(Agrimoney) – Wheat futures at least managed to stabilise, after last week’s fall, but commentators were hardly queuing up to forecast a recovery.
One factor in their favour is a fresh batch of cold weather for the US, where freezing temperatures today and on Friday “could bring some spotty winterkill to eastern Nebraska and eastern Kansas”, MDA said.
Furthermore, the Ukraine conflict drags on, a negative for the country’s grain export prospects, and offering particular support to Chicago wheat, the speculators’ favourite.
However, most comment was on the poor US export performance in wheat, and the idea of a stocks build of 71m bushels to 763m bushels in US inventories over 2015-16, as the US Department of Agriculture said on Friday in its first full forecasts for the season.
‘Flat out uncompetitive’
“Discussion in the market continues to reveal concern about US competitiveness lingers after Egypt rejected US wheat in favour of other origins last week,” said Tobin Gorey at Commonwealth Bank of Australia.
At Futures International, Terry Reilly said: “US wheat is flat out uncompetitive, and the trade was reminded this when Morocco failed to purchase US soft wheat and USDA export sales disappointed the trade.”
USDA weekly export sales data on Friday showed just 266,600 tonnes sold, a figure Benson Quinn Commodities termed “awful”.
By class, the data were particularly poor for soft red winter wheat, at a negative 13,400 tonnes, but decent for hard red spring wheat, at 150,500 tonnes.
Still, in early deals it was actually Chicago soft red winter wheat which fared better, up 0.1% at $5.07 ¼ a bushel as of 08:45 UK time (02:45 Chicago time), with Minneapolis-traded spring wheat for May easing 0.1% to $5.66 ½ a bushel.
Crude vs cattle
Corn lost a little ground too, easing 0.1% to $3.92 ¾ a bushel for May delivery, sapped by a weak start for oil prices.
Brent crude shed 0.9% to $59.70 a barrel, diminishing prospects for other fuels, and thus for prices of the crops that go into making some.
That offset the boost from data late on Friday showing a slightly larger-than-expected herd of cattle on US feedlots, at 10.771m head, slightly higher than the 10.678m head a year before, when investors had expected a small decline.
More cattle on feedlots implies greater feed use.
‘Charts are trending higher’
Indeed, soymeal, like corn a major feed ingredient, rose, by 0.7% to $340.90 a short ton for May delivery, also given support by decent US export data on Friday.
“Soymeal sales of 316,600 tonnes were excellent, and even better were shipments of 384,800 tonnes,” said Futures International’s Terry Reilly.
While soymeal sales have been unusually strong, the pace of actual exports has disappointed for much of the season, provoking fears that many orders will be cancelled.
Soymeal’s strength helped soybeans, which for May gained 0.2% to $10.04 a bushel, also gaining a tailwind from technical factors.
“The weekly charts are still trending higher and with last week’s higher close the best close in six weeks, I would favour modestly higher trade for this week,” said Kim Rugel at Benson Quinn Commodities.
“Seasonal trend also supports higher trade.”
Palm slips
Elsewhere in the oilseeds complex, palm oil did not fare so well, falling 2.4% to 2,244 ringgit a tonne in Kuala Lumpur.
The market was little helped by data from Intertek Testing Services showing Malaysian palm exports down 3.6% in the first 20 days of February.
That said, that was a little improvement on the 4.9% decline seen in the first 15 days of the months, according to Intertek.
