MARKET DEVELOPMENT
AM Markets: China Imports Help Ags - Palm, Sugar Especially
AM Markets: China Imports Help Ags - Palm, Sugar Especially
22/10/2015 (Agrimoney.com) - Wednesday bought the monthly test for agricultural commodity markets of detailed Chinese import data.
With China the top importer of many ags, such as cotton, sugar and rubber, these stats can have quite a bearing on markets, especially with the northern hemisphere harvests nearly over, meaning the uncertainty in the market will stem more from consumption.
"The faster the US harvest wraps up the faster the market will be focusing solely on demand," said Tregg Cronin at Halo Commodity Company, adding that this "has plenty of holes", for US crop balance sheets, at least.
DDGs in demand
But perhaps not as many holes as some investors had thought, with the Chinese import data for distillers' grains, of DDGs, for instance, coming in at 933,537 tonnes last month.
Selected Chinese oilseed imports for Sept, and (year on year change)
Palm oil: 568,585 tonnes, (+96%)
Rapseed: 295,496 tonnes, (-41%)
Rapeseed oil: 26,440 tonnes, (+30%)
Soybeans: 7.26m tonnes, (+44%)
Soyoil: 144,014 tonnes, (-18.2%)
That represented a jump of 73% year on year in imports of the feed ingredient, a byproduct of corn ethanol manufacture, and of which China imports nearly all from the US.
It is also far bigger than the average monthly pace of some 540,000 tonnes at which imports had been running so far this year.
It was a help to futures in corn, even though Chinese imports of the grain itself last month were a modest 169,711 tonnes.
Sure, that represented a rise of 729% year on year, but is small beer in global trade terms, supressed by Chinese efforts to get shot of its own huge inventories of the grain.
'Ground piles already the norm'
Chicago corn futures for December nudged 0.1% higher to $3.77 a bushel as of 09:45 UK time (03:45 Chicago time), also gaining support from the prospect of rain delays to the US harvest.
Selected Chinese grain imports for Sept, and (year on year change)
Barley: 1.30m tonnes, (+71%)
Corn: 169,711 tonnes, (+729%)
DDGs: 933,537 tonnes, (+73%)
Rice: 357,744 tonnes, (+99%)
Wheat: 206,599 tonnes, (+55%)
"Harvest continues to make strong strides but weather forecasts are calling for showers on the horizon which may delay corn harvest," CHS Hedging said.
This will ease the pressure on a US logistical system, including farmer storage, beginning to creak in parts under the weight of another strong harvest and forcing growers into sales.
"Storage is garnering a premium in the western Corn Belt and northern Plains, where some farmers are having to make tough decisions," Mr Cronin said.
"Temporary storage and ground piles are already the norm, a sign of both the size of the new crop and the amount of old crop being lugged forward."
It was also a help that corn futures are widely seen as having been "oversold" in their latest leg down to Monday.
'Substantial scale buying'
Back to Chinese import data, and another positive number was for sugar, of which Chinese buy-ins soared 80% last month to 656,224 tonnes.
Selected Chinese softs imports for Sept, and (year on year change)
Coffee: 7,162 tonnes, (+40%)
Cocoa beans: 1,326 tonnes, (-63%)
Chocolate products: 7,314 tonnes, (+2.3%)
Cotton: 50,948 tonnes, (-59%)
Sugar: 656,224 tonnes, (+80%)
Purchases so far in 2015, at 3.73m tonnes, are now up 55% year on year, encouraged by disappointing domestic production, and high Chinese prices, a reflection of generous guaranteed values for cane.
This cheered up New York raw sugar futures for March, which recovered 0.4% to 14.12 cents a pound after a tumble in the last session.
Still, that decline signally failed to keep the contract for long below 14 cents a pound, or the 200-day moving average at 14.04 cents a pound.
"The response below 14 cents was forceful as it reportedly uncovered substantial scale buying," Tobin Gorey at Commonwealth bank of Australia said.
"In our view that is a sign that buyers have started to lift their buying targets and are now accepting prices at these higher levels."
'Prices may continue to rally'
OK, not all the Chinese import data were so upbeat, with the cotton number coming in at 50,948 tonnes –a slump of 59% year on year.
But that decline had already been trailed by and industry report, and the market also has the threat to US harvest progress from rains in some southern growing areas to worry about.
Mr Gorey flagged "the unwelcome wet bias, and potential flooding, predicted for Texas cotton areas over the next week," Texas being the top US cotton producing state.
"Concerns over cotton quality will rise if drier conditions do not return to the area in November.
"While the global supply outlook remains bearish, if further downgrades are made to US crop conditions then prices may continue to rally."
In fact, New York's December contract was up a modest 0.2% at 63.92 cents a pound, battling above its 40-day moving average at 63.86 cents a pound.
Ukraine, Australia downgrades
Back in Chicago, wheat was also showing modest gains, adding 0.1% to $4.91 ¾ a bushel for December delivery, helped by some more tangible evidence of damage to Ukraine's winter grain seedings from dry weather.
Oleksiy Pavlenko, the country's agriculture minister, said that winter wheat sowings ahead of the 2016 harvest could fall to some 5.4m-5.5m hectares, from the 6.2m hectares which had been planned, a figure in line with last year.
Furthermore, there were further downgrades to the dryness-tested Australian wheat crop, leaving the US Department of Agriculture's 27.0m-tonne estimate two weeks ago looking ever more isolated.
Rabobank, citing "the combination of the third-driest September on record and hot, dry weather in October", pegged the harvest at 23m-24m tonnes.
Australia & New Zealand Bank cut its forecast to 23m tonnes.
In Sydney itself, wheat futures for January gained 1.2% to Aus$285.00 a tonne, their first gain in five sessions.
Soy gains
As for the oilseeds complex, China's strong imports of soybeans last month of 7.26m tonnes, up 44% year on year, were already known.
The breakdown showed particular strength in purchases from Brazil, up 52% to 5.13m tonnes, and Argentina, up 65% at5 1.62m tonnes, as would be expected at this time of year, with buy-ins from the US de minimis, ahead of the ramp up in its own new crop supplies.
Still, soybean futures for November nudged 0.2% higher to $8.97 ½ a bushel, climbing back above their 10-day moving average, helped by concerns over dryness in parts of central Brazil amid sowings time (although Brazilian officials themselves seem unphased, as Agrimoney.com reported on Tuesday).
Palm oil vs soyoil
Palm oil futures showed strong gains, adding 1.9% to 2,362 ringgit a tonne in Kuala Lumpur, with the Chinese import data showing volumes of a 568,885 tonnes last month – a gain of 96% year on year.
It was also more than 100,000 tonnes above the average monthly rate that imports had been running at in 2015, although there was some devil in the detail for Malaysia.
China's imports from Malaysia, the second-ranked exporter, fell by 2.6% to 215,335 tonnes in September, with top-ranked Indonesia enjoying a boom in business, with volumes up 408% at 353,246 tonnes.
The gain in palm oil prices did not travel into values of rival vegetable oil soyoil, which added a modest 0.1% to 28.70 cents a pound in Chicago for December delivery.
China's soyoil imports last month, at 144,014 tonnes, were down 18.2% year on year.
With China the top importer of many ags, such as cotton, sugar and rubber, these stats can have quite a bearing on markets, especially with the northern hemisphere harvests nearly over, meaning the uncertainty in the market will stem more from consumption.
"The faster the US harvest wraps up the faster the market will be focusing solely on demand," said Tregg Cronin at Halo Commodity Company, adding that this "has plenty of holes", for US crop balance sheets, at least.
DDGs in demand
But perhaps not as many holes as some investors had thought, with the Chinese import data for distillers' grains, of DDGs, for instance, coming in at 933,537 tonnes last month.
Selected Chinese oilseed imports for Sept, and (year on year change)
Palm oil: 568,585 tonnes, (+96%)
Rapseed: 295,496 tonnes, (-41%)
Rapeseed oil: 26,440 tonnes, (+30%)
Soybeans: 7.26m tonnes, (+44%)
Soyoil: 144,014 tonnes, (-18.2%)
That represented a jump of 73% year on year in imports of the feed ingredient, a byproduct of corn ethanol manufacture, and of which China imports nearly all from the US.
It is also far bigger than the average monthly pace of some 540,000 tonnes at which imports had been running so far this year.
It was a help to futures in corn, even though Chinese imports of the grain itself last month were a modest 169,711 tonnes.
Sure, that represented a rise of 729% year on year, but is small beer in global trade terms, supressed by Chinese efforts to get shot of its own huge inventories of the grain.
'Ground piles already the norm'
Chicago corn futures for December nudged 0.1% higher to $3.77 a bushel as of 09:45 UK time (03:45 Chicago time), also gaining support from the prospect of rain delays to the US harvest.
Selected Chinese grain imports for Sept, and (year on year change)
Barley: 1.30m tonnes, (+71%)
Corn: 169,711 tonnes, (+729%)
DDGs: 933,537 tonnes, (+73%)
Rice: 357,744 tonnes, (+99%)
Wheat: 206,599 tonnes, (+55%)
"Harvest continues to make strong strides but weather forecasts are calling for showers on the horizon which may delay corn harvest," CHS Hedging said.
This will ease the pressure on a US logistical system, including farmer storage, beginning to creak in parts under the weight of another strong harvest and forcing growers into sales.
"Storage is garnering a premium in the western Corn Belt and northern Plains, where some farmers are having to make tough decisions," Mr Cronin said.
"Temporary storage and ground piles are already the norm, a sign of both the size of the new crop and the amount of old crop being lugged forward."
It was also a help that corn futures are widely seen as having been "oversold" in their latest leg down to Monday.
'Substantial scale buying'
Back to Chinese import data, and another positive number was for sugar, of which Chinese buy-ins soared 80% last month to 656,224 tonnes.
Selected Chinese softs imports for Sept, and (year on year change)
Coffee: 7,162 tonnes, (+40%)
Cocoa beans: 1,326 tonnes, (-63%)
Chocolate products: 7,314 tonnes, (+2.3%)
Cotton: 50,948 tonnes, (-59%)
Sugar: 656,224 tonnes, (+80%)
Purchases so far in 2015, at 3.73m tonnes, are now up 55% year on year, encouraged by disappointing domestic production, and high Chinese prices, a reflection of generous guaranteed values for cane.
This cheered up New York raw sugar futures for March, which recovered 0.4% to 14.12 cents a pound after a tumble in the last session.
Still, that decline signally failed to keep the contract for long below 14 cents a pound, or the 200-day moving average at 14.04 cents a pound.
"The response below 14 cents was forceful as it reportedly uncovered substantial scale buying," Tobin Gorey at Commonwealth bank of Australia said.
"In our view that is a sign that buyers have started to lift their buying targets and are now accepting prices at these higher levels."
'Prices may continue to rally'
OK, not all the Chinese import data were so upbeat, with the cotton number coming in at 50,948 tonnes –a slump of 59% year on year.
But that decline had already been trailed by and industry report, and the market also has the threat to US harvest progress from rains in some southern growing areas to worry about.
Mr Gorey flagged "the unwelcome wet bias, and potential flooding, predicted for Texas cotton areas over the next week," Texas being the top US cotton producing state.
"Concerns over cotton quality will rise if drier conditions do not return to the area in November.
"While the global supply outlook remains bearish, if further downgrades are made to US crop conditions then prices may continue to rally."
In fact, New York's December contract was up a modest 0.2% at 63.92 cents a pound, battling above its 40-day moving average at 63.86 cents a pound.
Ukraine, Australia downgrades
Back in Chicago, wheat was also showing modest gains, adding 0.1% to $4.91 ¾ a bushel for December delivery, helped by some more tangible evidence of damage to Ukraine's winter grain seedings from dry weather.
Oleksiy Pavlenko, the country's agriculture minister, said that winter wheat sowings ahead of the 2016 harvest could fall to some 5.4m-5.5m hectares, from the 6.2m hectares which had been planned, a figure in line with last year.
Furthermore, there were further downgrades to the dryness-tested Australian wheat crop, leaving the US Department of Agriculture's 27.0m-tonne estimate two weeks ago looking ever more isolated.
Rabobank, citing "the combination of the third-driest September on record and hot, dry weather in October", pegged the harvest at 23m-24m tonnes.
Australia & New Zealand Bank cut its forecast to 23m tonnes.
In Sydney itself, wheat futures for January gained 1.2% to Aus$285.00 a tonne, their first gain in five sessions.
Soy gains
As for the oilseeds complex, China's strong imports of soybeans last month of 7.26m tonnes, up 44% year on year, were already known.
The breakdown showed particular strength in purchases from Brazil, up 52% to 5.13m tonnes, and Argentina, up 65% at5 1.62m tonnes, as would be expected at this time of year, with buy-ins from the US de minimis, ahead of the ramp up in its own new crop supplies.
Still, soybean futures for November nudged 0.2% higher to $8.97 ½ a bushel, climbing back above their 10-day moving average, helped by concerns over dryness in parts of central Brazil amid sowings time (although Brazilian officials themselves seem unphased, as Agrimoney.com reported on Tuesday).
Palm oil vs soyoil
Palm oil futures showed strong gains, adding 1.9% to 2,362 ringgit a tonne in Kuala Lumpur, with the Chinese import data showing volumes of a 568,885 tonnes last month – a gain of 96% year on year.
It was also more than 100,000 tonnes above the average monthly rate that imports had been running at in 2015, although there was some devil in the detail for Malaysia.
China's imports from Malaysia, the second-ranked exporter, fell by 2.6% to 215,335 tonnes in September, with top-ranked Indonesia enjoying a boom in business, with volumes up 408% at 353,246 tonnes.
The gain in palm oil prices did not travel into values of rival vegetable oil soyoil, which added a modest 0.1% to 28.70 cents a pound in Chicago for December delivery.
China's soyoil imports last month, at 144,014 tonnes, were down 18.2% year on year.