May starts where April left off for ags – with price falls

May 4th, 2015

By:

Category: Grains, Oilseeds

Beans_Corn_Soy_Lentils450x2(Agrimoney) – Chicago implemented new price limits for its grain futures on Friday.

Chicago corn futures, for instance, are now able to move $0.30 a bushel in a session, rather than the previous $0.25 a bushel, with wheat able to rise by $0.40 a bushel, rather than $0.35.

But grain futures, while remaining largely on the back foot, were not that downbeat, and did not come close to testing their new boundaries.

‘Producers are selling’

Indeed, the bigger price moves were in soft commodities, where New York arabica coffee futures for July tumbled 2.4% to 134.20 cents a per pound, as fears of a downbeat Brazilian crop this year continued to wane –to the chagrin of Silas Brasileiro, head of the CNC producers’ group.

Robusta coffee for July ended down 1.1% at $1,772 a tonne, despite arguably more bearish fundamentals with the Brazilian harvest of the variety stepping up, and producers apparently in selling mode.

“Brazil robusta producers are selling and the major roasters have gone there to buy,” said Price Futures’ Jack Scoville.

Still, Mr Brasileiro also pointed to the harvest in Espirito Santo, Brazil’s top robusta producing state, showing a drought-damaged crop.

‘Always disagreement’

Meanwhile, raw sugar for July, now the spot contract, slumped 2.0% to 12.91 cents a pound, as the market continued to ponder on the record 1.9m-tonne delivery against the May contract at expiry on Thursday, with Wilmar International believed to have taken ownership.

“There is always disagreement about whether such a large delivery is bullish or bearish,” said Tobin Gorey at Commonwealth Bank of Australia.

“We can though, surely, takeaway from such a huge delivery is a sign that there is still a lot of sugar around even if we are unclear on the implication for prices.”

Sucden Financial added that “we don’t see much fresh near term demand and feel producers from Thailand, Brazil and India will be waiting for any further opportunity to price their sugar”.

‘Vulnerable to further weakness’

It was also little help that the dollar found its feet again, rebounding 0.4% against a basket of currencies, although there was some suspicion that this was down to little more than pre-weekend profit-taking on short positions.

“On a broad basis, we expect the dollar to be vulnerable to further weakness during the second quarter,” Scotiabank said, if forecasting that the greenback will “resume its appreciating trend during the second half of 2015”.

A stronger dollar reduces the competitiveness of dollar-denominated exports, such as many commodities.

And, indeed, the CRB commodities index dropped 0.7%.

‘Bird flu has spread’

Among grains, soybeans handily underperformed the CRB, falling 1.1% to $9.64 ¾ a bushel for July delivery, dented by expectations of good planting weather in the Midwest, and by Argentina’s strong harvest – supplies from which appear to be reaching the market, for now at least.

CHS Hedging noted “added selling from Brazilian farmers” too to “douse any hopes for bullishness”.

Meanwhile, further bird flu cases continue to show up in the US, raising expectations for poultry herd liquidation and undermining hopes for soymeal demand.

“The bird flu has apparently spread to additional farms with total potential culls increasing,” Benson Quinn Commodities noted.

‘Aggressive planting’

Some of the same factors applied to corn, a major ingredient of bird feed in the US, too, and the July contract fell 0.8% to $3.63 a bushel, a fresh six-month closing low for the lot.

“The corn market is the one that just cannot seem to find any significant buying as the US planting pace and the large cash inventories in the US and South America are a real problem,” said Darrell Holaday at Country Futures.

On plantings, “expectations for next week’s crop progress data still at the 50-55% planted in terms of US corn, with Indiana and Ohio the major states that are trailing,” Mr Holaday added. (The data are out on Monday night, and taken as of Sunday.)

“Market sentiment remains negative as global values show few sign of improving, weather remains favourable for aggressive planting and technicals offer a defensive tone,” Benson Quinn Commodities said.

‘Not a bullish thing’

Wheat at least managed a little positive showing for Kansas City hard red winter wheat, which for July delivery nudged 0.3% higher to $4.99 a bushel.

That said, why it gained was not so clear, although there were some more charitable explanations emerging for the huge cancellation of old crop US wheat exports revealed on Thursday (with most actually transferred to 2015-16).

It appeared the data “may have originally been reported incorrectly and were now being accounted for in the proper shipment slots”, CHS Hedging said.

Still, “rolling sales to new crop is not a bullish thing”.

Benson Quinn Commodities, on the bright side for hard red winter wheat, said of deals against a series of deliveries against the expiring May contract that “JP Morgan’s customer is likely a good stopper in the Kansas City market”.

‘Rain shield expands’

Chicago wheat for July ended flat at $4.74 a bushel, amid some trepidation over how many short positions regulatory data later will show.

Minneapolis spring wheat for July did worst, in falling 0.7% to $5.34 ½ a bushel.

One support for the grain has been dry weather in the northern Plains which, while allowing ultra-speedy sowings, have raised some concerns for crop emergence.

But relief is on its way, with WxRisk.com noting that a “rain shield” forecast for early next week for the southern Plains “expands so it ends up covering all of the upper Plains into south central Canada by Wednesday, as it moves slowly east towards the Mississippi River”.

Add New Comment

Forgot password? or Register

You are commenting as a guest.