(Agrimoney) – Prices rose on Friday, as oil futures roared up, and traders prepare for some key data reports next week.
The global supply and demand estimates from the US Department of Agriculture, due out on Tuesday next week, are injecting a touch of uncertainty into the market, profit taking by short-sellers is trimming recent losses for soybean and corn markets.
And soybean markets will be looking closely at production figures from the Malaysian Palm Oil Board on Monday.
Palm oil prices broke lower this week, which has been bearing down on the entire soybean complex.
“This report may have a bigger impact on the soybean market than the USDA that will be released on Tuesday,” said Paul Georgy, at Allendale.
Energy rally
“Outside market offer a positive tilt this morning,” said Brien Henry, at BQCI Commodities.
Oil prices surged on Friday, hitting their highest levels since the middle of last month.
Prices are getting a boost from ideas that a meeting on April 17, between Opec and other big oil exporters, including Russia, could lead to a freeze in production.
Production freeze?
There has been some unhelpful noises from Iran and Saudi Arabia, who are key to any agreement on oil production.
Iran’s energy minister has vowed to boost production to its pre-sanction levels, while Saudi Arabia said it would not put any stops on pumping if Iran was not on board.
But there has been radio silence from all the main participants for several days now, and the markets appear to be taking no news as good news.
June Brent crude futures were up 5.4% in afternoon deals, at $41.54 a barrel.
Bearish price forecast
Still, there was some negative noise on grains, as Dan Basse, the president of the influential US advisory, gave an eye wateringly bearish price outlook.
Retuers reports that Mr Basse forecast the December corn contract to fall to just $2.80 a bushel as the harvest nears.
And July wheat was seen down at $4.00 a bushel, while November corn was seen at $7.60 a bushel.
These are all multi-year lows for the commodities.
Position squaring
But, on Friday at least, prices moved higher, in what may be position squaring by short-sellers ahead of next week.
“It felt like a few profits were taken in the wheat markets,” said Mr Henry.
An ongoing question is exactly how much rain the US Plains can hope to get in April.
Soil mosture levels in the Plains are low at the moment, but the winter wheat crop there is in good conditions, there is agreement that decent rains this month will be enough to put fears at ease.
Models ‘a mess’
But, as Darrell Holaday at Country Futures said, “the weather models continue to be a mess”.
One of the key weather models, the GFS, has turned “significantly drier for next week,” said Mr Holaday.
“This has provided some support for the wheat market.”
But the EU and Canadian models still point toward rain,” he said.
With the dryness fears focused on the plains, where hard red winter wheat is grown, the sharpest gains were seen in Kansas, where that grade is traded.
May Kansas wheat futures rose 1.5%, to $4.61 ¼ a bushel in late deals.
May Chicago wheat futures were up 1.1% at $4.62 a bushel.
Good start for corn
Soybean futures got a boost as good weather means that farmers in the US Midwest should be able to make a good start to corn sowing, meaning there will be fewer acres left to switch to soybeans, which is planted later in the year.
“Early this week there was some buying of corn and selling of soybeans tied to concerns there would be delays next week in getting started planting corn,” said Darrell Holaday.
“That seems less likely today so some of those spreads are unwinding,” he said.
May soybean futures were up 1.2% at $9.15 ½ a bushel in late deals.
May corn saw more modest gains, up 0.3% at $3.62 ¼.
Currency saga
The Brazilian real has been on a rollercoaster recently, as every twist and turn in the country’s ongoing political soap opera brings a new direction for the currency.
On Friday the news was good for the real, as the movement to impeach Dilma Rousseff gathers pace, with more and more of the legislature turning against the beleaguered leader.
Markets are tending to see the removal of Ms Rousseff as a buy signal for real, and for Brazilian stocks, as they hope that her ousting will bring in a more market-friendly regime.
Adding support for the real is the stronger oil price, which is good news for the commodity exporter.
The real was up 1.8%, at 3.6221 to a dollar in afternoon deals.
Softs change direction
The rally in the real bought a reversal of fortunes for softs, given the Brazil is the world’s top coffee and sugar exporter, and also a major cotton exporter.
And the stronger tone in the broad commodities complex, fuelled by the higher oil price, lent support as well.
May raw sugar futures rallied from a 5-week low of of 14.23 cents a pound, to finish up 1.9%, at 14.69 cents a pound.
May arabica jumped up from a one-month low, of 119.05 cents a pound, although it trimmed gains after bouncing of the 200-day moving average at 121.53 cents.
In the end the contract settled up 0.5%, at 120.45 cents a pound.
May robusta futures finished up 1.2%, at $1,515 a tonne.
May cotton futures finished up 1.7%, at 59.22 cents a pound.
