18th Sept 2012, by Agrimoney
One of the questions posed by soybeans', and soymeal's, limit-down trade to the last session in Chicago was how much selling went unfulfilled?
The answer, according to synthetics trading as of last night, was enough to drive the November contract down a further 7 cents, and in soymeal down a further $2.50 per short ton.
A second question was whether that pressure might wane once the calendar ticked to Tuesday, by reputation that day when Chicago crops reverse a strong trend of the previous session.
Oilseeds slip
The answer to this one was, in a word, no.
Wheat saw a marginal turnaround Tuesday. But the oilseeds complex found only enhanced selling.
Kuala Lumpur palm oil, in which trading had ended before soybeans suffered the worst of the last session's rout, made up for lost time by plunging 5.2% to 2,830 ringgit a tonne as of 09:15 UK time (03:15 Chicago time).
Chicago soybeans themselves were 35.75 cents, or 2.0% lower, at $16.35 ½ a bushel for November delivery, a far deeper decline than synthetic trading had indicated.
Soymeal for October dropped 2.4% to $491.30 a short ton.
That time of year…
Indeed, even a sell-off of an estimated 20,000 soybean lots, and 5,000 soymeal, in the last session, funds still found a bit of selling firepower to aim at the contracts.
But then, as Mike Mawdsley at Market 1 pointed out, "fundamentals are strong" for the complex "but seasonals are lower".
The condition of the crop is still poor, after severe summer drought, even after a 1 point rise to 33% in the proportion rated "good" or "excellent", according to overnight US Department of Agriculture data.
However, as for "seasonsals", harvest has started at a cracking pace, with 10% completed as of Sunday, compared with 4% on average, bringing a spike in supplies to the market and handing a temporary fillip to buyers' hands.
"This is the time of year that pressure is normally seen until harvest is more advanced," Mr Mawdsley said.
Round of downbeat news
Furthermore, many of the negatives around in the last session remained to haunt this one.
These factors included forecasts for much-needed rains in Brazil, as soybean sowings begin in main producing areas for a crop on which the world is depending to replenish inventories.
Soybean yields from the US harvest continue to beat, low, expectations, talk of a release of 3m-4m tonnes from Chinese soybean inventories continued to weigh.
As did the data from the Farm Service Agency further raising the figure for US soybean (and corn) sowings this year, as measured by growers' returns to government farm support programmes.
The data "could have USDA increasing planted acreage in the October production report", Benson Quinn Commodities said.
'General liquidation'
Also, the general market mood continued to be a selling one.
Asian shares lost ground overnight, with Shanghai stocks shedding 0.9%, while European stocks opened lower too, by 0.3% in London and 0.8% in Frankfurt, while the safe haven of the dollar edged a further 0.1% higher.
RJ O'Brien's Richard Feltes, flagging "general asset class liquidation", said that "row crop markets may need to ration later.
"But in the short term it's all about margin calls, capital preservation and rebalancing trade sentiment heavily weighted to the long side."
Aflatoxin impact
Indeed, that went too for corn, for which traders are highlighting an increasing pressure to sell, as elevated levels of toxic aflatoxin fungal residues in dryness-stressed crops boost the enthusiasm for farmers to sell rather than store.
"The presence of aflatoxin in the eastern Midwest will actually increase fall movement as producers reluctant to risk rising contamination via winter storage," Mr Feltes said.
And some supplies of the grain there may be for now, with US growers having harvested 26% of their corn as of Sunday, up 11 points in a week, and compared with an average of 9% at this time of year.
"Yields continue to be reported as better than expected in many areas and the producer has remained a willing seller nearby," Benson Quinn Commodities' Brian Henry said.
Harvest prospects
Furthermore, "the weather outlook features minimal rain this week so it's expected that harvest should continue at a good rate," he added.
"This should keep some pressure on the market nearby."
Still, with the benchmark December contract already having fallen by $1 a bushel from its peak a month ago, and standing around a two-month low, sellers proved unwilling yet to pursue the retreat as keenly as in soybeans.
The lot stood 0.2% lower at $7.46 ¼ a bushel.
Wheat plantings
That left wheat the leader of Chicago's big three, up 0.1% at $8.79 ½ a bushel for December, having factored in a healthy dose of negative sentiment in the last session's 5% plunge.
US winter wheat sowings, at 11% completed, proved a little behind the average of 14%, despite prices providing an incentive to get seeding.
"The insurance for hard red winter wheat came in at $8.78 a bushel, which will get winter wheat planted," Mr Henry said, also flagging the importance of the session for further movement in prices.
"Fund liquidation will likely increase on further weakness," he said, and with the grain hardly looking more technically appealing having fallen through 20-day and 50-day moving averages in the last session.
Softs soften
Among soft commodities, New York cotton remained more in tune with the broader market mood, dropping 0.2% to 75.16 cents a pound for December delivery.
And raw sugar dropped 1.1% to 19.81 cents a pound for October, having bucked weakness in the last session – if only for a technical factor.
That rise was "due to options-related dealings as October options were set to expire at the end of the trading session", Lynette Tan at Phillip Futures said.
"Otherwise, rapid sugar harvesting in Brazil and reviving monsoon in India would have weighed on prices," as they are doing in the current session.
That said, there is more talk of Chinese stockpiling of the sweetener, with the vnsugar.com website reporting that purchasing of 500,000 tonnes, to stabilise local prices, will begin on September 20.
One of the questions posed by soybeans', and soymeal's, limit-down trade to the last session in Chicago was how much selling went unfulfilled?
The answer, according to synthetics trading as of last night, was enough to drive the November contract down a further 7 cents, and in soymeal down a further $2.50 per short ton.
A second question was whether that pressure might wane once the calendar ticked to Tuesday, by reputation that day when Chicago crops reverse a strong trend of the previous session.
Oilseeds slip
The answer to this one was, in a word, no.
Wheat saw a marginal turnaround Tuesday. But the oilseeds complex found only enhanced selling.
Kuala Lumpur palm oil, in which trading had ended before soybeans suffered the worst of the last session's rout, made up for lost time by plunging 5.2% to 2,830 ringgit a tonne as of 09:15 UK time (03:15 Chicago time).
Chicago soybeans themselves were 35.75 cents, or 2.0% lower, at $16.35 ½ a bushel for November delivery, a far deeper decline than synthetic trading had indicated.
Soymeal for October dropped 2.4% to $491.30 a short ton.
That time of year…
Indeed, even a sell-off of an estimated 20,000 soybean lots, and 5,000 soymeal, in the last session, funds still found a bit of selling firepower to aim at the contracts.
But then, as Mike Mawdsley at Market 1 pointed out, "fundamentals are strong" for the complex "but seasonals are lower".
The condition of the crop is still poor, after severe summer drought, even after a 1 point rise to 33% in the proportion rated "good" or "excellent", according to overnight US Department of Agriculture data.
However, as for "seasonsals", harvest has started at a cracking pace, with 10% completed as of Sunday, compared with 4% on average, bringing a spike in supplies to the market and handing a temporary fillip to buyers' hands.
"This is the time of year that pressure is normally seen until harvest is more advanced," Mr Mawdsley said.
Round of downbeat news
Furthermore, many of the negatives around in the last session remained to haunt this one.
These factors included forecasts for much-needed rains in Brazil, as soybean sowings begin in main producing areas for a crop on which the world is depending to replenish inventories.
Soybean yields from the US harvest continue to beat, low, expectations, talk of a release of 3m-4m tonnes from Chinese soybean inventories continued to weigh.
As did the data from the Farm Service Agency further raising the figure for US soybean (and corn) sowings this year, as measured by growers' returns to government farm support programmes.
The data "could have USDA increasing planted acreage in the October production report", Benson Quinn Commodities said.
'General liquidation'
Also, the general market mood continued to be a selling one.
Asian shares lost ground overnight, with Shanghai stocks shedding 0.9%, while European stocks opened lower too, by 0.3% in London and 0.8% in Frankfurt, while the safe haven of the dollar edged a further 0.1% higher.
RJ O'Brien's Richard Feltes, flagging "general asset class liquidation", said that "row crop markets may need to ration later.
"But in the short term it's all about margin calls, capital preservation and rebalancing trade sentiment heavily weighted to the long side."
Aflatoxin impact
Indeed, that went too for corn, for which traders are highlighting an increasing pressure to sell, as elevated levels of toxic aflatoxin fungal residues in dryness-stressed crops boost the enthusiasm for farmers to sell rather than store.
"The presence of aflatoxin in the eastern Midwest will actually increase fall movement as producers reluctant to risk rising contamination via winter storage," Mr Feltes said.
And some supplies of the grain there may be for now, with US growers having harvested 26% of their corn as of Sunday, up 11 points in a week, and compared with an average of 9% at this time of year.
"Yields continue to be reported as better than expected in many areas and the producer has remained a willing seller nearby," Benson Quinn Commodities' Brian Henry said.
Harvest prospects
Furthermore, "the weather outlook features minimal rain this week so it's expected that harvest should continue at a good rate," he added.
"This should keep some pressure on the market nearby."
Still, with the benchmark December contract already having fallen by $1 a bushel from its peak a month ago, and standing around a two-month low, sellers proved unwilling yet to pursue the retreat as keenly as in soybeans.
The lot stood 0.2% lower at $7.46 ¼ a bushel.
Wheat plantings
That left wheat the leader of Chicago's big three, up 0.1% at $8.79 ½ a bushel for December, having factored in a healthy dose of negative sentiment in the last session's 5% plunge.
US winter wheat sowings, at 11% completed, proved a little behind the average of 14%, despite prices providing an incentive to get seeding.
"The insurance for hard red winter wheat came in at $8.78 a bushel, which will get winter wheat planted," Mr Henry said, also flagging the importance of the session for further movement in prices.
"Fund liquidation will likely increase on further weakness," he said, and with the grain hardly looking more technically appealing having fallen through 20-day and 50-day moving averages in the last session.
Softs soften
Among soft commodities, New York cotton remained more in tune with the broader market mood, dropping 0.2% to 75.16 cents a pound for December delivery.
And raw sugar dropped 1.1% to 19.81 cents a pound for October, having bucked weakness in the last session – if only for a technical factor.
That rise was "due to options-related dealings as October options were set to expire at the end of the trading session", Lynette Tan at Phillip Futures said.
"Otherwise, rapid sugar harvesting in Brazil and reviving monsoon in India would have weighed on prices," as they are doing in the current session.
That said, there is more talk of Chinese stockpiling of the sweetener, with the vnsugar.com website reporting that purchasing of 500,000 tonnes, to stabilise local prices, will begin on September 20.
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