(Agrimoney) – Wheat futures haven’t had a bad month, even after their tumble of the last session, which earned adjectives such as “epic” and “ugly” from brokers.
That said, it isn’t actually the Kansas City hard red winter wheat contract – grown in the southern Plains, whose dryness and cold problems have been the global wheat market’s highest profile feature this month – which has fared best.
In gaining 2.0%, as of time of writing, the May Kansas City contract has actually underperformed its soft red winter wheat peer as traded in Chicago, the more liquid market, and indeed the world benchmark.
And both are comfortably behind the Minneapolis hard red spring wheat lot, which is up 5.5% for May delivery.
Data ahead
The reasons behind the popularity of spring wheat futures will come into focus later on a day which – besides bringing the end of month and end of quarter, which might be expected to bring a bit of tidying up in fund portfolios – will witness a slew of key data from the US Department of Agriculture.
Besides the typical US weekly export sales data – expected to come in for all-wheat at 150,000-350,000 tonnes for this season, and 75,000-200,000 tonnes for 2016-17 – the day will bring the much-anticipated US prospective plantings and quarterly grain stocks reports.
The sowings briefing is expected to show a drop of some 400,000 acres to 12.838m acres in US spring wheat plantings – even after the big decline in winter wheat area.
And many observers believe even that estimate looks optimistic.
“This year, it is hard to find anybody in the country who expects that number to be more than 12.5m acres,” said Jonathan Watters at Benson Quinn Commodities, based in Minnesota, in US spring wheat country.
‘Well north of 90m acres’
In fact, the latest talk appears to be that corn plantings will recover more than the 90.0m acres that the USDA pencilled in at last month’s Outlook forum, and which is the market consensus ahead of the prospective plantings briefing too.
“There have been whispered rumours and talk amongst producers that corn acres could be well north of 90m as producers shift away from soybeans and away from spring wheat,” Benson Quinn Commodities said.
The cost of production for wheat is “too high” compared with returns indicated by the cash market, the broker said.
Meanwhile, Canada’s farm ministry has already downgraded its forecast for domestic spring wheat sowings even before they have begun, citing “competition” from crops such as oilseeds and pulses offering better returns prospects.
And a recovery in the Canadian dollar bodes well for US prices too, given that Canada is a major competitor in spring wheat exports.
Wheat price variations
Certainly, spring wheat futures were keeping their nose above water in Minneapolis as of 10:00 UK time (04:00 Chicago time), adding 0.1% to $5.15 ½ a bushel, and remaining narrowly ahead of their 10-day moving average.
That was better than Chicago soft red winter wheat futures for May, which were 0.2% lower at $4.63 ¼ a bushel, although Kansas City hard red winter wheat was doing marginally best of all – albeit after its bigger drop in the last session, of more than 3%.
Kansas City wheat for May recovered 0.2% to stand at $4.66 ¾ a bushel.
Worryingly for bulls, it appeared to be having problems bouncing back above its 40-day moving average just above, which was surrendered in the last session.
Flat corn
Corn for May, meanwhile, was flat at $3.67 a bushel, not recovering any of the ground it lost in the last session, when it was hit by data showing growing US ethanol stocks, besides the dent from ideas of large sowings, and the gravitational pull from wheat too.
On a more positive note, there remains comment about Brazil’s plans to suspend import taxes on corn, after an overgenerous export programme left supplies tight for domestic poultry and pork producers.
That said, any imports encouraged by the move would likely be fulfilled from Argentine supplies.
US export sales data for the grain are expected later at 800,000-1.0m tonnes for old crop, and 0-100,000 tonnes for 2016-17.
Palm up
Soybeans for May were a touch stronger, up 0.1% at $9.09 ½ a bushel, helped by the talk of a switch by growers to sowing corn, but also by strength in vegetable oil markets.
Palm oil gained 0.9% to 2,769 ringgit a tonne in Kuala Lumpur, rebounding off its 10-day moving average to return close to the two-year high of 2,793 ringgit a tonne reached on Tuesday.
Cargo surveyor Societe Generale de Surveillance pegged Malaysian exports of the vegetable oil in March at 1.17m tonnes, a rise of 22% month on month.
Chicago soyoil for May gained 0.7% to 34.01 cents a pound.
