(Agrimoney) – Will a new month bring in new money?
There is an idea on grain markets that month beginnings often see cash injections, and price rises, just as month ends are by tradition weaker periods.
It helped that China, a huge importer of agricultural commodities, over the weekend cut its interest rate for the second time in three months, giving many markets a boost.
Shares rose in Asian markets.
‘Increased wetness concerns’
And there are some weather threats around too.
For US wheat, the risk of winterkill ahead is not so severe, with the Plains receiving some snow at the weekend, although there were some sharply below-zero temperatures around at the weekend.
“Snow cover is expected to expand in central and southern crop areas this week thus maintaining winterkill protection,” MDA said, adding that the six-to-10 day outlook had warmed up a bit too.
But for South America, soybean harvesting in north west Brazil will be slowed this week by showers.
And in Argentina, “weekend showers have increased wetness concerns in Cordoba and northern Santa Fe. Meanwhile, dryness will persist in central Buenos Aires this week”, MDA said.
‘Logistics will remain a problem’
As for the Brazilian truckers’ strike, which buoyed prices last week, that was still showing some signs of life too, if in reduced form.
According to Reuters, by Sunday evening, there were 12 partial roadblocks nationwide, down from 52 on Saturday.
And “regardless of whether or not an agreement is reached, logistics will remain a problem in the near term as it will take time to get back to an orderly flow of product to port,” said Benson Quinn Commodities.
‘Fundamentals have not changed’
Not, it has to be said, that all are convinced that Brazil’s logistical woes, feared to drive importers to purchase soybeans from the US instead, represent that much of a long-term setback.
“It’s important to note that the long term fundamentals have not changed because of the trucker strike.
“Nearby supply disruptions are influencing the market, but South American yields and production shouldn’t be changed.”
Therefore higher futures values “should be considered a pricing opportunity”.
Palm soars
Still, soybeans for May were 0.6% higher at $10.37 ½ a bushel as of 08:30 UK time (02:30 Chicago time), helped also by strength elsewhere in the oilseeds complex, with palm oil soaring 2.7% to 2,367 ringgit a tonne in Kuala Lumpur.
Back in Chicago, rival vegetable oil soyoil added 1.6% to 33.48 cents a pound.
And a little bit of strength fed over into corn too, which added 0.1% to $3.93 ¾ a bushel for May delivery, despite a weak start for oil, important for the grain given its status as a major raw material for ethanol plants, in the US especially.
Corn and soybean futures will tend to feed off eachother as the US spring sowing period approaches, given that both crops are key competitors for acres, and relative pricing will determine to a large extent how much of each is planted.
‘Not awash with wheat’
Still, wheat fared better, adding 1.0% to $5.18 a bushel for March delivery, helped by a lack of deliveries against the expiring March contract, and by the extent of short positions that hedge funds have already built up in the grain.
In the week to last Tuesday, managed money took its net short position in Chicago wheat futures and options to a four-month high of 32,238 contracts.
In Kansas City hard red winter wheat, the net long fell below 6,000 contracts for the first time in 13 months, raising some question marks about the appetite for more such holdings.
Besides, as Tobin Gorey at Commonwealth Bank of Australia said, “the wheat market is not awash with wheat right now so we were a little surprised by the degree of falls” in prices.
Hard red leads
He added that “prospectively though, there’s going to a lot more Kansas deliverable and Chicago deliverable wheat in the 2015 season so the Kansas premium should decline”.
(Kansas City trades the hard red winter wheat grown on the central and southern Plains, while soft red winter wheat, as grown in the Midwest, is traded in Chicago.)
In fact, with some concerns around over the weekend’s low temperatures, Kansas City May wheat rose 1.2% to $5.46 a bushel.
