MARKET DEVELOPMENT
AM Markets: Argentine Rains Refresh Soybean, Palm Oil Bulls
AM Markets: Argentine Rains Refresh Soybean, Palm Oil Bulls
22/02/2017 (AgriMoney.com) - Maybe the wet weather returning to Argentina is not quite innocuous after all.
Chicago soybean futures made a firm start to the US-holiday-shortened week, gaining 0.6% to $10.39 a bushel for March delivery as of 09:30 UK time (03:30 Chicago time).
The gain, which signally took the contract back above its 40-day and 50-day moving averages, was attributed to the rains which are raising, some, concerns over inundation to Argentina's soybean crop.
"The return of rains in Argentina during last weekend is raising fears about soybean harvest potential and supports prices in Chicago," said Agritel.
'Wetness concerns'
The weekend brought "widespread showers", reaching 4 inches in places, "in central and south east Buenos Aires, northern La Pampa, Chaco, Santiago del Estero, Entre Rios, Santa Fe, and Cordoba," weather service MDA said.
The rainfall has "maintained minor wetness concerns in Entre Rios".
While the market mood was hardly one banking on crop devastation, nor did traders appear quite as relaxed as they had been about the precipitation, which helped raise prices too of the soybean processing products, of which Argentina is the top exporter.
Soymeal for March gained 0.5% to $341.30 a short ton, while soyoil for March added 0.7% to 33.13 cents a pound, rebounding from in the last session its weakest close in five months.
Corn vs soybeans
This buoyancy helped rival vegetable oil palm oil too to recover 0.3% to 2,840 ringgit a tonne in Kuala Lumpur, which earlier set a three-month low (on a continuous chart) of 2,823 ringgit a tonne.
Furthermore, Chicago corn received a little help, seen as having some exposure (although less) to Argentine rainfall, but also to soybean prices at this time of year in particular, when northern hemisphere countries farmers are drawing up spring sowings plains.
In many countries, the US in particular, corn and soybeans are rival in these planting programmes, and how much of each is seeded is seen as, to some extent, being influenced by their relative prices, and so the scope for farmer returns.
Data ahead
This factor will come into particular focus later in the week when the US Department of Agriculture, at its annual outlook forum, unveils its first forecasts for domestic crop balance sheets for 2017-18 (bar somewhat more finger-in-the-air estimates made in November).
For now, corn futures for March rose 0.3% to $3.69 ¼ a bushel, while the new crop December lot gained 0.4% to $3.95 ¾ a bushel.
That lagged the 0.5% rise to $10.23 ¾ a bushel in in new crop November soybean futures, taking the November soybean: December corn futures ratio back to 2.59, even further into territory encouraging plantings of the oilseed rather than the grain.
Fund worries
The early headway defied some concerns over the extent of the fund buying in grains, as provoked by regulatory data showing that they had hiked their net long in the complex by nearly 141,000 lots in the week to last Tuesday to 378,611 contracts, the highest in nearly eight months.
The position also contrasted with the small net short in grains (including the soy complex) that funds had entering 2013.
Large buying raises concerns that funds have less purchasing powder dry than had been thought.
Indeed, with long bets representing unfulfilled sales orders, they can provoke concerns too over the extent of downward pressure on prices that may lie ahead from a liquidation wave.
Importers in the market
Still, in early deals, wheat was the only one of Chicago's big three crops to stand in negative territory, and even then down by a modest 0.2% to $4.40 a bushel.
Somewhat helpful for sentiment has been a string of interest in the market from importers, with Ethiopia on Monday unveiling the purchase of some 400,000 tonnes of wheat at tender, and Iraq reissuing a tender for 50,000 tonnes, which may well end up as a purchase of far more than that.
On Tuesday, Philippines were reported to have bought 54,000 tonnes of Australian wheat, with Indonesia said to be looking at this origin too.
Russia downgrade
While Australia may have a geographical advantage in Asia, many northern hemisphere exporters are taking heart from the boost to Russian values spurred by a rising rouble.
This has cut the competitiveness of Russian wheat, which is renowned for its value prices, and, in undermining rouble values of the grain, slowed farmer selling too.
Agritel flagged that Russian logistics giant Rusagrotrans had cut estimates for the country's grain, including wheat, exports this month and next.
"Consequently, the logistics specialist is now seeing a target of 27m tonnes of export for Russia instead of 28m tonnes for this marketing year," Agritel said.
"The main reason of this setback is possibly the strength of the rouble and the selling retention of producers."
Cotton up
Among soft commodities, New York cotton made a firm start, adding 0.4% to 75.81 cents a pound for the best-traded May contract, recovering a few of its heavy losses of the last session.
The crop, which also competes with corn and soybeans for spring planting area, tends at this time of year to see its prices move more in line with these crops too.
But sentiment was also helped by data from China, where the China Cotton Association said that the country's imports of the fibre last month, at 114,900 tonnes, were up 20% year on year.
That supported ideas that the weaker prices and higher supplies spurred by the country's auction programme (which closed, temporarily, in September) have indeed boosted underlying demand.
On China's Zhengzhou exchange, cotton futures for May gained 1.2% overnight to close at 15,705 yuan a tonne.
Chicago soybean futures made a firm start to the US-holiday-shortened week, gaining 0.6% to $10.39 a bushel for March delivery as of 09:30 UK time (03:30 Chicago time).
The gain, which signally took the contract back above its 40-day and 50-day moving averages, was attributed to the rains which are raising, some, concerns over inundation to Argentina's soybean crop.
"The return of rains in Argentina during last weekend is raising fears about soybean harvest potential and supports prices in Chicago," said Agritel.
'Wetness concerns'
The weekend brought "widespread showers", reaching 4 inches in places, "in central and south east Buenos Aires, northern La Pampa, Chaco, Santiago del Estero, Entre Rios, Santa Fe, and Cordoba," weather service MDA said.
The rainfall has "maintained minor wetness concerns in Entre Rios".
While the market mood was hardly one banking on crop devastation, nor did traders appear quite as relaxed as they had been about the precipitation, which helped raise prices too of the soybean processing products, of which Argentina is the top exporter.
Soymeal for March gained 0.5% to $341.30 a short ton, while soyoil for March added 0.7% to 33.13 cents a pound, rebounding from in the last session its weakest close in five months.
Corn vs soybeans
This buoyancy helped rival vegetable oil palm oil too to recover 0.3% to 2,840 ringgit a tonne in Kuala Lumpur, which earlier set a three-month low (on a continuous chart) of 2,823 ringgit a tonne.
Furthermore, Chicago corn received a little help, seen as having some exposure (although less) to Argentine rainfall, but also to soybean prices at this time of year in particular, when northern hemisphere countries farmers are drawing up spring sowings plains.
In many countries, the US in particular, corn and soybeans are rival in these planting programmes, and how much of each is seeded is seen as, to some extent, being influenced by their relative prices, and so the scope for farmer returns.
Data ahead
This factor will come into particular focus later in the week when the US Department of Agriculture, at its annual outlook forum, unveils its first forecasts for domestic crop balance sheets for 2017-18 (bar somewhat more finger-in-the-air estimates made in November).
For now, corn futures for March rose 0.3% to $3.69 ¼ a bushel, while the new crop December lot gained 0.4% to $3.95 ¾ a bushel.
That lagged the 0.5% rise to $10.23 ¾ a bushel in in new crop November soybean futures, taking the November soybean: December corn futures ratio back to 2.59, even further into territory encouraging plantings of the oilseed rather than the grain.
Fund worries
The early headway defied some concerns over the extent of the fund buying in grains, as provoked by regulatory data showing that they had hiked their net long in the complex by nearly 141,000 lots in the week to last Tuesday to 378,611 contracts, the highest in nearly eight months.
The position also contrasted with the small net short in grains (including the soy complex) that funds had entering 2013.
Large buying raises concerns that funds have less purchasing powder dry than had been thought.
Indeed, with long bets representing unfulfilled sales orders, they can provoke concerns too over the extent of downward pressure on prices that may lie ahead from a liquidation wave.
Importers in the market
Still, in early deals, wheat was the only one of Chicago's big three crops to stand in negative territory, and even then down by a modest 0.2% to $4.40 a bushel.
Somewhat helpful for sentiment has been a string of interest in the market from importers, with Ethiopia on Monday unveiling the purchase of some 400,000 tonnes of wheat at tender, and Iraq reissuing a tender for 50,000 tonnes, which may well end up as a purchase of far more than that.
On Tuesday, Philippines were reported to have bought 54,000 tonnes of Australian wheat, with Indonesia said to be looking at this origin too.
Russia downgrade
While Australia may have a geographical advantage in Asia, many northern hemisphere exporters are taking heart from the boost to Russian values spurred by a rising rouble.
This has cut the competitiveness of Russian wheat, which is renowned for its value prices, and, in undermining rouble values of the grain, slowed farmer selling too.
Agritel flagged that Russian logistics giant Rusagrotrans had cut estimates for the country's grain, including wheat, exports this month and next.
"Consequently, the logistics specialist is now seeing a target of 27m tonnes of export for Russia instead of 28m tonnes for this marketing year," Agritel said.
"The main reason of this setback is possibly the strength of the rouble and the selling retention of producers."
Cotton up
Among soft commodities, New York cotton made a firm start, adding 0.4% to 75.81 cents a pound for the best-traded May contract, recovering a few of its heavy losses of the last session.
The crop, which also competes with corn and soybeans for spring planting area, tends at this time of year to see its prices move more in line with these crops too.
But sentiment was also helped by data from China, where the China Cotton Association said that the country's imports of the fibre last month, at 114,900 tonnes, were up 20% year on year.
That supported ideas that the weaker prices and higher supplies spurred by the country's auction programme (which closed, temporarily, in September) have indeed boosted underlying demand.
On China's Zhengzhou exchange, cotton futures for May gained 1.2% overnight to close at 15,705 yuan a tonne.