(Agrimoney) – The tables turned in the grain markets.
This time, it was the row crops which led, and wheat which was the follower.
Corn futures were particularly strong in Chicago, ending 2.0% higher at $3.89 ¾ a bushel for March delivery, boosted by strong US export sales data.
Net sales last week “of 1.17m tonnes for 2014-15 were up 24% from the previous week and 65% from the prior four-week average”, the US Department of Agriculture said.
It was also well above expectations of a figure of some 750,000 tonnes.
Weaker cash premium
And there were hopes for further strong sales too, only enhanced by a retreat of 0.2% in the dollar against a basket of currencies, as the euro rose, strengthened by a decision by the European Central Bank to hold off further stimulus measures for now.
Benson Quinn Commodities said: “With exportable supplies of Ukrainian corn dwindling and more competitive US values, interest in US supplies is on the rise.
“There are very good prospects of seeing another positive number next week,” the broker added.
Mr Holaday said that “the strength in the corn has also been helped by the weaker Gulf basis that has made US corn more competitive”, referring to a weaker corn price premium over futures at US Gulf ports.
“This weakness in the Gulf basis has been prompted by the clearing up of transportation issues,” and the logistical squeeze which swelled the premium during the autumn.
Pressure on logistics has also been eased by a drop-off in soybean shipments, “so there is more infrastructure available to offer corn at cheaper price levels”, Mr Holaday said.
Export logging trick
Not that soybean export signs are weak, with US sales of the oilseed to foreign buyers coming in at 1.18m tonnes for 2014-15, “down 16% from the previous week, but up 5% from the prior four-week average”, the USDA said.
That compared with market forecasts of a figure of at best 850,000 tonnes.
Benson Quinn Commodities said: “Despite talk of interest in US soybeans ebbing, weekly soybean sales were also above expectations.”
That said, investors’ ability accurately to forecast soybean shipments is being hampered by a trend among merchants of booking importers’ purchases as being initially of “optional origin”, and only later booking the origin as the US, a move which avoids triggering declarations through the USDA’s daily alerts system
“The larger-than-expected soybean sales today once again highlight the degree to which commercial exporters are concealing daily sales transactions, via last minutes shifts from optional origin to US, as daily sales announcement over last week do not support a near-1.2m-tonne weekly sales number,” Richard Feltes at broker RJ O’Brien said.
Chinese demand
Indeed, the talk has been of “limited Chinese interest” in US soybeans, Mr Feltes noted, when in fact the country bought 767,800 tonnes last week.
Indeed, the China Chamber of Commerce of Foodstuffs and Native Produce reassured on Chinese demand by pegging the country’s 2014-15 soybean imports at 73.5m tonnes, up 4.5% year on year, and in line with the USDA estimate of 74m tonnes.
US soymeal export sales were strong too, at 227,000 tonnes, well above forecasts for a figure of at best 50,000 tonnes.
The strong export data helped soybeans ride out a bit of a negative for the oilseeds sector in an upgrade by Statistics Canada to its estimate for this Canadian canola harvest to a level 1m tonnes above market expectations.
Soybeans closed up 1.2% at $10.10 ½ a bushel, regaining its 20-day moving average as well as the $10-a-bushel mark, and soymeal up 1.1% at $357.80 a short ton in Chicago, January basis.
In Winnipeg, canola ended up 0.1% at Can$412.70 a tonne, pulled up from early lows by soybeans’ strength.
Russia fears ease
The row crops [propped up wheat too, helping Chicago’s March contract close at $5.89 ¾ a bushel, up 0.25 cents, and well above an early low of $5.77 ½ a bushel.
The grain was undermined by weakened concerns over a Russian export squeeze, with talk of Moscow going easy until grain exports approach 25m tonnes.
“We think Moscow will take another look at situation once wheat exports hit 20m tonnes,” likely in early February, RJ O’Brien’s Richard Feltes said.
Even so, that “leaves only 2m-2.5m tonnes at risk of needing replacement from other origins” on the broker’s calculations.
Not cold enough
Meanwhile, concerns over winterkill in the former Soviet Union took a step backwards with ides from Ukrainian meteorological officials that recent deep frosts have not affected winter grain crops in the country.
While temperatures dropped to about minus 18 degrees Celsius in parts of northern Ukraine, they did not hit levels in the upper soil layer needed to cause notable damage, the officials said.
And US export sales were weak, at 319,000 tonnes, “down 26% from the previous week and 14% from the prior four-week average,” the USDA said.
“The USDA is going to have to recognise the fact that their wheat export estimate is too high,” for US shipments in 2014-15.
“We actually saw some cancellations from Brazil in this week’s report,” with the country a key buyer of hard red winter wheat.
Bumper exports
With the euro strengthening, cutting the competitiveness of eurozone exports, Paris wheat ended lower, down 0.4% at E186.25 a tonne for January delivery.
This despite bumper European Union export data, sowing export licences for 729,000 tonnes of soft wheat this week.
That took the total for 2014-15 so far to 12.75m tonnes, above the 11.8m tonnes at the same time of 2013-14, which turned out to be a record season.
Paris rapeseed for February eased 0.2% to E336.75 a tonne, depressed by the Canadian canola data as well as the strong euro.
‘Buyers will have to get more animated’
Among soft commodities, arabica coffee for March closed down 0.7% at 182.45 cents a pound, amid talk of roasters staying on the sidelines in the hope of yet cheaper prices.
Jack Scoville at Price Futures noted “quiet” cash markets, adding that “buyers of coffee will have to get more animated if the forecasts are to come true” for prices to top 200 cents a pound, as forecast by Commerzbank.
Weakness in the real, which dropped 1.3% against a poorly-performing dollar, hardly helped either, denting the value in dollar terms of assets in which Brazil is a major player.
Still, raw sugar for March edged 0.8% higher to 15.21 cents a pound in New York.
“As it’s the beginning of the month we will soon be getting the release of the key economic data from the US and the general chat seems to be one of generally good news for our beleaguered sugar producers,” Sucden Financial said.
