There was a firmer tone to markets to start the week, although how long it lasts of course…
One help was a slight easing in the dollar, making dollar-denominated exports such as many ags that much less affordable.
Some gains in Brent crude – as Iraqi-Kurdish conflict raised Middle East tensions – helped the rouble, for instance, gain a touch against the dollar.
In ag markets, the rouble is particularly closely watched by wheat traders, given Russia’s record harvest of the grain, and huge supplies for export.
Thinking of wheat and the Middle East-North Africa, dryness is a worry for crops in the region, a major importer of the grain, despite some rains over the weekend, Commodity Weather Group said.
It was somewhat helpful too for prices that there were rains in parts of the US Midwest too over the weekend, with up to 3 inches in parts of the western Corn Belt, slowing corn and soybean harvesting, and winter wheat sowing.
The rains are expected to shift to the eastern Midwest, and the Delta, where they will remain a bit of an issue, CWG said.
For corn and soybeans, a slower harvest means less pressure on prices from growing supplies, at a time anyway when values are seen as likely to see some seasonal improvement.
For wheat, meanwhile, slow sowings matter increasingly as deadlines for crop insurance are passing.
In Kansas, for instance, the top winter wheat growing state, deadlines have passed for the north-west one-third or so. (The latest date for Kansas farms, for the south east corner, is November 15.)
‘A little bit supportive’
As an extra support for wheat, data late on Friday on investor positioning, for the week to last Tuesday, showed “showed managed money adding nearly 10,000 to their net short in Chicago,” Benson Quinn Commodities noted.
The net short in Chicago soft red winter wheat futures and options in fact rose by 9,963 lots to 77,692 contracts.
This “could be a little bit supportive” to prices, the broker said, in meaning that extra selling pressure from speculators has already been absorbed.
Certainly, Chicago wheat for December stood up 0.3% at $4.27 ¼ a bushel as of 09:30 UK time (03:30 Chicago time), bouncing a touch from a contract closing low.
‘Corn sales into Europe could increase’
Another factor for wheat investors worth keeping an eye on is unrest in Ukraine, a sizeable exporter of the grain, with Agritel noting demonstrations by protestors demanding “the cancellation of parliamentary immunity, amendments to the electoral law and on the creation of anti-bribery court. “A gathering occurred again this Sunday in front of the Rada.
“These events have made a limited number of casualties so far, but the previous revolution a few years ago costed the lives of dozens of people,” Agritel noted.
This could prove a factor ultimately for corn investors to deal with too, with Ukraine a major exporter of this grain as well, including to the EU.
In fact, Terry Reilly at Futures international added that “we are hearing corn yields across Eastern Europe are not living up to expectations.
“If this is the case US corn sales into Europe could increase over the next few months.”
‘Might be seen as supportive’
There were other reasons too for Chicago futures to rise above their own contract closing low to the last session.
“Wet weather in the US slowing corn harvesting might be seen as supportive,” said Terry Reilly at Futures international.
He also noted that in China, “corn harvest progress slowed across north western Heilongjiang, north eastern Inner Mongolia and central parts in the northeast after snow falls through Saturday”.
Meanwhile, sticking with China, data on the country’s commodity imports for last month showed corn buy-ins up 13-fold last month at 250,000 tonnes, albeit below the 377,518 tonnes the month before.
Chinese corn imports for the first nine months of 2017 as a whole, at 2.28m tonnes, are up 24% year on year.
Chicago corn futures for December added 0.2% to $3.45 a bushel.
‘Aggressive anti-dumping duties’
Soybean futures for November made a similar rise, adding 0.2% to $9.80 ½ a bushel, despite a China downdraft, in the form of January futures on the Dalian exchange dropped 0.95 to 3.690 yuan a tonne, a contract closing low.
China is the biggest soybean importer.
Still, the vegetable oils complex remains supportive, after the US late last week ditched ideas of weakening the US biofuels mandate. (Biodiesel is a big source of demand for vegetable oils.)
Furthermore, Mr Reilly flagged talk that “the US Commerce Department may disclose aggressive anti-dumping duties on Argentina biodiesel imports soon. Indonesia maybe included.
“Traders were looking for direction on this on Friday but we have not heard anything as of Sunday.”
As an extra support, Richard Feltes at RJ O’Brien noted Oil World analysis that “higher-than-expected exports and consumption of palm oil so far this year contributed to a weaker-than-assumed recovery of stocks in Indonesia and Malaysia” of the oilseed.
In fact, palm oil added 1.0% to 2,768 ringgit a tonne in Kuala Lumpur, while Chicago soyoil for December gained 0.3% to 34.27 cents a pound.
‘Not many bullish to stay long’
In New York, cotton bounced 1.1% from a two-month closing low to hit 67.63 cents a pound for December delivery.
Not that all commentators are upbeat on values.
“There aren’t many bullish reasons to stay long this market as the cotton pipeline starts to fill up,” said traders at Ecom.
But one reason for bears to tread cautiously is that demand has tended to emerge at levels below 67 cents a pound.
(Source – http://www.agrimoney.com/marketreport/am-markets-grains-start-brightly-as-rains-slow-us-harvest–4322.html)