(Agrimoney) – As so often happens, the performance of shares contrasted with that of agricultural commodities.
For shares, March started with some notable headway, in New York at last, where the S&P 500 returned close to a record high, while the Nasdaq popped over 5,000 at one point for the first time since the height of the dotcom bubble.
But for grains, any ideas of the new month bringing new money into the market disappeared as a strong start gave way to a far weaker close.
Roadblocks dwindle
In fact, commodities in general struggled. The CRB index ended down 0.9%, weighed by a 4.7% slump in Brent crude back below $60 a barrel.
But for grains, a number of the fundamental problems which had been supporting futures waned, allowing for some sharp price retreats.
Soybeans for May, for instance, tumbled 1.7% to 10.13 ¾ a bushel, undermined by the apparent progress in clearing up the Brazilian truck strike.
“Brazilian police have nearly ended all roadblocks caused by striking truckers. By late Sunday, only 12 partial roadblocks remained nationwide,” CHS Hedging said.
ADM Investor Services said: “It would appear the weekend direction of Brazil transport woes moved more towards a positive direction,” although the broker did note that “all problems have not disappeared”.
“The roadblocks in Brazil are much fewer in number today. The Brazilian truckers’ strike appears to be waning,” Jefferies said.
China worries
And, as extra evidence that the US is losing its seasonal edge in world soybean exports, whatever is happening in Brazil, the country’s shipments of soybeans fell last week to 635,164 tonnes.
That was down from 978,097 tonnes the week before, itself the first figure below 1m tonnes since October.
Indeed, there was concern that China, the top soybean importer, is not buying much from anyone.
“If they do not buy some soybeans this week after two weeks of nothing, this concern will escalate and there will be increased ideas that the 74m-tonne import number could be in jeopardy,” said Darrell Holaday at Country Futures.
Too wet
Meanwhile, Richard Feltes at RJ O’Brien flagged a “noticeable” absence “from all the headlines on truckers’ strikes and rain delays to harvest is that no-one is reporting poor or disappointing Brazil soybean yields”.
OK, bears did not have it all their own way, with Jefferies noting that “heavy rains in parts of Argentina may take the edge off what appears to be a record crop”.
Telvent DTN said that “local flooding is possible in areas that saw the heaviest thunderstorms”.
Still, tumbling soymeal values, down 2.6% at $333.50 a short ton for May delivery, did little to help the cause of the soy complex.
‘No concern of damage’
For wheat, the problem was that the damage over the weekend from cold to the US winter crop was not deemed so severe.
“Even with below average temperatures over the weekend in many of the Plain states, there is little to no concern of damage to winter wheat,” CHS Hedging said.
Benson Quinn Commodities added: “With added moisture in the southern Plains, weather tends to be viewed as favourable for this point in the year.”
Against such a backdrop, investors were in no mood to cover short positions, especially with monthly US data due later which could confirm only modest setbacks to seedlings.
Chicago wheat for May closed down 2.5% at $5.00 a bushel, with US export data offering little help, showing a retreat last week in shipments to 450,093 tonnes from 529,038 tonnes the week before.
Corn vs soybeans
At least corn had some half decent export data to count on, with US shipments last week at 1.28m tonnes, up from 908,797 tonnes the week before.
Still, on the negative side, prospects for corn sowings – based on calculations for the November soybean: December corn futures performance for February (which sets the basis for US insurance payout levels) – do not look as dire as they did.
The levels of $9.72-9.73 a bushel reported for soybeans and $4.15 a bushel for corn indicate a ratio of 2.34:1 – hardly negative in terms of encouraging farmers to grow soybeans, but not as much of a small dunk as it looked a few weeks ago, with the ratio above 2.4:1.
Corn for May closed down 1.3% at $3.88 a bushel.
‘Interpreted as bearish’
Among soft commodities, raw sugar for May ended down 0.9% at 13.64 cents a pound, earlier hitting a five-month low of 13.57 cents a pound, undermined by a weak Brazilian real, which lost 1.8% against the dollar.
A falling real cuts the price of assets in which Brazil is a major force, such as sugar or coffee.
Also on the negative side, more than 1m tonnes of sugar were delivered against the expiring May contract, taken as a bearish indicator in showing extent of the desire to get shot of sugar, even at low prices.
“The overall market was on contract lows so the delivery so far has been interpreted as bearish,” Sucden Financial said.
Arabica coffee for May tumbled 1.5% to 138.35 cents a pound, its weakest close for a year, amid improved ideas for Brazil’s crop potential, following rains in many growing areas.
