The rally in soybean futures stalled on Thursday, with no fresh news to buoy the soybean complex, while wheat future came down as confidence grew on much needed rains in the US Plains.
“Crop weather in the US looks to benefit wheat growing areas in the southern plains as three or more inches of rain is expected to fall through Tuesday across Kansas, Oklahoma, and northern Texas,” said John Tjornehoj, at CHS Hedging.
“Very wet weather is still expected across the Plains over the next week, with the heaviest precipitation expected Saturday through Monday,” said Kyle Tapley, at MDA weather Services.
“Rainfall has been well below normal across most of the Central and Southwestern Plains since the start of this year, but after the next week of heavy rainfall, moisture deficits well be replaced by significant moisture surpluses across western Nebraska, eastern Colorado, and western Kansas.
Only the far western Texas will see any lingering dryness.
Weak export sales
Adding to the bearish picture for wheat was some lacklustre US export sales data.
Just 124,700 tonnes of wheat were booked for sale in 2015-16, after cancellations left sales net-negative last week.
True, analyst expectations were muted, with forecasts ranging from no sales, to 400,000 tonnes.
But even so, the number underlines the fact that the total number of shipments booked for 2015-16 is still only 92% of the USDA export forecast, with a month and a half to go.
EU wheat stocks smaller
Still there was some support from prices, from reduced ideas of European Union wheat stocks.
EU soft wheat stocks will fall to 15.6m tonnes by the end of 2015-16, analysis group Strategie Grains said.
This is the latest in a series of downgrades for European stocks from group, which six months ago expected ending stocks of nearly 20m tonnes.
Strategie Grains cited the “export competitiveness of EU wheat,” which has supported exports, particularly from France, and also forecast increased feed use in the next marketing year.
May Chicago wheat futures finished down 0.7%, at $4.59 ѕ a bushel.
Soybean rally stalls
And overall it appeared to be a day for profit taking, with soybean futures seeing the most marked effect.
Soybeans and meal have been rallying strongly, assisted by some heavy fund buying.
Richard Feltes, at R.J. O’Brien, warned that “the longer markets unable to post new highs—the more bears will probe short side—especially with near ideal US weather over next two weeks”.
Tregg Cronin, at Halo Commodities, noted the rally had been “not about acreage or perceptions of a change”.
He said the buying was “not rooted in demand but instead money flow”.
“All of our markets are due for a correction,” he said.
“Money flow in recent sessions has dictated the price movement in grain,” said Paul Georgy, at Allendale.
“Fundamental conditions have not changed significantly when looking strictly at supply and demand.”
Decent export sales not enough to stall sell-off
True, US soybean export sales came in ahead of expectations, at 455,900 tonnes. This was ahead of market expectations of 100,000-400,000 tonnes.
But soybean futures broke from eight-month highs, as profit taking and producer selling weighed.
May soybean futures ended the day down 1.0%, at $9.48 a bushel.
Sales beat expectations
But corn bucked a bearish trend in grains, helped by some decent export sales, and
Corn soybean export sales beat expectations, by a hair, at 1.14m tonnes. Markets were expecting sales of between 0.9 and 1.1m tonnes.
Corn sales have been very strong for several weeks now.
May corn futures edged up 0.1%, to finish at $3.74 a bushel, the strongest close in over two months.
Sugar finds a floor
Raw sugar futures seem to have found a floor at last, after a sharp four-day sell-off.
May raw sugar futures rallied from a one-and-one-half month low, finishing up 0.9% at 14.13 cents a pound.
Support came from a large upward revision to ideas of the 2015-16 sugar deficit from trade house Czarnikow.
The global deficit, the degree to which supply outstrips demand, was seen at 11.4m tonnes, a 3.2m tonne upward revision.
But the prospect of heavy Brazilian supplies are keeping a lid on prices. Conab, the Brazilian crop supply agency, forecast Centre South production to rise by 11% in 2016-17, to 34.32m tonnes, thanks to a large harvested area, and mills increasingly diverting cane to sugar rather than ethanol production.
Rally ahead of data release
Cocoa futures rose, ahead of the release of North American demand data.
Cocoa grinding for the first three weeks of 2016 will be issued after Thursday’s market close, with estimates running from a drop of 1% to an increase of 4%.
July New York cocoa futures settled up 1.2%, at $2,988 per tonne.
(Source – http://www.agrimoney.com/marketreport/pm-markets-wheat-futures-falter-on-poor-exports-rains–3578.html)