(Agrimoney) – By repute, Tuesdays bring turnarounds in Chicago, meaning that prices reverse a strong trend of the previous session.
And a weak version was in progress in early deal this Tuesday, led by corn, which for once took the lead in Chicago, rather than looking to soybeans and wheat for direction as it has done of late.
Corn futures for May rose 0.6% to $3.90 ¼ a bushel as of 09:35 UK time (02:35 Chicago time), rising back over their 10-day moving average, and maintaining something of a pattern of alternate winning and losing sessions.
“For now, it’s a day trader’s paradise. Sell up days, cover and buy down days, etc,” Mike Mawdsley at broker Market 1 said.
‘Likely delays in planting’
“That range may soon change, for better or worse, as spring weather patterns become more clear,” Mr Mawdsley said.
Spring weather determines the pace of sowings, and can have some impact on the crop make-up too given that corn, for instance, has an earlier planting window than soybeans, meaning delayed seedings encourage a switch to the oilseed.
And already there is some talk of what weather is to come, with Commodity Weather Group, for instance, talking of cool, dry weather for most of the central and northern Midwest for the last half of the month.
CWG’s forecast also “suggests likely delays in southern US planting, on a continuation of a wet pattern stretching from eastern Texas to Virginia,” said Richard Feltes at RJ O’Brien.
Strong exports
If that was somewhat positive for corn prices, oil managed a positive start, adding 1.5% for Brent crude to return above $60 a barrel, a positive for a crop used largely in making ethanol.
There was also continued comment over Monday’s strong US export data, showing shipments at 1.28m tonnes last week, up from 910,000 tonnes the week before.
“Even though the US appears to be uncompetitive with Ukraine and South American corn, we continue to see good sales and inspections,” CHS Hedging said.
The figure was “the largest since September, and beat trade expectations”, Benson Quinn Commodities noted.
‘Challenge to turn a profit’
There is also a renewed focus on US planting options after last month’s average futures prices, for the December contract for corn and the November contract for soybeans, set the insurance price for this year.
“The averages were $4.15 a bushel for corn and $9.73 for soybeans,” one US broker said.
“This provides a revenue guarantee for corn 8.6% lower than last year and 14.3% less for soybeans.
“This has certainly raised a challenge to turn a profit on the farm this year,” and will hardly encourage growers to plant every last scrap of land.
Strike update
And this was some cause for reflection among soybean bears, as were the continued roadblocks in some parts of Brazil, slowing progress of harvested crop to port.
There were some 24 roadblocks as of yesterday, down from 99 a week ago, according to Reuters.
Terry Reilly at Futures International said that “we were hearing the Brazil truck strike lingered into Monday with some roads still blocked.
“Three southern states were thought to have a combined 23 road blocks, but about a third reported on Friday and nearly 100 at this time last week.”
Broker Jefferies flagged reports of “12 partial roadblocks reported nationwide versus 52 on Saturday.
“There were reportedly two blockages on BR-163 and 10 in Santa Catarina which would be less important for soybeans but important for poultry,” the New York broker added.
Slow harvest
Not, it has to be said, that the strike appears to have deterred Chinese buyers, with Benson Quinn Commodities noting that the top soybean importing country “continues to bid for South American origination, with success noted on Brazilian and Argentine cargos”.
(And this linked in too with some downbeat US export data for last week,)
While Brazilian soybean exports in February were, at 870,000 tonnes, well down on the 2.79m tonnes a year earlier, that looks to be down largely to a slow harvest, which is 29% complete, compared with an average of 33% by now, according to AgRural.
In Chicago, soybeans for May gained 0.1% to $10.14 ¾ a bushel, also gaining some help technically from their ability to reverse back above their 50-day moving average by the close.
Soft vs hard
As for wheat, it rose 0.3% to $5.01 ¼ a bushel in Chicago for May delivery, underpinned by data overnight showing some deterioration in the condition of US winter wheat seedlings, albeit not a huge downgrade.
The proportion of soft red winter wheat, as traded in Chicago, rated “good” or “excellent” dropped by 2 points to 47%.
In hard red winter wheat states, while Kansas wheat showed some deterioration, falling 2 points to 44% rated “good” or “excellent”, crops in the likes of Nebraska, Oklahoma and Texas showed some improvement.
Kansas City-traded hard red winter wheat futures indeed continued to underperform, rising 0.1% to $5.26 ½ a bushel for May.
“The market is pricing in relatively heavy hard red wheat winter wheat supply this coming season,” said Tobin Gorey at Commonwealth Bank of Australia, noting relatively benign weather last weekend too.
“The weekend, passing without the extreme temperature lows in hard red winter wheat regions, eased market fears for crops without snow cover.”
