(Agrimoney) – Financial markets – unnerved at the close of last week that the Federal Reserve decision to leave US interest rates on hold betrayed deep concerns over the world economy – found another reason to fret.
The bigger-than-expected victory in Greek elections by the governing Syriza party would appear to leave the door open to further drama when it comes to the next Greek debt negotiation, and the world instability that could cause.
Certainly, shares proved mixed-to-negative, with London’s FTSE 100 index up 0.3% in early deals, but Frankfurt stocks down 0.3%, while in Asia, both stocks shed 2.0% in both Tokyo and Sydney, while shedding 1.8% in Seoul.
Trade data
And there was a somewhat mixed mood on agricultural commodity markets too, with oilseeds making headway, but not grains.
The oilseeds sector was given particular support bypalm oil which, after a poor finish to last week, rebounded 2.5% in Kuala Lumpur to stand at 2,155 ringgit a tonne as of 09:35 UK time (03:35 Chicago time), back above its 100-day moving average on a continuous chart.
Data from cargo surveyor ITS showed Malaysian palm oil exports for the first 20 days of September up 7.6% month on month, a bit of an acceleration on the 6.9% rise at the September 15 stage.
Furthermore, data from China showed a jump of 75% to 541,964 tonnes in imports of palm oil last month – representing a sharp pick-up in buy-ins.
Chinese imports for the first eight months of 2015 as a whole, at 3.73m tonnes, were up only 2.6% year on year.
‘May not slow as much’
OK, palm oil on China’s Dalian exchange eased 0.7% to 4,242 yuan a tonne for January delivery, with the extra imports meaning larger domestic supplies.
But from an exporter’s perspective, the data were positive.
(Actually, most of the palm oil, 318,049 tonnes, last month came from Indonesia, a rise of 80% year on year, but for Malaysia, the 67% increase to 223,924 tonnes followed a dismal start to the year, with imports from the origin down 6.3% in the January-to-August period as a whole.)
And an increase late last week by India to 12.5%, from 7.5%, on its import tax on crude edible oils, with the duty on refined oils raised to 20% from 15%, was largely shrugged off.
“Palm oil imports may slow from Indonesia and Malaysia but some traders the hike was minor and imports may not slow as much as many predict,” said Terry Reilly at Chicago broker Futures International.
Price gains
The data for China’s imports of soyoil were not so promising, seeing a drop of 35% to 111,934 tonnes, although that is a slightly lower rate of decline than the average 41% for the first eight months of the year.
Still, soyoil futures in Chicago were helped by Kuala Lumpur palm oil, and added 1.1% to 26.53 cents a pound for December delivery.
And that was a fillip for soybeans too, even though the other main soybean processing product, soymeal, showed a modest gain of 0.1% to $308.10 a short ton for December.
Soybeans themselves for November added 0.6% to $8.72 ¼ a bushel, rebounding from a close to the last session which was the lowest, for a spot contract, in six years.
‘Slightly wetter forecast’
The Chinese import data for soybeans themselves – at 7.78m tonnes, up 29% year on year – were already known.
In fact, important for prices later may be the latest news from the US soybean harvest, and thinking on whether the US Department of Agriculture will on data tonight cut further its condition rating on the crop.
“US crop condition could end up unchanged to one point lower in corn, and down one in soybeans,” Futures International’s Mr Reilly said, with the score referring to the proportion of crop rated “good” or “excellent”.
On harvest progress, MDA noted that the outlook for the Corn Belt was “slightly wetter” and forecast that “showers across north western crop areas will slow corn and soybean drydown a bit”.
Still, “a wetter forecast for the upper Midwest may slow harvest, but the crop is far enough ahead that a delay is of little concern,” CHS Hedging said.
“A bigger concern will be space as harvest progresses.”
‘Prices more competitive’
That thinking goes for corn too, which eased by 0.3% to $3.76 a bushel in Chicago for December delivery, fighting to stay above its 20-day moving average.
Data on Chinese corn imports for August were actually strong, at 6097,582 tonnes, up 354% year on year, but the vast majority (445,219 tonnes) from Ukraine.
Imports of distillers’ grains, the corn-derived high protein feed ingredient, mainly from the US were up 26% at 793,524 tonnes, although that was down from 1.1m tonnes in July.
There is also pressure on Chicago prices from China in terms of proposals by Beijing to cut the guaranteed price to farmers for corn, meaning more competitive domestic supplies, and higher utilisation of the country’s huge stockpiles.
Meanwhile, Brazil is fighting stronger on exports, with its shipments forecast to hit a two-year high of 3.5m tonnes this month.
“The weak currency has made Brazilian prices more competitive in global markets,” Mr Reilly noted.
‘Dryness to persist’
And wheat fell even further than corn, by 0.7% to $4.8 ½ a bushel in Chicago for December delivery, despite continued concerns over dryness in the former Soviet Union, so raising questions over winter wheat sowings ahead of the 2016 harvest.
In the region this week, “showers will remain limited allowing dryness to persist in most areas,” MDA said.
And the results of the latest Gasc tender, released after the close of markets on Friday, could be construed as positive on a demand side too, with the authority putting a large size order, of 230,000 tonnes, and at prices higher than last time.
Still, market ideas are broadly of ample supplies of the grain, with CHS Hedging noted that “the fundamentals do not support a major rally and producers should be selling into any rally”.
The broker added that US winter wheat planting, “should pick up” this week, with “adequate soil moisture to get the crop off to a good start”.
‘Causing delays’
Among soft commodities, cotton put on a brave face after its poor performance of the last session, when New York’s December lot ended at a contract closing low, hurt by the broad economic weakness besides factors such as decent US harvesting conditions.
The contract rebounded 0.4% to 60.79 cents a pound.
Chinese import data were soft, at 70,019 tonnes, down 66% year on year, but that was already known.
Still, Louis Rose at the Rose Report noted that “cold and damp conditions over Xinjiang, China are reportedly causing delays in harvesting operations”.
That said, he also flagged that “rains across west central India should enhance this season’s yield potential.
“Conditions are expected to be mostly favourable across northern India and Pakistan for harvesting operations over the near-term.”
