The concerns over bird flu in the US hung around to ensure grains a soft start to trading in grain markets.
This week, the spread of the H5N2 avian flu variety, a virulent strain, has risen dramatically in profile.
There was the detection of the disease at an egg-laying facility in Iowa, with 5.3m hens, the latest in a series of notifications in a number of states.
“This is the largest population to have the bird flu detected within the US, and not good news for feed grain demand,” said Terry Reilly at Futures International.
Mexico, the biggest importer of US chicken, has halted purchases of live birds and eggs from Iowa, following similar curbs on imports from states, including Arkansas.
And Hormel Foods, the owner of the Jennie-O Turkey Store brand, highlighted the commercial impact of the outbreak when trimming its profits forecast, citing “significant challenges in our turkey supply chain due to the recent highly pathogenic avian influenza outbreaks in Minnesota and Wisconsin”.
‘End to migratory flights’
The trouble from a grains perspective is that the poultry sector in the US – the top producer of broiler meat, at nearly 18.0m tonnes a year – is a huge user of feed, and accounts for instance for more than half of domestic soymeal demand.
OK “warmer weather and end to migratory flights of wild birds,” which are blamed for spreading the disease, “is expected to bring an end to this spread of avian flu in short order,” noted Kim Rugel at Benson Quinn Commodities.
And only a small proportion of the US flock has been affected.
“But it is the unknowns of when the outbreaks end and how long the barns will be quarantined that has triggered selling,” Ms Rugel said.
Soymeal for July stood 0.2% down at $314.20 a short ton in Chicago, dragging on prices of soybeans themselves, which stood down 0.4% at $9.73 ј a bushel for July as of 09:35 UK time (03:35 Chicago time).
As an extra setback, weather has turned drier in Argentina, speeding prospects for a harvest which is looking ever bigger, with analyst Michael Cordonnier this week raising his forecast for the crop by 1.0m tonnes to 59.0m tonnes.
The US Department of Agriculture has the crop at 58.0m tonnes.
“Delays in the Argentine harvest should be minimal with improving weather conditions,” CHS Hedging said, adding that “harvest activity should pick up by the end of the week and next week”.
And this time, the oilseeds complex did not get support from palm oil, which dropped 1.2% to 2,148 ringgit a tonne in Kuala Lumpur for July delivery.
The drop was blamed in part on a rising ringgit, but also on data showing an accelerating decline in Chinese imports, which dropped 46% last month to 245,258 tonnes.
Chinese palm oil imports so far in 2015 are, at 955,333 tonnes, down 40% year on year.
In Chicago, rival vegetable oil soyoil for July fell 0.4% to 31.85 cents a pound.
That said, not all the news from abroad was negative for soybeans, with the Dalian’s September contract soaring 1.8% to 4,108 yuan a tonne.
Sowings to speed up?
Chicago corn for May, stilled the best-traded contract, dropped 0.5% to $3.71 a bushel, undermined too by the bird flu concerns and ideas of a speedier Argentine harvest.
The market has “seemed to overlook the slower-than-anticipated US corn planting progress” revealed in data late on Monday, Benson Quinn Commodities said.
That said, in the six-to-10 day outlook “outside of scattered showers there doesn’t seem to be much on the forecast to inhibit accelerated planting progress” in the Corn Belt, the broker added, although further south, the Delta states look like getting more rain.
Chinese imports of corn-based distillers’ grains were, at 243,334 tonnes, down 44% year on year last month, although that represents a sharp improvement month on month.
For corn itself, imports were up 5.1% at 50,562 tonnes year on year, but well down month on month.
‘Generating some talk’
Investors have largely overlooked the failure, yet, of US winter wheatto show improvement to recent rains, although ratings “are expected to improve this week after the recent rain events”, CHS Hedging said.
“More rain is forecast this week for the southern Plains,” where dryness has been a particular setback to hard red winter wheat crops.
In fact, it is now dryness in the northern US, and parts of Canada, which is prompting concerns in, while allowing speedy progress on spring wheat sowings, potentially hampering germination and emergence.
“The dry conditions in this region are generating some talk,” Benson Quinn Commodities noted.
And the “northern Great Plains will see mostly dry weather over the next week”, said Futures International’s Terry Reilly.
Still, looking to other major growing countries, weather worries are few.
“Improvements to areas of the EU crop that have been a touch dry are expected,” Benson Quinn said.
“Conditions for much of the Black Sea region are generally viewed as favorable as the influence of recent showers will be bolstered by warmer temperatures.”
Minneapolis spring wheat for July fell 0.5% to $5.55 Ѕ a bushel, while Kansas City hard red winter wheat was down 0.3% at $5.17 Ѕ a bushel.
Chicago soft red winter wheat, the world benchmark, dropped 0.2% to $4.99 Ѕ a bushel.
Back to Chinese import data, and they showed a 19.3% rose to 490,545 tonnes in sugar buy-ins last month, reflecting the strong discount of imported prices to domestic ones.
That helped raw sugar prices gain 0.7% to 12.46 cents a pound in New York.
(Source – http://www.agrimoney.com/marketreport/am-markets-bird-flu-fears-see-soft-start-for-grain-futures–3102.html)