MARKET DEVELOPMENT
Morning Markets: Both Ag Bulls and Bears Grain Early Succour
Morning Markets: Both Ag Bulls and Bears Grain Early Succour
11/04/2013 (Agrimoney.com) - If Brazil's crop figures, from Conab, on Tuesday were something of an agricultural commodities skirmish, Wednesday is bringing the main battle.
The first shots have already been fired, offering hope to both bears and bulls.
For the bulls, the Malaysian Palm Oil Board estimated Malaysia's palm oil stocks last month at 2.17m tonnes, a drop of 10.9% month on month and nearly 180,000 tonnes below market expectations.
The drop, which reflected a notable rise in exports when analysts had expected a decline.
And there was more supportive news on shipments when Intertek, the cargo surveyor, estimated Malaysian shipments so far this month up 3.5%.
'The Scary Part'
But not all the sentiment surrounding palm oil was upbeat, with Singapore-based Phillip Futures taking a more downbeat view over than Standard Chartered across town over the Chinese bird flu epidemic.
"China's latest avian flu outbreak, H7N9 is appearing to be more infectious than the H5N1 strain of bird flu," Phillip Futures said, as the number of people infected ticked up to 31, including nine fatalities.
"This new strain is looking to be more difficult to contain in their hosts as the distribution of cases is over several hundred kilometres, without obvious epidemiological links - ie no obvious risk factors to associate with higher possibilities of contracting the disease.
"This is the scary part."
With China the second-biggest palm oil importer, after India, "any pandemics would affect the economic outlook for China and therefore have a direct impact on the demand for palm oil", the broker added.
Kuala Lumpur palm oil for May made some headway, before reversing to 2,384 ringgit a tonne at 09:40 UK time (03:40 Chicago time), a drop of 0.5%.
Chinese Imports Flag
The other piece of data so far on Wednesday was, on the face of it, a victory for the bears.
China, the world's top soybean buyer, imported 3.84m tonnes of the oilseed last month – a drop of 20.5% year on year, if up 32% from February.
The data follow an estimate on Tuesday from the China National Grain & Oils Information Centre (CNGOIC) think tank that the country's soybean imports will come in at 59m tonnes in 2012-13 – below the 59.24m tonnes last season, representing the first year-on-year decline in nine years.
Such an outcome would also be well below the 63m tonnes the US Department of Agriculture has forecast.
Revival To Come?
Still, the March data were affected by the Brazilian port hold-ups which have cut the South American country's exports of the oilseed so far in 2013 to well below expectations.
(Brazil, with a 45% market share, in 2011-12 overtook the US, with 39%, as the main soybean shipper to China.)
China's Commerce Ministry forecasts April imports improving to 5.7m tonnes.
Chicago soybeans fell, but by a modest 0.2% to $13.93 a bushel for May delivery.
'A lot of traders antsy'
But of course the most anticipated data on Wednesday come later from the US Department of Agriculture, with its monthly Wasde crop supply and demand report.
While normally a quiet month for Wasde changes, coming ahead of the May briefings which offer the first data for the next marketing year, this time the report is being given spice by the surprise results of a US inventory briefing two weeks ago which showed grain stocks higher than analysts had thought.
Corn stocks, in particular, beat expectations, by nearly 400m bushels, sparking what has been reported as the grain's worst two-day losses in history in Chicago.
"Obviously coming off that major setback from the March 28 report, the Wasde has a lot of traders antsy," a US broker said.
Key Number
The key is how those extra 400m bushels in March, half way through the crop year, will pan through into the all-important stocks number at the end of 2012-13.
The average forecast is for a 180m-bushel increase in the number to 812m bushels – ie estimating that extra demand caused by the collapse in prices will swallow up much of the extra stocks found last month.
Still, investors were taking few chances in early deals in Chicago, where corn for May stood all of 0.25 cents higher at $6.45 ½ a bushel.
'Can't seem to catch a break'
For movement, it was necessary to go to wheat, which besides the Wasde faces trial by weather in the US, where a cold snap is seen posing a threat to winter crops which, now some distance out of dormancy in many areas, are vulnerable to frost.
"The south west plains can't seem to catch a break, with little drought relief so far this spring and now a second bout of harmful cold," said Jonathan Watters at Benson Quinn Commodities.
"Forecasts call for 20 degree Fahrenheit temperatures down into western Oklahoma and Texas, and though the crop is behind normal as far as maturity goes, it looks like damage will be possible."
US Commodities has said "it is possible that a loss of 20m-30m bushels could occur".
But a drop of 0.8% to $7.40 ½ a bushel in Kansas hard red winter wheat, as grown in the southern Plains, for May indicates that maybe the temperatures are not as low as forecast.
Chicago wheat for May dropped 0.5% to $7.05 ¼ a bushel.
Cotton Rises
In New York, cotton for May did better, rising 1.0% to 85.44 cents a pound.
But then the fibre, for which recent Wasdes have bought declines in US stocks estimates, may emerge bullishly from Wednesday's report too.
"Another downward revision to US cotton inventories is probable given the strong export sales programme so far this season," Luke Mathews at Commonwealth Bank of Australia said.
"New crop concerns will continue to linger given ongoing dryness in key US regions."
The first shots have already been fired, offering hope to both bears and bulls.
For the bulls, the Malaysian Palm Oil Board estimated Malaysia's palm oil stocks last month at 2.17m tonnes, a drop of 10.9% month on month and nearly 180,000 tonnes below market expectations.
The drop, which reflected a notable rise in exports when analysts had expected a decline.
And there was more supportive news on shipments when Intertek, the cargo surveyor, estimated Malaysian shipments so far this month up 3.5%.
'The Scary Part'
But not all the sentiment surrounding palm oil was upbeat, with Singapore-based Phillip Futures taking a more downbeat view over than Standard Chartered across town over the Chinese bird flu epidemic.
"China's latest avian flu outbreak, H7N9 is appearing to be more infectious than the H5N1 strain of bird flu," Phillip Futures said, as the number of people infected ticked up to 31, including nine fatalities.
"This new strain is looking to be more difficult to contain in their hosts as the distribution of cases is over several hundred kilometres, without obvious epidemiological links - ie no obvious risk factors to associate with higher possibilities of contracting the disease.
"This is the scary part."
With China the second-biggest palm oil importer, after India, "any pandemics would affect the economic outlook for China and therefore have a direct impact on the demand for palm oil", the broker added.
Kuala Lumpur palm oil for May made some headway, before reversing to 2,384 ringgit a tonne at 09:40 UK time (03:40 Chicago time), a drop of 0.5%.
Chinese Imports Flag
The other piece of data so far on Wednesday was, on the face of it, a victory for the bears.
China, the world's top soybean buyer, imported 3.84m tonnes of the oilseed last month – a drop of 20.5% year on year, if up 32% from February.
The data follow an estimate on Tuesday from the China National Grain & Oils Information Centre (CNGOIC) think tank that the country's soybean imports will come in at 59m tonnes in 2012-13 – below the 59.24m tonnes last season, representing the first year-on-year decline in nine years.
Such an outcome would also be well below the 63m tonnes the US Department of Agriculture has forecast.
Revival To Come?
Still, the March data were affected by the Brazilian port hold-ups which have cut the South American country's exports of the oilseed so far in 2013 to well below expectations.
(Brazil, with a 45% market share, in 2011-12 overtook the US, with 39%, as the main soybean shipper to China.)
China's Commerce Ministry forecasts April imports improving to 5.7m tonnes.
Chicago soybeans fell, but by a modest 0.2% to $13.93 a bushel for May delivery.
'A lot of traders antsy'
But of course the most anticipated data on Wednesday come later from the US Department of Agriculture, with its monthly Wasde crop supply and demand report.
While normally a quiet month for Wasde changes, coming ahead of the May briefings which offer the first data for the next marketing year, this time the report is being given spice by the surprise results of a US inventory briefing two weeks ago which showed grain stocks higher than analysts had thought.
Corn stocks, in particular, beat expectations, by nearly 400m bushels, sparking what has been reported as the grain's worst two-day losses in history in Chicago.
"Obviously coming off that major setback from the March 28 report, the Wasde has a lot of traders antsy," a US broker said.
Key Number
The key is how those extra 400m bushels in March, half way through the crop year, will pan through into the all-important stocks number at the end of 2012-13.
The average forecast is for a 180m-bushel increase in the number to 812m bushels – ie estimating that extra demand caused by the collapse in prices will swallow up much of the extra stocks found last month.
Still, investors were taking few chances in early deals in Chicago, where corn for May stood all of 0.25 cents higher at $6.45 ½ a bushel.
'Can't seem to catch a break'
For movement, it was necessary to go to wheat, which besides the Wasde faces trial by weather in the US, where a cold snap is seen posing a threat to winter crops which, now some distance out of dormancy in many areas, are vulnerable to frost.
"The south west plains can't seem to catch a break, with little drought relief so far this spring and now a second bout of harmful cold," said Jonathan Watters at Benson Quinn Commodities.
"Forecasts call for 20 degree Fahrenheit temperatures down into western Oklahoma and Texas, and though the crop is behind normal as far as maturity goes, it looks like damage will be possible."
US Commodities has said "it is possible that a loss of 20m-30m bushels could occur".
But a drop of 0.8% to $7.40 ½ a bushel in Kansas hard red winter wheat, as grown in the southern Plains, for May indicates that maybe the temperatures are not as low as forecast.
Chicago wheat for May dropped 0.5% to $7.05 ¼ a bushel.
Cotton Rises
In New York, cotton for May did better, rising 1.0% to 85.44 cents a pound.
But then the fibre, for which recent Wasdes have bought declines in US stocks estimates, may emerge bullishly from Wednesday's report too.
"Another downward revision to US cotton inventories is probable given the strong export sales programme so far this season," Luke Mathews at Commonwealth Bank of Australia said.
"New crop concerns will continue to linger given ongoing dryness in key US regions."