US export hopes extend gains in grains

(AgriMoney) – Agricultural commodities maintained upward movement on Monday, even as many other assets demonstrated something of a Monday morning feeling.

Shares, for instance, were mixed, closing 0.3% higher in Tokyo, but opening 0.2% lower in London.

Brent crude was a touch easier too, as the prospect of the return of the US in earnest from Thanksgiving holidays revived concerns about the US budget talks.

“The US fiscal cliff story has not gone away”, Strategas Research said.

“The details of the plans are being worked on by the staff members in Washington, before going back to the principals for negotiation. The tax ‘revenue’ versus tax ‘rate’ question still seems key.”

Rising exports

But grains maintained their revival, continuing to benefit from good-to-strong US export data on Friday, which signalled that a long-awaited switch in demand from world cornand wheat importers might be switching to America, and showed demand for soybeans not waning as some had feared.

Wheat’s reached 657,500 tonnes, more than twice the amount of the week before, and the best result in more than three months.

“Declining supplies in other origins and the improved competiveness of US grain supported the lift in sales,” Luke Mathews, at Commonwealth Bank of Australia, said.

“In addition, importers may be looking to lock in some supplies now given the poor state of the 2013 US winter wheat crop,” boding ill for supplies from that origin at least in 2013-14.

Jordan tender

Indeed, Monday offered a more on the world wheat trade front, with Jordan – often a buyer from the Black Sea, whose supplies are dwindling, tendering for 100,000 tonnes of the grain, as well as 100,000 tonnes of barley.

Furthermore, there is the prospect of Ukraine, actually, halting exports, “this time not by government-imposed restrictions on exports but by grain traders’ self-imposed exports halt to protect the domestic market after a poor harvest”, Lynette Tan at Phillip Futures said.

“It seems the global wheat market is moving one step closer to importing from US wheat again, a development that is much anticipated to move CBOT wheat prices higher.”

Harvest rains

Also, there are still rain threats to the ongoing harvest in Argentina and Australia, the top southern hemisphere exporters, (with Brazil already believed to have turned, unusually, to Germany for milling wheat supplies, rather than to its South American neighbour).

“Rainfall is expected to move into eastern states this week following weekend rainfall in Western Australia,” Mr Mathews said, noting up to 1 inch falling in parts of that state, “disrupting harvest progress”.

While the east-coast rain is not expected to be significant, it is likely to “temporarily” interrupt harvesting, he added.

December wheat gained 0.6% to $8.52 ½ a bushel in Chicago as of 09.30 UK time (03:30 Chicago time).

‘Needing to replant’

For corn too, US weekly export sales were back to historic levels of 958,600 tonnes, old crop and new combined, more than three times the estimates of some analysts expecting a continuation of the post-drought levels of shipments which had reigned in 2012-13 up till then.

Furthermore, the grain flashed investors a strong technical signal too in the last session by, for Chicago’s December contract, closing above its 50-day moving average for the first time since September.

Again, there are some Argentine concerns here too, with row crop sowings being slowed by rain, a problem particularly acute for corn in being earlier sown. (Indeed, soybean area may gain from a switch from corn).

“A bit too much rain fell in Argentina lately and may cause concern about flooding and needing to replant,” Mike Mawdsley at Market 1 said.

Corn for December added 0.9% to $7.52 a bushel.

‘Phenomenal export sales’

That was enough to eclipse soybeans, which did better in the last session, spurred by US export sales data which, while good rather than excellent, included healthy Chinese demand, easing concerns of a slowdown in the appetite of the top importer of the oilseed.

Furthermore, the US sold 125,053 tonnes of soyoil, the strongest weekly figure for nearly two years, and a total deemed “stunning” and “phenomenal” by Mr Mawdsley.

Again, soyoil demand has come notably from China, where soyoil for May added 1.1% on Monday on the Dalian exchange.

Chicago soybeans for January rose 0.5% to $14.25 ¼ a bushel, with soyoil itself adding 0.5% to 49.30 cents a pound for December delivery.

Less steep decline

The strength fed through into Kuala Lumpur too, where rival vegetable oil palm oil recovered, adding 1.7% to 2,436 ringgit a tonne.

It was helped by data from cargo surveyors showing a less steep drop in Malaysian palm oil exports in the first 25 days of November than was evident in the first 20 days.

Intertek testing service saw palm oil exports falling 1.8% at the 25-day mark, with Societe Generale de Surveillance putting the drop at 1.9%.

At the 20-day mark, the declines were reported at rates of 3.3% and 3.8% respectively.

Cotton revives

Meanwhile, in New York, cottonfor December added 0.9% to 70.48 cents a pound, encouraged by data showing that cotton deliveries from Indian farmers have fallen 29% so far in 2012-13, according to the Cotton Corporation of India.

As of November 18, deliveries were 2.26m bales of 170kg each, compared with 3.2m bales a year ago, the state-run procurement group said. India is the second-ranked cotton exporter.

The rise took the lot to just below its 20-day moving average, which it surrendered in the last session, having failed to break up to the 50-day line, at 72.40 cents a pound.