(Agrimoney) – A session marked by weak trading volumes in grains also saw largely lower prices, as the bull stories on the likes of corn demand and wheat winterkill proved no match for profit-taking.
“Trade remains slow today,” said Darrell Holaday at Country Futures.
“The overnight trade and trade into the first hour of the day session may have been lowest volume for the holiday period.”
And what interest there was proved weighted towards selling, especially in wheat, which closed down 2.2% in Chicago at $6.02 a bushel for March delivery.
‘Struggling to keep upward momentum’
In part, the sale reflected market ennui over the story of Russia’s wheat export squeeze, with data on Monday failed to show that importers had switched orders to the US, at least.
“Wheat is struggling to maintain upward momentum now that Russia has announced its export tariff programme and this week’s disappointing weekly export sales did not reflect a shift in demand to date,” Benson Quinn Commodities said.
Indeed, there are some forecasting strong Russian exports for now, before the tariff kicks in at the start of February.
“US wheat remains uncompetitive on the global export scene,” CHS Hedging added.
Winterkill threat?
Nor did the concerns over US winterkill, thanks to an ongoing cold snap, grab investors’ attention.
“There is talk about cold temperatures in the hard red winter wheat areas,” ie in the southern Plains, Mr Holaday noted.
“But there was also significant snow on a large number of acres is Kansas and more moisture in the offing in the more southern areas later this week.”
Benson Quinn Commodities said: “Cold weather forecast for the northern Plains this week and next offered support yesterday, but accompanying snows across the southern Plains preceding the temperature drop are seen reducing any risk of winterkill on the dormant US hard red winter wheat crop.”
Chart headwind
In fact, Kansas City-traded hard red winter wheat itself did fare a little better, in falling a more modest 1.6% to $6.37 a bushel for March delivery.
But it also lacked the technical headwind of falling through its 200-day moving average (having risen only briefly above it of late, on December 18.)
The Chicago soft red winter wheat contract lost some chart credibility in ending back below its 200-day moving average, and recording its lowest close in two weeks.
Paris wheat for March did fare better, in closing up 0.3% at E201.25 a tonne.
However, it did have the advantage of a euro which earlier fell to a two-year low against the dollar, of E1.2122 to $1, so improving the competitiveness of eurozone exports, which have already started the season strong.
Quota link
The poor performance of wheat was one drag on fellow grain corn too, although there were others, such as Chinese confirmation of the sale of 5m tonnes of corn from state reserves.
“The fact they are auctioning off this corn is not negative, but the results may end up being negative,” Mr Holaday said, noting that allocations of tariff rate quota [TRQ] imports are to be linked purchases at the sales.
“The problem with this is that there is very little interest in buying the lower grade reserve corn at market prices because there is a lot of corn in China available.
“This little restriction in TRQ’s may be China’s roundabout way of limiting corn imports.”
Sorghum spree
This offset continued upbeat news on the US export front, with the US Department of Agriculture unveiling the private sale of 157,000 tonnes of corn to Mexico for the 2014-2105 marketing year, on top of Monday’s decent export data.
There was also continued comment on the strength of US sorghum exports, after Monday’s data showed sales of 584,300 tonnes in the week to December, of which 357,300 tonnes were to China and a further 227,000 tonnes to unknown destinations (which could also include China, of course).
That was the biggest weekly figure since 1995, and in one sense a positive, in showing demand for feed grain, but in another a negative, with orders going to sorghum (over which China does not operate TRQs) rather than corn.
Whatever, corn for March ended down 1.5% at $4.06 ½ a bushel, also feeling some pressure on the technical front.
“Corn is overbought technically and with market yesterday unable to hold new intraday highs, we have uncovered some modest profit taking today,” Benson Quinn Commodities said.
‘Very good yields’
Nor could bulls keep a rein over soybeans, with the oilseeds sector taking a knock earlier when palm oil, having appeared well on course for a ninth successive positive close in Kuala Lumpur, suffered late profit-taking, and ended down 2 ringgit at 2,284 ringgit a tonne.
“Palm oil prices have supported vegetable oils, rallying on flooding in Malaysia which is said to be the worst in 10 years,” said New York-based Jefferies.
“However, there was some slight long profit-taking, probably before year end, in palm oil today.”
Jefferies also noted that “yields from early-harvested soybeans in Mato Grosso are reportedly very good,” as highlighted by Agrimoney.com on Monday, although this is very early days for harvest in Brazil’s top soybean growing state.
And adding extra pressure, Michael Cordonnier, the influential crop scout, has apparently raised by 1.0, tonnes to 94.0m tonnes his forecast for Brazil’s soybean harvest, bringing his estimate in line with that of the USDA.
Soybeans for March eased 0.5% to $10.44 a bushel, keeping just ahead of a bunch of major moving averages.
Mixed softs
Nor could cotton extend gains in New York, after rising on Monday on bumper US export data, with the March contract this time easing 0.03 cents to 61.98 cents a pound.
Some producer selling was blamed for weighing on values in light holiday trading volumes.
But raw sugar for March recovered to end 0.01 cents higher at 14.61 cents a pound, helped by a rising real, which made the value of Brazilian assets more valuable in dollar terms.
Arabica coffee too found a little support from the real, but only enough to take it a little above its intraday low of 164.50 cents a pound for March.
The contract ended down 0.3% at 164.80 cents a pound nonetheless, a 10-month closing low for the lot.
