many other risk assets gained, boosted by positive US jobs data.
US non-farm payrolls increased by a bigger-than-expected 165,000 in April, and there were also upward revisions totalling 114,000 for data for the preceding two months.
The jobless rate fell to 7.5%, the lowest since December 2008.
Shares, for instance, took succour in that, standing 0.9% higher in Wall Street in late deals, after gaining 0.9% in London and 2.0% in Frankfurt.
Brent crude added 1.2% to get back over $104 a barrel.
'No significant system'
But for corn, more than worries over macroeconomic or fuel prices were the concerns over whether the skies will clear for Midwest farmers, allowing them to catch up on corn plantings.
As ever, there were a number of interpretations of the outlook.
"The next week is not completely dry, but there is no significant system until the May 21-23 time period," Darrell Holaday at Country Futures said.
"The lack of drying as the current system meanders east south east at a slow pace is probably the biggest concern, as the longer it hangs on with clouds the narrower the gap to create another planting window."
'Open planting window'
Benson Quinn Commodities also took a broadly optimistic approacjh, saying that once the current low "moves out of the central Midwest over the weekend, warmer and drier weather is expected to set in for most of the Midwest into late next week.
"Planting should progress rapidly once soil conditions improve. There should be a nice 4-6 day window next week for planting to advance in central Midwest and being in the northern plains ahead of the next system.
US Commodities said: "An open planting window will begin Monday/Tuesday for the next six days. This should push seedings to 35% by May 15."
Not that this is a huge rate of completion, of course, by the mid-May period when plantings are late enough to attract yield penalties.
'Major rain event'
However, David Tolleris at WxRisk.com took a more downbeat view, saying that the latest run of the GFS model "has turned back towards the European model solution, and now shows a major rain event for all the Delta and the entire Midwest - including the western Corn Belt and the eastern Corn Belt for the period of May 9-11
"In this case with regard to this next event for the Midwest the European model has been far more consistent," he said, adding that "I think the weather models will hold over the weekend".
Still, other investors were not so sure.
"There is a risk that Sunday night weather updates are less threatening, that will keep end-of-week buying muted," Richard Feltes at RJ O'Brien said.
He added: "Even though upcoming weather is sub-optimal, it looks better than the weather extremes that have buffeted the plains and Midwest this week."
New crop, old crop gap
Many investors decided to take profit rather than bank all on the weather rally continuing, and December corn fell 1.0% to $5.53 ½ a bushel in Chicago, still up 6.7% for the week thanks to the worse-than-expected conditions, including snow across many states, which have slowed plantings this week.
Old crop July corn eased 0.1% to $6.61 ¼ a bushel, still gaining some support from the idea that even if 2013 yields are not reduced by the poor weather, the harvest is at least likely to be delayed, meaning more reliance on thin old crop supplies.
And there was a little bit of that kind of thinking in a strong performance by soybeans too, especially as demand is continuing strong, raising concerns over the availability of crop to cover paper promises.
Are the beans there?
"The story is the same. Strong cash bids by soybean processors who continue to make export sales of soymeal like they have it," Country Futures' Darrell Holaday said.
"The reality is the margins are good if they can get the soybeans bought, but that is the problem."
Old crop July soybeans added 1.1% to $13.87 ¼ a bushel in Chicago, gaining support too by the earlier positive close of the oilseed on the Dalian exchange in China, whose market is being especially closely watched, given the bird flu epidemic and potential damage to the poultry industry and feed demand.
New crop November soybeans added 1.4% to $12.21 ¼ a bushel, helped by the performance of old crop besides a touch of profit-taking, with the contract have suffered from long corn, short soybean spreads.
Thin inventories
Soybeans also received support from its fellow oilseed, canola, after Canada revealed stocks well below market estimates as of the end of March, at their lowest for the time of year since 2005.
That said, canola itself managed a gain of a modest 0.2% to Can$601.40 a tonne in Winnipeg, doing better in Paris, where the August rapeseed contract added 0.7% to E433.25 a tonne.
In wheat too, Canadian stocks were below expectations, also playing to the idea of the extended gap between old crop and new crop supplies caused by cold weather, delayed plantings and therefore likely a delayed harvest.
Minneapolis spring wheat, a proxy for Canadian wheat, certainly did better than winter wheat contracts, but still lost 0.8% to $8.18 a bushel.
As US Wheat Associates noted, even if there is a poor harvest this year, "with carry-in stocks expected to be just more than 5.0m tonnes, buyers can be assured there will be sufficient supplies of high protein, strong gluten US hard red spring wheat available".
'Possible Gasc tender'
Winter wheats fell in part on prospects for rain for the dry southern Plains (depending which commentator you listen to).
Furthermore, while Informa Economics did cut its estimate for the US hard red winter wheat crop, after the wheat tour results from the likes of Kansas and Colorado, the downgrade, to 798m bushels, left its still above that of many other forecasts, such as Lanworth.
Demand hopes have taken a hit too, with the non-appearance of Egypt's Gasc grain authority, which had been rumoured to launch its first tender in months this week, but was deemed to have been scared away by the price rally.
In fact, investors will nonetheless "watch for a possible Gasc tender through the weekend, with more definition being afforded to the market should they indeed tender", FCStone said.
Still, for now Kansas hard red winter wheat for July dropped 1.6% to $7.78 ½ a bushel, still up 3.7% for the week, while Chicago soft red winter wheat for July fell 1.2% to $7.21 a bushel, up 4.1% for the week.
Flat cocoa
Among soft commodities, cocoa appeared to be taking more notice of more cautious price outlooks, the latest from Macquarie.
Cocoa for July set a four-month high of $2,437 a tonne in New York, but fell back to close at $2,416 a tonne, up just 0.1% on the day.
London cocoa for July eased 0.2% to £1,567 a tonne.
But New York arabica coffee for July added 1.0% to 140.90 cents a pound, amid ideas that Brazil will, despite delaying a decision, settle on a rise in support prices which will underpin values.
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