New month, new money?
By repute, the first day of the trading day brings in fresh fund cash to ags, giving buoyancy to prices.
But other markets appeared to be getting more attention from bulls in early deals, with Brent crude, for instance, up 0.8% at $36.86 a barrel as of 08:50 UK time, (02:50 Chicago time), and shares broadly higher too.
Shanghai stocks gained 1.7%, with Sydney stocks up 0.9%, and Hong Kong shares up 1.4% in afternoon deals.
Grains were, largely, sat in positive territory too, but not by the same degree. And cotton remained in investors’ naughty step, after hitting six-year lows in the last session.
‘Drier than normal’
One exception was Kansas City-traded hard red winter wheat, which eased 0.2% to $4.56 ѕ a bushel for May delivery – losing a bit of the vim which drove its premium over Chicago soft red winter wheat to $0.04 a bushel in the last session.
While hardly a large premium by historical standards, that was among the higher levels of the last five months, May basis – and a sharp turnaround from the discount of $0.12 a bushel seen in mid-February, before concerns over US Plains dryness kicked in.
(Hard red winter wheat is grown mainly in the Plains, with soft red winter wheat produced largely in the Midwest.)
“Most of Texas, Oklahoma, southeast Colorado, and Kansas south of I-70 has been drier than normal since the first of the year,” said Mark Welch at Texas A&M University.
However, to what effect on crops?
Crop condition data overnight were somewhat mixed for hard red winter wheat growing areas, with the proportion of crop rated “good” or “excellent” in Kansas, the top wheat-growing state, for instance gaining 4 points over February to reach 59%.
Nebraska winter wheat was rated, at 59% good or excellent, 3 points improved over February, with the South Dakota crop also better.
But declines were seen in the likes of Texas, Oklahoma and North Dakota, as well as Montana, where the proportion of seedlings rated good or excellent slumped by 19 points to 53%.
‘Still much above average’
In fact, Terry Reilly at broker Futures International said that “we were looking for several state winter wheat conditions to improve from a month ago, but out of the 12 select states that were reported at the time this was written, only [a minority] of them improved”.
(It looks like four of these states showed improvement.)
Still, speaking of Texas, Dr Welch said that the winter wheat rating, while declining, was “still much above average”.
Meanwhile, both of the two soft red winter wheat states reporting – Illinois and North Carolina – showed a decline in ratings, in the case of Illinois, a major grower of the variety, by 7 points to 58% rated good or excellent.
Certainly, soft red winter wheat futures for May were faring better in early deals, adding 0.2% to $4.54 a bushel to reduce to a slither their discount to hard red winter wheat, although the weather outlook could yet give Kansas City contracts fresh legs.
“The forecast for the week ahead is for mostly dry conditions over the major hard red winter wheat production region,” Dr Welch said.
‘Fieldwork will likely be slowed’
Small gains were the order of the day for the Chicago row crops too, with corn nudging 0.4% higher to $3.58 ј a bushel for May delivery, while soybeans for May gained 0.4% to $8.64 a bushel.
Brazilian rains, which delay harvesting and exports, and sowings of safrinha corn (if improving soil moisture levels) were somewhat helpful.
“Rain in Brazil this week will be greatest through Wednesday from Sao Paulo and southern most Minas Gerais and northern Parana into Mato Grosso where 2.00 to more than 4.00 inches may result by this time next week,” said Futures International’s Terry Reilly.
“This will disrupt harvesting and port loading in the south.”
At Commonwealth Bank of Australia, Tobin Gorey said: “Fieldwork will likely be slowed in parts of Brazil that are forecast to receive rain and thunderstorms this week.”
There were some more deliveries overnight against the expiring March soybean, and soyoil, contracts, of 1,234 lots and 227 lots (again), which might have been taken as negative news, with a further 110 soymeal contracts too.
Still, Benson Quinn Commodities said that the initial soybean deliveries “came as no surprise given weakness in spread and cash basis last week”.
And certainly, investors appeared unmoved, with soyoil futures for May gaining too, by 0.5% to 31.01 cents a pound, while soymeal for May ticked up 0.2% to $263.00 a short ton.
Soyoil’s gain came despite a 0.8% drop to 2,529 ringgit a tonne in futures in rival vegetable oil palm oil in Kuala Lumpur, a decline blamed on a firmer ringgit, which cuts the competitiveness of Malaysian exports.
In New York, cotton for May fell too, by 0.3% to 56.36 cents a pound, albeit remaining above the 54.53 cents a pound seen in the last session which represented the lowest for a nearest-but-one contract since June 2009.
It was little help on Monday that Australia’s Abares estimated the domestic cotton crop in 2015-16 at 2.5m bales, some 100,000 bales above the US Department of Agriculture forecast, and sees a further increase next season.
Still, the biggest worry remains when, how much, and under what terms, China will begin selling more of its huge reserves of the fibre.
“Traders continue to look for an official announcement from China regarding release of a portion of its reserve stocks,” said Louis Rose at the Rose Report.
(Source – http://www.agrimoney.com/marketreport/am-markets-march-brings-headway-to-grains.-but-not-cotton–3523.html)