(Agrimoney) – Ag investors who hoped that a new month might bring a reversal in the, largely, negative sentiment around for most of 2015 have, in the main, cause for disappointment.
Not many contracts have managed a positive start to May, although raw sugar is one, helped by talk of a large amount of vessels being lined up to carry the record delivery against New York’s May contract, which expired last week.
The extensive shipping order is seen as implying that buyers have been found for the sugar – ie that there is demand out there for the sweetener after all.
‘Concerns eased’
Wheat is actually another of the gainers, just, although only after setting a five-year low in Chicago, on a spot contract basis, on Tuesday.
Chicago’s July contract was put into positive territory for April so far by a 0.5% rise to $4.75 a bushel in prices as of 09:45 UK time (03:45 Chicago time), with Kansas City hard red winter wheat up 0.5% at $5.02 a bushel.
This despite widespread feelings of decent northern hemisphere crop hopes, with the United Nations talking of an “overabundance” of the grain.
“What were serious concerns about wheat production in key growing areas around the world have eased somewhat in the last few months thanks to timely rainfall,” US Wheat Associates said.
Tour results
Still, there are some more mixed feeling about the results of the Wheat Quality Council’s three-day tour of crops in Kansas, the top wheat-producing state, which came in with a final yield estimate of 35.9 bushels per acre, equivalent to about 2.55 tonnes per hectare.
That is more than the 32.2 bushels per acre forecast by last year’s tour, and the 28.0 bushels per acre actually achieved, according to US Department of Agriculture data.
Indeed, the yield “ended up higher than the previous two day tour routes, so US wheat futures could see some light pressure” in early trading, said Terry Reilly at Futures International.
US Wheat Associates took a more bullish stance, saying that the final yield figure “is less than farmers and the industry had expected”.
Too much of a good thing?
What clinched it for bulls in early deals may have been the weather outlook, with the southern Plains, for months dogged by too little rain, now potentially set to receive too much.
“The central Great Plains will see heavy rain over the next five days, increasing concerns over too much wet weather disease development in parts of Oklahoma,” said Terry Reilly at Futures International.
Brian Henry at Benson Quinn Commodities said that “weather has portions of Oklahoma getting soaked with totals in some areas approaching 9 inches.
“At this point, this does not seem like a good thing.”
‘Border on freezing’
Meanwhile, frost may return too even to winter wheat country, at a time when crops, well emerged from dormancy, are less resistant to low temperatures.
“Hard red winter wheat areas are forecasted to get very cold next week, with some snow in Colorado a possibility,” CHS Hedging said, although added that “at this juncture, any damage would likely be minimal”.
Mr Henry said that “temperatures through the northern regions perhaps into western Nebraska and north west Kansas are expected to border on freezing, which could cause problems for some of the more developed wheat”.
Futures International’s Terry Reilly focused further north in spring wheat country, saying that “the northern Great Plains and southern Canadian Prairies will see a cold shot of air over the next couple of days.
“But we don’t think it’s threatening for newly-planted crops, but it may slow fieldwork activity.”
More deliveries
If there were any concerns over corn crops, then markets were not showing them, with Chicago’s July contract up a marginal 0.25 cents at $3.61 ¾ a bushel.
Still, there are factors to consider in this market, including unexpected deliveries against the expiring May contract which hit prices in the last session.
Overnight saw a further 247 lots delivered, following on from the 330 lots the previous day.
And there was the whopping 232m-tonne forecast by China’s CNGOIC think talk for domestic production of corn this year, a rise of 7.6% on the 2014 result, as estimated by the US Department of Agriculture.
“Look for imports in 2015-16 to end up less than 1.8m tonnes, with much of that originating from Ukraine and other approved countries, and little if any from the US,” Futures International’s Terry Reilly said.
It wasn’t that long ago when people were talk of Chinese import needs on a rising trend to well above 10m tonnes.
Export support
Soybeans, meanwhile, were flat at $9.75 a bushel, supported by some positive comment over the US export performance so far in 2014-15, which still has a further three months plus to go for the oilseed.
CHS Hedging said: “Total old crop soybean sales commitments are 1.815bn bushels when the USDA forecast is for 1.79bn bushels” for the whole of the season, if highlighting that “sales usually begin to tail off now and a certain amount of the sales – 50m bushels last year – will likely be rolled over into new crop”.
Mr Reilly said that US soybean commitments “are running at 99.6% of USDA’s export projection, raising the possibility for an upward revision to the 2014-15 US soybean export forecast by 10m-15m bushels” when the department next week unveiled its next Wasde crop report.
On the negative side, from a Chicago bull’s perspective, concerns are waning over disruptions to Argentine strikes, with ideas of action being delayed for at least a week.
And official data showed China, the top soybean importer, taking in 5.31m tonnes of the oilseed last month, down 18.3% year on year.
Still, that decline is seen as reflecting trucker strikes which disrupted Brazilian exports, and forecasts are for improved Chinese imports over the next few months.
Palm down
Meanwhile, in Kuala Lumpur, palm oil for July fell 0.9% to 2,153 ringgit a tonne – but is still among the May agricultural commodity gainers so far.
Indeed, Friday’s decline was put down to profit-taking, after the jump on Indonesia’s decision to impose an export tax on crude palm oil at $50 a tonne, at a time when Chinese buyers were prowling.
