(Agrimoney) – Grain markets rallied on better than expected US exports on Thursday, while softs got a boost from a recovery in the Brazilian real.
Weekly export sales data from the US Department of Agriculture reported that 721,900 tonnes of wheat were booked for export, well ahead of forecasts of 200,00 to 400,000 tonnes.
“Wheat exports were really strong this week,” said Joe Lardey, of CHS Hedging.
This was the second largest sales number of the marketing year.
Mr Lardy noted that this figure, along with a cut to export forecast by the USDA last week, left the pace of exports ahead of those needed to meet the forecast.
Black Sea drought
Aside from the US exports, there was evidence of weaker global supplies, particularly from the Black Sea.
The International Grain Council maintained its forecast for global wheat production at 726m tonnes this season.
But it forecast a drop in the planted area for wheat next year, down 1% year-on-year to 221.8m hectares, citing dryness concerns in Ukraine, where the progress of winter wheat planting has been slow.
Export cap
Reuters reported that the Ukrainian agriculture minister and traders have agreed to cap wheat exports at 16.6m tonnes this season.
The cap on wheat exports comes as fears grow over next seasons harvest due to the dry weather.
The Ukrainian agriculture minister said that in a worst case scenario, around 12m tonnes of wheat could be lost.
‘Good acreage’
French Consultancy Strategie Grains trimmed its forecast for EU soft wheat sowings by 100,000 hectares to 23.9m hectares.
However, this represents a decline of just 1% year on year, despite the weakened returns from growing the grain.
“Soft wheat maintains a good acreage despite losing competitiveness,” the influential Paris-based consultancy said.
December Chicago wheat settled up 1.5% at $4.90 ¾ a bushel.
Record plantings
US soybean export sales also came in very strong at 1.80m, where markets had expected between 0.70m and 1.10m.
But there is a distance still to go, with total export sales still lagging last year by some 6m tonnes.
Thursday also saw the first estimate of Argentine soybean plantings in the 2015-16 season.
Plantings were seen at a record 20.6m hectares.
But the scale of row crop plantings in Argentine could still be altered by political events, following a run-off election to be held on Sunday, which could spark hopes of agricultural reform.
‘Favourable weather’
Tregg Cronin, of Halo Commodities, noted that the soybean market “is still subject to ongoing conditions in Brazil and Argentina, which to-date have been adequate”.
Brian Henry of Benson Quinn commodities reported that “much of Brazil is seeing favourable weather conditions for the advancement of planting and establishment”.
January soybeans settled up 0.3% at $8.60 a bushel.
Export chance opens up
Corn export sales beat expectations as well, coming in at 779,800, compared to forecasts of 500,000 to 700,000, in the biggest sale of the marketing year.
This week US corn cash prices finally reached a level below that at other origins, which has sparked hopes of flourishing exports.
But there is a distance still to go, with total export sales still lagging last year by some 6m tonnes.
IGC trims outlook
And International Grain Council cut its forecast for global corn production this season.
The intra-governmental body saw production over 2015-16 at 967m tonnes, down 3m from its previous forecast.
December corn settled up 0.6% at $3.64 ¼ a bushel.
Austerity finds support
The Brazilian real carried off a fourth straight day of gains, in its biggest rally in 6 months, as the parliament voted in a raft of spending reforms.
The vote has raised hopes that President Dilma Rousseff’s austerity campaign, which has faced heavy political opposition, could be successful.
The real rose 1.3% against the dollar on Thursday, helped by a weaker sentiment on the greenback after dovish sounds from the US Federal Reserve.
‘Pot continues to boil’
The movement in the real is bullish for coffee and sugar prices, of which Brazil is the world’s largest exporter.
March arabica settled up 5.6%, at 122.2 cents a pound, with January robusta up 3.7%, at $1,563 a tonne.
And sugar prices gained back ground, after two days of losses on fears of fresh Indian exports.
“The pot continues to boil as ever bullish El Nino reports circulate, weather in center-south Brazil continues to be rainier than usual and ethanol sales and prices in Brazil continue to post records,” said Nick Penney, senior trader at Sucden Financial Sugar.
March raw sugar settled up 3.3%, at 14.95 cents a pound.
March cotton in New York rose 0.3% to settle at 63.12 cents a pound, after the US reported cotton export sales of 194,400 bales in the current marketing year.
