MARKET DEVELOPMENT
AM Markets: Jo'burg Maize Hits Record Top, As Ags Start Firm
AM Markets: Jo'burg Maize Hits Record Top, As Ags Start Firm
19/01/2016 (Agrimoney.com) - Ags, which stood relatively resilient amid markets mayhem in the last session, put in a firm performance to start this week too - especially Johannesburg-traded maize - despite a soft performance by the likes of shares and oil.
Stocks dropped in most major Asian markets, by 1.1% in Tokyo and 0.7% in Sydney, feeling follow-on pressure from Friday's weak close on Wall Street.
Meanwhile, Brent crude fell below $28 a barrel at one point, hitting its lowest since November 2003, before recovering a little ground to stand at $28.48 a barrel as of 08:35 UK time (02:35 Chicago time), down 1.6% on the day.
Oil has been hurt by worries that lifting of sanctions against Iran will only add to supply surplus.
Nonetheless, gains were the rule on ag markets – at least, those which were open, with Chicago and New York markets closed for a US holiday.
Better China news
It helped ags that news from China - a huge importer of commodities including the likes of cotton and sugar - was better.
The renminbi extended a mild recovery, with China's central bank lifting the daily midpoint rate for the currency by 0.07% to 6.5590 per $1 for Monday – the strongest in 12 days.
And data on China's much-watched house market showed prices in 70 large cities rose by an average of 1.6% year-on-year in December.
Shanghai shares avoided the decline in other markets, closing up 0.5%.
Firm prices
Meanwhile, ags on Chinese markets traded higher too, despite what might have been seen as a mild negative in terms of a stronger currency, which would cut the value in local terms of assets traded internationally in dollars.
On the Dalian, soybeans for May, the best-traded contract, nudged 0.2% higher to 3,595 renminbi per tonne, soymeal for May settled up 1.2% at 2,433 renminbi per tonne, and soyoil for May gained 0.3% to 5,550 a tonne.
Rival vegetable oil palm oil gained 0.7% to 4,678 renminbi per tonne for the March contract.
In Shanghai, rubber for May soared 1.2% to 9,995 renminbi per tonne, while on the Zhengzhou, sugar for May settled up 0.2% at 5,462 renminbi per tonne, although cotton for May marred the bullish picture by easing 0.4% to 11.205 renminbi per tonne.
'Hunger strike'
And that strength was largely represented in other markets too, albeit not in rubber, which eased by 0.6% to 156.60 yen a kilogramme in Tokyo.
This retreat does, though, come after a revival from Tuesday's near-seven-year low of 144.50 yen a kilogramme – a recovery fostered by an announcement by the government in Thailand, the top exporter, that it will buy product at premium rates from producers, in response to the weak market.
"Thailand's government meanwhile is under pressure from producers, some of whom are threatening to go out on hunger strike," Commerzbank noted.
While world rubber output last year dropped 0.6% to 10.9m tonnes, according to the Association of Natural Rubber Producing Countries, a pullback in car markets slowed demand.
Imports into China, the top rubber consumer, dropped by 10% to 3.68m tonnes.
Palm up
But palm oil futures in Kuala Lumpur fared better in following in the wake of their peers on the Dalian, adding 0.5% to 2,475 ringgit a tonne for the benchmark April contract.
Gains were also helped by a survey from Reuters which showed that trades believe that palm oil output in Indonesia, the top producer, fell by 12% month on month in December to 2.457m tonnes (albeit in a seasonally weak time of year).
Markets are sensitive to production news, as investors attempt to gauge the extent of dryness to plantations from El Nino-induced dryness, and from losses to South East Asia's haze, which curbed photosynthesis.
Meanwhile, Indonesian exports for last month were seen soaring by 28% to 2.675m tonnes, helped by stockpiling by Chinese buyers ahead of the forthcoming lunar new year holiday.
Record high
In the grain markets, meanwhile, Johannesburg white maize – a food staple - topped 5,000 rand a tonne for the first time, standing 2.0% higher at 5,065 rand a tonne for the spot January lot, while the better-traded March contract gained 2.4% to 5,106 rand a tonne.
Prices have been spurred by a second successive drought-hurt growing season – which on Friday prompted the government to warn of a record 6m tonnes of imports.
While crops have received some recent rain relief the planting window for maize now passed in the South African corn belt.
'Moisture stress, heatwaves'
Industry group Grain SA said: "It has been a rocky start to 2016 for South African agriculture.
"The country is facing a drought, which has led to a large part of summer-crop areas not being planted this season. Some areas that have been planted continue to struggle with moisture stress, which has been exacerbated by heatwaves."
Yellow maize for January, a feed grain, gained 1.3% to a record 4,050 rand a tonne, with the March lot up 2.1% at 3,945 rand a tonne.
And this despite some recovery in the rand against the dollar, of 0.6% to 16.7067 rand per $1, which puts negative pressure on prices of rand-denominated goods.
Stocks dropped in most major Asian markets, by 1.1% in Tokyo and 0.7% in Sydney, feeling follow-on pressure from Friday's weak close on Wall Street.
Meanwhile, Brent crude fell below $28 a barrel at one point, hitting its lowest since November 2003, before recovering a little ground to stand at $28.48 a barrel as of 08:35 UK time (02:35 Chicago time), down 1.6% on the day.
Oil has been hurt by worries that lifting of sanctions against Iran will only add to supply surplus.
Nonetheless, gains were the rule on ag markets – at least, those which were open, with Chicago and New York markets closed for a US holiday.
Better China news
It helped ags that news from China - a huge importer of commodities including the likes of cotton and sugar - was better.
The renminbi extended a mild recovery, with China's central bank lifting the daily midpoint rate for the currency by 0.07% to 6.5590 per $1 for Monday – the strongest in 12 days.
And data on China's much-watched house market showed prices in 70 large cities rose by an average of 1.6% year-on-year in December.
Shanghai shares avoided the decline in other markets, closing up 0.5%.
Firm prices
Meanwhile, ags on Chinese markets traded higher too, despite what might have been seen as a mild negative in terms of a stronger currency, which would cut the value in local terms of assets traded internationally in dollars.
On the Dalian, soybeans for May, the best-traded contract, nudged 0.2% higher to 3,595 renminbi per tonne, soymeal for May settled up 1.2% at 2,433 renminbi per tonne, and soyoil for May gained 0.3% to 5,550 a tonne.
Rival vegetable oil palm oil gained 0.7% to 4,678 renminbi per tonne for the March contract.
In Shanghai, rubber for May soared 1.2% to 9,995 renminbi per tonne, while on the Zhengzhou, sugar for May settled up 0.2% at 5,462 renminbi per tonne, although cotton for May marred the bullish picture by easing 0.4% to 11.205 renminbi per tonne.
'Hunger strike'
And that strength was largely represented in other markets too, albeit not in rubber, which eased by 0.6% to 156.60 yen a kilogramme in Tokyo.
This retreat does, though, come after a revival from Tuesday's near-seven-year low of 144.50 yen a kilogramme – a recovery fostered by an announcement by the government in Thailand, the top exporter, that it will buy product at premium rates from producers, in response to the weak market.
"Thailand's government meanwhile is under pressure from producers, some of whom are threatening to go out on hunger strike," Commerzbank noted.
While world rubber output last year dropped 0.6% to 10.9m tonnes, according to the Association of Natural Rubber Producing Countries, a pullback in car markets slowed demand.
Imports into China, the top rubber consumer, dropped by 10% to 3.68m tonnes.
Palm up
But palm oil futures in Kuala Lumpur fared better in following in the wake of their peers on the Dalian, adding 0.5% to 2,475 ringgit a tonne for the benchmark April contract.
Gains were also helped by a survey from Reuters which showed that trades believe that palm oil output in Indonesia, the top producer, fell by 12% month on month in December to 2.457m tonnes (albeit in a seasonally weak time of year).
Markets are sensitive to production news, as investors attempt to gauge the extent of dryness to plantations from El Nino-induced dryness, and from losses to South East Asia's haze, which curbed photosynthesis.
Meanwhile, Indonesian exports for last month were seen soaring by 28% to 2.675m tonnes, helped by stockpiling by Chinese buyers ahead of the forthcoming lunar new year holiday.
Record high
In the grain markets, meanwhile, Johannesburg white maize – a food staple - topped 5,000 rand a tonne for the first time, standing 2.0% higher at 5,065 rand a tonne for the spot January lot, while the better-traded March contract gained 2.4% to 5,106 rand a tonne.
Prices have been spurred by a second successive drought-hurt growing season – which on Friday prompted the government to warn of a record 6m tonnes of imports.
While crops have received some recent rain relief the planting window for maize now passed in the South African corn belt.
'Moisture stress, heatwaves'
Industry group Grain SA said: "It has been a rocky start to 2016 for South African agriculture.
"The country is facing a drought, which has led to a large part of summer-crop areas not being planted this season. Some areas that have been planted continue to struggle with moisture stress, which has been exacerbated by heatwaves."
Yellow maize for January, a feed grain, gained 1.3% to a record 4,050 rand a tonne, with the March lot up 2.1% at 3,945 rand a tonne.
And this despite some recovery in the rand against the dollar, of 0.6% to 16.7067 rand per $1, which puts negative pressure on prices of rand-denominated goods.